IAG has abandoned plans to invest further in China.
The Australian insurance giant had been investigating taking a major investment in China, possibly second tier national insurance industry player.
Today IAG said: “After completing significant work on assessing the opportunities available, IAG has determined not to pursue further investment in China.”
The company still believes in the fundamentals of China, according to outgoing CEO Mike Wilkins, despite booking a $60 million write-down on a $100 million investment in motor insurer Bohai.
However, sources said investment in China’s insurance industry carried many risks, including navigating a maze of regulations and a lack of transparency in local business transactions.
In a statement today, Wilkins clarified the company’s position on opportunities of a national scale in China and endorsed further investment in the rest of Asia.
“Our future focus will be on pursuing growth opportunities in our other Asian markets and our core businesses in Australia and New Zealand,” he says.
IAG is cashed up after Warren Buffet’s Berkshire Hathaway bought a 3.7% stake for $500 million.
Peter Harmer, the current chief executive of IAG Labs and a 36 year insurance industry veteran with responsibility for driving digital initiatives, takes over as CEO later this month.
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.
The company’s margins also fell as it integrated the former Wesfarmers insurance business.