IAG guides for higher 2018 insurance margin
Insurance Australia Group (IAG) has raised its full-year 2018 reported insurance margin guidance to 15.5-17.5 percent, on back of an increase in reserve release expectations to around 3 percent of net earned premium (NEP) and a first half 2018 (Sept.-March) favourable credit spread impact.
The reported margin for the first half of 2018 grew to 17.3 percent from 13.5 percent in the same period a year ago. Net natural peril claim costs were $78 million lower than allowance at $262 million (1H17: $420 million), following $120 million of protection from aggregate reinsurance cover, the company explained.
Overall, insurance profit grew 30.1 percent year over year to A$743 million ($584.1 million) in the first half of 2018. Net profit increased 23.5 percent to A$551 million over the period. Gross written premium expanded 0.6 percent year over year to A$5.83 billion.
“This is an encouraging result for IAG,” said IAG CEO Peter Harmer. “It reflects solid like-for-like gross written premium (GWP) growth of nearly 4 percent, primarily achieved through rate increases in commercial and consumer, along with some volume growth in motor.”
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