IAG has announced a net profit of $665 million for 2003/04, compared with $153 million in the previous year.

Proceeds from the sale of non-core businesses contributed to the result, and the acquisition of CGU/NZI a year ago added $160 million. Its investment income was $434 million.

CEO Michael Hawker says the company’s insurance margin increased from 12.3% to 13.5% for the year, compared with a long-term target of 9-12%. In the second half, the margin reached 15.2%.

“Our insurance margin of 15% is sustainable and appropriate,” he said. “Premium levels are going up in CTP, workers’ comp and commercial. Motor and liability are flat and D&O is going up. In the past five years this is the second time we’ve had an insurance margin at the upper end of the range and it needs to be there at this point.”

The company now has its focus clearly set on general insurance. It sold its health underwriting operations and ClearView Retirement Solutions during the year, contributing about $57 million to the result.

“We believe that we can continue to grow insurance earnings faster than premiums in the next 12 months as the full benefits of integration and our various efficiency programs, such as technology transformation, come online,” Mr Hawker said.

IAG has entered new markets, including home warranty and marine insurance, and has launched NRMA Insurance in Tasmania. It is also seeking joint ventures in China, Thailand, India, Malaysia, Singapore and Hong Kong.