IAG has announced that insurance profits for the first half of 2017 have dipped to $571 million from $610 million in the first half of 2016.
Net profit after tax also fell from $466 million to $446 million but GWP rose from $5.5 billion to $5.8 billion thanks to improved commercial pricing and rate increases to counter higher claims costs.
The New Zealand business produced an insurance profit of $36 million in the first half of 2017, compared with $11 million in the same timeframe last year.
Growth in personal lines in New Zealand was offset by softer commercial lines as GWP grew by 1% when taking into account foreign exchange rates.
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The business noted that the New Zealand Business Division continues to see challenging market conditions and the focus will remain on pricing and underwriting discipline.
“This is a sound result for our core businesses in Australia and New Zealand, reinforced by the strength and integrity of our brands, our sharpened customer focus, and the quality and passion of our people,” Peter Harmer, IAG managing director and CEO, said.
Net natural peril claims costs exceeded allowances by $80 million and hit $420 million for the half, with the Kaikoura earthquake contributing $117 million.
The firm, acknowledging that today was the sixth anniversary of the February 2011 earthquake, noted that over 96% of all claims by number related to the Canterbury earthquake in 2011 had been fully settled, as of 31 December 2016.
Looking ahead, the firm maintained its full year reported margin guidance of 12.5-14.5%, as IAG expects to face continued claim cost pressures.
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