It seems cities aren’t the only ones that took a hit from the recent hailstorms in Australia as IAG announced on Friday that it cut its fiscal 2020 insurance margin guidance on the back of hailstorm claims.
The major insurer confirmed that the surge in hailstorm claims sent its shares sliding to their biggest one-day decline in more than 17 months, so it now expects its 2020 insurance margin to be in the range of only 14.5% to 16.5% – lower than its previous forecast of 16% to 18%.
“Unfortunately, it just highlighted to the market that these are really unpredictable events and insurance companies really are at the mercy of the weather,” Henry Jennings, senior analyst and portfolio manager at Marcus Today, commented, as reported by Reuters.
IAG said it received more than 28,000 claims following the hailstorms that hit Melbourne, Canberra, and Sydney – predicting a pre-tax cost of AU$169 million from the claims. Its shares fell as much as 6.4% and closed down 5.4%, which was the insurer’s biggest one-day fall since mid-August 2018 and the lowest close since February 2019.
IAG also raised its net natural peril claim costs for 2020 by AU$74 million to AU$715 million, assuming no further major events will occur until June 30. It also revealed that its first-half results will include a net post-tax provision of around AU$80 million for customer refunds.
