Australian company IAG’s cash profit was down 62 per cent as a result of a rise in natural disaster claims.

The news sent the company’s shares up 4 per cent to $ A4.74, the highest level in more than two months.

Adverse weather conditions in Australia led to an increase in claims, prompting many insurers to increase their cots premiums to cover claims related to natural hazards for the entire state.

Earlier this week, rival Suncorp reported a 29 per cent drop in first-half cash profits.

IAG, Australia’s largest public insurer, said its net natural risk loss exposure was 681 million Australian dollars (487.94 million dollars) a half year, almost 299 million Australian dollars more than the provision made for the period.

The company made a cash profit of 176 million Australian dollars for the six months ended December 31, up from 462 million Australian dollars the previous year, but declared a dividend of 6 Australian cents per share.

Citi had estimated the dividend at 129 million Australian dollars and the dividend at 5 Australian cents.

($1 = 1.3957 Australian dollars)