Insurance Australia Group says fewer than expected insurance claims in the 2012/13 financial year will improve its financial performance.
The owner of the CGU and NRMA brands has increased its guidance for insurance margin and gross written premium, one month before it releases its profit result for the financial year.
IAG expects its expense from natural peril claims to be around $470 million for the year to June 30, well below its assumption of $620 million.
The company also will record a favourable credit spread impact of about $110 million, higher than an anticipated $90 million.
A greater-than-expected release of reserves - amounts held to cover insurance liabilities - will also benefit IAG.
"Compared to our previously-held assumptions, these factors have caused the group's insurance margin to exceed our earlier guidance," chief executive Mike Wilkins said in a statement on Wednesday.
"Meanwhile, the underlying performance of the group has remained strong over the course of the financial year."
IAG expects its insurance margin for the year to June 30, a measure of the profit it makes on premiums, to be between 16.8 per cent and 17.2 per cent.
That's up from its previous guidance range of 12.5 to 14.5 per cent.
Gross written premium is expected to grow by 11.8 per cent from the previous financial year's $8.99 billion, stronger than its original growth forecast in the range of 9.5 to 11.5 per cent.
The company's profit result will be impacted by the sale of its UK commercial insurance broker business in December 2012, which came at a loss of about $240 million.
IAG shares gained 10 cents, or 1.8 per cent, to $5.94.
Share
