The gentle hand of mother nature this year is set to deliver bumper financial results for Australian insurance companies, with one major insurer substantially boosting its predicted insurance margin.
IAG Managing Director and CEO Mike Wilkins says the firm has revised their estimated insurance margin for 2013/2014 from around 15% to more than 18%.
This reflects the relatively benign natural peril activity in the second half of the financial year, notably in Australia, and a more favourable financial impact from narrower credit spreads than previously anticipated,” Wilkins says.
“The underlying performance of the group has remained strong.”
IAG is also expected to report 4% growth in gross written premium, after allowing for the removal of the Victorian FIre Services Levy.
More detail of how IAG will consolidate its acquisition of Wesfarmers’ insurance business has also emerged, with the company advising the market that restructuring its activities into a new operating model is expected to cost $100 million.
“A related annualised pre-tax benefit of $90 million is expected to be realised within a two-year timeframe, as the new operating model allows IAG to deliver savings by removing duplication and further improving its management of procurement and supply chain activities,” the company states.