IAG rides hard market to boost profit by 140%

The news: Insurance Australia Group has posted a net profit after tax of $832 million, up 140%, as hard market conditions continue in the insurance sector.

The numbers: IAG's gross written premium was up 10.6% to $14.7 billion, as insurance profits lifted 37% to $803 Million. The insurer paid claims of roughly $10.2 billion, up 20% on the previous year, following multiple natural catastrophes in Australia and New Zealand. IAG declared a final dividend of 9 cents per share.

The context: Numerous underwriters have exited the Australian market in recent years due to profitability issues and hard-to-place risks, contributing to a hard insurance market, when premiums become more expensive and certain types of insurance are harder to obtain. A hard market is the upswing of the insurance market cycle. At a global level, the cost of reinsurance has also been increasing alongside the rate of natural catastrophes, which is also contributing to hard market conditions.