Storms Crimp Australia's IAG Year Profit Growth
Date: 19-Aug-05
Country: AUSTRALIA
IAG said it expected its insurance margin, which measures the difference between premiums received and claims paid, would be above 13.5 percent in fiscal 2006, although this would be lower than the 16.3 percent achieved in fiscal 2005.
"We expect our business volumes to continue to grow," said Chief Executive Michael Hawker, a former senior executive of Westpac Banking Corp., Australia's fourth-largest bank.
IAG, with brands such as NRMA Insurance, SGIO, SGIC, CGU Insurance and Swann Insurance, said net profit climbed to A$760 million ($570 million) for the year ended June 30. That compared with A$665 million for the year-earlier period.
The result was below the average of six analysts' forecasts of A$794.5 million from a Reuters poll. The forecasts had ranged from A$762 million to A$844 million.
IAG has been planning for several years to expand further into Asia because a local acquisition would face antitrust concerns. It already owns Beijing-based CAA, a 24-hour roadside vehicle repair and towing service, and it told Reuters in June it expected to apply for a Chinese insurance licence this year.
IAG, which also owns 20 percent of Thailand's Safety Insurance, Thailand's fifth-largest car insurer, has been talking to insurers in China, Malaysia, Singapore, Hong Kong, Thailand, and India about potential joint ventures and partnerships.
"We are confident that we will make further acquisitions, but if we don't find the right expansion opportunity at an appropriate price by the end of the calendar year, we will return surplus capital to shareholders," Hawker said in a statement.
Any Asian transaction would be limited to about half a year's profits, IAG has said.
Shares in IAG rose 20 percent over fiscal 2005, just behind a 21 percent gain in the benchmark S&P/ASX 200 Index. Over the past two years its share price has almost doubled.
IAG said net earned premium was 4.8 percent higher at A$6.144 billion. Analysts, on average, had forecast A$6.246 billion.
The company said it would pay a final dividend per share of 14.5 cents, taking the year dividend up 20.5 percent to 26.5 cents. Analysts' final dividend forecasts had ranged from 14-15 cents.
"We expect to deliver dividend growth of around 10 percent for the current year," Hawker said.
($US1=A$1.33)
