SYDNEY (Reuters) - Insurance Australia Group <IAG.AX> said it is reviewing its Asian operations after running out of buying opportunities, as it reported a sharp increase in first-half profit driven by higher premiums.
The country's biggest general insurer by market share booked a A$50 million ($39.3 million) writedown to the carrying values of its Asian businesses and said it was "considering all options" for them.
"This has been prompted by an inability to make progress on our long-standing ambition of growing our preferred markets either by way of increased ownership or participation in industry consolidation," IAG Chief Executive Peter Hammer said at an investor briefing on Wednesday.
IAG, which has operations in five general insurance businesses in Asia including Thailand, Vietnam, Indonesia, Malaysia and India, said it expected to finalise its review by the end of 2018.
Net profit jumped 24 percent to A$551 million ($432.92 million) in the six months ended Dec. 31, helped by higher fees and reserve releases, the company said. The result beat a A$475 million average estimate of four analysts polled by Reuters.
Margins for the first half were significantly higher than a year earlier at 17.3 percent, up from 13.5 percent in the first half of the previous fiscal year, prompting it to raise its guidance for the full year to 15.5 percent to 17.5 percent.
It expected "low single-digit growth" in gross premiums for the full year.
IAG shares posted their biggest intraday gain in six years shortly after the results release, before paring some of those gains. By early afternoon they were 2.8 percent higher at A$7.4, amid broader market falls.
IAG, which has a strategic partnership with U.S. investor Warren Buffett's Berkshire Hathaway Inc <BRKa.N>, increased dividends by one cent to 14 Australian cents per share, and said it was in a flexible position to consider capital initiatives in the future.
Gross written premiums rose about 1 percent for the half-year, helped by rate increases.
IAG, which specialises in motor and property insurance, said last year it would share 12.5 percent of its premiums and costs with Munich Re <MUVGn.DE>, Swiss Re <SRENH.S> and Hannover Re <HNRGn.DE>, to help release capital.
Shares of IAG fell sharply in August after it reported weaker margins due to disaster claims, but have since been gaining steadily to scale a record peak this month.
(Reporting by Paulina Duran in SYDNEY. Additional reporting by Shashwat Pradhan in Bengaluru; Editing by Stephen Coates)
