Insurance Australia Group Limited

FY26 premiums grew 7.6% to $18.4 billion, underlying insurance profit rose 2.3% to nearly $1.6 billion, underlying insurance result was $1.58 billion, and reported profit was around $1.55 billion. The final dividend increased 5% to $0.20 per share, taking the full-year dividend to $0.32 per share; payout ratio was 73%. Group net perils costs were $179 million, the underlying claims ratio improved 50 basis points to 51.6%, and the admin expense ratio improved 60 basis points to 11.6%. FY27 guidance is for premium growth of 5% to 8% and a reported insurance margin of 14.5% to 16.5%; the perils allowance increases only 2% to $1.49 billion, and management expects the group admin expense ratio, excluding levies, to reduce to below 11% in FY27.

Nicholas Hawkins framed FY26 as a year of strategic execution, saying IAG had sharpened its strategy, grown where it wanted to grow, and reduced volatility while improving shareholder returns. He emphasized strong momentum in the direct retail businesses, the successful integration of RACQ Insurance, and the acceleration of AI and technology initiatives to improve customer service and claims handling. His tone was confident and constructive, repeatedly pointing to a stronger platform for FY27 and beyond.

William McDonnell focused on the quality and stability of earnings, noting that FY26 results were compared against a FY25 aided by benign perils and a business interruption provision release. He highlighted non-quota share reinsurance expense of $1.34 billion, net perils costs of $179 million, underlying claims ratio improvement to 51.6%, admin expense ratio improvement to 11.6%, and technical reserves investment income of $246 million with an underlying yield of 4.8%. He also said the CET1 multiple finished at 1.14x, the $200 million buyback was completed at about $7.30 per share, and FY27 dividends are expected to be 80% to 100% franked.

Analysts probed whether retail premium growth was being driven by price versus volume, and management said Australia was increasingly seeing both, while New Zealand remained more volume-led but should see more price in FY27. Questions also focused on the sharp margin decline in New Zealand intermediated business, where management said the market is soft but the decline has slowed and margins should stabilize in FY27. On reinsurance profit commissions and synergies, management said the $50 million benefit mainly came from better RACQ quota-share terms and improved pricing on other covers, while profit commissions are being booked conservatively and should gradually build, but remain broadly within the 100 to 200 basis point range.