IAG holds firm despite $65m hit
INSURANCE Australia Group (IAG) is sticking to a key earnings forecast for the year, despite taking another $65 million hit from the latest earthquake aftershocks in Christchurch, New Zealand.
INSURANCE Australia Group (IAG) is sticking to a key earnings forecast for the year, despite taking another $65 million hit from the latest earthquake aftershocks in Christchurch, New Zealand.The insurer expects to receive claims totalling $115 million arising from the June aftershocks, but $50 million of that will be covered by reinsurance. As a result, IAG's natural peril claim costs for the year to June 30 have risen to an estimated $600 million. It had originally budgeted for $435 million at the beginning of the 2010-11 financial year.Most of these costs relate to the Christchurch earthquakes, cyclone Yasi and the Queensland floods.The latest costs have not altered the insurer's forecast of a full-year insurance margin of between 8 per cent and 10 per cent, and for gross written premium growth of between 3 per cent and 5 per cent, it said yesterday.The chief executive, Mike Wilkins, said the commitment to the forecasts reflected a larger release of insurance reserves, now expected to be more than the $228 million reported in 2009-10.Mr Wilkins said the reserve releases would be higher than expected because of favourable outcomes in long-tail insurance classes - insurance lines that typically involve a long delay between collecting premiums and settling claims, such as workers' compensation and compulsory third-party insurance.A Goldman Sachs' analyst, Ryan Fisher, said the latest claims bill was "in the ballpark" of expectations.