Insurance Australia Group Ltd (ASX:IAG) has released its full-year results for 2024 featuring a net profit after tax (NPAT) of A$898 million, a 7.9% increase compared to the previous financial year.
The growth was primarily driven by an 11% rise in net earned premiums, an improvement in insurance profit and a significant 35% increase in investment income on shareholder funds, which reached A$286 million.
The company's insurance profit rose sharply by 79.1% to A$1,438 million, resulting in a reported margin of 15.6%, up from 9.6% in FY23. This increase was further supported by natural perils costs of A$983 million, which were A$115 million below the A$1,098 million allowance, positively impacting the insurance profit.
The IAG Board has declared a final dividend of 17 cents per share (cps), up from 9 cps in FY23, bringing the total dividend for the year to 27 cps, compared to 15 cps in the previous year.
“Today’s result reflects the strength of the IAG business as well as the operational improvements we have implemented," IAG managing director and CEO Nick Hawkins said.
"The trust our customers have in our brands is reflected in continued high customer advocacy and retention in our retail businesses in Australia and New Zealand. We are well positioned to continue supporting our customers and the broader economy.
“The strategic measures we have put in place over the past few years have created a stronger and more resilient IAG.
"We’ve streamlined our Australian business, established a clear brand strategy and launched NRMA Insurance nationally, outside of Victoria. We have also improved our claims management capability to ensure we are well-placed to support our customers when they need us the most.
“We’ve delivered on our target of at least A$250 million in insurance profit from our Intermediated Insurance Australia business and significantly improved our technology platform that delivers the products and services we provide to our retail customers.
“New Zealand saw a material uplift in our pricing capability and risk management as we migrated policies to the Enterprise Platform. We strengthened our retail presence, launching AMI Insurance Hubs for in-person customer support, while expanding the AMI RepairHub.”
Growth driven by strategic initiatives
Hawkins attributed the company's strong results to a combination of factors, including growth in gross written premiums, stronger investment returns and less volatile weather conditions in Australia and New Zealand compared to previous years. He emphasised that the business was actively working to minimise the impact of premium increases on its customers.
He also acknowledged that inflation, increasing weather volatility and rising reinsurance costs had significantly influenced customer premiums. However, Hawkins noted that there were early signs of inflation easing. Additionally, the long-term reinsurance agreement announced in June was expected to reduce year-on-year volatility from extreme weather events, helping to stabilise costs for customers over the long term.
“Understanding the impact of premium increases on customers, the company has enhanced its support for those affected by cost-of-living pressures. Specialised customer care teams are providing tailored solutions and additional assistance to those in financial hardship. The company has also enhanced training for frontline teams and introduced artificial intelligence (AI) tools to better identify and assist vulnerable customers."
Furthermore, Hawkins highlighted that the company’s recent investments in operational initiatives were yielding positive results.
"The migration of over five million insurance policies to the Enterprise Platform has significantly improved customer experience and enabled better pricing and risk management. This platform is not only designed to support current operations but also allows the company to execute with scale and agility, driving future growth and innovation across the Group.”
Clear strategy ahead
Hawkins believes IAG has a clear strategy and a strong and scalable business model as to focus on the next phase of growth.
“Having streamlined our operations in recent years, we are now focused on building on our strong customer relationships with our leading brands and products and enhancing our retail business – enabled by our integrated Enterprise Platform.
“We’ll continue to invest in the Commercial Enablement platform for our broker network and optimise our capital structure.
“Our advocacy efforts to encourage government investment in resilience and for improved land use planning to help our customers will remain a key focus.”