IAG 1H24 Financial Performance Overview

Insurance Australia Group (ASX: $IAG) has reported a strong first half of the financial year 2024, with Gross Written Premium (GWP) increasing by 12.5% to $7.9 billion. The insurance profit surged to $614 million from $350 million in the previous corresponding period. The reported insurance margin also saw a significant improvement, reaching 13.7% from 8.5%. Despite a slight decrease in net profit after tax to $407 million, the company has reaffirmed its financial guidance for the full year 2024.

Executive Commentary on 1H24 Performance

We've achieved a solid operating first half result, with our focus on strategy execution and the momentum in the underlying business continuing to drive IAG's performance. Our first half Gross Written Premium (GWP) growth was the strongest in nine years at 12.5%. The margins and underlying claims ratios in Australia and New Zealand improved, and we are on track to meet our FY24 financial guidance. GWP growth reflected premium increases across Direct Insurance Australia (DIA), Intermediated Insurance Australia (IIA) and the New Zealand business in response to inflation pressures, higher perils, and reinsurance costs. This was partially offset by slightly lower volumes, mainly driven by our IIA business focusing on improved underwriting and pricing. Customer retention remained high, reflecting the strength of our brands. This was recognized in the latest Brand Finance Australia 100 2024 report, where NRMA Insurance was ranked Australia's 2nd strongest brand.

Outlook and Ambitions

IAG's financial performance in the first half of FY24 has demonstrated a robust operating result, with a focus on strategy execution and momentum in the underlying business. The company's ambitions include delivering a 15% insurance margin and a reported Return on Equity (ROE) of 13% to 14% on a 'through the cycle' basis. Additionally, IAG aims to add one million direct customers, achieve an IIA insurance profit of at least $250 million in FY24, and realize $400 million in value from DIA claims and supply chain cost reductions on a run-rate basis from FY26. The company also seeks further simplification and efficiencies to reduce the Group's administration ratio. IAG has reaffirmed its financial guidance for FY24, expecting GWP growth of 'low double digits' and a reported insurance margin of 13.5% to 15.5%. The company remains well positioned to continue playing a critical role as an economic shock absorber for consumers and businesses in Australia and New Zealand, while also delivering returns for its shareholders.