IAG CEO Michael Hawker has come out swinging to counter the insurer’s falling share price.

Speaking at a business lunch in Melbourne last Wednesday, Mr Hawker defended IAG’s pricing policy and blamed insurance accounting methods for confusing investors.

He says IAG’s share price, which has haemorrhaged a third of its value this year to a low of $4.35 from a high of $6.60, was not a true reflection of the company’s worth.

“It’s hard for investors to really get a sense of the profitability of insurance companies,” he said. “There is not enough understanding yet of the core fundamentals of our business.”

In August IAG announced a 27% decline in its net profit, to $552 million. The company has attributed the disappointing results to severe floods in the UK, flooding in NSW and problems integrating its recent UK motor acquisitions, Hastings and Advantage UK.

And last month, the insurer issued an earnings downgrade, adjusting its gross written premiums growth forecast to 7-9% from 10-12%.

Mr Hawker also defended IAG’s decision to not follow competitors further down the path of cutting rates. He says short-term investors should look elsewhere for returns, as IAG is a strong performer in the medium-term.

“I can’t deal with those short-term issues because they’re outside my control,” he said. “All I can do is try to manage the company to outperform over the medium term, and I think we will.”