Australia's IAG misses annual cash earnings estimates; shares slip
Reuters
Published Aug 20, 2023 06:45PM ET
Updated Aug 20, 2023 08:45PM ET
By Nausheen Thusoo
(Reuters) -Insurance Australia Group (IAG (LON:ICAG)) said on Monday its cash earnings for fiscal 2023 more than doubled, buoyed by a rise in premiums in Australia and New Zealand but missed market expectations, sending its shares down 1.2% in early trade.
The country's top general insurer posted cash earnings of A$452 million ($290.00 million) for the year ended June 30, up from A$213 million a year ago but missing analysts' average estimate of A$656.7 million, according to Refinitiv Eikon data.
IAG also declared a final dividend of 9 Australian cents per share, up from 5 cents per share a year ago.
Citi analysts said the result is a "little disappointing" and the dividend is also lower than consensus.
IAG added that it expected lower double-digit growth in gross written premiums (GWP) for fiscal 2024 on a likely modest volume growth and an increase in customer numbers due to the company's desire to cover claims inflation, higher reinsurance costs and an increased natural peril allowance.
GWP rose 10.6% to A$14.73 billion ($9.4 billion) for fiscal 2023, matching the Refinitiv estimate.
IAG's topline guidance (for GWP) looks "solid" for FY24 and is ahead of consensus of 8%-9%, UBS analysts wrote in a note.
"We enter FY24 with positive momentum across the company and confidence that the strategy we have in place will deliver long-term benefits for our shareholders and the customers we serve," CEO Nick Hawkins (NASDAQ:HWKN) said.
Australian insurers have seen their profits soar this year, as they incur higher premiums in an elevated interest-rate environment, while also benefiting from a rebound in investment income.
The company also expects an insurance margin in fiscal 2024 of 13.5%–15.5%, higher than the 12.6% margin last year.
However, elevated inflation in home and motor claims costs, as well as the higher natural perils allowance, impacted the underlying insurance margin, IAG said in a statement.
($1 = 1.5586 Australian dollars)
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.