IAG on course despite slim pickings: Wilkins
IAG CEO Mike Wilkins says the group’s corporate restructuring has “laid the platform for future success” after he reported slim first-half takings last week.
In line with a recent trading update, IAG confirmed a net profit of $4 million for the six months to December 31, against $110 million in the previous corresponding period.
And he warns the CGU commercial arm isn’t going to be tempted into any competitive bidding war if it means applying irrational premiums – even if the result is lost business.
“Some parts of that [commercial] market were irrational,” Mr Wilkins said. “We have concentrated our withdrawal on those areas where we cannot get an acceptable return.” He described CGU’s insurance margin of -0.6% as unsatisfactory.
New Zealand results were also disappointing with GWP flat at $482 million and overall losses of $16 million.
But mainly Mr Wilkins was keen to emphasise the underlying results to a media briefing in Sydney last week, pointing out the impact of volatile investment markets and significant writedowns.
“We always said that 2009 was the year of rebuilding for IAG,” he said. “The underlying results show we are making good progress.”
Mr Wilkins says IAG expects to hit forecast annual savings of $130 million now the restructure is complete.
Total revenue climbed 13% to $5.3 billion during the first six months as insurance profit climbed to $227 million from $190 million in the previous corresponding period. The GWP of $3.92 billion compares to $3.85 billion achieved in the six months to December 2007.
Overall investment losses of $72 million combined with a $115 million loss on the sale of the under-performing UK assets and a $23 million overshoot in expected claims to put a drag on earnings, which were partly offset by a $38 million share in the sale of IAG’s Malaysian life insurance business.
Mr Wilkins says the group will focus on strong underwriting to lead future growth rather than rely on reserve releases. Reserve releases fell to $85 million during the first half against $143 million in the previous equivalent period.
The group has gone to shareholders to raise capital, with a $450 million capital raising and $100 million share purchase plan.
The Victorian bushfires are likely to cost IAG $126 million, its maximum exposure under its current reinsurance arrangements. Full-year allowances have been raised $150 million.
IAG has forecast GWP growth between 0-2% for the 2009 financial year, with an expected insurance margin of above 6%.
In line with a recent trading update, IAG confirmed a net profit of $4 million for the six months to December 31, against $110 million in the previous corresponding period.
And he warns the CGU commercial arm isn’t going to be tempted into any competitive bidding war if it means applying irrational premiums – even if the result is lost business.
“Some parts of that [commercial] market were irrational,” Mr Wilkins said. “We have concentrated our withdrawal on those areas where we cannot get an acceptable return.” He described CGU’s insurance margin of -0.6% as unsatisfactory.
New Zealand results were also disappointing with GWP flat at $482 million and overall losses of $16 million.
But mainly Mr Wilkins was keen to emphasise the underlying results to a media briefing in Sydney last week, pointing out the impact of volatile investment markets and significant writedowns.
“We always said that 2009 was the year of rebuilding for IAG,” he said. “The underlying results show we are making good progress.”
Mr Wilkins says IAG expects to hit forecast annual savings of $130 million now the restructure is complete.
Total revenue climbed 13% to $5.3 billion during the first six months as insurance profit climbed to $227 million from $190 million in the previous corresponding period. The GWP of $3.92 billion compares to $3.85 billion achieved in the six months to December 2007.
Overall investment losses of $72 million combined with a $115 million loss on the sale of the under-performing UK assets and a $23 million overshoot in expected claims to put a drag on earnings, which were partly offset by a $38 million share in the sale of IAG’s Malaysian life insurance business.
Mr Wilkins says the group will focus on strong underwriting to lead future growth rather than rely on reserve releases. Reserve releases fell to $85 million during the first half against $143 million in the previous equivalent period.
The group has gone to shareholders to raise capital, with a $450 million capital raising and $100 million share purchase plan.
The Victorian bushfires are likely to cost IAG $126 million, its maximum exposure under its current reinsurance arrangements. Full-year allowances have been raised $150 million.
IAG has forecast GWP growth between 0-2% for the 2009 financial year, with an expected insurance margin of above 6%.