IAG has reported a 51.3% jump in annual net profit to $1.36 billion and says its RACQ insurance acquisition should be completed at the start of next month.

Gross written premium grew 4.3% to $17.11 billion in the year to June 30, in line with revised guidance at the start of July, and net catastrophe costs of $1.088 billion were $195 million below allowance. The insurer also benefited from pre-tax releases of $330 million from a business interruption provision.

“IAG’s financial outcomes this year are a result of the positive financial and operational performance of all our divisions, supported by favourable natural perils and investment markets,” CEO Nick Hawkins said.

The company reports growth in retail customer numbers, and premium rates overall increased, led by Australia. Market conditions were weaker in the New Zealand commercial business.

Mr Hawkins says the RACQ acquisition is expected to be completed on September 1, adding at least $1.3 billion in GWP on an annual basis.

Excluding that deal, IAG expects GWP growth this fiscal year in the low to mid single digits, with retail Australia at the mid-level, the intermediated business recording low single digit growth and New Zealand likely to be flat.

With the addition of RACQ, the group’s GWP is expected to increase about 10%.

IAG is still awaiting regulatory approval for its acquisition of RAC insurance in WA.

Mr Hawkins says RACQ and RAC combined should add about $3 billion a year in premium and increase insurance profits by at least $300 million.  

Group catastrophe losses last year benefited from benign conditions in New Zealand. In Australia, a more active second half followed a quiet first six months.

“It tended to be smaller events spread more broadly across Australia, but there was quite a lot of activity,” CGU and WFI Insurance CEO Jarrod Hill told insuranceNEWS.com.au. “That talks to the changing weather patterns we are seeing ... and why there’s that constant uplift in weather-related losses that we should expect to see across the portfolio.”

The company has previously announced a revamp of its reinsurance program to provide greater stability and protection against catastrophe losses.

Mr Hill says in the intermediated business, there is a focus on improving claims handling, including through artificial intelligence, and rolling out a new technology platform and products.

“We see that as really an uplift to our capabilities that puts us in a position to better serve our brokers and our mutual clients,” he said. “That is going to be really important for us in the next 12 months.”