IAG announced its preliminary financial results for the year ended 30 June 2022 (FY22) and its FY23 guidance.
The results, subject to finalisation of the audit process and Board approval, are expected to be:
Reported NPAT (Net Profit After Tax) of $347 million (FY21: $427 million loss) including:
- strengthening of prior period reserves by $135 million in the second half (FY22: $172 million), driven by the commercial liability portfolio, reflecting the inflationary impact on claims settlement costs and the greater than anticipated late notification of large claims mainly from the 2017 and 2018 accident years, which are now assumed to continue into later years;
- a challenging operating environment with a high incidence of natural perils, volatile investment markets, and a higher inflationary environment;
- a $200 million pre-tax release from the business interruption provision; and
- a strong momentum in the underlying1 business performance which provides confidence in the outlook for FY23.
GWP growth of 5.7% (FY21: 3.8%), consistent with guidance of ‘mid-single digit’ growth;
A reported insurance profit of $586 million representing a margin of 7.4%
(FY21: 13.5%), below the guidance range of 10% to 12%, reflecting:
- net natural peril costs of $1,119 million, $354 million above the original allowance of
- $765 million, consistent with the expectation of ‘approximately $1.1 billion’ as announced on 9 March 2022;
- prior period reserve strengthening of $172 million; and
- negative credit spread impacts of $45 million.
An underlying insurance margin in the second half of FY22 of 14.1% (2H21:13.5%).
A loss on shareholders' funds of $105 million.
A pre-tax net corporate expense benefit of $200 million (FY21: $1,510 million loss) reflecting a reduction in the business interruption provision.
IAG Managing Director and CEO Nick Hawkins said: “Our preliminary FY22 financial results reflect high natural perils and volatile investment markets. We have also strengthened our reserves following adverse experience in our commercial liability portfolio from prior accident years.
“The FY22 preliminary underlying results reflect the positive momentum we’ve achieved as we build a stronger, more resilient IAG.
“Despite the challenges we have seen in the external environment over the year, our businesses have performed well, delivering strong GWP growth.
“Our direct insurance business in Australia is growing in key segments, particularly as we roll out the NRMA Insurance brand in Western Australia and South Australia,” Hawkins said.
IAG will announce its final audited FY22 results on 12 August 2022.