IAG has increased its margin guidance after first-half net profit grew 23.5% to $551 million, and has signalled its Asian businesses may be divested following a strategic review.

Gross written premium (GWP) gained 0.6% to $5.83 billion in the half and insurance profit increased 30.1% to $743 million.

The insurer recorded a 17.3% margin for the six months to December 31, up from 13.5% in the corresponding period of 2016.

Margin guidance for the full financial year has now been raised to 15.5-17.5% from 12.5-14.5%.

“This is an encouraging result,” CEO Peter Harmer said. “We started to see a favourable impact over the half [from] a number of initiatives we have put in place.”

Rate rises to counter claims inflation eased pressure in motor, and the upswing in commercial rates continues. Net natural peril claim costs were $78 million lower than the $262 million allowance, thanks to $120 million of protection from aggregate reinsurance cover.

The Australian business made $625 million in insurance profit, up from $542 million, despite a fall in GWP to $4.45 billion from $4.48 billion.

Earnings from the Asian division jumped to $15 million from $2 million, but it is still making an underwriting loss, although this has narrowed to $6 million from $12 million.

IAG expects to complete a strategic review of its operations in Thailand, Indonesia, Vietnam, India and Malaysia this year.

“We have always taken a measured approach to Asia and we believe this is the right time to review the immediate and longer-term strategic options for our individual Asian businesses given the limited expansion opportunities,” Mr Harmer said.