IAG announced a 30.1% dip in its insurance profits as the company revealed its FY2015 results.
The insurance profit moved from $1.6 billion down to $1.1 billion thanks to an increase of nearly $500 million in net natural peril claim costs, the company said.
GWP of the company rose 17%, thanks in large part to the integration of the former Wesfarmers businesses into the Group, as IAG CEO and MD, Mike Wilkins stressed that the year has been challenging and rewarding for the business.
“The 2015 financial year was a challenging and rewarding one for IAG,” Wilkins said of the results.
“Despite tougher commercial market conditions and a record net claims cost from natural perils, the group still produced an insurance margin in excess of 10% and an underlying performance which continues to deliver on our long-term return targets.”
Wilkins noted that the insurer saw good growth in its personal lines which picked up the slack from a softer than expected commercial market.
“The year was also characterised by some pleasing like-for-like growth in our personal lines business which was countered by the softer than originally expected market conditions which we saw in commercial markets.
“In this environment, the strength of our franchises was amply demonstrated as we achieved volume growth in key segments such as motor and SME while continuing to maintain our underwriting discipline.”
The commercial area of the business saw GWP growth of 40.7%, thanks to the Wesfarmers additions, but like-for-like GWP growth was “modestly negative,” the company confirmed.
For FY16, IAG said it expected another year of solid performance with relatively flat GWP growth due to the market’s challenging conditions and subdued inflationary pressures, as Wilkins believes the company is set for growth.
“Our performance in 2015 has again been sound with a strong underlying result in an environment of increased competitive pressure and that demonstrates the quality of the platform that we’ve established at IAG over the past several years,” Wilkins said.
“It leaves us in a very strong position to pursue the longer-term strategic opportunities available to us and it enables us to look to our future with considerable confidence.”
