Insurance Australia Group (IAG) has released preliminary, half-yearly results for FY22-23. The insurance giant expects net profit after tax to be $468 million with growth at 7.5%. Gross written premium (GWP) grew by nearly 10%.

“Our strong top-line growth over the half reflects significant premium increases and new customer growth,” said CEO Nick Hawkins. “Premium rates continue to increase in response to claims inflation and in anticipation of additional reinsurance and natural perils costs.”

Natural perils costs for 1H23, according to the IAG media release, are expected to be $524 million, or $70 million above the allowance for the period.

The release said IAG has made a preliminary assessment of expected claims for the ongoing Auckland flooding event. The release said the natural perils cost impact, net of reinsurance, will be at the $236 million retention level.

“The Auckland event, combined with the escalation in supply chain inflation has delayed our ability to fully demonstrate our strategic and operational progress in FY23,” said Hawkins.

The release referred to increasing inflationary impacts, particularly in motor claims. Together with natural perils costs, said the release, these contributed to the firm’s increased loss ratio of 70.8%, up by 2% on the previous  year.

However, Hawkins said “early signs” suggest supply chain inflation impacts on claims costs have stabilised and he expected “strong improvement in the underlying margin,” during the second half of the year.