Key Highlights

• On 13 August 2026, IAG reported results for the year ended 30 June 2026.

•s, net profit after tax was $1.022 billion, down from $1.359 billion in FY25.

• Gross Written Premium (GWP) rose 7.6% to $18.412 billion, helped by the Acquisition of RACQ Insurance (RACQI).

• Reported profit was pressured by weather-related claims and acquisition effects, yet underlying insurance profit rose to $1.578 billion from $1.542 billion.

What does Insurance Australia Group (ASX:IAG)'s FY26 result tell investors about the insurer heading into FY27? In short, premiums grew encouragingly, but statutory profit fell as natural perils costs exceeded allowance, while management set out a new 2030 growth plan and guidance for the year ahead.

The central development

On 13 August 2026, IAG reported results for the year ended 30 June 2026.s, net profit after tax was $1.022 billion, down from $1.359 billion in FY25. Gross written premium (GWP) rose 7.6% to $18.412 billion, helped by the acquisition of RACQ Insurance (RACQI).

The result matters because it separates two stories. Reported profit was pressured by weather-related claims and acquisition effects, yet underlying insurance profit rose to $1.578 billion from $1.542 billion.

What IAG does and how it earns

IAG is one of the largest general insurers in Australia and New Zealand. Its brands include NRMA Insurance, CGU, SGIO, SGIC and WFI in Australia, along with State in New Zealand.

Revenue comes mainly from premiums, with profit determined by claims costs, expenses, Reinsurance and Investment income on policyholder funds and Shareholder capital. Premium growth depends on a mix of Volume and pricing, while claims depend heavily on weather, repair costs and inflation.

Results and operating performance

• Pre-tax insurance profit was $1.552 billion, down from $1.743 billion.

• Net natural perils costs were $1.579 billion, which was $114 million above allowance. FY25 had a $195 million favourable outcome.

• The underlying insurance Margin was 15%, 50 basis points lower, or 16% excluding a one-off RACQI effect.

• Australian Retail GWP rose 17.8% to $10.308 billion, including $1.272 billion from RACQI. Underlying growth was about 4.5%.

• Australian Intermediated GWP rose 1.1% to $4.6 billion, with underlying growth of about 2%.

• New Zealand GWP fell 8.0% to $3.504 billion, largely reflecting a weaker New Zealand dollar. In local currency the fall was 2.7%.

Headline growth was flattered by the acquisition, and underlying retail growth was more modest. Management attributed much of the natural perils overrun to RACQI's first-half losses.

Capital and dividends

IAG completed a $200 million on-market buyback, retiring about 27.3 million shares at an average price of $7.30. Its common Equity tier 1 position was 1.14 times the prescribed Capital amount, above the 0.9 to 1.1 times target range.

The final Dividend rose 5% to 20 cents per share, taking the full-year dividend to 32 cents. The full-year Payout Ratio was 74%, within the 60% to 80% policy range. Franking rose to 80% in the second half, and management expects 80% to 100% in FY27.

Dividends are not guaranteed and depend on earnings, capital and board decisions.

Guidance and strategy

For FY27, IAG guided to GWP growth of 5% to 8% and a reported insurance margin of 14.5% to 16.5%. This is management guidance, not a result. The margin range assumes no material prior-period reserve releases or strengthening and no material change in macroeconomic conditions.

Disclosed GWP drivers include mid-single-digit underlying growth in retail in Australia and New Zealand, low single-digit growth in intermediated business, about $300 million from two extra months of RACQI premiums and about $100 million from multi-year workers' compensation. These are partly offset by roughly $150 million from exiting the Honey portfolio.

The FY27 natural perils allowance is $1.491 billion, about 2% higher than the FY26 allowance of $1.465 billion. IAG also said its reinsurance arrangements provide about $1 billion of additional protection per year for the remaining three years, with modelled outcomes suggesting an average benefit of over $100 million, or about 1% of the reported margin.

Alongside the result, IAG launched its Ambition 2030 strategy. Targets include more than 11 million customers, over $25 billion in premiums, a Return on Equity of 15% or higher, high single-digit Earnings per share growth and top-quartile total shareholder returns. CEO Nick Hawkins said the company is well positioned for growth. These are aspirations, and delivery is uncertain.

Sector conditions and competitive position

Australian general insurance is concentrated, with IAG competing mainly against Suncorp and QBE's local operations, along with Allianz and a number of smaller and direct insurers. Scale helps with claims handling, purchasing power and reinsurance negotiations. Competition on price can compress margins, however, and customers remain sensitive to premium increases after several years of cost-of-living pressure.

Sector conditions are driven by the cost of repairs, parts and labour, reinsurance pricing and the frequency of storms, floods and bushfires. Regulatory scrutiny of pricing, claims handling and climate resilience is a continuing consideration for all insurers.

Risks and what to watch

• Natural perils: costs above allowance reduce profit, and a severe summer season in Australia or New Zealand could do so again despite reinsurance protection.

• Integration: bringing RACQI into the group and delivering expected benefits carries execution risk.

• Premium growth versus margin: underlying retail growth of around 4.5% leaves limited room for error if claims Inflation outpaces pricing.

• Currency: a weaker New Zealand dollar reduces reported earnings from that business.

• Regulation: changes in pricing, claims and capital rules could alter economics.

The Australian storm season will also be a major influence on the first-half FY27 outcome.

Takeaway

IAG's FY26 result showed encouraging premium growth, steady Underlying Profit and a encouraging capital position, against lower statutory profit. FY27 guidance and the Ambition 2030 targets set benchmarks for judging future results.