By Paul McBeth
Feb 21 (BusinessDesk) - Insurance Australia Group's $380 million purchase of the beleaguered AMI Insurance helped boost the firm's New Zealand premium revenue by 40 percent in its first half.
The New Zealand unit, the country's biggest underwriter across the NZI, State and AMI bands, lifted profit to A$53 million in the six months ended Dec. 31 from A$34 million a year earlier, with a 40 percent increase in gross written premium (GWP) revenue to A$751 million. The bulk of the premium increase came from the AMI acquisition, and excluding that business, GWP rose 8.4 percent.
"In New Zealand, the underlying performance of the business has remained strong with an improved reported insurance margin of 8.3 percent," chief executive Mike Wilkins said in a statement. "The acquisition of AMI has cemented our market-leading position in the country and its integration is tracking to plan."
Profitability in New Zealand is expected to stay strong with significant price increases expected to offset rising costs, lower costs achieved from better integration of AMI, disciplined underwriting and containing costs on claims, IAG said.
The Australian parent more than tripled net profit to A$461 million with a 14 percent gain in GWP. It expects GWP annual growth of between 9.5 percent and 11.5 percent and an insurance margin from ongoing operations of between 12.5 percent and 14.5 percent. That margin forecast is up from the 11 percent to 13 percent range previously forecast.
The Sydney insurer's board declared an interim dividend of 11 Australian cents per share, more than twice the 5 cents a year earlier. The return is payable on April 3 with a record date of March 6.
The shares rose 3 percent to A$5.58 on the ASX today, and have gained 13 percent this year.