IAG has reported a full-year profit of $347 million, recovering from a loss earlier in the year, as the company released some business disruptions while strengthening business reserves following pressure.
Gross written premium (GWP) increased by 5.7%, in line with the guidance of “moderate” growth, but the insurance profit fell to $ 586 million, representing a margin of 7.4%, which decreased from 13.5% last year. Under the guidance of 10-12%, the preliminary results released today show.
CEO Nick Hawkins says the results reflect environmental risks, volatile financial markets and a high-cost environment, but improved performance and higher yields underpin a strong forecast.
“Despite the challenges we’ve seen in overseas markets throughout the year, our sales have performed well, delivering strong GWP growth,” Hawkins said.
“Our direct insurance business in Australia is growing in key areas, particularly as we roll out the NRMA Insurance brand in Western Australia and South Australia.”
IAG has released $200 million in corporate damages following the Federal Full Court’s ruling in the company’s second trial in February, considering the amount and nature of the claims it received. The offering now stands at $975 million.
The strengthening of reserves of $172 million, led by the business portfolio, reflects the decline in prices and the late introduction of capital goods, especially from the crisis years of 2017 and 2018, which are said to have continued.
The company says that about $ 45 million of the strengthening is related to exposure to silicosis, and it has taken steps to reduce future problems due to exits from certain accounts, exclusions and prices.
Another difficult area is workers’ compensation cases, where claims are made under the compensation policy, and then the policy generates interest on the government debt policy of the insurance client.
IAG says the medium-sized business has the potential to deliver a target insurance profit of $250 million in the 2024 financial year, with measures taken to improve the turnaround showing encouraging signs.
“The situation is going well,” said senior midfielder Jarrod Hill. “The external conditions are difficult, but I am still confident in delivering the results, and the sector is confident in delivering the results we have committed to.”
Environmental expenses of $ 1.119 billion were $ 354 million more than the initial cost of $ 765 million and in line with the March revisions that showed an expectation of about $ 1.1 billion.
The permit this year will increase by about 19% to $ 909 million, part of the post quota, which increases the frequency and severity of natural disasters.
In this year, IAG expects an insurance margin of 14-16% and GWP growth in the “medium to high range”, mainly interest driven by inflation, high reinsurance costs and increased environmental risk.
Mr Hawkins said the group is seeing a moderate to high rise in prices, compared to the low levels of the previous 12th.
“This is the operating environment we are in and I would say it is the same in Australia and New Zealand. We are seeing price increases everywhere, and we are putting these into prices,” he said briefly.
IAG reported that the title lost $427 million a year ago due to business disruptions, customer refunds and payment compliance issues, as well as strengthening reserves during and after remote classes.
The company will release its final audit results on August 12.