IAG lifts profit outlook as natural disaster costs fall $200m short
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The news: Insurer IAG has raised its full-year insurance profit guidance, with natural perils costs estimated to be around $200 million lower than the company's annual allowance.
The numbers: IAG said it expects insurance profit for fiscal 2025 to be between $1.6 billion and $1.8 billion, up from previous guidance of $1.4 billion to $1.6 billion.
The company also increased its insurance margin guidance to the top end of a range of 15.5% and 17.5%, up from 13.5% to 15.5%.
The changes follow an update to IAG's natural peril costs for the year, which are estimated to be $200 million lower than expected at around $1.08 billion. This includes over 4,000 claims lodged during floods in the NSW Mid North Coast and Hunter during May, with an estimated net cost of around $100 million.
IAG said its full-year gross written premium (GWP) growth is expected to be between 4% and 4.5%. This is tracking weaker than its original guidance of "mid-to-high single digit" growth.
The context: The insurer said it is delivering "solid" GWP growth in direct home and motor segments in Australia, but its New Zealand commercial business is experiencing softer market conditions.
IAG shares tumbled in February after the company reported half-year GWP growth of 6%, short of estimates.
The source: ASX
