Thursday 22nd August 2013
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Insurance Australia Group's New Zealand unit posted a 12 percent gain in full-year insurance profit as the owner of the Lantern, NZI and State brands benefited from a 12-month contribution from AMI Insurance.
Insurance profit rose to A$115 million in the 12 months ended June 30, the Auckland-based division said in a statement. The size of the New Zealand business, as measured by gross written premium (GWP), jumped more than 30 percent to A$1.58 billion, largely as a result of the AMI purchase.
IAG acquired the 'good' assets of AMI last year for $380 million after the New Zealand rival was forced to seek a financial rescue from the government because the Christchurch earthquakes drained its reserves. AMI contributed a full year of premiums to its latest result, compared to three months a year earlier.
New Zealand chief executive Jacki Johnson said GWP also rose as a result of rate increases imposed to recover high reinsurance costs and new regulatory requirements. The insurer said it had spent $13 million to manage the legislated change to home insurance policies to sum insured.
Those costs and the need to build up reserves as a result of IAG's Canterbury earthquake recovery commitments, resulted in the New Zealand insurance margin shrinking to 8.9 percent from 10.4 percent a year earlier.
The company is on track to achieve synergy benefits of at least $30 million by April 2014 from the integration of AMI, it said.
The Australian parent, based in Sydney, today reported full-year profit more than tripled to A$776 million as premiums rose and it received fewer claims. Profit missed the A$819 million median estimate in a Bloomberg survey.
It will pay a final dividend of 25 Australian cents. The shares last traded on the ASX at A$5.93 and have gained 26 percent this year.
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