Regional insurer IAG has seen a 7.7% drop in consolidated GWP from its businesses in Asia, with two countries in particular contributing to the slower growth.
Revealing its half year results yesterday, the insurer noted that Asia’s overall earnings contribution for the firm fell to $2 million, compared with $10 million in the first half of 2016.
Peter Harmer, managing director and CEO of IAG, called out two countries which contributed to the poor result.
“We did experience a bit of deterioration in our Malaysian and Thailand businesses, primarily due to really intensive pricing competition but also due to some currency affects as well,” Harmer told a press conference following the results announcement.
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In Thailand, the business saw increased competition, which drove growth down.
Malaysia is currently undergoing a process of detariffication and Nick Hawkins, chief financial officer of IAG and also responsible for the international division of the firm which includes the Asian businesses, said that the business expects these issues to stabilise in due course.
“That does often create a little bit of volatility in the market, as the market transitions and that is probably what we are experiencing in Malaysia right now,” Hawkins said.
“Our expectation is that it will stabilise over the next 12 to 18 months and our return profile in Asia will pick up.”
The IAG business in both Thailand and Malaysia is focused on motor and Harmer noted that a drop in new car sales has also impacted both markets.
Elsewhere in Asia, IAG saw its business in India move into profit but this was offset by the Thai and Malaysian issues.
Hawkins stressed that the business will focus on both troubled markets in the future.
“We are focused on improving the profitability of both of those countries back to the levels they have operated at,” Hawkins said.
“I really can’t see a reason why that won’t occur in the next 12 to 18 months.”
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