Australia's largest insurer suffers profit dip

SYDNEY - Insurance Australia Group Ltd, the country's biggest home and car insurer, posted a bigger-than-expected 6.4 per cent fall in annual profit after claims for a devastating cyclone and lower average premiums.

IAG, which has around four brands in Australia and the State and NZI brands in New Zealand, said it had potential acquisitions in Asia and Europe in the pipeline and forecast fiscal 2007 gross written premium growth of 5-10 per cent.

"We have the governance and management structures in place to continue expanding globally and have been pursuing acquisitions in general insurance markets in Europe to supplement our Asian business," chief executive Michael Hawker said in a statement.

Net profit for the year ended June 30 fell to A$759 ($920.55) million from A$811 ($983.62) million a year earlier, below the average forecast of A$787 ($954.51) million.

Second-half profit fell 13 per cent to A$298 ($361.43) million.

IAG said it would pay a final dividend of A16 cents a share, taking the total year ordinary dividend up 11.3 per cent to a record A29.5 cents. A special dividend of A12.5 cents a share was paid to shareholders in June.

IAG said in April it expected to pay out up to A$135 ($163.73) million for more than 5,900 claims from Cyclone Larry, which devastated Australia's far northeast coast in March. Total insured losses for the insurance industry have been estimated at A$425 million.

IAG said storms, including Larry, had cost the company A$76 million more than the previous year on a net basis.

Net earned premium dipped 2 per cent to A$5.970 billion, below the average of analysts' forecasts for about A$6.126 billion.

IAG's dominance of Australia's general insurance market has required it to make acquisitions in Asia for longer term growth.

IAG agreed in July to pay up to A$375 million for a 24.9 per cent stake in China's second-largest general insurer, China Pacific Property Insurance Co Ltd.

With assets now in Thailand, China, Singapore and Malaysia, IAG said its Asian portfolio contributed to its results for the first time by adding A$65 million to gross written premiums.

Shares in IAG fell 1.3 per cent over the January-June second half.

- REUTERS