NCR IAG
Published on July 29th 2022 in

IAG forecasts $750m profit improvement

IAG has increased its natural perils allowance for the current financial year and has forecast stronger gross written premium (GWP) growth and an improved margin following missed guidance in the past year.

CEO Nick Hawkins says top-line and margin improvement is expected, after results for the year ended 30 June were affected by high natural perils, volatile investment markets and reserve strengthening in the commercial liability business.

In preliminary full-year figures released on Friday, IAG reported a headline profit of $347 million, compared to a $427 million loss in the previous corresponding period, when the result was affected by business interruption provisions and customer refund and payroll compliance issues.

The reported insurance profit fell to $586 million, representing a margin of 7.4%, which was down from 13.5% and below the guidance range of 10-12%. The company benefitted from a $200 million release in business interruption provisions, but there was a net $135 million second-half strengthening in liability prior period reserves. IAG says around $45 million of its commercial liability reserve strengthening relates to silicosis exposures, in which the assumed average claim size has doubled during the year.

Mr Hawkins told a briefing the group is seeing inflationary impacts across Australia and New Zealand portfolios and is factoring that into pricing. “We have been impacted by claims inflation in our key home and motor portfolios and have significantly increased our natural perils allowance to help ensure the business can withstand the impact of increasing frequency and severity of natural perils. In our intermediated business, the steps we’ve taken to improve the performance are showing promising signs and positions us well to deliver the targeted insurance profit of $250 million in FY24.”

This article courtesy of insuranceNews. Check out the website at: https://www.insurancenews.com.au/.

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