By Tina Morrison
Insurance Australia Group's New Zealand unit has boosted annual profit 56 percent after hiking household premiums, increasing sales through the internet and taking advantage of a favourable exchange rate.
The New Zealand division, the country's largest general insurer, increased earnings to $A183 million ($NZ201.5M) in the 12 months ended June 30, from $A117M the year earlier, the Sydney-based company said in a statement.
New Zealand gross written premium revenue rose 17 percent to $A1.85 billion.
IAG, whose local brands include State, NZI and AMI, said it has completed the two-year integration of the AMI businesses saving $35M in costs.
IAG expects to achieve further savings over the coming two years from its purchase of Wesfarmers' Lumley Insurance unit, it said today.
In New Zealand dollar terms, growth in gross written premium revenue slowed to a 2.7 percent pace in the second half of the financial year, from 4.7 percent in the first half.
Only modest rate increases are anticipated for homeowner insurance for the 2015 financial year, the company said.
Increased competition in the corporate market following the Canterbury earthquakes is keeping pricing "under pressure", it said.
The company's reinsurance expense increased 8.4 percent to $A257M in the latest year, as higher "catastrophe cover" costs following the Canterbury earthquakes and additional regulatory requirements outweighed savings from bringing AMI under the group's catastrophe cover programme.
IAG's NZ unit recorded a 15 percent increase in net claims expense to $A892M.
During the financial year, September storms in Canterbury, Tropical Cyclone Ita in April and heavy rain and storms in June increased claims from "natural perils" to $A106M from $A56M the year earlier.
IAG said it had settled about 58 percent of its Canterbury earthquake claims as at June 30, amounting to more than $3.3 billion in claim settlements. Projects are taking longer than expected and the company expects the rebuild completion date to extend out to mid-2016, later than the previous target.
source: newshub archive