Thursday 7th February 2019
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Australian insurance giant IAG’s premium growth from its New Zealand operations was nearly twice as brisk as in its home market in the six months ended December, although down 42 percent from a year earlier.
IAG, which claims about 45 percent of New Zealand’s insurance market through brands including AMI, State and Lumley, reported 5.5 percent growth in New Zealand premiums in the latest six months, down from the 9.5 percent growth in the year-earlier six months in New Zealand dollars.
A slight foreign exchange benefit, compared with a drag in the previous first half, meant the growth in Australian dollars was 6.6 percent to A$1.268 billion, up from 5.5 percent to A$1.19 billion a year earlier.
In Australia, gross written premiums (GWP) grew at a more sedate 3.4 percent.
The New Zealand profit margin rose from 14.2 percent in the previous first half to 24.9 percent. That compares with the Australian profit margin of 10.7 percent, down from 11.4 percent.
IAG managing director Peter Harmer said that the New Zealand business “continued to perform well, with solid GWP growth supported by sustained margins.”
The margin improvement was largely driven by higher premiums with higher commercial rates partially offset by lower volumes, the company said.
About 59 percent of GWP were consumer policies and the remainder business. About 43 percent were sold directly, 41 percent through a broker or agent and 16 percent came from its “affinity” banking partners, ASB, BNZ, Westpac and the Co-operative Bank.
The IAG group reported an overall 9.3 percent drop in net profit for the latest six months with the result hit by net natural peril claims coming A$110 million above its allowance because of a freak hailstorm in Sydney in December.
IAG is forecasting total GWP growth of 2-4 percent for the year ending June, compared with 4.1 percent in the first half and a reported insurance margin of 16-18 percent compared with 13.7 percent in the first half.
That’s assuming net losses from natural perils for the year total A$608 million, reserve releases of about 2 percent and no material movement in foreign exchange rates or investment markets.
That would mean claims from natural perils coming in at no more than A$300 in the second half.
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