(Reuters) -Insurance Australia Group on Monday said it expects lower double-digit growth in gross written premiums (GWP) for fiscal 2024, while annual cash earnings more than doubled for fiscal 2023 but missed market expectations.
IAG’s forecast was issued on the back of an expectation of modest volume growth and an increase in customer numbers and is driven by the company’s desire to cover claims inflation, higher reinsurance costs and an increased natural peril allowance.
Australia’s top general insurer reported a 10.6% rise in GWP to A$14.73 billion ($9.4 billion) for fiscal 2023, matching the Refinitiv estimate.
“We enter FY24 with positive momentum across the company and confidence that the strategy we have in place will deliver long-term benefits for our shareholders and the customers we serve,” Chief Executive Officer Nick Hawkins said.
Australian insurers have seen their profits soar sharply this year, as they incur higher premiums in an elevated interest-rate environment. Insurers have also benefited from a rebound in investment income.
The company also expects an insurance margin in fiscal 2024 of 13.5%–15.5%, higher than the pervious year’s margin of 12.6%.
However, elevated inflation in home and motor claims costs, as well as the higher natural perils allowance, impacted the underlying insurance margin for the year ended June 30, 2023, the company said in a statement.
IAG also declared a dividend of 9 Australian cents per share, up from 5 cents per share a year ago.
The insurer posted cash earnings of A$452 million for the 12 months ended June 30, up from A$213 million a year ago.
It missed analysts’ average estimate of A$656.7 million, according to Refinitiv Eikon.
($1 = 1.5610 Australian dollars)
(Reporting by Nausheen Thusoo and Archishma Iyer; Editing by Paul Simao and Stephen Coates)
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