Insurance Australia Group (IAG) has shared its preliminary financial results for FY22, reporting a net profit after tax (NPAT) of $347 million, up from its $427 million loss in the previous year.

According to a statement released Friday, this recovery was driven by the strengthening of reserves through IAG’s commercial liability portfolio, as well as a $200 million pre-tax release from business interruption provisions.

The insurer also saw a 5.7% growth in gross written premiums (GWP), described as “consistent with guidance of mid-single digit growth.”

Additionally, IAG reported $586 million in insurance profit, indicating a 7.4% margin that was down from 13.5% in FY21 and below this year’s guidance range of 10-12%.

This dip in profit margin was attributed to several factors. First, IAG saw net natural peril costs of about $1.12 billion in FY22 – $354 million more than the original allowance but still consistent with estimations made last March. The insurer also reported a prior period reserve strengthening of $172 million, plus $45 million of negative credit spread impacts.

Nick Hawkins, IAG’s managing director and CEO, explained that these preliminary results reflect the “high natural perils and volatile investment markets” that defined the past year.

“The FY22 preliminary underlying results reflect the positive momentum we’ve achieved as we build a stronger, more resilient IAG,” said Hawkins. “Despite the challenges we have seen in the external environment over the year, our businesses have performed well, delivering strong GWP growth. Our direct insurance business in Australia is growing in key segments, particularly as we roll out the NRMA Insurance brand in Western Australia and South Australia.”