Insurance Australia Group's (IAG) New Zealand division made a loss in the second half of the financial year on the mounting costs of Canterbury's earthquakes.

The Sydney-based company's New Zealand insurers, NZI, State and Business Partnerships, made a loss of A$86 million in the six months ended June 30, compared to a profit of A$63 million a year earlier.

The second-half loss reduced local annual earnings to A$4 million, compared to A$132 million in 2010.