Fewer Natural Disasters Boost Insurance Australia Group's Insurance Margin and Fiscal 2014 Profit

Last week we reiterated our upbeat outlook for Insurance Australia Group, underpinned by a benign claims environment, reserve releases, and claims cost control, leading to our insurance margin forecast for fiscal 2014 of 16.5%, towards the top end of guidance. In a welcome surprise, the company has now increased insurance margin guidance to between 18% and 18.3%, reflecting less natural-peril activity and narrower credit spreads than previously expected. Incorporating guided gross written premium growth of 3% and the stronger insurance margin, our fiscal 2014 net profit after tax forecast is increased by 7% to AUD 1.3 billion. Our dividend forecast is similarly increased from AUD 0.37 to AUD 0.39 per share.