IAG NZ premium growth and margins outpace Australia

Sales of car and home insurance through AMI has helped boost IAG's half year result. Photo/John Stone.

Australian insurer IAG must be looking across the Ditch to New Zealand and smiling with its half-year result showing premiums and margins in its New Zealand arm looking much healthier that its home market.

IAG, New Zealand's largest general insurer which owns the brands State Insurance, AMI and Lumley, chose to report its financial result on Waitangi Day - which obviously doesn't register as a public holiday at all for Australian corporates.

IAG was not alone on this front with Commonwealth Bank of Australia - the parent of ASB - also choosing to ignore New Zealand's national holiday, releasing its result on Wednesday.

IAG's result shows its NZ arm performing well above Australia with New Zealand gross written premiums up 5.5 per cent in New Zealand dollar terms and 6.6 per cent when converted to Australian dollars for the six months to December 31.

That compared to 3.4 per cent from its Australian business and helped push the overall premium lift across the group to 4.1 per cent.

The New Zealand business growth was pushed up by higher premium growth in its retail business particularly through car and home insurance sold via its AMI brand.

Margins in the New Zealand business were also much higher with a 20 per cent underlying margin - up from 17.4 per cent in the last six months of 2017.

Its reported margin for NZ was 24.9 per cent after it saw a lower number of large claims and a benign period for "natural perils."

That compared to the underlying margin of its Australian business of 14.8 per cent which was also up from 11.4 per cent in the same prior period and a reported margin of 10.7 per cent.

Good news for IAG investors but not so good for those insured by the company - IAG is picking gross written premiums to be up by 2 per cent to 4 per cent of its full 2019 financial year which ends at June 30 and a reported insurance margin of 16 per cent to 18 per cent.