Australian insurer IAG has reported a net loss of $427 million for the 12 month period ending June 30 2021, down considerably from the $435 million profit announced in FY20.
The company highlights significant one-off corporate expenses mainly relating to business interruption, customer refunds and payroll remediation as having impacted its overall result.
Managing Director and Chief Executive Officer Nick Hawkins describes these as historical issues that have been identified, provisioned for and are in the process of being fixed.
He adds that IAG is making investments to continue to lift its risk management and operational capabilities.
IAG’s results also include gross written premium (GWP) growth of 3.8% compared to FY20.
This growth in GWP was mainly rate driven, but IAG also highlighted promising new business growth and stronger customer retention.
A high number of extreme weather events are described as having impacted IAG’s customers and their communities; net perils are reported to have cost IAG $742 million for FY21, $84 million above allowance.
COVID-19 had a $50 million adverse impact in 1H21, but no material impact in 2H21
The firm’s insurance profit of $1,007 million represents a significant increase over FY20’s $741 million and was driven by lower natural perils costs, positive credit spreads and a first half COVID-19 benefit mainly from lower motor claims in Australia.
This translated to an improved reported insurance margin of 13.5%, compared to 10.1% in the prior year.
Cash earnings, which exclude one-off items, increased to $747 million for the year and represent an improvement on the $279 million reported in FY20.
