Growth might not be the only reason Asia is so attractive to IAG – the region is also less regulation-happy. That’s one observation of ratings agency Fitch after reaffirming the AA- financial strength ratings of IAG’s main underwriting subsidiaries, Insurance Australia Ltd and IAG New Zealand.

The agency says the outlook for IAG is stable and notes that the Australian market appears to offer “only limited organic growth opportunities and further downward rate pressure on Australian commercial lines is likely”.

It notes that recent investments in parts of Asia offer growth potential, and that IAG is investing in countries with “less developed legal, reporting and governance frameworks and it does not always have a controlling interest”.

Fitch Ratings Head of Financial Institutions John Miles told Sunrise Exchange News the Australian market is only producing premium growth of 3-4% compared with 10-12% in Asia.

“Compared to the Australia market’s reporting requirements it is understandable to see why companies such as IAG are moving into Asia – it’s less stringent,” he said.

The agency’s report says IAG’s premium growth appears to be moderating in the face of increased competition. But the negative effect is offset by strong underwriting and investment performance.

Positive reserve development continued last year for IAG, and due to the tort law reforms in Australia, the group is reserving with a greater degree of certainty, particularly for its third-party motor liability business.