A lucrative business exit in Thailand helped IAG achieve a 16.6% rise in annual net profit to $1.08 billion as the sale offset a marked decline in the profitability of domestic insurance operations.

The result includes a windfall of more than $200 million from the sale of IAG’s Thai operations in August last year.

Pre-tax profit from insurance operations fell 13% to $1.22 billion in the year to June 30 despite an improved underlying performance, hit by large natural disaster claims in Australia and weaker returns on fixed interest, sending the 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 and a favourable foreign exchange effect against the New Zealand currency. Like-for-like premium growth was close to 4%, and IAG says there has been continued commercial rate growth, which in Australia averaged around 6% while personal lines rose 4-5%.

“This is another pleasing set of numbers which highlight the ongoing improvement in our business,” MD and CEO Peter Harmer said. “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."

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.

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

Sound growth is expected from short tail personal lines but lower Comprehensive Third Party GWP is forecast due to scheme change effects in New South Wales, ACT and South Australia. Underwriting agency-related GWP in Australia would 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 advanced discussions with a number of bidders over a potential sale of all or part of its 26% interest in SBI General in India may result in one or more transactions, it said.