Insurance Australia Group Ltd. raised its fiscal-year 2025 guidance as estimated natural perils costs are projected at A$1.08 bn, about A$200 mn below the group’s allowance for the period.
With this development, IAG adjusted its reported insurance profit guidance to a range of A$1.60 bn–A$1.80 bn from the previous A$1.40 bn–A$1.60 bn.
The reported insurance margin guidance also moved to the top end of the 15.5%–17.5% range from the earlier top end of 13.5%–15.5%.
IAG stated its fiscal 2025 gross written premium (GWP) growth is expected between 4% and 4.5%, accounting for its exit from the Coles business, adverse currency movements, and multiyear workers’ compensation premiums.
Retail Insurance Australia’s direct business shows about 8% growth with positive customer and unit momentum. The company noted “solid” GWP growth in Australia’s direct home and motor segments.
In New Zealand, the commercial business is experiencing softer market conditions. IAG New Zealand anticipates broadly flat GWP growth in Australian dollar terms, increasing approximately 1% in New Zealand dollars.
The natural perils allowance for the period includes over 4,000 claims from the New South Wales, Mid North Coast, and Hunter flood event in May, with an estimated net cost of A$100 mn.
IAG earlier entered a strategic alliance with the Royal Automobile Club of Western Australia. The deal, valued at A$1.35 bn, involves IAG acquiring the RAC insurance business and providing general insurance products and services for RAC members and Western Australians under a 20-year exclusive distribution agreement.
The total consideration of A$1.35 bn comprises A$400 mn for IAG’s acquisition of 100% of RAC shares, equivalent to the expected net tangible asset value at completion, and an upfront payment of A$950 mn for entry into the exclusive distribution and brand licensing agreement.
IAG’s fiscal year ends June 30, and the group will release its fiscal 2025 results on Aug. 13, according to a statement.
