Business, Main News

IAG Reviewing Asian Operations

Insurance Australia Group, the country’s biggest general insurer by market share, is conducting a strategic review of its Asian operations, including considering selling off units in the region.

The company says in a statement that as part of its Asia strategy, it has focused on growth via market consolidation and increased ownership. IAG’s current assessment is that such opportunities are limited, resulting in its decision to conduct a strategic review of the options available for its Asian businesses.

“We have always taken a measured approach to Asia and we believe this is the right time to review the immediate and longer term strategic options for our individual Asian businesses given the limited expansion opportunities,” IAG Managing Director and CEO Peter Harmer said.

This review is expected to be concluded by the end of 2018.

“The options could range from, if we had the opportunity, to investing more capital under conditions we think are appropriate, all the way through to disposing of assets,” Harmer said.

IAG reveals that the Asian division contributed a profit of A$15 million in the six months to 31 December 2017, compared to A$2 million in the corresponding period the previous year. The increase is attributed in part to recovery in Thailand and growth in India.

The 1H18 results, though, include a writedown of A$50 million (US$39 million), included in the amortisation and impairment expense line, following a review of carrying values applicable to the respective Asian businesses.

IAG, which specialises in motor and property insurance, has invested about A$850 million in the region since 1998 and has a presence in five Asian markets – Thailand, Vietnam, Indonesia, Malaysia and India.

IAG’s net profit increased by 24 per cent to A$551 million in the six months ended 31 December 2017, helped by higher fees and reserve releases. Gross written premiums rose by 0.6 per cent to A$5,834 million for the half-year, helped by rate increases. The company expects “low single-digit growth” in gross premiums for the full year to 30 June 2018.