Fitch Ratings has affirmed the financial strength ratings of IAG Australia and IAG New Zealand at AA- on a “stable” outlook.

The agency says the ratings reflect IAG’s “stronger operational performance, operational changes following the strategic review in 2008 and remedial work in the UK business, which should support profitability and a stronger insurance margin going forward”.

Fitch says IAG was able to increase its insurance trading result for 2010/11 despite large gross losses from natural catastrophes.

It says if catastrophe losses revert to the long-term average, redundancies in the company’s natural peril allowances should flow into future profits.

IAG is already highly rated, so there is little prospect of its rating being upgraded in the near term, Fitch says.

In order to preserve the rating, the agency “would expect IAG to maintain solid financial metrics”.