IAG First-Half Profit Triples on Investments, Fewer Claims

Insurance Australia Group Ltd., the Sydney-based insurer formed in 1925, raised its full-year insurance margin forecast and said first-half profit more than tripled as claims fell and investment income surged.

Net income rose to A$461 million ($473 million) in the six months to Dec. 31 from A$144 million a year earlier, IAG said today in a statement. The company expects a profit margin of 12.5 percent to 14.5 percent at its insurance business for the full year, it said.

IAG Chief Executive Michael Wilkins agreed to sell the group’s ailing U.K. business to increase profits at home and expand in Asia in December. IAG shares rose 2.8 percent to A$5.57 in Sydney, taking gains for the year to 19 percent, making it the second-best performer behind QBE Insurance Group Ltd. in the Australian industry.

“Post disposal of U.K., IAG is now a very clean play on the favorable domestic general insurance business,” Richard Coles, an analyst at CIMB Group Holdings Bhd, said before the announcement.

IAG raised its insurance margin forecast from a previous prediction of 11 percent to 13 percent to reflect the sale of the U.K. unit. It also increased its gross written premium growth target to 9.5 percent to 11.5 percent.

Investment income on shareholders’ funds was A$201 million, compared with a loss of A$30 million in the same period a year earlier, IAG said. Net natural peril claim costs fell to A$133 million from A$396 million.

The insurer increased its interim dividend to 11 cents a share from 5 cents a year earlier.

IAG’s profit in the six months to Dec. 31, 2011, was affected by claims generated by a Christmas Day storm in Melbourne and floods in Thailand.

The insurer on Dec. 14 said it expects a net loss after tax of about A$240 million in the year ending June 30 from the U.K. unit. Yesterday, Brisbane-based Suncorp Group Ltd. reported a 48 percent increase in first-half net income.