IAG s profit slides on disasters
IAG's profit slides on disasters

Insurance Australia Group's first half profit fell by 10.6 per cent after incurring $396 million in claims from natural disasters.

IAG posted a net profit of $144 million in the six months to December 31, 2011, down from $161 million in the previous corresponding period.

The company said natural peril costs in the period were $130 million above the company's allowance.

IAG also said its cost of reinsurance increased to $356 million, 56 per cent up on the previous corresponding period.

"The first six months of the 2012 financial year have again been challenging for the insurance industry, with high net natural peril claim costs, including floods in Thailand and the severe Christmas Day storm in Melbourne, significantly increased reinsurance costs and volatile investment markets," chief executive Mike Wilkins said in a statement.

IAG confirmed its previous insurance margin guidance for the full financial year, with premium increases and higher volumes from acquisitions helping to offset those higher costs, he said.

The company expects to deliver a full year insurance margin at the lower end of a 10 to 12 per cent range.

First half underlying insurance margin was 10.7 per cent.

IAG upgraded its guidance for gross written premium, and now expects growth of between eight and 10 per cent.

Gross written premium growth in the first half was 9.7 per cent, to more than $4.3 billion.

"Our outlook reflects the improved underlying performance we've delivered in the opening half of the year as well as the momentum were seeing in the business," Mr Wilkins said.

The guidance assumes net natural peril claims of $630 million for the full year.

IAG declared a fully-franked interim dividend of five cents per share, down from nine cents for the same period in the previous year.

The West Australian

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