Insurance Australia Group says its insurance profit was down 13 per cent to $1.22 billion in the year to June 30, in part because of higher costs from natural disasters such as the Sydney hailstorm in December.
IAG's overall net profit after tax was up 16.6 per cent to $1.08 billion, including $200 million in profit on the sale of its Thailand operations.
Gross written premiums were up 3.1 per cent to $12 billion and IAG expects "low single digit" growth in premiums this fiscal year.
"This is another pleasing set of numbers which highlight the ongoing underlying improvement in our business," chief executive Peter Harmer told investors on Thursday.
"Importantly they are squarely in line with expectations we gave you at the outset of the year and which we confirmed six months ago."
But at 1119 AEST, IAG shares were down 39 cents, or 4.8 per cent, to a two-month low of $7.69.
"Following from SUN (Suncorp) result, IAG shows weak outlook for insurers. Yield looks attractive but the outlook is dim. Better risk/return elsewhere. Time to move on!!!" tweeted @EquityAus.
IAG said it would pay a 20 per cent dividend, 70 per cent franked - the same final dividend as a year ago.
It said its net perils outcome in the first half was $110 million over budget, driven by the Sydney hailstorm, but the second half of the fiscal year was $91 million below allowance for a total $19 million overrun.
IAG also it took a $20 million swing from credit spreads.
IAG said it was increasingly offering insurance products for the shared economy, with insurance products for ride sharing and boat sharing and liability insurance for tasks.
In June, it also acquired a 51 per cent stake in Carbar, a digital car trading platform, giving it the chance to design complementary forms of insurance.
It said it was in advanced discussions with a number of bidders for the sale of its remaining investments in Asia, including its 26 per cent stake of SBI General in India.
IAG INSURANCE PROFIT DOWN 13 PER CENT
* Gross written premiums up 3.1pct to $12b in 12 months to June 30
* Insurance profit down 13pct to $1.22b
* Net profit after tax up 16.6pct to $1.08b
* Final dividend of 20c per share, 70pct franked. A year ago IAG paid a 20c per share dividend but it was 100pct franked.