OPERATING PERFORMANCE

ASIA

IAG has established a presence in five Asian markets: Thailand, Malaysia, India, Vietnam and Indonesia and participates in a gross annual premium pool of around $1.4 billion.

RESULTS

Our Asia business’ overall insurance profit decreased to $10 million, from $26 million last year. The lower result reflects the combination of:

• a small loss in Thailand, driven by a higher claims ratio and increased competitive pressures in motor, and lower prior period reserve releases;
• a lower margin from Malaysia in the face of soft new car sales and increased competition in motor ahead of the removal of tariffs;
• a move into profit by India on the back of better risk selection, coupled with improved expense management;
• a small loss in Vietnam, consistent with last year;
• an increased loss from Indonesia, as it explores the development of a digital model;
• a favourable net movement in mark-to-market valuations of investments in Malaysia and India; and
• lower regional support and development costs.

IAG’s proportional share of gross written premium in Asia this year was $747 million. This reflected continued strong growth in India; lower premium in Thailand, influenced by slow new car sales, intensified competition in motor and a planned reduction of large commercial business; flat growth in Malaysia, on the back of a decline in new car sales, increased competition and lower average premiums; and an adverse foreign exchange impact. Without the currency impact, proportional gross written premium would have increased by 2.6% compared to last year.

As at 30 June 2017, IAG’s investment in Asia was $807 million, with nearly 80% of this invested in Thailand and Malaysia. We expect the future development of our Asia business to be driven by:

• organic growth prospects in each market;
• superior customer and partner experiences;
• industry consolidation opportunities in Thailand and Malaysia;
• ownership dial-up opportunities when appropriate, in Malaysia and India;
• moves into adjacent business opportunities; and
• improved returns from increased scale and capability.