Insurance Australia Group Ltd (IAG) recorded net profit after tax of A$778 million for the first half of the 2025 financial year, marking a 91% increase from A$407 million in the prior corresponding period.
The growth was primarily driven by a A$140 million post-tax release of the COVID Business Interruption provision, higher net earned premiums and an improved insurance profit.
Pre-tax insurance profit rose 56% to A$957 million (1H24: A$614 million), translating to a reported margin of 19.4%, up from 13.7% in the prior period. The company’s natural perils costs were A$215 million below allowance, contributing significantly to the stronger insurance profit.
The IAG board declared an interim dividend of 12 cents per share.
“We finished 1H25 with strong momentum as we focus on supporting our customers and communities in Australia and New Zealand,” IAG managing director and CEO Nick Hawkins said.
“Today’s result reflects the quality of our business as we continue to see consistent, reliable performance across our portfolios and steady progress against our strategic priorities.
“It follows a challenging four-year period for IAG, marked by extreme weather events, volatile investment markets and COVID-related issues that impacted our performance.”
Hawkins attributed the company’s improved profitability to favourable weather conditions, strong investment markets and the release of A$200 million from its COVID Business Interruption provision.
“These more favourable periods allow us to build up reserves to pay future claims when we need to,” he noted.
IAG has prioritised customer service, underwriting discipline and operational efficiency across its Australian and New Zealand businesses.
“We’ve significantly improved our claims management capability to ensure we are there for our customers when they need us most. We are now at our lowest level of unresolved claims since the 2022 floods,” Hawkins said.
He also acknowledged the financial pressures facing policyholders.
“In the past six months, we have provided financial support to more than 10,000 customers across Australia and New Zealand who are experiencing financial difficulties. We understand the pressures many of our customers are under and are offering tailored assistance.”
Hawkins noted that easing inflation is contributing to a moderation in premium increases and highlighted IAG’s investment in natural perils protection to stabilise costs.
“Our investment in our multi-year natural perils protection will help reduce volatility from extreme weather events and further stabilise costs for our customers,” he said.
Operational investments deliver results
The company’s operational investments have also delivered results.
“We have migrated more than three million insurance policies to our Retail Enterprise Platform and are adding 300,000 policies each month, delivering significant improvements in customer experience and enabling us to efficiently price and manage risk.
“The Enterprise Platform allows us to execute at scale and will support our future growth across the Group.”
Hawkins also pointed to the importance of resilience amid growing climate risks.
“The LA wildfires and recent floods in Far North Queensland underscore how critical it is for governments, insurers and communities to work together.
“New IAG research shows the LA fires have heightened awareness and concern across Australia and New Zealand around preparing for and responding to natural disasters.
“Our research shows nearly half (48%) are now more concerned about their safety and protection needs and 86% are more inclined to take action. And 46% are more likely to seek information on the actions they can take to prepare for and respond to a bushfire.
“It’s up to us as insurers to help educate our customers on their risks, provide the information they need, lift awareness of discounts available, and work with government on upfront mitigation for communities at risk.”
IAG has invested in education and engagement programs to support community resilience.
“This includes EmergencyRedi workshops in partnership with Australian Red Cross and our AgCarE partnership, which aims to help strengthen rural communities.”
What’s next?
Looking ahead, Hawkins expressed confidence in the company’s strategic direction.
“We enter the second half of financial year 2025 in a position of strength. With our streamlined structure, investment in technology and commitment to quality customer service, we have a scalable business ready to grow beyond our current 7.2 million direct and partner customers.
“Our innovative reinsurance agreements enhance our resilience and reduce volatility for our customers. As we move into the next phase of growth, I’m confident in IAG’s ability to support our customers, deliver strong returns for shareholders and help build resilience and strength across Australia and New Zealand.
“In Australia, our strategic alliance with RACQ, once complete, will further increase the reach of our retail insurance products through some of the most trusted brands in financial services.”