IAG swings to $173m profit but natural perils claims weigh

The Insurance Australia Group is back in black, reporting a profit swing to $173 million for the half-year but has been hit by shrinking margins caused by a blowout in natural perils claims.

IAG shareholders will receive a dividend of 6 cents per share for the six months to December 31, compared to 7 cents per share delivered the same time last year.

IAG chief executive Nick Hawkins said the gross written premiums increase was “primarily rate driven” but added the group’s plans to sign up 1 million new customers over the next five years was “delivering encouraging progress”.Credit:Jessica Hromas

Australia’s largest general insurer’s headline profit was a major swing from the $460 million loss posted the same time last year, as the group grappled with accepting liability for business interruption claims related to COVID-19.

The profit was driven by a 6.2 per cent increase in gross written premiums, a key measure of insurer profitability, to $6.5 billion after hiking premiums and growing volumes.

IAG chief executive Nick Hawkins said the GWP increase was “primarily rate driven” but added the group’s plans to sign up 1 million new customers over the next five years was “delivering encouraging progress”.

“We’ve expanded into new regions while targeting new customer segments in our core insurance markets in Australia and New Zealand, and we’re improving customer experiences, especially across our digital channels,” Mr Hawkins said.

“During the half we took NRMA Insurance – one of Australia’s most trusted brands – national.”

IAG’s profits were once again hamstrung by higher-than-expected natural perils claims totalling $681 million for the half, $299 million above the allowance provided. The most costly events included New Zealand flooding, the Melbourne earthquake and South Australian hail storms between August and October last year.

Mr Hawkins said the extreme weather affected thousands of IAG’s customers and the team navigated COVID-19 protocols to assist affected customers lodge claims.

“The scale of our claims operations and supply chain is delivering faster, more efficient claims experiences.”

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