OPERATING PERFORMANCE
NEW ZEALAND
IAG is the largest general insurer in New Zealand, trading under the State, NZI, AMI and Lumley Insurance brands.
RESULTS
The New Zealand business grew its gross written premium by 7.2% to $2,339 million. This result included a favourable foreign exchange effect; local currency premium growth was 4.3%. Growth reflected increased prices in personal policies, some some volume growth in motor and a second half recovery in the price of commercial policies.
New Zealand produced an insurance profit of $125 million, compared to $135 million last year, which translated to a reported insurance margin of 7.6%. This was slightly lower than last year’s 8.6% because of the net effect of:
- substantially higher net natural peril claim costs, especially from the Kaikoura earthquake in November 2016;
- higher average claim costs and frequency, particularly in personal lines and commercial motor;
- challenging market conditions in the Business Division, especially during the first half of the year;
- a continued focus on disciplined expense management; and
- the absence of the NZ$150 million increase to risk margin for the February 2011 earthquake event, as recognised last year.
The business produced another strong underlying performance, with an underlying margin of 14.8%; this was slightly lower than last year’s 16.9% due to increased claim cost pressures, notably in motor.
The Consumer Division’s commitment to providing positive customer experiences and products that target specific customer needs resulted in continued improvement in its net promoter score, and improved customer retention rates, for all key personal lines products.
The Business Division improved retention rates in all key commercial lines by continuing to focus on building successful partnerships, providing comprehensive insurance solutions and supporting customers to grow and be successful.
New Zealand experienced a number of significant natural disaster events during the 2017 financial year, the most notable of which was the Kaikoura earthquake. This 7.8 magnitude earthquake affected a widespread region with the majority of claims received from an area spanning Christchurch through to Wellington.
At 30 June 2017, over NZ$70 million of claim settlements for the Kaikoura earthquake had been completed, with nearly 37% of all claims by number fully settled at that date.