Feb 12 (Reuters) – Insurance Australia Group on Thursday reported a smaller-than-expected drop of 21% in its first-half cash earnings, as higher gross premiums blunted the impact of increased claims costs and lower investment income.
Insurance Australia Group (IAG) also announced a fresh share buyback of up to A$200 million ($142.44 million), citing a strong capital position.
Australia’s top general insurer’s cash earnings slipped to A$507 million for the six months ended December 31, down from last year’s A$640 million. However, it beat the Visible Alpha consensus estimate of A$464.7 million.
Net claims expense for the first half rose 15% to A$3.51 billion, although it was slightly lower than the consensus of A$3.53 billion.
Investment income from shareholder funds slipped 14% to A$186 million.
“Various major hailstorms and severe weather events in October and November across south-east Queensland and northern NSW resulted in significant claims for insurers,” CEO Nick Hawkins said.
IAG forecast full-year gross written premiums growth in high-single digits, compared with the prior view of 10% rise, and in line with the consensus estimate of 9.6% growth.
For the six months ended December 31, IAG reported gross written premiums of A$8.93 billion, 6% higher than last year. Net earned premium, which excludes reinsurance expenses, also rose 8.5% to A$5.35 billion.
The Sydney-based insurer also announced an interim dividend of 12 Australian cents per share, the same as what it paid last year.
($1 = 1.4041 Australian dollars)
(Reporting by Sameer Manekar and Sneha Kumar in Bengaluru; Editing by Vijay Kishore)
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