Insurance Australia Group (IAG) has lifted its guidance on insurance margins for the 2013/14 financial year but has reduced expected growth in premiums.

IAG on Thursday said that following a review of its expected performance in the first half, it had revised its reported insurance margin guidance for the full year to 14.5 to 16.5 per cent, up from previous guidance of 12.5 to 14.5 per cent.

Also, IAG reduced its full year guidance for growth in gross written premiums to three to five per cent, down from previous guidance of five to seven per cent.

But for the half year, gross written premiums were expected to grow by about four per cent, or six per cent after allowing for the cessation of the Victorian Fire Services Levy.

The reported insurance margin for the half year was expected to be around 17.5 per cent.

“While our financial results for 1H14 (the first half of the 2013/14 year) remain subject to finalisation, including board approval, we expect to record a strong first half underlying performance which builds on the improvement evident in prior periods,” IAG chief executive Mike Wilkins said in a statement.

“This expected first half outcome includes strong underlying performances from each of the businesses in Australia and New Zealand, as well as a small contribution from our Asian operations.”

Shares in IAG were 15 cents lower at $5.62 at 1027 AEDT.