Insurance Australia Group said today it is “far too early” to assess the cost of the latest earth tremors to hit New Zealand’s disaster-stricken city of Christchurch.
|Iag Weighs Cost Impact Of Latest Nz Tremors|
The company said prior to yesterday’s large aftershocks near Christchurch it was on target to deliver an insurance pre-tax profit margin of between 8 to 10 per cent.
Assessments of the impact of the latest natural disaster on its full-year results will now be undertaken and the stock market would be updated as soon as possible, chief executive Mike Wilkins said. IAG is due to release its 2011 profit figures in late August.
The group also indicated that its re-insurance costs – the cover it takes out to put a cap on its claim costs – are expected to rise in the coming year as the re-insurers seek to recover the large bills that have come in since the natural disasters in Australia, New Zealand and Japan.
This increase, in turn, will result in higher premium costs for householders and car owners as the bills are passed on. The company is expecting that its reinsurance bill this year will come in at $630 million.
Before yesterday’s aftershocks in Christchurch, IAG said it had seen a “strong underlying performance” from its Australia and New Zealand businesses. It is currently anticipating growth in its gross written premium – revenue – of between 3 and 5 per cent.
Its forthcoming results are built on the premise that the company’s reserve releases will be no greater than the $228 million recorded in the 2010 financial year. However it said today there was scope for higher releases from “long tail” insurance classes – which cover such areas as workers compensation and motor liabilities – as a consequence of lower costs.
In the meantime, its previously poorly-performing UK business is beginning to show signs of turning around although it will make another loss in the second half of this year – the six months to June 30. The group is hoping the division will break even sometime in the 2012 financial year.
Source : smh.com.au