Insurance Australia Group (ASX:IAG) reported a significant increase in full-year earnings and shareholder returns for the 12 months ending June 30. The company also announced a $350 million share buyback.
Cash earnings nearly doubled to $905 million, up from $452 million a year ago. This was primarily due to reduced natural catastrophes and continued premium increases, a trend also seen among competitors like QBE, Suncorp, and Allianz. Premiums rose 14% over the year according to the Australian Bureau of Statistics.
Revenue increased by nearly 7% to $17.24 billion, driven by a 11% rise in net written premiums and a 35% jump in investment income.
IAG declared a final dividend of 17 cents per share, bringing the total for the year to 27 cents. However, investors were unimpressed and shares fell by more than 3% in the afternoon. This may be due to concerns that the strong performance in 2023-24, largely driven by premium increases and low catastrophe claims, may not be sustainable.
The company's insurance profit surged by 79.1% to $1.438 billion, with a reported margin of 15.6%. Natural perils costs of $983 million were $115 million lower than expected, positively impacting the insurance profit.
CEO Nick Hawkins attributed the strong results to growth in premiums, higher investment returns, and favourable weather conditions. He emphasised the company's operational improvements and customer trust, which has led to high customer advocacy and retention. IAG is well-positioned to continue supporting its customers and the broader economy.
Hawkins highlighted the strategic measures implemented in recent years to strengthen and improve IAG. These include streamlining the Australian business, establishing a clear brand strategy, launching NRMA Insurance nationally, and enhancing claims management capabilities.
The company successfully achieved its target of at least $250 million in insurance profit from its Intermediated Insurance Australia business and improved its technology platform for retail customers. In New Zealand, IAG strengthened its pricing capability and risk management by migrating policies to the Enterprise Platform. It also expanded its retail presence with AMI Insurance Hubs and AMI RepairHub.
Hawkins acknowledged the impact of the cost-of-living crisis on customers. While inflation, weather volatility, and rising reinsurance costs have contributed to premium increases, he noted that inflation is beginning to ease and the long-term reinsurance agreement announced in June will help stabilise costs.
IAG is committed to supporting customers facing financial hardship through specialised customer care teams and tailored solutions.
