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REPORTING SEASON: Insurance Australia Group (IAG)

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Figure 1: Insurance Australia Group Ltd 12 month chart


Insurance Australia Group (IAG) shares sink as results miss expectations

 Insurance Australia Group has reported a near 10% fall in net profit for the first half year while at the same time leaving the dividend payment for the period unchanged. Both results have disappointed investors.

 Gross Written Premium (GWP) increased by 17.1% to $5.6 billion, which to a substantial degree reflected the inclusion of the recently acquired Wesfarmers business. Removing the contribution of the acquisition, GWP was flat reflecting stable premiums, heightened competition in the commercial business and constrained volume growth in the personal insurance segment.

 The reported Insurance Margin of 13.4% was impacted by net natural peril claim costs of $421 million which were $71 million higher than allowances and included $165 million for the Brisbane storms in November 2014.

 The full year outlook saw margin guidance maintained in the range of 13.5% to 15.5%, while growth in Gross Written Premium is expected to be at the lower end of the 17% to 20% guidance range.

 Investment Income fell more than 40% compared to the same period last year to $137 million, an outcome which reflected the strong equity market returns of the previous year.

 IAG will pay a fully franked interim dividend of 13 cents per share which is unchanged from the same time last year. The payment will be made on 1 April to shareholders registered on 4 March 2015.


You can see all of CommSec’s reporting season analysis by clicking here.

Tom Piotrowski, Market Analyst,