IAG suffers $460 million loss in first half

IAG suffers $460 million loss in first half | Insurance Business Australia

IAG suffers $460 million loss in first half

It’s the turn of Insurance Australia Group (IAG) to release its financial results for the half year ended December 31, 2020 (1H21), and the general insurance giant is the bearer of bad news.

According to IAG, it posted a net loss after tax worth $460 million in the period – a massive drop from the $283 million profit attributable to shareholders in 1H20. The loss came about despite growth in the group’s gross written premium (GWP), underwriting profit, and insurance profit.

Here’s how IAG performed in the six months ended December 31:

Source

GWP

Underwriting profit

Insurance profit

Australia

$4.8 billion

$410 million

$505 million

New Zealand

$1.4 billion

$154 million

$162 million

Group

$6.2 billion

$566 million

$667 million


“While our business has been relatively stable, our profitability was affected by the pre-tax $1.15 billion expense we announced in November for potential business interruption claims relating to COVID-19,” explained IAG managing director and chief executive Nick Hawkins.

“Our business interruption policies were never intended to cover pandemics. However, following the Supreme Court of NSW Court of Appeal decision on the COVID-19 business interruption test case, we conducted a detailed review to determine our potential exposure, and took action to strengthen our balance sheet.”

Hawkins also highlighted that the insurer is “acting decisively” to address the issues facing IAG.

He noted: “We are working with the broader insurance industry to get clarity on how our business interruption policies should be interpreted in the context of COVID-19, and we continue to make progress on our customer remediation program.”

Meanwhile the company also announced a dividend of 7 cents per share, which the CEO said represents a payout ratio of 37% of cash earnings.