Insurance Australia Group (ASX: IAG) – IAG FY2026 Annual Results Presentation

Insurance Australia Group reported full-year results to 30 June 2026 showing solid underlying profit growth alongside capital returns, though near-term earnings momentum faces headwinds from normalising natural peril claims and continued rate pressure in key markets.

Net profit after tax fell 24.8% to $1,022 million, though this reflects tough comparisons rather than deteriorating fundamentals. The prior-year result was elevated by favourable natural peril experience and insurance reserve releases. Underlying insurance profit, which strips out these volatility items, rose 2.3% to $1,578 million, demonstrating the resilience of core operations.

The headline growth figure of 7.6% in gross written premiums to $18,412 million is heavily influenced by the RACQI acquisition, which contributed $1,272 million over ten months. Stripping this out reveals underlying GWP growth of just 1.9%, with the direct retail businesses representing 60% of the premium pool and performing better at mid-single-digit rates while intermediated channels grew low single-digits. New Zealand continued its momentum with 5.1% direct growth, though the intermediated commercial market remains soft with 11% underlying decline.

The pressure on reported margins, which fell to 14.7% from 17.5%, reflects the perils environment. Natural peril claims ran $114 million above allowance during the year, driven heavily by severe weather events in the RACQI portfolio during the first half. Management has provided FY27 perils allowance of $1,491 million, up only 2% despite the portfolio growing 5.4%, suggesting an increasingly cautious stance as catastrophe frequency rises.

Operational execution has been a bright spot. The customer experience metric improved substantially across both geographies, with the NRMA brand achieving the Roy Morgan most-trusted rating. Administrative costs fell $35 million in absolute terms despite organic growth, with the expense ratio improving 60 basis points to 11.6%. This reflects both cost discipline and the integration of RACQI, which is delivering synergies above the $50 million annual target.

The balance sheet remains strong with the CET1 ratio at 1.14x, comfortably above the 0.9 to 1.1x target range. Management completed a $200 million buyback and increased the final dividend by 1 cent per share to 20 cents. The total dividend of 32 cents represents 74% of reported net profit, consistent with the stated 60-80% payout policy.

Forward guidance for FY27 projects GWP growth of 5-8% with reported insurance margins of 14.5-16.5%. This assumes the perils allowance of $1,491 million holds and incorporates the full-year benefit of RACQI and multi-year workers compensation premiums, partially offset by exit of the Honey portfolio. The company is investing heavily in AI and technology modernisation, with $200 million directed to each initiative. Watch how claims inflation evolves in motor and home repair and track the pace of RACQI integration execution.

View the full ASX announcement (PDF)

About Insurance Australia Group Limited (ASX: IAG)

Insurance Australia Group Limited is the largest general insurance company operating in Australia and New Zealand. The company provides a range of personal and commercial insurance products, primarily motor vehicle and home insurance, selling insurance under many brands including NRMA, CGU, SGIO, and SGIC in Australia and NZI, State, AMI, and Lumley in New Zealand. Headquartered in Sydney, IAG underwrite over 14 billion dollars of premium per annum.

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