IAG Sets 5.79% Distribution on Capital Notes 3 for December Payment

Dividend Announcement Overview

Insurance Australia Group Limited (ASX, IAG) has declared an ordinary dividend of AUD 1.443 per security for its Capital Notes 3 (ASX code, IAGPF). This quarterly distribution is set to be paid on 15 December 2025, with the ex-dividend date falling on 2 December 2025 and the record date on 3 December 2025. The announcement confirms the dividend is partly franked at 40%, reflecting a tax credit component that benefits Australian investors.

Distribution Rate and Calculation

The distribution rate for this period is anchored to the 3-month Bank Bill Swap Rate (BBSW) as of 15 September 2025, which stood at 3.5802%, combined with a fixed margin of 3.20% established at the time of the Capital Notes 3 issuance. This results in an annualised distribution rate of approximately 5.79%. The dividend covers a 91-day period from 15 September to 14 December 2025, aligning with the terms set out in the Capital Notes 3 prospectus.

Franking and Tax Implications

Notably, 40% of the dividend is franked, meaning it carries a corporate tax credit at the prevailing 30% tax rate, while the remaining 60% is unfranked. This split provides a partial tax benefit to eligible investors, which can influence after-tax returns. There is no conduit foreign income component associated with this distribution, simplifying tax considerations for holders.

Regulatory and Approval Status

The announcement clarifies that no additional approvals; such as security holder, court, or regulatory consents; are required ahead of the dividend payment. Furthermore, IAG does not have a securities plan related to these distributions, indicating a straightforward payment process without complicating factors.

Investor Considerations

For investors in IAG’s Capital Notes 3, this dividend announcement confirms a steady income stream consistent with prior distributions and the terms of the notes. The partly franked nature of the dividend and the fixed margin component provide a degree of income stability, while the linkage to the BBSW rate introduces some variability aligned with market interest rates. This update will be important for portfolio income projections and yield calculations as the payment date approaches.