IAG announces 1H22 results
11 Feb 2022
IAG has released its results for the first half of the 2022 financial year.
Announcing the results, IAG Managing Director and CEO Nick Hawkins said:
“IAG delivered a solid performance in 1H22, reflecting the foundations we have put in place to create a stronger and more resilient IAG. We’ve reset the business with a simpler operating model, new leadership, and a clear strategy for growth which we are investing in to create long-term value for our stakeholders.
We have upgraded our FY22 gross written premium (GWP) guidance from low to mid single-digit growth reflecting the confidence we have in the business and future economic outlook. We’ve reaffirmed reported insurance margin guidance of 10-12% for FY22.
We’re encouraged by our strong GWP growth of 6.2% and sound underlying performance, with our underlying insurance margin improving to 15.1% (FY21: 14.7%).
While GWP growth was primarily rate driven, we achieved new customer growth and strong retention across our key motor and home lines in our direct Australia business. GWP in this business grew 3.3%.
We are seeing a notable turnaround in our intermediated Australia business which grew GWP ~9%, reported strong retention and some new business growth, and an improving underlying margin of 5% (1H21: 3.8%).
The New Zealand business performed well across its business and consumer portfolios driving GWP growth of 5.9% in NZ currency while its strong underlying margin of 16.8% was an improvement on FY21 (16.4%).
IAG’s insurance profit of $282m (1H21: $667m) was impacted by significant natural perils costs of $681m largely from severe weather events in October along with modest reserve strengthening. This equated to a lower reported insurance margin of 7.1% (1H21: 17.9%). We delivered a net profit of $173m compared to a $460m loss in 1H21. There have been no further material changes to the provisions we’ve made for business interruption and customer refunds and we reiterate that we have no net insurance exposure to trade credit via BCC Trade Credit.
Supporting our customers
As the pandemic continues to disrupt our lives, our priority is keeping people safe while minimising disruptions to our customers.
Severe and damaging weather events, particularly in October 2021, affected thousands of our customers. Our team successfully navigated COVID-19 protocols to provide customers practical on the ground support and ensure their claims were lodged quickly. The scale of our claims operations and supply chain is delivering faster, more efficient claims experiences. Our motor repair model, which includes Repairhub and Motorserve, is helping keep repair costs down while our simplified claims technology platform is leveraging automation and artificial intelligence to help us make faster claims decisions.
Growing with our customers
Our strategy is delivering encouraging progress against our plan of adding one million new customers over the next five years. We’ve expanded into new regions while targeting new customer segments in our core insurance markets in Australia and New Zealand, and we’re improving customer experiences, especially across our digital channels. Our direct business in Australia aims to deliver $400 million of value through initiatives to increase claims and supply chain effectiveness and we want 80% of customers’ activity to be digital in five years.
During the half we took NRMA Insurance – one of Australia’s most trusted brands – national. This initiative is already contributing to GWP growth through new customers. We established a new digital business ROLLiN’ in late 2021 for the younger generation and while it’s early days for this brand, we are seeing a positive response.
In New Zealand, we have a strong presence through relationships with one in two households. We will build on this by enhancing our customer value propositions. For our intermediated business in Australia, we’re focused on strengthening our relationships with brokers and partners. During the half we made a number of digital improvements to make it easier to do business with IAG and continue to enhance our pricing and underwriting.
Continued disciplined and focused investment in our enterprise platform is a key enabler of our growth and efficiency across all our businesses.
A stronger, more resilient IAG
IAG today is a much stronger, more resilient company than in recent years and we have the right foundations to position us well for the future. I am confident we will continue to deliver profitable business and customer growth in FY22 and longer-term value for our stakeholders.”