Company Interview / IAG "insures" its future growth

Key points:

IAG (ASX:IAG) reports a 51% increase in full-year net profit to $1.35 billion Strategic alliances with RACQ and RAC WA expected to add $3 billion GWP Customer retention remains high at around 90% Improved reinsurance protections and AI enable better response to climate risks

Insurance Australia Group (ASX:IAG) has reported a robust performance, highlighting a 51% lift in net profit to $1.35 billion and a final dividend of 19 cents per share, bringing the full-year total to $0.31. William McDonnell CFO of IAG outlines a strong set of results, citing a favourable perils experience in New Zealand, one-off releases from business interruption provisions, and successful system investments driving organic growth and customer retention.

McDonnell points to recent strategic alliances with the Royal Automobile Clubs of Queensland and Western Australia, forecasting that these deals will contribute around $3 billion of gross written premium (GWP) and significantly bolster IAG’s Retail Australia business. With retention rates around 90%, IAG continues to win new customers at a rate of 10,000 per month, supported by initiatives to enhance affordability, such as encouraging higher deductibles.

Addressing climate change, McDonnell emphasises IAG’s use of advanced reinsurance protections and artificial intelligence to manage perils and support affected customers swiftly. The capital position remains strong, with payout ratios maintained at 65%, and upgraded margin and return on equity (ROE) guidance to 14-16% and 15% respectively for FY26. McDonnell is confident growth, margin stability, and customer-focused innovation will underpin future results.