UK Business Drags Insurance Australia Profit Down 17.2%

   By Caroline Henshaw 
 

SYDNEY--Almost 300 million Australian dollars (US$315 million) of writedowns at its ailing U.K. operations dragged Insurance Australia Group Ltd. (IAG.AU) net profit down by 17.2% in fiscal 2012, the insurance group said Thursday.

Net profit after tax in the 12 months to June 30 fell to A$207 million, down from A$250 million a year earlier, the insurer said in a statement to the exchange. That figure was less than half the consensus forecast of five analysts polled by Dow Jones Newswires ahead of the result.

Chief Executive Mike Wilkins said IAG expected to complete a review of its troubled U.K. business before the end of the year. In total, the insurer has written off A$297 million in remaining goodwill and intangible assets associated with its Equity Red Star and Barnett & Barnett divisions.

"All options continue to be assessed, including a focus on improving the business' performance within the current operating model, refining the business' strategy to a more focused specialist motor offering, and exploring a potential sale of all or part of the business," Mr. Wilkins said.

Overall, IAG's insurance profit rose 26% to A$832 million in fiscal 2012 on the back of a 150-basis-point increase in its margin for the year to 10.6%, in line with previous guidance of between 10-12%.

IAG declared a full-year dividend of 17 cents, up from 16 cents last year.

Write to Caroline Henshaw at [e-mail]

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