Insurance Australia Group has flagged flat growth in gross written premiums, and its insurance margin will be lower than forecast, ahead of its full-year results.
IAG, which owns brands including CGU, NRMA and SGIO, said growth in gross written premiums would likely be 1.1 per cent due to lower compulsory third party pricing and COVID-19 impact.
The company had earlier forecast growth would be in low single digit figures.
The coronavirus pandemic has led to fewer new customers, which reduced gross written premiums by about $80 million between March and May.
The amount of new customers has since returned to normal levels in most portfolios, IAG said.
While there had been fewer claims from motorists during the pandemic, this had been partially offset by more claims from landlords and travel operators.
However, the insurer’s anticipated insurance margin of 10.1 per cent would miss earlier guidance of 12.5 to 14.5 per cent.
Natural peril claim costs of $904 million, higher than the expected $850 million, were the main reason. Prior period reserving and negative credit spread were also factors.
The insurer’s cash earnings are expected to be $279 million.
Shareholders will not receive a dividend.
IAG chief executive Peter Harmer said the second half of the financial year had been immensely challenging.
The summer bushfires, drought, COVID-19 and volatility in share markets had impacted financial results, according to Mr Harmer.
The company is due to publish its full-year results on August 7.