IAG says the pressure on home and car premiums is easing after double-digit price jumps in previous years, as the insurance giant told investors that earnings were likely to come in at the top of forecasts.
Mr Hawkins said the company was aiming for a “reasonable” return on equity of between 14 per cent and 15 per cent. “We and our industry has not delivered that type of return profile over the last five years,” he said.IAG also signed a highly simplified version of reinsurance – insurance for insurers in big disasters – for the next five years with global giants Warren Buffett’s Berkshire Hathaway and Canada Life Reinsurance.
Citigroup analyst Nigel Pittaway told clients the new protection would likely provide “greater potential stability in results” and said the market would likely be positive about the better than expected guidance this year. Mr Hawkins said the reduction in pressure on consumer products came with inflation on the insurer’s costs starting to “come back”. That included motor costs such as parts, and labour expenses for repairs.