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Insurance profit gives IAG a 23.5pc lift

Simone Ziaziaris  |  14 Feb 2018Text size  Decrease  Increase  |  
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SYDNEY - [AAP] Insurance Australia Group (IAG) has lifted first-half profit 23.5 per cent to $551 million, primarily due to a significant increase in insurance profit.

It's insurance profit for the six months to December 31 was up by more than 30 per cent at $743 million, from $571 million in the prior corresponding period, and IAG says its reported insurance margin had widened to 17.3 per cent, from 13.5 per cent.

The company's Australia division delivered the bulk in insurance profit, reporting $625 million, compared to $542 million a year ago.

The group's underlying margin--the company's preferred measure of performance--was flat at 12.6 per cent.

IAG said profit had also been driven by a higher contribution from investment income on shareholders' funds.

The insurance company in December signed deals with three European businesses to share a portion of its premiums and expenses in a bid to reduce regulatory capital requirements by about $435 million over three years and to reduce earnings volatility.

The three agreements, which have an average initial period of more than five years, build on a similar, yet larger deal IAG signed with Warren Buffett's Berkshire Hathaway more than two years ago and are expected to deliver similar benefits.

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Revenue in the six months grew 1.1 per cent to $8.3 billion, while gross written premiums (GWP) rose 0.6 per cent to $5.8 billion.

IAG's Australia division accounted for 76 per cent of the group's GWP and continued to deliver a strong, but slightly lower, underlying margin of 11.4 per cent, and an improved reported insurance margin of 18.8 per cent, the company said.

Its New Zealand division contributed 21 per cent of group GWP.

IAG said it expects to report further improvement in its underlying performance in the second half of the financial year.

The company on Wednesday further increased its reported margin guidance, after adjusting its range in December, and now expects its reported margin to be between 15.5 per cent and 17.5 per cent.

IAG UP ON INSURANCE PROFIT:

* Net profit up 23.5pc to $551m

* Revenue up 1.1pc to $8.3bn

* Fully franked interim dividend up 1 cent to 14cps

 

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is an AAP journalist.

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© 2021 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

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