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Highlights
IAG reported AU$347 million in net profit after tax for FY22.
The company had reported a loss of AU$427 million in the previous fiscal.
However, IAG saw a fall in margins.
Insurance Australia Group Ltd (ASX:IAG) swung back into profit in FY22 after having reported losses in the prior financial year. The ASX-listed insurer reported AU$347 million in net profit after tax (NPAT) for the 12 months ending 30 June 2022, compared to a loss of AU$427 million in the previous fiscal.
Despite recording profit in the financial year 2022, IAG saw a fall in margins, raising concerns for investors. The company reported a margin of 7.45 % from its profit from insurance of AU$586 million.
The margin was below the previous guidance of 10% to 12%. The insurance profit margin stood at 13.5% in FY21.
Following the release of results, shares of IAG were trading at AU$4.18, down 2.11% at 10:17 AM (AEST). The share price has risen over 6% on a year-to-date (YTD) basis, but fallen nearly 14% in the past year. In the past month, the share price has dipped over 2%. The 52-week high and low of the stock stand at AU$5.51 and AU$4.02, respectively.
Meanwhile, IAG also indicated a “prior period reserve strengthening” of AU$172 million and negative credit spread impact of AU$45 million.
“We have also strengthened our reserves following adverse experience in our commercial liability portfolio from prior accident years,” IAG said in its preliminary financial results for the year ended 30 June 2022 (FY22) and its FY23 guidance.
What does IAG’s management say?
IAG Managing Director and CEO Nick Hawkins was upbeat about the company’s performance despite FY 2022 having posed several challenges.
“Our direct insurance business in Australia is growing in key segments, particularly as we roll out the NRMA Insurance brand in Western Australia and South Australia,” he added.
IAG’s guidance for FY2023
The Australian insurer expects to see a “strong underlying business momentum” in the financial year 2023. IAG sees a mid-to-high single digit growth in FY23. The company’s management also expects a much-improved reported insurance margin of between 14% and 16%.
