Bloomberg News

IAG First-Half Profit Triples on Investment Income, Fewer Claims

February 20, 2013

Insurance Australia Group Ltd., the Sydney-based insurer formed in 1925, said first-half profit more than tripled as claims fell and investment income surged.

Net income rose to A$461 million ($473 million) in the six months to Dec. 31 from A$144 million a year earlier, IAG said today in a statement. Analysts had predicted adjusted net profit of A$490.3 million, according to three estimates compiled by Bloomberg.

IAG Chief Executive Michael Wilkins agreed to sell the group’s ailing U.K. business to increase profits at home and expand in Asia in December. Reduced insurance claims along with the planned exit from the U.K. has boosted the insurer’s share price 16 percent this year, making it the second-best performer behind QBE Insurance Group Ltd. in the Australian industry.

“Post disposal of U.K., IAG is now a very clean play on the favorable domestic general insurance business,” Richard Coles, an analyst at CIMB Group Holdings Bhd, said before the announcement.

Investment income on shareholders’ funds was A$201 million, compared with a loss of A$30 million in the same period a year earlier, IAG said. Net natural peril claim costs fell to A$133 million from A$396 million.

IAG’s profit in the six months to Dec. 31, 2011, was affected by claims generated by a Christmas Day storm in Melbourne and floods in Thailand.

The insurer on Dec. 14 said it expects a net loss after tax of about A$240 million in the year ending June 30 from the U.K. unit. Yesterday, Brisbane-based Suncorp Group Ltd. reported a 48 percent increase in first-half net income.

To contact the reporter on this story: Narayanan Somasundaram in Sydney at nsomasundara@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net


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