Insurance Australia Group Limited (ASX: IAG) may have posted a slump in its profits last year, but it was still able to give the chief executive a raise.

IAG profits went down to $91 million in the 2009 – 2010 financial year. The figure is equivalent to half of its annual net profit of the year before. Insurance claims filed after winter storms in Melbourne and Perth and competition in the British market brought the insurance firm to take a one-off charge of $327 million.

Inspite of the decrease in profit, the firm gave an 11 percent pay hike to chief executive Mike Wilkins in the same year. The raise brings Wilkins' total package to $4.27 million.

A large percentage of the increase was due to $1.33 million worth of share-based payments that forms part of a long-term incentive program. The payment somehow offsets a cut to the CEO's short-term bonus from $1.11 million to $765,000 for the year which was caused by the dip in company profits.

Eight other top executives received the same 20 percent increase due to re-valuation of long-term incentives. The remuneration hike costs a total of $20.14 million.

In the IAG annual report, Wilkins said the firm was two years into a three-year turnaround strategy and gross written premium is expected to rise by three to five percent. “I am encouraged with our progress, but I know we can do better,” Wilkins said.