profit soars to 655mil

lIAG net profit soars to $665m; doubles final to 14c
09:23, Thursday, 19 August 2004

Sydney - Thursday - August 19: (RWE Australian Business News) -
Insurance Australia Group Ltd lifted net profit from $153 million to
$665 million in the year to June 30.
This reflected a full 12 months of the CGU/NZI acquisition, a
strong performance from the underlying business and investment income of
$434 million.
Profits from the sale of non-core businesses also contributed
to the result.
In light of the strong performance and in line with its new
dividend policy, IAG has increased the final dividend from 7c to 14c.
This brings the total dividend for the year to 22c, an increase
of 91 per cent.
The group is targeting growth of at least 10 per cent a year in
dividends.
IAG chief executive Mr Michael Hawker said the performance of
the Group's insurance business and the investment markets aligned to
produce a solid result.
"CGU and NZI are now fully integrated into our business and
we've completed the program to deliver the $160 million in annual
synergies promised at the time of the acquisition," Mr Hawker said.
"Completing the integration is an important milestone as we now
have centralised platforms for underwriting and claims management across
our core businesses, a wider range of products, and a greater presence
in all markets, in particular the important commercial and rural
sectors.
"We've got real momentum in our business. Customer satisfaction,
sales, operating efficiencies and employee engagement all increased
during the year and contributed to the improvement in our insurance
margin from 12.3% to 13.5%."
Mr Hawker said the focus was now firmly on general insurance,
with the sale of both the health underwriting operations and ClearView
Retirement Solutions completed during the year, contributing around $57
million in after tax profits.
"Our financial position is strong and we expect to continue to
generate excess capital from our business," Mr Hawker said.
"With the diversity of our business and our low cost, scale
franchise, the company is well placed to compete effectively should
trading conditions become less favourable.
"We believe that we can continue to grow insurance earnings
faster than premiums in the next 12 months as the full benefits of
integration and our various efficiency programmes, such as technology
transformation, come on-line.
"As a result, in the short term we expect to sustain an
insurance margin above our target 9 to 12 per cent."