IAG's GWP surges 12.5% 1H’24
Profits from its insurance business accumulated $403.3m (AU$614m).
Insurance Australia Group (IAG) reported a significant surge in Gross Written Premium (GWP) growth during the first half of the fiscal year 2024, marking its strongest performance in nine years with a growth rate of 12.5% to $5.2b (AU$7.9b), compared to 7.5% in the previous year.
The improved margins and underlying claims ratios in both the Australian and New Zealand markets contributed to this impressive growth trajectory.
Interim dividend saw 10 Australian cents per share.
Premium increases across Direct Insurance Australia (DIA), Intermediated Insurance Australia (IIA), and the New Zealand business were implemented in response to inflation pressures, higher perils, and rising reinsurance costs.
However, this was slightly offset by lower volumes, primarily due to IIA's focus on enhancing underwriting and pricing strategies.
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IAG also reported an insurance profit of $403.3m (AU$614m), a significant increase from $230m (AU$350m) in the previous year, translating to a reported insurance margin of 13.7%.
The underlying insurance margin also saw improvement, reaching 13.7%, compared to 10.7% in the previous year.
However, net profit after tax (NPAT) declined by 13% to $267.3m (AU$407m), primarily due to the absence of a $236.5m (AU$360m) pre-tax business interruption (BI) claim provision release.
The expense ratio increased to 23.7%, attributed to higher commissions, government levies, and investments supporting growth strategies such as the Enterprise Platform rollout and IIA's Commercial Enablement technology program.
Nevertheless, the company expects the expense ratio to decline in the second half of the year.
In response to its strong financial position, IAG announced an on-market share buyback of up to $131.4m (AU$200m), signalling confidence in its prospects and commitment to delivering returns for shareholders.