Equity helps IAG return profit

Insurance Australia Group has said strong results at Equity Red Star and selling its underperforming UK businesses helped it return to profit this year.

“A solid performance from specialist motor underwriter, Equity Red Star, in the UK and the sale of the underperforming mass-market portion of the UK business” was a key success point.

IAG said: “The performance of the UK business improved significantly reflecting the sale of underperforming assets, rate increases and the continued shift of the portfolio mix away from private motor.

“The retained business, EquityRed Star, delivered a sound margin, excluding reserve releases from a syndicate in run-off.

IAG financial highlights (2008 in brackets)

• Gross written premium (GWP) $7,842m ($7,793m)
• Premium revenue $7,718m ($7,765m)
• Net premium revenue $7,233m ($7,295m)
• Underwriting loss $265m ($40m)
• Insurance profit $515m ($392m)
• Profit/loss before income tax $312m (-$136m)
• Profit/loss for the year $247m (-$226m)

Managing director and CEO, Michael Wilkins, said: “The past year has been one of rebuilding for IAG. We refocused back on our core businesses, improved our underwriting disciplines and put decision-making closer to our customers.

“There is still more work to do. While our performance has improved, it’s below the expectations we held at the outset of the year largely due to unprecedented volatility in investment markets, high natural peril claim costs, a slower than anticipated recovery in CGU and a disappointing first half performance in our New Zealand business.