UPDATE 1-IAG posts year loss on charges, higher claims
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SYDNEY, Aug 22 (Reuters) - Insurance Australia Group Ltd (IAG.AX) reported an annual loss of A$261 million ($229 million) on Friday, hurt by impairment charges and a rise in weather-related claims, and unveiled plans to scale back its UK operations and look for growth in Asia.
IAG, the nation's top car and home insurer, took a restructuring provision of A$60 million and impairment provisions of A$350 million in relation to the UK assets.
"This is a poor result. While we have been affected by the increased frequency of natural perils, widening credit spreads and soft cycles in key markets, we have acknowledged we need to do better," CEO Michael Wilkins said in a statement.
The company said it would scale back its operations in the UK, and reduce operational costs in Australia by A$130 million a year from 2009, in an attempt to increase discipline and focus.
Part of its focus would be to pursue international growth opportunities in Asia and other segments of the group's existing markets.
IAG said claims costs from natural events rose 22 percent to A$502 million, well above allowances, for the year ended June 30. The company was hit by more severe weather events in Australia than usual in its first half.
Insurance profit fell to A$448 million from A$767 million a year ago. In 2006/07, IAG reported a profit of A$552 million.
The company paid a final dividend of 9 cents for the year, down from 16 cents a year earlier.
IAG shares are down 10.4 percent so far in 2008 compared with an 23.1 percent fall in the benchmark S&P/ASX 200 Index .AXJO.
Rival QBE Insurance Group Ltd (QBE.AX), on Thursday unveiled a 7 percent fall in first-half profit due to weaker investment returns, and said it was not planning to revisit an acquisition of IAG, after scrapping a bid for the company earlier this year. ($1=A$1.14) (Reporting by Mette Fraende; editing by James Thornhill)
