IAG Declares AUD 1.5353 Quarterly Dividend on Capital Notes, Payable September 15

Dividend Announcement Overview

Insurance Australia Group Limited (IAG) has confirmed a new ordinary dividend distribution for its Capital Notes (IAGPE), set at AUD 1.5353 per security. This payment is scheduled for 15 September 2025, with the ex-dividend date on 2 September and the record date on 3 September. The dividend relates to the quarter ending 14 September 2025.

Distribution Details and Franking

The dividend is partly franked at 40%, meaning that AUD 0.6141 of the dividend carries franking credits, while the remaining AUD 0.9212 is unfranked. This partial franking reflects the company's tax position and offers investors some tax credit benefits, a factor that can influence income-focused investors' decisions.

Calculation and Yield

The distribution rate is based on a combination of the 3-month Bank Bill Swap Rate (BBSW) plus a fixed margin of 3.5%, resulting in an effective annual distribution rate of 6.1581%. The base rate was set on 16 June 2025, the first business day of the distribution period, and applies for 91 days. Notably, the calculation includes a minor negative adjustment, which slightly reduces the total rate.

Investor Implications

This dividend announcement is significant for holders of IAG’s Capital Notes, a hybrid security that blends features of debt and equity. The steady quarterly payment and partial franking may enhance the notes' attractiveness amid a competitive fixed income environment. Importantly, no additional approvals were required for this distribution, indicating a smooth process aligned with prior expectations.

Market Context

As capital notes often serve as a key funding source for insurers like IAG, consistent dividend payments help maintain investor confidence and support the company’s capital management strategy. The announced yield compares favorably with other hybrid securities in the financial sector, potentially influencing demand and secondary market pricing.