() -Insurance Australia Group reported higher annual cash profits on Wednesday, surpassing expectations, driven by rising premiums and lower-than-anticipated costs from natural disasters, which enhanced results and enabled the leading domestic general insurer to increase its dividend.
The firm disclosed cash earnings of A$1.17 billion ($763.54 million) for the period ending June 30, an increase from A$905 million in the previous year and just beyond Visible Alpha's average prediction of A$1.15 billion.
The company's stock rose 2.8% to A$8.74 during early trading, reaching its highest level since August 8.
Net earned premium increased by 8% to A$9.98 billion, leading to an insurance profit of A$1.74 billion. The company now anticipates a reported insurance profit ranging from A$1.45 billion to A$1.65 billion for fiscal year 2026.
Good weather allowed the company to keep risk-related expenses under its budget, while consistent growth in premiums and operational enhancements within its domestic market contributed to better profits.
Natural disaster costs for the year totaled A$1.09 billion, approximately A$200 million less than what was set aside. The company plans to set aside A$1.32 billion for natural perils in fiscal 2026.
IAG announced a final dividend of 19 Australian cents per share, resulting in a total annual payment of 31 cents, representing a 15% increase compared to the previous year.
Citi analysts stated that the results exceeded expectations and the updated guidance "appears at least as strong as the consensus estimate, if not slightly better."
Citi also noted high renewal rates in both Australia and New Zealand, anticipating the stock will remain stable or increase.
IAG stated that its newly announced partnerships with the Royal Automobile Clubs in Queensland and Western Australia are anticipated to generate approximately A$3 billion in total premium revenue and increase insurance profits by a minimum of A$300 million.
In mid-May, the insurance company announced it would allocate A$1.35 billion to acquire the underwriting operations and trademark of the Royal Automobile Club of Western Australia, similar to a previous agreement with the club in Queensland.
($1 = 1.5323 Australian dollars)
(Produced by Rishav Chatterjee and Sherin Sunny in Bengaluru; edited by Mohammed Safi Shamsi and Alan Barona)