Insurance Australia Group (IAG) has released its half yearly annual results. The general insurance company with operations across Australia and New Zealand posted a net profit of $173 million. However, cash earnings and insurance profit were both down by about 60%.
“IAG delivered a solid performance in 1H22, reflecting the foundations we have put in place to create a stronger and more resilient IAG,” said CEO Nick Hawkins.
Hawkins said the company has “reset the business” and now has a simpler operating model and new leadership.
He said the claims, policy, pricing and mobile areas of the business were all seeing benefits from new technology and operational efficiencies, including more use of artificial intelligence (AI).
Hawkins said he was “very encouraged” by gross written premium growth which was primarily rate driven but he noted new customer growth and strong retention across motor, home and direct Australia business.
“We have upgraded our FY22 gross written premium (GWP) guidance from low to mid single-digit growth reflecting the confidence we have in the business and future economic outlook,” he said.
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He said IAG was also seeing a turnaround in its intermediated Australia business with a 5% underlying margin for the half year.
In New Zealand Hawkins credited a claims optimization process with improving claims handling times.
“The New Zealand business performed well across its business and consumer portfolios driving GWP growth of 5.9% in NZ currency while its strong underlying margin of 16.8% was an improvement on FY21 (16.4%),” he said.
Natural perils costs were blamed for reducing IAG’s insurance profit of $282 million and cost $681 million.
The company announced an interim dividend to shareholders of 6 cents per share, 14% down on last year.
“IAG today is a much stronger, more resilient company than in recent years and we have the right foundations to position us well for the future.” Said Hawkins.
At the company’s 2020-21 full year results conference in August, Hawkins announced a net loss of $427 million but higher dividends for shareholders.
In October, during IAG’s annual general meeting, chair Elizabeth Bryan announced total reductions in bonuses amounting to nearly $7 million. Bryan said this was to penalize the executives who were accountable for IAG’s serious risk failures.