IAG’s full year net after-tax profit fell 41% to $728 million after a significant rise in insurance claims from earthquakes in New Zealand and storms in Australia.
Net natural peril claim costs of $1.048 billion were $348 million higher than the related allowance of $700 million for the year and $495 million higher than 2014.
IAG’s underlying insurance margin, the company’s preferred measure of business performance, was 13.1% compared to 14.2% last year, as the group integrated the lower margin, former Wesfarmers insurance business.
And CEO Mike Wilkins says the company is well positioned in a rapidly changing and competitive market.
“Our strong franchises in Australia and New Zealand, our increasing digital presence, and the significant opportunities available to us in the fast growing Asian market mean we are well placed for the future,” he says.
“China in particular is a key focus for us as we pursue opportunities which have more of a national presence, enabling us to capitalise on a market that remains under-penetrated and with significant growth potential.”
In New Zealand, claims are still being made for the 2011 Canterbury earthquake. However, with more than 78% of these settled, IAG expects claims will be largely complete by the middle of the 2016 calendar year.
IAG expects underlying profitability in 2016 to remain strong with further benefits from the integration of the Wesfarmers insurance business.
The results in detail: