Profits dip at IAG but commercial pricing improving, CEO claims
Profits dipped at IAG Group in the first six months of its reporting cycle to December 31, 2016, but its CEO said that commercial pricing in Australia and New Zealand has passed the bottom of the cycle.
The company’s net profit was A$446 million ($343 million), 4.3 percent lower than in the same period a year earlier (A$466 million). It said this included a significantly higher contribution from investment income on shareholders’ funds, which reflected stronger equity markets in the period.
Its gross written premiums for the period increased to A$5.8 billion, a 4.7 percent increase on 1H16, which it said was above expectations and "predominantly due to rate increases to counter higher claim costs in short tail personal lines in Australia and New Zealand, and improved commercial pricing".
Peter Harmer, the chief executive of IAG, said the 1H17 result reflected a strong performance in IAG’s consumer businesses, which he said was further signs that commercial pricing has passed the bottom of the cycle.
"This is a sound result for our core businesses in Australia and New Zealand, reinforced by the strength and integrity of our brands, our sharpened customer focus, and the quality and passion of our people," he said.
He added that in its Asian businesses, India moved into profit over the half but this was more than offset by increased competitive and claims pressures in Thailand and Malaysia.
"Underpinning our result is our strategy to make our customers feel safer and more confident through the products and services we deliver," Harmer said.
He also revealed that the company has committed to a number of initiatives to help it retain a competitive edge.
It has committed to a $75 million venturing fund to work with emerging and established business on new products and services, a Singapore-based InsurTech innovation hub to co-create solutions for future customer needs, and the increased use of aerial drones so customer claims are assessed quickly and safely after severe weather events.
"Through leading, we put customers at the centre of what we do by the enhanced use of technology, offering innovative new products through our core businesses, and identifying new ways to meet ever-changing customer needs.
"We are already seeing positive results, with our customers' measure of our performance across our different brands above industry average. Our customer feedback is put into action through our 'listen, learn and act' model which enables us to implement improvements, from the front line through to senior management, to continuously drive better outcomes," he said.
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