IAG, the biggest non-life insurer in Australia and New Zealand, has announced its results for the financial year ended 30 June 2024, reporting a net profit after tax (NPAT) of A$898m ($605.3m), an increase of 7.9% on FY23.
This increase was driven by an 11% rise in net earned premiums, an improvement in the insurance profit, and higher investment income on shareholder funds of A$286m up 35% on the previous year, the insurer says in a statement.
The insurance profit of A$1,438m was up by 79.1% compared to FY23 and equated to a reported margin of 15.6% (FY23: 9.6%). The company’s natural perils costs of A$983m, A$115m below the A$1,098m allowance, positively impacted the insurance profit.
The IAG board declared a final dividend of 17.0 Australian cents per share (cps), bringing the full-year dividend to 27 Australian cps (FY23: 15cps).
Company performance
Commenting on the company’s performance, IAG managing director and CEO Nick Hawkins, said, “Today’s result reflects the strength of the IAG business as well as the operational improvements we have implemented.”
He also said, “The strategic measures we have put in place over the past few years have created a stronger and more resilient IAG. We’ve streamlined our Australian business, established a clear brand strategy, and launched NRMA Insurance nationally, outside of Victoria. We have also improved our claims management capability to ensure we are well-placed to support our customers when they need us the most.
“We’ve delivered on our target of at least A$250m in insurance profit from our Intermediated Insurance Australia business, and significantly improved our technology platform that delivers the products and services we provide to our retail customers.
“New Zealand saw a material uplift in our pricing capability and risk management as we migrated policies to the Enterprise Platform. We strengthened our retail presence, launching AMI Insurance Hubs for in-person customer support while expanding the AMI RepairHub.”
Factors explaining profit increase
Mr Hawkins said the company's result was primarily driven by a combination of growth in gross written premiums, stronger investment returns, and less volatile weather in Australia and New Zealand compared to previous years.
However, he noted that the business is focused on minimising the impact of premium increases on its customers.
“We have previously said inflation, increasing weather volatility, and rising reinsurance costs were major factors affecting customer premiums. We are beginning to see some signs of inflation easing, and our long-term reinsurance agreement announced in June is expected to reduce year-on-year volatility from extreme weather events and help stabilise costs for our customers over the longer term.
“We recognise premium increases are affecting customers, and we’ve bolstered our support for those impacted by cost-of-living pressures. Our specialised customer care teams are helping those in financial hardship by finding tailored solutions and providing extra support.
“This year, we’ve also enhanced training for our frontline teams and introduced AI tools to better identify and assist vulnerable customers.”
Mr Hawkins said the company’s investment in operational initiatives over the last few years is also showing promising results.
“We have commenced migrating more than five million insurance policies to our Enterprise Platform, delivering significant improvements in customer experience and enabling us to better price and manage risk. The platform is designed to support our current operations, but it also allows us to execute with scale and agility, driving future growth and innovation across the Group.”
Operating highlights
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Established long-term reinsurance protections to reduce the impact of natural perils, help stabilise costs for customers, and reduce earnings volatility.
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Started migrating around 5 million policies to the Enterprise Platform, improving the digital experience for customers and fuelling growth across the Group.
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Commercial Enablement transformation underway, delivering better outcomes for brokers and their customers.
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Introduced more ways for customers to understand risks plus pricing benefits for taking positive action.
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Expanded the AMI Hub Services footprint in New Zealand to provide essential services for customers.
Signed an agreement to source the equivalent of 100% renewable energy for IAG sites in Australia from January 2025.
Looking ahead
“We enter FY25 with a clear strategy and a strong and scalable business model as we focus on the next phase of growth,” Mr Hawkins said.
He added, “Our advocacy efforts to encourage government investment in resilience and for improved land use planning to help our customers, will remain a key focus.”