Earnings and IAG’s dividend payout have fallen below some expectations for one of Australia’s biggest insurers.
IAG flagged more premium hikes coming, blaming inflation and disaster costs.Insurance giant IAG has warned premiums will keep rising, blaming inflationary pressures and the cost of protecting itself from large disasters.
But IAG chief executive Nick Hawkins brushed aside questions about whether insurers would be over-earning with an El Nino dry period predicted to arrive this financial year. “In my 23 years at IAG, I’ve never seen inflation like we’ve experienced,” he told“I’ve never seen us have to manage the way we have to manage through cost of reinsurance and perils either.
IAG’s profits and final dividend of 9¢ undershot some market expectations. Citigroup analyst Nigel Pittaway questioned the company setting a disaster allowance this year of $1.147 billion. That was below what the company had experienced a year earlier despite having less reinsurance cover, which is in effect insurance for insurers.IAG shares were down 17¢ at $5.67.
The company just met its guidance with a reported insurance margin of 9.6 per cent, and forecast this would be between 13.5 per cent and 15.5 per cent. That would mean reported insurance profits would rise from $803 million to between $1.2 billion and $1.45 billion in the current financial year.
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