Insurance Australia Group has lifted its first half profit almost by 40 per cent despite a decline in its margins due to higher than expected claims.

The owner of brands such as NRMA and CGU incurred $335 million in natural peril claims in the six months to December 31, with bushfires in the NSW Blue Mountains and storms in NSW and Queensland the most significant events.

That was slightly above the company’s allowance, and $200 million more than the same period a year earlier.

IAG made a net profit of $642 million in the six months to December, up 39 per cent from $461 million in the prior corresponding period.

The result was skewed by a $182 million loss relating to the company’s discontinued UK business in the prior corresponding period.

IAG’s insurance profit for the half was $758 million, down seven per cent, due to the rise in claims, plus strong releases of its reserves in the prior corresponding period.

That equated to an insurance margin of 17.5 per cent.

Chief executive Mike Wilkins said the result illustrated improved performances from its Australian, New Zealand and Asian businesses.

“Our underlying margin has more than doubled since the 2009 financial year, as we have improved our underwriting and claims disciplines and realised significant cost efficiencies,” Mr Wilkins said.

IAG reiterated its guidance for gross written premium growth of between three and five per cent in the full 2013/14 financial year, and an insurance margin of between 14.5 and 16.5 per cent.

The company’s shares gained three cents to $5.55.