Insurer IAG chief executive asks country to ‘take a longer-term view’ of its big profit rise

Thursday, 13 February 2025

The country’s largest insurer IAG has reported a big jump in half-year profit, saying it is the result of lower-than-expected claims thanks to benign weather.

IAG owns the AMI and State insurance brands in New Zealand, but is owned by an Australian ASX sharemarket-listed company.

The parent company reported that in Australian dollar terms IAG’s New Zealand delivered an “insurance profit” of A$311 million in the six months to the end of December, up from A$204m in the corresponding period a year earlier.

IAG’s New Zealand chief executive Amanda Whiting said: “Today’s result is driven by the continuation of a benign weather period, gross written premium growth and strong underwriting discipline.”

And she asked New Zealanders to take a longer-term view of its profit jump, saying the country was “highly vulnerable” to disasters, and that “today’s profit underpins access to the resources and capital which will be needed to help us recover from the next big event”.

IAG’s announcement comes in the same week Tower reported large profits after a “great year” and a $45m return of capital to shareholders, with that insurer also saying a lack of extreme weather events had led to fewer claims than expected.

In New Zealand through IAG’s three sales channels, IAG collected just over $2billion of premiums from policyholders, both households insuring house, car and contents, and businesses.

It earned $902m of premiums through its broker-sold policies, with the total premium collected rising by just 0.6%.

Its direct business, representing sales under the AMI and State brands to households, brought in $1.77b, up 5.9%.

It earned $306m in premiums through policies sold by banks to their customers, 14.7% more than in the six month-period a year earlier.

IAG’s margins rose in New Zealand thanks to fewer claims. That included fewer large claims of $100,000 or more, and fewer car and contents claims.

Whiting said: “New Zealand remains highly vulnerable to natural hazards and weather-related disasters which are expected to increase in frequency and severity.

“In recent months we have seen local and international examples of the devastating impact that climate related natural hazards can have on people and the importance of having a sustainable insurance industry to support their recovery.”

The Post has reported premium rises on house, contents and car insurance have slowed, and Whiting acknowledged the pressure that had put on households.

“We are conscious of the financial pressures many New Zealanders are experiencing and so we have bolstered our support for those impacted by these pressures,” she said.

Those pressures have also included high mortgage rates, which Kiwibank said had contributed to a sluggish economy as households sought to balance their budgets.

IAG indicated some households faced worse premium increases than others.

The company has been following Tower in increasing the depth of its risk-based pricing, charging more to owners of very risky assets, like flood-prone homes.

“Increasing weather volatility, reinsurance costs, government levies and the industry’s move to more granular risk-based pricing will continue to affect customer premiums,” Whiting said.

Inflation had eased, which had slowed the rise in the cost of handling claims.

IAG has been expanding its MotorHub and HomeHub operations around the country to handle car repairs after crashes, and repairs in homes.