AIG parent hoovers up higher dividend

AIG has been a major sponsor of the All Blacks and it uses Richie McCaw in its marketing material Photo/Norrie Montgomery.

The New Zealand arm of global insurance giant American International Group has paid out a higher dividend to its parent despite seeing a drop in its operating profit.

Accounts for AIG Insurance New Zealand, a major sponsor of the All Blacks, show the insurer paid out $15 million in dividends in its 2018 financial year - up from $14m.

That was despite its operating profit after tax taking a dive falling from $13.1m in 2017 to $8.6m.

While insurance premium revenue rose from $187m to $211.7m its claims also rose from $127.8m to $139m.

That helped push its total expenses for the year up from $87m to $110.6m.

Auditors PriceWaterhouseCoopers noted AIG New Zealand's valuation of gross outstanding claims as a key audit matter.

Outstanding claims for the New Zealand arm have risen in the last year from $230.9m to $247m.

PwC said this was a key audit matter because of the complexity involved in the estimation process and "significant judgements" the company makes in determining the balance.

"Claim reserves are a best estimate of all claims incurred but not settled at a given date, regardless of whether these have been reported to the company."

PwC undertook a deep dive looking at the work of the insurer's actuary and compared the models used to generally accepted practices.

In the end it found the outstanding claims included a risk margin that factored in the uncertainty.

AIG will celebrate its 100th birthday this year although the local arm has only been in operation since 1970.