IAG has lowered its full-year premium growth outlook but says it is well placed for a stronger second half as contributions from its RACQ acquisition increase.

The company today also rejected a report in The Australian suggesting it is positioning its intermediated division for sale and that investment bank Barrenjoey could have a role.

“That’s not accurate,” Australian intermediated division CEO Jarrod Hill told insuranceNEWS.com.au.

“That, from what we can see, is purely based on some speculation and market gossip. There’s no basis to that article.” 

The company forecasts “high single digit” gross written premium growth for the year, down from a previous expectation of about 10%, with New Zealand commercial lines weakness and currency impacts providing headwinds.

First-half net profit fell to $505 million from $778 million after severe weather affected RACQ Insurance before it was brought within more favourable IAG reinsurance arrangements.

GWP rose 6% to $8.9 billion, with Australia and New Zealand retail businesses contributing about 4% underlying growth and strong margins.  

“What we have delivered in the first six months leaves us in good shape for the second,” CEO Nick Hawkins told a briefing.

Mr Hill says Intermediated Insurance Australia achieved first-half underlying GWP growth of 3.5% and is well placed to continue delivering about 3%-5%, and the normalised margin is also a positive.

“A large portion of our portfolio is not as exposed to the market variability as others, so we’ve got a nice balance,” he said. “In our SME space, we’re still getting rate come through to offset some of the inflation impacts we still see on claims.”

Mr Hill says an intermediated business technology overhaul will be completed ahead of schedule and the division is increasing the use of artificial intelligence to bring claims efficiencies.

“We’ve delivered two AI bots that are supporting our business at the moment, one in commercial property, one in motor, but we’ve got another four or five we’re delivering before the end of this financial year that are going to uplift our service capability,” he said.

IAG will soon reapply to the Australian Competition and Consumer Commission for clearance to buy WA-based RAC’s underwriting business, after the deal was initially rejected last year.

The shift to a new ACCC merger review regime in January meant IAG had to reapply and can appeal under revised arrangements if it is again knocked back.

IAG’s underlying insurance profit for the half rose to $804 million from $747 million.