IAG says stronger earnings last financial year reflect operational improvements and it will now focus on its “next phase of growth”.

“We have done a lot of heavy lifting over the last couple of years, simplifying and streamlining our business to set us up to provide better outcomes for our customers, our shareholders and our people,” CEO Nick Hawkins says in the annual report.

“Now it is time to focus on the next phase of growth and opportunity as we seek to deliver on our purpose for Australians and New Zealanders.”

IAG’s net profit rose 7.9% to $898 million as gross written premium increased 11.3% to $16.4 billion and investment income provided a tailwind.

The insurance profit surged 79.1% to $1.438 billion, with improved results from the direct, intermediated and New Zealand businesses.

Direct Insurance Australia insurance profit rose 19% to $654 million, with GWP up 12.8% following rate increases to address claims inflation and increased natural peril and reinsurance costs.

IAG says in retail lines, motor repair costs are moderating, but double-digit inflation is still being seen on the property side, driven by labour and building supply costs.

Intermediated Insurance Australia profit grew 57% to $328 million, surpassing the $250 million target set about three years ago when the business was loss-making. 

IAG has applied to the Australian Prudential Regulation Authority for a separate financial services licence for the intermediated division, to provide a clearer focus on the distinct characteristics of the business within the wider group.

Intermediated head Jarrod Hill told insuranceNEWS.com.au it could be the second half of next year before the licensing process is finalised. Under the proposal, there will be no change to the CGU and WFI trading brands.

New Zealand insurance profit surged to $457 million last financial year from $44 million the previous year, which included the Auckland floods and Cyclone Gabrielle.

IAG expects GWP growth will be in the “mid to high single digit” range this year and reported insurance profit will reach $1.4-$1.6 billion.

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