IAG has reported net profit after tax of $461 million for the six months to December 31, up from $144 million in the previous corresponding period.

Gross written premium (GWP) for the half was $4.59 million, up 13.5% – or 9.5% excluding the impact of acquiring New Zealand insurer AMI.

IAG posted an insurance margin of 19.9% with an underlying margin – excluding favourable movement in credit spreads – of 12.1%, up from 11.7%.

The result reflects “a strong business performance supplemented by the benefits of a benign weather period and favourable investment markets”, MD and CEO Mike Wilkins says.

The weather was indeed kind, with IAG’s net natural peril claim cost of $133 million being less than half its allowance for the period. 

The natural catastrophe claims outlook for the second half of 2012/13 is less favourable, with last month’s Queensland and NSW floods and bushfires to cost $155-175 million.

“We believe it is prudent to retain a net natural peril claim cost assumption for the full year in line with our allowance of $620 million ex-UK,” Mr Wilkins said.

“This follows the significant natural peril activity in the opening weeks of calendar 2013.”

However, the outlook remains strong, with IAG raising its full-year insurance margin forecast from 11-13% to 12.5-14.5%.

Revenue and earnings in each division grew during the first half, in what Mr Wilkins calls “effective execution” of IAG’s long-term strategy.

The Australia Direct business posted an underlying insurance margin of 13.1%, down from 15.2% following “increased claim frequency and lower investment yields on the NSW [compulsory third party] CTP portfolio”, Mr Wilkins says.

CTP in NSW is now the subject of a government review.

The turnaround at CGU under the OneCGU program – which is now at its halfway point – continues, with an underlying insurance margin of 10.7%, up from 7.5%.

Mr Wilkins says the integration of AMI is “tracking to plan”, while the portfolio of Asian joint ventures is expected to deliver a “small” full-year profit.