IAG’s net profit rose 16.6% to $1.08 billion last financial year, boosted by a windfall of more than $200 million from the sale of IAG’s Thai operations in August last year.

That offset a marked decline in the profitability of domestic insurance operations.

Pre-tax profit from insurance operations fell 13% to $1.22 billion in the year to June 30. While underlying performance improved, large natural disaster claims in Australia and weaker returns on fixed interest hurt, sending IAG’s reported margin down to 16.9% from 18.3% a year earlier.

The combined operating ratio worsened to 87.5%, up from 84.7% in fiscal 2018.

Gross written premium (GWP) grew 3.1% to $12.01 billion, mainly from higher rates. Like-for-like premium growth was close to 4%. IAG says there has been continued commercial rate growth, which in Australia averaged around 6%, while personal lines rose 4-5%.

“We’ve improved our underlying performance as we realise the benefits of our simplification program, build on our customer focus and identify future growth opportunities,” MD and CEO Peter Harmer said.

The underlying margin improved to 16.6%, from 14.1%.

GWP rose 2% to $9.33 billion in Australia last year, and 7% to $2.66 billion in New Zealand.

In the current year, IAG expects GWP growth to be in low single digits.

Sound growth is expected from short-tail personal lines but lower compulsory third party GWP is forecast due to scheme change effects in NSW, ACT and SA. Underwriting agency-related GWP in Australia will fall by more than $100 million after business exits, IAG said.

In Asia, the insurer expects sales of operations in Indonesia and Vietnam will be secured in coming weeks, while talks continue regarding IAG’s 26% interest in its joint insurance joint venture with the State Bank of India.