Insurance Australia Group (IAG) has announced a $200 million (US$130 million) share buyback and raised its dividend after its profit from insurance lifted 75 percent to $614 million (US$400 million) in the first half.
Gross written premiums rose 12.5 percent to $7.9 billion (US$5.1 billion) in the six months to Dec. 31, IAG said on Feb. 16, reaffirming its 2023/24 guidance.
IAG reported a statutory net profit after tax of $407 million (US$265 million), down from $468 million (US$305 million) a year ago, when its earnings were swelled by the release of a $360 million (US$235 million) provision related to COVID-19 business insurance claims.
“Our key message is that today’s a good result, and IAG’s on track,” chief executive and managing director Nick Hawkins told analysts during a webcast on Feb. 16.
IAG’s reported insurance margin was 13.7 percent, up from 8.5 percent a year ago but at the bottom end of full-year guidance of 13.5 to 15.5 percent.
Mr. Hawkins said that reflected the ongoing impacts from inflation and additional reinsurance impacts.
The chief executive repeated an apology he gave before the House economics committee earlier this month to customers who were disappointed with IAG and other insurers’ response to the devastating east coast flooding in early 2022.
Since then IAG has increased its claims team, scaled up its partner workforce and expanded its network of tradespeople, Mr. Hawkins said.
There has been more flooding since late November on the east coast and Mr. Hawkins said IAG was working hard to progress claims and get customers back on their feet again.
In response to a question from an analyst, Mr. Hawkins acknowledged that IAG had lost market share in the home insurance market.
“We’ve had a difficult pricing environment to manage our way through,” he said.
“The last six months has been tough ... but the medium term view is unchanged.
“We’ve got population growth, we’ve got wonderful brands, so we should be able to grow our company in line with that.”
Mr. Hawkins also acknowledged that customer retention levels had slipped a bit amid the cost of living crunch and premium increases.
“We’re feeling the pressure of affordability that our customers are experiencing on retentions,” he said.
“We recognise that it’s been a very challenging environment across Australia and New Zealand.”
As well as the share buyback, IAG will pay a 10 cent per dividend interim dividend, up from six cents per share a year ago.
QBE also reported earnings on Feb. 16, disclosing it made US$1.35 billion (A$2.08 billion) in full-year profit, more than double the $587 million (US$383 million) it made in 2022.
Gross written premiums increased 10 percent to $21.7 billion (US$14 billion).
Late Feb. 16 afternoon, IAG shares were down 3.5 percent to $6.10 (US$4) and QBE shares were down 2.1 percent to $16.04 (US$10.5).
