IAG flags full-year net loss

INSURANCE giant IAG has reported a preliminary fullyear net loss of $427m and flagged premium growth for the year ahead.

The reported net loss comes after a net profit of $435m in the previous financial year.

The preliminary results showed a choppy financial year, with adjustments to prior reserves and the cost of pandemic provisions weighing on its bottom line

Cash earnings for the year were $747m, up from $279m a year earlier. “Our underlying financial results for the year are sound and within expectations,” said IAG chief executive Nick Hawkins.

IAG has booked a $1.15bn pre-tax charge to cover business interruption insurance provisions arising from legal issues around policies sold by the insurer to businesses.

Chief financial officer Michelle McPherson said the insurer had received only 700 claims so far for business interruption insurance claims.

IAG said its net earned premium of $7.47bn represented a 1.5 per cent growth on the previous financial year. It flagged “low single-digit” gross written premium growth for the 2022 financial year. The company forecast an insurance margin of 13.5 per cent to 15.5 per cent.

“I’m confident that, with the steps we have in place, we will deliver business and customer growth,” Mr Hawkins said

IAG said it expected to deliver results showing an increase in gross written premium of 3.8 per cent, boosted to a 3.9 per cent increase in the second half of the financial year.

The insurer said it was also expecting a “negligible” impact from Covid-19 in the second half of the financial year.

The result has reportedly been driven by an underlying insurance margin of 14.7 per cent, a figure which declined to 13.5 per cent in the second half of the financial year.

However margins have fallen on the previous financial year’s 16 per cent.

IAG has also been hit by a payroll compliance problem, after it emerged the company had failed to “identify” full entitlements owed to employees.

The insurer has booked a $51m pre tax charge to cover remediation and costs in the 2021 financial year results.