Insurance giant IAG posted a 59% increase in net profit to $1.233 billion, a result helped by better investment returns and the shedding of an ailing UK business.
The insurance margin of 18.3% benefited from lower than expected claim costs from natural perils and favourable credit spreads on fixed interest investments.
Gross premiums were up 3% to $9.779 billion.
The result was helped by the sale of the UK business in April 2013, which had been a $287 million drag on results.
IAG, which has the NRMA brand, sees gross premium growth of 17% to 20% in the current financial year, largely as a result of consolidating the Wesfarmers business in Australia and New Zealand.
The acquisition of the Wesfarmers insurance underwriting business was completed on June 30 and includes the WFI and Lumley Insurance brands, as well as a 10-year distribution agreement with Coles.
It delivers market leadership in commercial insurance in Australia and consolidates IAG’s market leadership in New Zealand.
CEO Mike Wilkins says the Wesfarmers business further strengthens the group’s ability to meet the needs of customers and partners.
“Our new operating model will create an organisation that is more customer-focused and efficient, allowing the group to better leverage its scale and insurance expertise,” he says.
A final fully franked dividend of 26 cents a share was announced, bringing the full year dividend to 39 cents, an 8.3% increase.
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