IAG quake payout at $3.3b

IAG says the Canterbury situation is tougher than initially forecast. Photo / APN

Insurer’s NZ arm settles 58 per cent of claims from disaster and boosts annual earnings to $199m.

New Zealand's biggest general insurer has paid out more than $3.3 billion for Canterbury earthquakes damage and settled 58 per cent of claims.

These figures were in a presentation accompanying the annual result from Insurance Australia Group (IAG), out yesterday, which showed that despite the big payouts, the New Zealand arm of the business was increasingly profitable, making A$180 million ($199 million) in the June 2014 year, up 56.5 per cent from A$115 million the previous year.

The Canterbury figures caught a strong Twitter backlash yesterday, with comments pointing out the numbers meant IAG still had 42 per cent of Canterbury earthquake claims to settle.

Reverend Mike Coleman, of community action group WeCan!, said some of those worst hit by the earthquakes were being unfairly treated by insurance companies not honouring their industry's own Fair Insurance Code.

IAG revealed how the Canterbury situation was tougher than it had initially forecast.

"Increased complexities have pushed expected completion date out to mid-2016 [previously December 2015]," the company said.

IAG's bigger parent company pushed up profits 10.6 per cent from last year's A$1.43 billion to make A$1.58 billion in the year to June 30.

IAG, with operations here, in Australia, Thailand and Vietnam, owns some of this country's biggest insurance brands including State Insurance, NZI, Lumley Insurance and AMI.

A statement from the company to the ASX, where it is listed, detailed performance here.

"New Zealand's performance remained strong. Local currency gross written premiums grew 3.7 per cent, reflecting improved volumes from customer and sales initiatives, as well as rate increases on home insurance to recover higher reinsurance costs," the company said.

"Reported margin rose to 11.5 per cent [FY13: 8.9 per cent] despite the impact of a number of heavy rain and storm events which led to natural peril claim costs being well above the related allowance. The underlying margin improved to 14.8 per cent."

IAG's New Zealand chief executive Jacki Johnson said the New Zealand result reflected the good momentum in this country's economy, disciplined underwriting and pricing in a competitive market and a strong focus on delivering positive customer experiences.

She said that underlying profitability was expected to remain strong as IAG focused on improving operational efficiencies.

"Settling claims relating to the Canterbury earthquakes continues as our most pressing priority, while considerable attention is also being given to welcoming Lumley employees and customers into IAG and leveraging the strengths of both businesses," Johnson said.

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