Aussie insurer IAG says rise in claims, third-party costs to push up premiums
Rewrites with updates on share price, premium rises and outlook
By Himanshi Akhand and Rishav Chatterjee
Aug 21 (Reuters) -Insurance Australia Group IAG.AX said on Wednesday it expects premiums to keep rising because of a huge jump in loss claims and third-party costs for home and automobile repairs, sending its shares more than 3% lower.
IAG said the money it earns from premiums for fiscal 2025 would rise by "mid-to-high" single digit percentage amid some growth in volume, mirroring the outlook that rival Suncorp SUN.AX shared earlier this week.
Its shares fell as much as 3.2% to A$7.2 and were set for their worst trading session since early August.
"We recognise premium increases are affecting customers," said IAG CEO Nick Hawkins, adding the business was focussed on reducing the impact.
IAG said labour costs and expenses associated with building materials jumped during the year in the state of Victoria where a massive chunk of the workforce is unionised.
The insurance group reported a net profit of A$898 million ($605.43 million) for fiscal year 2024, missing a Citi forecast of A$1.05 billion.
IAG had posted an annual net profit of A$832 million last year.
Australian insurers have seen their profits rise over the past year as they wrote more premiums in the wake of extreme weather conditions and heightened living costs. Their fixed income and equities investments also benefited from high interest rates and market volatility.
IAG's gross written premiums were at A$16.40 billion in fiscal 2024, up from A$14.73 billion last year and in line with the Visible Alpha consensus estimate of A$16.42 billion.
Its natural perils costs were below the amount it had set aside for the fiscal.
The insurer declared a final dividend of 17 Australian cents per share.
($1 = 1.4826 Australian dollars)
Reporting by Himanshi Akhand and Ayushman Ojha in Bengaluru; Editing by Shilpi Majumdar and Mrigank Dhaniwala
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