It’s the turn of Insurance Australia Group (IAG) to release its financial results for the half year ended December 31, 2020 (1H21), and the general insurance giant is the bearer of bad news.
According to IAG, it posted a net loss after tax worth AU$460 million (around $492 million) in the period – a massive drop from the AU$283 million profit attributable to shareholders in 1H20. The loss came about despite growth in the group’s gross written premium (GWP), underwriting profit, and insurance profit.
Here’s how IAG performed in the six months ended December 31:
|
Source |
GWP |
Underwriting profit |
Insurance profit |
|
Australia |
AU$4.8 billion |
AU$410 million |
AU$505 million |
|
New Zealand |
AU$1.4 billion |
AU$154 million |
AU$162 million |
|
Group |
AU$6.2 billion |
AU$566 million |
AU$667 million |
“While our business has been relatively stable, our profitability was affected by the pre-tax $1.15 billion expense we announced in November for potential business interruption claims relating to COVID-19,” explained IAG managing director and chief executive Nick Hawkins.
“Our business interruption policies were never intended to cover pandemics. However, following the Supreme Court of NSW Court of Appeal decision on the COVID-19 business interruption test case, we conducted a detailed review to determine our potential exposure, and took action to strengthen our balance sheet.”
Hawkins also highlighted that the insurer is “acting decisively” to address the issues facing IAG.
He noted: “We are working with the broader insurance industry to get clarity on how our business interruption policies should be interpreted in the context of COVID-19, and we continue to make progress on our customer remediation program.”
Meanwhile the company also announced a dividend of AU7¢ per share, which the CEO said represents a payout ratio of 37% of cash earnings.
