Australia's IAG stresses growth track despite bleak results

Insurance and net profits posted respective double-digit slumps.

Australia’s IAG has reiterated that its gross written premium growth (GWP) is still on track despite only increasing a measly 1.1% and incurring lower business volumes due to the pandemic.

Gross written premiums only managed to rise to $12.14b in FY 2020 from $12.01b in FY 2019 whilst insurance profit sank 39.5% to $741m from $1.22b. Net profit plunged almost 60% to $435m.

IAG’s FY20 reported margin of 10.1% was below its own guidance of 12.5-14.5% due to the higher than expected level of natural disasters, a strengthening of reserves mainly in the liability, professional risks and workers’ compensation areas, and credit spread effects.

Underlying margin was 16.0% versus 16.6% in FY 2019, impacted by a weaker H2 owing to higher reinsurance costs, lower interest rates hurting investment income, and a poorer performance from commercial long tail classes in Australia.

The year also saw IAG successfully exit its investment in India, realising a post-tax profit of $326m, whilst the option for its remaining assets continue to be weighed up.

Dividends fell 68.8% to 10 cents per share with no dividend declared for H2.