Insurance Australia Group (IAG) has reported a net profit after tax of $1,022 million for the 2026 financial year, down from $1,359 million in FY25, as the insurer absorbed higher natural peril costs and the first-year integration impacts of its RACQ Insurance acquisition - even as gross written premium (GWP) climbed 7.6% to $18,412 million.
The result, released this morning to the ASX alongside IAG's FY26 investor presentation and corporate governance statement, was broadly in line with guidance the group gave at its half-year results in February. Reported insurance profit came in at $1,552 million, down from $1,743 million a year earlier, largely reflecting a swing in natural perils from a $195 million favourable outcome in FY25 to a $114 million unfavourable one in FY26.
For brokers, the headline profit fall is only part of the story. The more pointed detail sits in how growth was distributed across IAG's distribution channels - and it is not evenly spread.
IAG's Intermediated Insurance Australia (IIA) division, which channels business through brokers, lifted gross written premium by just 1.1% to $4,600 million for the year, with underlying growth of approximately 2% that the group attributed to "discipline in a competitive market." By contrast, the Retail Insurance Australia arm (RIA), IAG's direct-to-consumer business, largely written under the NRMA Insurance brand, grew GWP by 17.8% to $10,308 million, though $1,272 million of that came from the acquired RACQ Insurance book.
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Stripping out the RACQ contribution, underlying growth in retail was still around 4.5%, more than double the broker channel's pace. IAG said the intermediated result reflected "disciplined underwriting and resilient mix," including growth of more than 10% in its WFI commercial brand, but the overall gap will draw scrutiny from brokers watching where insurers are directing growth ambition.
New Zealand told a similar story on the intermediated side, with NZI's commercial and personal lines GWP falling 11% in local currency terms as the group maintained pricing discipline in what it described as a "soft commercial market." Reported insurance profit for NZ Intermediated dropped to NZ$170 million from NZ$246 million a year earlier.
Reinsurance costs were another pressure point relevant to the broking and underwriting community. IAG's quota-share reinsurance expense rose to $6,298 million from $5,631 million, driven partly by a 2.5 percentage point increase in the whole-of-account quota share arrangement to 35% from January 1 2026. Non-quota-share reinsurance expense increased roughly 15% to $1,337 million, which the group linked to the inclusion of the RACQ Insurance portfolio and a doubling in costs tied to the Cyclone Reinsurance Pool.
Net perils costs for the year came in at $1,579 million, some $114 million above IAG's allowance - a result the insurer said was largely attributable to severe weather experience in the RACQ portfolio before it was folded into the group's long-term perils volatility cover. IAG's CEO Nick Hawkins (pictured) said the group had actively managed responses to 65 severe weather events in Australia and 44 in New Zealand over the year, paying out more than $12.4 billion in claims.
"In a year of elevated natural perils, our financial results reflect the deliberate strategic choices we have made to reduce volatility and deliver sustainable, growing shareholder returns. We are well positioned for growth and have a clear path to continue supporting customers through adversity and achieving our long-term financial targets," Hawkins said.
Despite the profit decline, IAG's underlying insurance margin held at 15%, down 50 basis points on FY25, or 16% excluding the one-off drag from RACQ Insurance's integration. The board lifted the final dividend to 20.0 cents per share, bringing the full-year dividend to 32.0 cents, up from 31.0 cents in FY25.
IAG also flagged a deepening reliance on artificial intelligence across underwriting, claims and customer service, pointing to a new partnership with OpenAI aimed at improving claims handling during severe weather events. The group said more than 60 per cent of its people now use AI regularly, with over 90 AI solutions deployed across the business - a trend brokers will need to watch closely as it reshapes claims triage and customer contact during catastrophe events.
Looking ahead, IAG guided to FY27 GWP growth of 5 to 8% and a reported insurance margin of 14.5 to 16.5%, underpinned by mid single-digit retail growth but only low single-digit growth in the intermediated channel - a signal that the broker-versus-direct growth gap may not close quickly.
