UPDATE 1-IAG sees FY insurance profit down; changes UK CEO

* Says 2010 results in line with estimates

* Management change in ailing UK unit

* Final dividend of 4.5 cents a share (Adds detail, analyst)

SYDNEY, July 27 (Reuters) - Insurance Australia Group (IAG.AX), Australia's top home and car insurer on Tuesday flagged a 4.3 percent drop in insurance profit, in-line with market views, and announced a management change at its ailing UK unit.

IAG, which cut its 2010 earnings forecast in June for the third time in as many months on storm claims and a poor UK market, said it saw its insurance margin at 7 percent, or the top end of its latest, 6-7 percent forecast range.

Australian insurers have struggled this year with weak stock markets, lower bond yields and increased weather related claims due to storms in Australia.

On Monday, bigger rival QBE Insurance (QBE.AX) flagged a 40 percent fall in first-half net profit on equity losses and a lack of one-off gains, disappointing investors who knocked its shares down 6 percent. [ID:nSGE66P00R]

"Most of the numbers are in-line. Not surprising that IAG has updated the market recently. We think the change of management in UK will be positively received given the recent problems there," Arjan Van Veen an analyst at Credit Suisse said.

IAG said Ian Foy, the chief executive of its New Zealand business will move to head the UK business, replacing Neil Utley.

In June IAG said it would take a A$365 million ($329.4 million) charge to cover additional claims on top of a roughly similar charge in 2008 which forced the company to report its first loss in six years.

The group has spent about A$1.7 billion since 2006 to expand in the UK as it battles tough market conditions in Australia. But returns have disappointed.

"Foy's successful track record in improving the performance of the group's New Zealand business, combined with his experience in the UK intermediated motor market, made him the clear choice to lead IAG's UK operation," Group CEO Mike Wilkins said in a statement.

IAG said it expects a gross written premium of A$7.8 billion in the year ended June 30, up 3.8 percent, and a net profit of A$91 million, about half the number reported in 2009.

It added it expected to announce a final dividend of 4.5 cents, which was just shy of market expectations of at least 5.5 to 6.5 cents a share.

But investors and analysts agreed 2010 had been written off and the market was focussing on 2011, where IAG reiterated its insurance margin forecast of 10.5 percent to 12.5 percent.

IAG will announce full details of its 2010 earnings on August 26. (Reporting by Sonali Paul & Narayanan Somasundaram; editing by Balazs Koranyi)