IAG expects a strong increase in gross written premium in the year ahead, CEO Mike Wilkins told an investor briefing last week.

Announcing the group’s annual result, he said IAG is aiming for an insurance margin of 10-12% next year, up from 9.1% in 2010/11, and gross written premium (GWP) growth of 6-9%, against 4.8% last financial year.

Mr Wilkins says the group has achieved rate increases of 5-10% across the portfolio, and he expects these to “stick and continue”.

IAG reported a net profit of $250 million, up from $91 million last year, with GWP of $8.05 billion, compared with $7.78 billion. Its insurance profit was $660 million, compared with $493 million in 2010.

Mr Wilkins described the result as “sound, in an extremely challenging year”.

Australia Direct’s insurance margin was 19.5% and this is expected to remain strong but lower, reflecting the lag in recovering reinsurance costs from increased premiums. The division made an insurance profit of $702 million, up 23%.

CGU continued to make steady progress and achieved the first increase in GWP in several years on rate increases, new business and acquisitions. It made an insurance profit of $140 million.

The New Zealand operations returned a profit of $3 million, compared with $131 million, after net claims of $578 million. Asia made a $4 million loss.

The UK operations reported an insurance loss of $181 million, but Mr Wilkins says the loss reduced in the second half and the trend is “encouraging”. IAG aims for the business to move towards break-even this financial year.

Natural perils cost $610 million, including $83 million from New Zealand earthquakes, $119 million from Cyclone Yasi and $108 million from the Brisbane floods.

CGU renews its reinsurance treaties on January 1. CFO Nick Hawkins says IAG expects to fully recover higher reinsurance costs from premium rate increases, although there could be a short-term lag while this occurs.