Insurance Australia Group Ltd. has responded to a request for information from the Royal Commission ahead of the hearings scheduled mid-September that will focus on the insurance industry, executives from the insurer said in an earnings briefing Aug. 15.
The executives also said the company expects a low-single-digit growth rate in gross written premiums for the current fiscal year ending June 30, 2019, and that the insurer is looking to sell its 16.92% stake in China's Bohai Property Insurance Co. Ltd.
"Earlier this month, we had a request for information [from the Royal Commission], which was of a fairly broad nature," said Peter Harmer, managing director and CEO of IAG. "We've now responded to this, and our understanding is that our industry participants received very similar requests," he said, adding that it is not known whether IAG will be required to appear at the hearings held between Sept. 10 and Sept. 21.
The Royal Commission in Australia is a public inquiry into the conduct of banks and financial services companies. Since the first public hearings in March, the inquiry has focused on the banking, superannuation and financial service industries, and revealed misconduct among some of the country's biggest financial institutions.
Harmer's comment came after IAG posted a 0.6% drop in net profit after tax for the fiscal year ended June 30 to A$923 million from A$929 million a year earlier.
During the earnings briefing, IAG CFO Nicholas Hawkins said the company expects its gross written premium to grow between 2% and 4% in fiscal 2019, slightly higher than the 1.8% growth in fiscal 2018.
Lower return on average premiums attributable to a reform of compulsory third-party motor insurance in New South Wales, which took effect in December 2017, will likely reduce IAG's gross written premium by A$80 million in fiscal 2019, Hawkins said. He said the impact will be "the final wash through of the changes in the New South Wales CTP scheme, where we are seeing lower average premiums."
The new insurance legislation reduced IAG's gross written premium in fiscal 2018 by A$190 million, he added.
IAG reported gross written premium growth of 1.8% to A$11.65 billion in the fiscal year ended June 30. The company said that after excluding one-off factors including the impact from the New South Wales reform, its gross written premium would have grown 4.3% in fiscal 2018.
Mulls exiting China
Meanwhile, after selling its operations in Thailand, Indonesia and Vietnam, Harmer said the company continues to "pursue exit options for our investment in China," without elaborating further. IAG holds a 16.92% stake in China's Bohai Property Insurance.
"At this stage, we are retaining our interests in Malaysia and India and are continuing to assess our position and do not expect to see any further material investment in the region," he said.
IAG's financial report said it expects at least A$200 million of realized gains from the announced divestments in Asia for fiscal 2019.