IAG Reports 91% NPAT Surge, Insurance Profit Hits $957m with 6% Premium Growth

Robust Financial Performance Amid Favourable Conditions

Insurance Australia Group (IAG) has delivered a striking turnaround in its first half results for the 2025 financial year, reporting a net profit after tax (NPAT) of $778 million, up 91% from $407 million in the prior corresponding period. This robust performance was underpinned by a combination of favourable weather conditions, a $200 million release from the COVID Business Interruption provision, and growth in net earned premiums.

The company’s insurance profit climbed 56% to $957 million, translating to a strong reported insurance margin of 19.4%, well above the 13.7% margin recorded in 1H24. IAG’s natural perils costs were $215 million below allowance, providing a significant tailwind to underwriting results during the half.

Premium Growth and Customer Focus Drive Momentum

Gross written premium (GWP) increased 6% to $8.43 billion, reflecting steady demand across IAG’s Australian and New Zealand markets. The Retail Insurance Australia division saw GWP growth of 6.1%, supported by strong renewal rates near 90% for motor and above 90% for home insurance. The Intermediated Insurance Australia segment grew premiums by 10.3%, with commercial motor and workers’ compensation portfolios performing well despite some competitive pressures.

In New Zealand, GWP growth was more modest at 1.2%, but the insurance profit surged 52% to A$311 million, driven by improved underwriting discipline and a lower claims ratio. IAG’s focus on customer experience is evident, with transactional net promoter scores rising significantly in both Australia and New Zealand, alongside a claims payment total exceeding $5.2 billion to support customers recovering from loss.

Capital Strength and Dividend Confidence

IAG’s capital position remains robust, with Common Equity Tier 1 (CET1) capital at $3.65 billion, representing 1.42 times the Prescribed Capital Amount (PCA), comfortably above target ranges and regulatory requirements. The board declared an interim dividend of 12 cents per share, a 20% increase from 10 cents in 1H24, reflecting confidence in the company’s earnings quality and cash flow generation.

Looking ahead, IAG reaffirmed its full-year guidance for reported insurance profit between $1.4 billion and $1.6 billion and a reported insurance margin towards the top end of the 13.5% to 15.5% range. The company anticipates mid-to-high single-digit GWP growth, tempered by moderating premium increases as inflation eases and reinsurance costs stabilise.

Strategic Initiatives and Community Resilience

CEO Nick Hawkins emphasised the importance of operational improvements and community support initiatives. The migration of over three million policies to IAG’s Retail Enterprise Platform is enhancing customer experience and underwriting efficiency. The company is also investing in resilience programs, including partnerships with the Australian Red Cross and rural community initiatives, to better prepare customers for natural disasters.

Recent severe weather events, such as the LA wildfires and Queensland floods, underscore the ongoing volatility in the insurance sector. IAG’s innovative reinsurance arrangements and multi-year natural perils protection aim to reduce earnings volatility and support premium stability for customers.

With a streamlined structure and strategic alliance with RACQ progressing, IAG is positioning itself for sustainable growth beyond its current 7.2 million direct and partner customers across Australia and New Zealand.