Like its listed peers QBE and Suncorp, Insurance Australia Group (IAG) has sliced its dividend payout to shareholders for the year to June 30 after reporting results of a very mixed quality.
The details of the results were released in an update on July 22 with only the size of the final dividend to be revealed and the auditing of the results to be completed.
IAG will pay a final dividend of 5 cents a share and full year payment of 11 cents a share, down from the 20 cents a share paid for 2020-21.
And like Suncorp in particular (but less so with QBE) the impact of floods, rain, storms and high winds hurt the company’s insurance performance, driving up the cost of these natural catastrophes.
The insurer reported a net after tax profit of $347 million (a $427 million loss in 2020-21), reflecting the performance of the underlying core business and a $200 million pre-tax release from the business interruption provisions.
The net result also includes a strengthening of prior period reserves of $135 million in the June, 2022 half (FY22: $172m) “and a challenging operating environment with a higher incident of natural perils, volatile investment markets and higher inflation.”
IAG said that $172 million ‘prior years reserves strengthening was due to “mainly to late reported claims, notably worker injury claims and a higher claims inflation in the commercial liability portfolio.”
For the year to June natural perils costs were $354 million above original allowance of $765 million and “broadly in line with the guidance of $1.1 billion announced in March.
There was also a negative credit spread impact of $45 million for the year.
