IAG expects an insurance margin of between 16.8% and 17.2% for the full financial year ended 30 June 2013, compared to previous guidance of 12.5-14.5%.
Net earned premium (NEP) for the year is expected to be circa $8.3bn and gross written premium growth, 11.8%, slightly higher than the guidance range of 9.5-11.5%, due to favourable foreign exchange movements.
The expected reported insurance margin of 16.8-17.2% is in respect of continuing operations and is based on preliminary results which remain subject to finalisation, board approval and audit completion. Following anticipated impacts, the expected margin is a net natural peril claim expense of around $470m, compared to a guidance assumption of$620m.
A favourable credit spread impact of about $110m, compared to a guidance assumption of $90m; and reserve releases in the region of 2.5% of NEP, compared to guidance of 1-2% of NEP, derived from continued favourable experience in long tail classes in a low inflation environment.
IAG managing director and CEO, Mike Wilkins, said the group’s financial performance in FY13 has been favourably impacted by natural peril, reserve release and credit spread outcomes.
“Compared to our previously held assumptions, these factors have caused the group’s insurance margin to exceed our earlier guidance. Meanwhile, the underlying performance of the group has remained strong over the course of the financial year,” Wilkins said.
In line with the group’s stated policy, IAG intends to pay a full year dividend equivalent to 50-70% of reported cash earnings in FY13.
The group will announce full details of its FY13 results on 22 August 2013, including the outlook for FY14.