IAG shares tumble on weak premium growth outlook
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More news: Shares in IAG have slumped more than 8% to $8.20 despite the insurance giant reporting first-half profit ahead of estimates.
While the bottomline increased due to the release of Covid-related provisions, investors focused on weaker growth in gross written premiums, which lagged market expectations.
IAG flagged ongoing weakness, forecasting annual gross written premium growth to come in at the lower end of the mid-to-high single digit forecast, as improving claims trends and lower reinsurance costs are driving a moderation in premium increases.
IAG beats forecasts as half-year profit nearly doubles
The news: Insurance Australia Group has topped expectations to nearly double its first-half profit on the back of higher insurance profits and the release of COVID-related provisions.
The numbers: Net profit for the six months to December jumped 91% to $778 million, coming in ahead of Visible Alpha consensus estimates of $699.80 million.
Gross written premiums were up 6% to $8.43 billion but lagged analysts' estimates. The company will pay an interim dividend of 12 cents a share, up from 10 cents a year ago.
The context: The insurer said its half-year profit was boosted by the release of a post-tax $140 million COVID Business Interruption provision.
Its insurance profit also jumped 55.9% to $957 million, while net earned premiums were up 9.7% to $4.93 billion.
What they said: “Today’s result was delivered in a period of favourable weather and benefited from a $200 million release from the COVID Business Interruption provision," Managing Director Nick Hawkins said.
"Our results reflect the volatility of our sector and the fact we’re often subject to factors outside our control - the good years help us weather the bad and be well positioned to pay future customer claims.”
The source: ASX announcement
