Insurance Australia Group Limited

IAG reported premiums up 7.6% to $18.4 billion, underlying insurance profits up 2.3% to nearly $1.6 billion, underlying insurance result of $1.58 billion, and reported profit of around $1.55 billion. Australian retail underlying profits rose 7% to $846 million; New Zealand retail underlying profits rose 10.7% in local currency; Australia intermediated reported profits were $316 million; and New Zealand intermediated underlying profits were $133 million. The company said the underlying claims ratio improved 50 basis points to 51.6% and the admin expense ratio improved 60 basis points to 11.6%, with a final dividend of $0.20 per share and full-year dividend of $0.32 per share. For FY27, management guided to 5% to 8% premium growth, 14.5% to 16.5% reported insurance margin, and an admin expense ratio below 11%; it also said the FY27 perils allowance rises only 2% to $1.49 billion.

Nicholas Hawkins framed FY26 as a year of strategy execution, saying IAG had strengthened its growth engine, reduced volatility, and delivered sustainable shareholder returns. He highlighted premium momentum in direct retail, the RACQ acquisition and integration, and the company’s AI rollout and OpenAI partnership as evidence that technology investment is improving efficiency and customer service. His tone was confident and upbeat, but he repeatedly stressed discipline, especially in commercial insurance and reinsurance.

William McDonnell focused on earnings quality, claims discipline, and capital strength. He said non-quota share reinsurance expense increased to $1.34 billion, net perils were $38 million below allowance for the year, the underlying claims ratio improved to 51.6%, and the admin expense ratio fell to 11.6%; he also noted claims transformation benefits of around $350 million per year. On capital, he said CET1 ended at 1.14x, IAG completed the $200 million buyback, and the final dividend brought the full-year payout ratio to 73%; he also said dividends are expected to be 80% to 100% franked in FY27 and beyond.

Analysts pressed management on whether retail premium growth, especially Australian motor and home unit growth, could hold up and what was driving the improvement. Hawkins said momentum improved through the year, with direct retail businesses showing around 7% growth in the final quarter, and said IAG wants at least to hold its own versus system growth; he also said some New Zealand growth will continue but at a slower rate than direct retail. Questions on New Zealand commercial margins, RACQ profitability, and reinsurance profit commissions led management to say NZI margin should stabilize, RACQ should move toward double-digit profitability in FY27 but may not reach 15% until FY28, and profit commissions are being booked conservatively and should stay in the 100 to 200 basis-point range rather than exceed it.