IAG New Zealand posted a 39% decline in first-half insurance profit after the country’s biggest general insurer was hit by claims from extreme rain and flooding in Westport and Auckland.
The local division of Australian insurer IAG reported a profit of A$99 million in the six months ended Dec 31, down from A$162m a year earlier. The reduction was largely due to a 25.6% increase in its net claims to A$565m as the insurer covered the bills associated with flooding last winter.
Like other local insurers, IAG was rocked by the increased frequency of heavy rain and storms last year and the subsequent claims on policies on both sides of the Tasman.
IAG’s group profit was A$173m in the half, turning around a loss of A$460m in the prior year when the bottom line was dented by business interruption provision, customer refunds, and fixing payroll compliance.
The insurer’s NZ division, which operates the State, AMI and NZI brands, lifted its gross written premiums (GWP) 8.3% to A$1.48 billion, outpacing the wider group’s 6.2% increase to A$6.57b.
However, that included the benefits of a weaker NZ dollar, and in local currency terms IAG’s NZ GWP rose a more modest 5.9% to NZ$1.55b. The bulk of that growth was among IAG’s NZ business lines, with GWP rising 10.1% from a year earlier as the insurer wrote new business at higher rates, particularly in construction and engineering.
IAG’s NZ consumer GWP rose just 2.6% primarily through price hikes as the insurer struggled to win new customers. That’s against a backdrop of home, contents and vehicle insurance consumer prices rising between 3.5% and 4% through that period.
