IAG Delivers $1.36b Profit as Strategy, Calm Weather and Growth Plans Align

Insurance Australia Group (IAG) has capped FY25 with a hefty profit jump and a stronger hand in the Australian and New Zealand markets, courtesy of disciplined underwriting, better claims management, and a little help from calmer-than-expected weather.

The group posted a net profit after tax of $1.36 billion, up 51.3 per cent on FY24’s $898 million. Insurance profit climbed 21.2 per cent to $1.74 billion, delivering a reported margin of 17.5 per cent, up from 15.6 per cent. Natural perils costs came in at $1.09 billion, a tidy $195 million below allowance, which gave the bottom line some extra shine.

Gross written premium nudged up 4.3 per cent to $17.1 billion, while net earned premium rose 8 per cent to $9.98 billion. Investment income on shareholder funds also added a welcome boost, rising to $403 million from $286 million. The board declared a final dividend of 19 cents per share, taking the full-year payout to 31 cents, up 14.8 per cent on last year.

Chief executive Nick Hawkins credited the performance to the long-game strategy laid out five years ago. “We had strong momentum through FY25 and supported our customers when they needed us most. By delivering on our strategy and investing for growth, we can execute at scale and are set to protect significantly more Australians and New Zealanders,” he said.

Operationally, IAG sharpened its customer proposition. The group paid out $10.2 billion in claims, supported more than 15,000 customers in financial hardship, and rolled out tech upgrades, including AI, data, and satellite tools to speed up claims handling. Renewal rates hovered around 90 per cent in Australia and the mid-90s in New Zealand, underscoring sticky customer relationships.

Growth-wise, IAG is setting its sights on a bigger footprint through strategic alliances with RACQ in Queensland and RAC in Western Australia. When bedded down, these deals are tipped to add around $3 billion in GWP, at least $300 million in insurance profit, and double-digit earnings per share accretion once synergies kick in. Hawkins said the alliances would deliver scale benefits while sharing IAG’s tech and reinsurance muscle with the motoring clubs’ members.

The capital position remains robust, with Common Equity Tier 1 at $3.94 billion, or 1.47 times the Prescribed Capital Amount — well above regulatory minimums. This strength should allow IAG to fund the RACQ and RAC tie-ups from organic capital generation, keeping the balance sheet tidy.

Looking ahead to FY26, IAG is guiding for low-to-mid single-digit GWP growth, an insurance profit of $1.45 to $1.65 billion, and a margin of 14 to 16 per cent — excluding any RACQ or RAC uplift. If the RACQ acquisition completes on 1 September as expected, GWP growth should lift to about 10 per cent.

For now, Hawkins and his team can chalk FY25 up as a year where strategy, operational discipline, and a bit of meteorological luck combined to deliver a tidy set of numbers. The trick will be repeating it when the weather gods are less forgiving.