Australian insurance major IAG on Monday cut guidance on its margins after its UK subsidiary incurred a loss and following the aftermath of floods and storms in Australia.
Australia’s largest home and car insurer issued insurance margin guidance of between 9 to 11 per cent for the year ending June 30th 2011. The company had previously expected to deliver margins of between 10.5 to 12.5 per cent.
Despite predicting a lower margin IAG said that its gross written premium growth is expected to remain at between 3 to 5 per cent.
Mike Wilkins, IAG chief executive, commenting on the flooding in Queensland, Victoria and New South Wales said:”It requires a collaborative approach between industry, governments and communities,”
“Initiatives needed include better flood maps, stricter land use planning, stronger building codes, appropriate infrastructure, and a common definition of flood.”
First half profits for the period ending December 31st are expected to come in at $470 million compared with $488 million during the same time period in the previous year IAG said in a statement.
Its UK subsidiary lost $121 million as bodily injury claim inflation continued to affect that industry.
“This, coupled with rate increases taking longer than anticipated to emerge in non-private motor classes, has contributed to a greater than expected loss for this business,” Mr. Wilkins said.