Insurance Australia Group's New Zealand division benefited from good weather in the past year, with a lack of natural peril claims and ongoing gross written premium growth driving a 79 per cent jump in annual earnings.
The local unit reported an insurance profit of A$390 million ($408.5m) in the year ended June 30, up from A$218m a year earlier. Net claims from natural events - referred to as natural perils - were just A$15m compared to A$100m a year earlier. That saw total claims by policyholders fall to just A$846m from A$975m a year earlier.
Gross written premiums were up 7 per cent at A$2.66 billion, although in New Zealand currency terms, the gain was 5.2 per cent at $2.84b.
"New Zealand maintained its record of strong profitability and sound growth, reinforcing its position as the country's leading general insurer," IAG said.
Insurance Council of New Zealand data show just four natural disaster events in the June 2019 year at a total cost of $14.7m. There were nine events at a total cost of $263.4m in the 2018 year. Excluding the estimated $2.12b cost of the Kaikoura quake, the 10 other natural events in the June 2017 year cost the industry $213.7m.
IAG New Zealand's underlying earnings outperformed the group. IAG's total insurance profit was down 13 per cent at A$1.22b as a number of storms in Australia boosted payouts on natural peril events. Net profit was up 17 per cent at A$1.08b, including a A$200m gain on the sale of its operations in Thailand.
The parent company's board declared a final dividend of 20 Australian cents per share, taking the annual payout to 37.5 cents, up from 34 cents a year earlier. That included a 5.5 cent special dividend.
The ASX-listed shares dropped 4.2 per cent to A$7.74 in early trading.
The local division earnings were also boosted by reserve strengthening last year not being repeated. Investment income on reserves rose to A$36m from A$9m a year earlier.
IAG New Zealand's consumer premiums rose 4.9 per cent in New Zealand dollar terms, led by increased rates and volumes for private motor policies and higher rates for home policies. Business premiums rose 5.5 per cent, led by higher rates and volumes for commercial vehicle policies.
The local company's premium growth lagged that of nearest rival - Suncorp New Zealand - which yesterday reported an 8.4 per cent increase.
IAG New Zealand's spending on commissions increased 2.3 per cent to A$179m, whereas Suncorp's acquisition costs climbed 14 per cent to $322 million.
IAG expects the underlying profitability of the New Zealand business to stay strong despite the market remaining competitive in the 2020 financial year.
Sound gross written premium growth is expected "in both consumer and business, comprising a combination of volume growth and rate increases, with the latter expected to be at lower levels than those experienced in FY19," it said.
IAG New Zealand chair Hugh Fletcher will retire from the boards of the local subsidiary and parent company at this year's annual meeting. He has chaired IAG New Zealand since 2003 and joined the IAG board in 2007.