IAG is aiming for 8-10% growth in gross written premium (GWP) this financial year due to strong business growth and premium increases.

CEO Mike Wilkins upgraded the guidance at last week’s half-year results announcement, saying the insurer expects to increase GWP from its earlier forecast of 6-9% growth due to operating performance and the “momentum we’re seeing in the business”.

GWP for the six months to December 31 grew by 9.7% to $4.32 billion, and the group reported a net profit of $144 million compared with $161 million in the previous corresponding half. Its insurance margin was 7.1% compared with 12.7% and its combined ratio 105.3% versus 91.4%.

CGU’s GWP grew 13% to $1.3 billion on acquisitions and rate increases. Its insurance profit was $79 million and its insurance margin 6.7%.

IAG says it expects continuing strong GWP growth from CGU, which will enter the next stage of a revised operating model in the second half.

The HBF general insurance business will contribute over $100 million of GWP this year.

IAG will hold a market briefing on March 9 to provide further details on the CGU business. It says CGU is on track to record a double-digit margin in the 2013 financial year.

Natural disasters and higher reinsurance costs dragged on the Australia Direct business, with GWP up 8.5% to $2.08 billion, driven by rate increases to recover higher reinsurance costs and natural peril allowances.

GWP grew 16.7% in the home portfolio and motor grew by 5.7%, mostly on volume.

The division made an insurance profit of $230 million and its insurance margin was 12.3%.

The New Zealand operations returned to profit, reporting GWP of $538 million and an insurance profit of $33 million.

Although reinsurance costs increased substantially, the market grew on hardening conditions and volume gains in the intermediated market. 

IAG has previously said its reinsurance cost will be 13-16% higher this year.

Mr Wilkins says rate increases are being implemented across Australia and New Zealand, focused mainly on home and property portfolios.

He says IAG has significantly reduced its losses from the UK operation, reporting an insurance loss of $5 million compared with a $121 million loss previously as remedial actions are felt.

The business remains on track to report a close-to-breakeven result for the full year.

The Asian operations made a $67 million insurance loss, with the Thai floods costing $65 million.

IAG says Thailand performed soundly on an underlying basis and it expects a return to near breakeven in the second half.