Catastrophe losses drag down profits at IAG

Insurance Australia Group (IAG) reported a fall in insurance profits in the year ended June 30, 2015 as catastrophe losses took their toll.

The firm reported a profit of $1.1 billion for 2015, compared with $1.6 billion in the 2014 year, driven by a “significant increase of $495 million in net natural peril claim costs, lower net reserve releases, and a more competitive environment in commercial markets”.

However, IAG posted a 17 percent increase in gross written premiums (GWP) to $11.4 billion this year, compared with $9.8 billion in the prior year period.

Mike Wilkins, IAG managing director and chief executive officer, confirmed that IAG was focusing on China as the insurer pursues “opportunities which have more of a national presence” and enables it to “capitalise on a market that remains under-penetrated and with significant growth potential”.

Wilkins added: “While our full year reported performance was affected by a substantial increase in net natural peril claim costs, particularly in the second half, we continue to enjoy a strong position as we respond to competitive pressures while continuing to meet the evolving needs of our customers.

“Customer expectations and preferences are changing, and digital technology is enabling new and innovative approaches in anticipating, meeting and exceeding these expectations.

“Our creation of IAG Labs will drive digitisation and innovation across IAG and its brands to ensure we meet and exceed customer expectations. It will do so by bringing together technology, customer insights and a venturing unit focused on business opportunities and disruptive technologies.”