IAG announces 1H24 results

1H24 financial highlights

• GWP up 12.5% to $7.9b
• Insurance profit of $614m, up from $350m
• Reported insurance margin of 13.7%, up from 8.5%
• Underlying insurance margin of 13.7%, up from 10.7%
• Net profit after tax of $407m, down from $468m
• Up to $200m on-market share buyback
• Reaffirmed FY24 financial guidance
• Interim dividend of 10 cents per share

Financial performance

“We’ve achieved a solid operating first half result, with our focus on strategy execution and the momentum in the underlying business continuing to drive IAG’s performance.

Our first half Gross Written Premium (GWP) growth was the strongest in nine years at 12.5% (1H23: 7.5%). The margins and underlying claims ratios in Australia and New Zealand improved, and we are on track to meet our FY24 financial guidance.

GWP growth reflected premium increases across Direct Insurance Australia (DIA), Intermediated Insurance Australia (IIA) and the New Zealand business in response to inflation pressures, higher perils, and reinsurance costs.

This was partially offset by slightly lower volumes, mainly driven by our IIA business focusing on improved underwriting and pricing. Customer retention remained high, reflecting the strength of our brands. This was recognised in the latest Brand Finance Australia 100 2024 report, where NRMA Insurance was ranked Australia’s 2^nd strongest brand.

Our reported insurance profit of $614m (1H23: $350m), equated to a reported insurance margin of 13.7% (1H23: 8.5%). The underlying insurance margin was 13.7% (1H23: 10.7%) with credit spread and natural perils benefits, offset by some prior period short-tail strengthening.

Net profit after tax (NPAT) was $407m, down 13% on 1H23 (1H23: $468m) which had the benefit of a $360m pre-tax business interruption (BI) claim provision release.

The increase in the expense ratio to 23.7% (1H23: 22.9%) is the result of increased commissions and government levies as well as the investments we are making to support our growth strategy, such as our Enterprise Platform rollout and IIA’s Commercial Enablement technology program. The expense ratio is expected to decline in the second half of the year.

DIA, IIA and the New Zealand business all delivered solid GWP growth and improved margins. Our first half performance demonstrates IAG is a stronger and more resilient business. We have a sound reinsurance program, and our capital position is strong. As a result, today we’ve announced an on-market share buyback of up to $200m.

We are well positioned to continue to play our critical role as an economic shock absorber for consumers and businesses in Australia and New Zealand, helping them when they need us most, while also delivering returns for our shareholders.

Nick Hawkins

Managing Director and CEO

Helping our customers

We continue to see natural perils impacting our communities. Since late November, large parts of Australia’s east-coast have been devastated by major weather events. We’re working hard to progress claims and get customers back on their feet quickly.

Paying claims is core to what we do. In the first half alone, we settled more than $6bn in claims (1H23: $5.45b) – that’s around 730,000 claims across Australia and New Zealand.

The increased frequency and severity of natural perils, inflation, and increased reinsurance costs have flowed through to premium increases. We know this has added to our customers’ cost of living pressure in a difficult economic environment. We’ve worked hard to minimise premium increases and continue to work with government, businesses, and communities to improve community resilience and reduce risk.

Earlier this month we participated in the Federal Government’s 2022 Flood Inquiry and carefully listened to feedback from government, consumers, regulators, and community groups. We were disappointed to hear the experiences some customers had with us in the aftermath of these devastating floods.

We know we play an important role in protecting our customers when disaster strikes and are taking steps to ensure we are better prepared for large weather events in the future. This is a top priority for me and my leadership team.

Since the 2022 floods, we’ve increased our claims team numbers, scaled up our partner workforce, improved our triaging and claims oversight to identify vulnerable customers, expanded our regional network of tradespeople we can access at short notice, and revitalised our “all hands-on deck” program.

A stronger, more resilient IAG

Today’s results show the progress we’ve made against our strategic priorities. We’ve added new direct insurance customers and our IIA business is on track to deliver its FY24 insurance profit target of at least $250m, after a solid first half performance.

We now have over 600,000 policies on the Enterprise Platform and over the next 12 months, we plan to renew approximately

5m retail and partner policies on to the platform.

We’re on track to deliver the FY24 guidance we outlined at the beginning of the financial year. Our strategy is clear, and our leadership team is focused on delivering against our goals.

We are well positioned to continue to play our critical role as an economic shock absorber for consumers and businesses in Australia and New Zealand, helping them when they need us most, while also delivering returns for our shareholders.”