Insurance Australia Group maintains its 2020 guidance but has flagged “limited” scope to pay a final dividend in September amid uncertainty over the impact of the novel coronavirus.
The pandemic has added to challenges facing Australian insurers, which have yet to recover from a turbulent summer as raging bushfires, drought and hailstorms led to a surge in claims that weighed on their margins.
Australia’s prudential regulator in April asked banks and insurers to consider deferring dividend payouts or use buffers such as dividend reinvestment plans until the impact of the pandemic was better known.
The insurer on Monday said it was retaining its 2020 guidance of “low single digit” gross written premium growth and a reported insurance margin of 12.5 per cent to 14.5 per cent.
IAG added, however, that based on year-to-date investment income outcomes and forecast full-year insurance profit, it saw limited scope to pay a final dividend in September.
The insurer had posted a drop of more than 43 per cent in first-half profit and cut its full-year insurance margin outlook in February.
IAG’s statement did not specify how many virus-related claims it had received so far.
The company’s shares last traded at $5.60, a 25 per cent drop since the start of the year amid a wider market downturn.