IAG earnings hopes dampened by NZ floods, FY23 claims

The news: Insurance Australia Group says its first-half earnings will fall in the lower range of guidance, as FY23 claims and reinsurance costs weigh on expectations.

The numbers: At IAG's group's AGM today, chief executive Nick Hawkins reported natural peril costs of $120 million, including $47 million for claims from FY23 events. Reinsurance reinstatement costs following NZ floods earlier this year were around $70 million, he said. The insurer expects to post full-year insurance profits of between $1.2 billion and $1.45 billion. IAG shares were up 0.45% at 12:40pm AEDT, fetching $5.545.

The context: Global reinsurance capacity has been contracting, driving up insurance premiums. However, rising inflation has also driven up the costs of natural disasters, leading to a temporary imbalance for insurers.

What they said: "Combined with additional reinsurance reinstatement costs of around $70 million following the New Zealand events earlier this year, it is likely that our first half underlying margin will be around the lower end of our guidance range," Hawkins told shareholders.