By Rishav Chatterjee
(Reuters) -Insurance Australia Group reported higher annual cash earnings on Wednesday, beating estimates, as stronger premiums and lower-than-expected natural peril costs improved performance and allowed the top domestic general insurer to lift dividend.
The company reported cash earnings of A$1.17 billion ($763.54 million) for the year ended June 30, up from A$905 million last year and slightly above Visible Alpha's consensus estimate of A$1.15 billion.
Net earned premium gained
8% to A$9.98 billion, driving insurance profit to A$1.74 billion. The company now expects to log a reported insurance profit of A$1.45 billion to A$1.65 billion for fiscal 2026.
Favorable weather conditions kept natural disaster costs well below budget, while continued premium growth and improved operations across Australian market boosted earnings.
Natural peril costs for the year came in at A$1.09 billion, about A$200 million below provision for the year. The company will be allocating A$1.32 billion towards its provision for natural perils during fiscal 2026.
IAG declared a final dividend of 19 Australian cents a share, bringing the full-year payout to 31 cents, up 15% from last year.
Henry Jennings, a senior market analyst at Marcustoday, backed the better-than-expected dividend and said it was good to see natural peril costs below allowance.
IAG said its recently announced alliances with the Royal Automobile Clubs of Queensland (RACQ) and Western Australia were expected to add about A$3 billion in gross written premium and lift insurance profit by at least A$300 million.
The insurer, in mid-May, said it would invest A$1.35 billion to buy the underwriting business and brand of the Royal Automobile Club (RAC) of Western Australia, following a similar deal with the club in Queensland.
"Some of the benefits of the RACQ and RAC alliances have yet to come through. That will push GWP (gross written premiums) to around 10%," Jennings added.
($1 = 1.5323 Australian dollars)
(Reporting by Rishav Chatterjee & Sherin Sunny in Bengaluru; Editing by Mohammed Safi Shamsi)
