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Highlights:

  • IAG's FY25 NPAT increased by 51.3% year-on-year to AUD 1,359 million, with insurance profit up 21.2% to AUD 1,743 million.

  • Final dividend rose to 19.0 cents per share, taking the full-year payout to 31.0 cents per share, up 14.8% from FY24.

  • FY26 GWP growth is forecast at low-to-mid single digits, increasing to about 10% with the completion of the RACQI acquisition.

Insurance Australia Group Ltd (ASX:IAG) has reported its full-year results for FY25, with net profit after tax (NPAT) and insurance profit both rising year-on-year. The company also announced higher dividends and provided guidance for FY26, including the anticipated impact of upcoming acquisitions.

FY25 Financial Results

For the year ended 30 June 2025, IAG reported NPAT of AUD 1,359 million, up 51.3% from AUD 898 million in FY24. The increase was supported by an 8.0% rise in net earned premiums to AUD 9.98 billion, a higher insurance profit of AUD 1,743 million (FY24: AUD 1,438 million), an increase in investment income on shareholder funds to AUD 403 million (FY24: AUD 286 million), and pre-tax releases of AUD 330 million from the Business Interruption provision.

The reported insurance profit margin was 17.5%, compared to 15.6% in FY24. Natural perils costs totalled AUD 1,088 million, which was AUD 195 million below allowance. The company stated that results were supported by a balanced mix of earnings across divisions.

Gross written premium (GWP) rose 4.3% year-on-year to AUD 17.11 billion. Over the period, IAG paid AUD 10.2 billion in claims to assist customers with recovery from losses. The Common Equity Tier 1 (CET1) capital position was AUD 3.94 billion, an increase of 17% from the prior year.

Dividend Increase

The IAG Board declared a final dividend of 19.0 cents per share, 40% franked, compared to 17.0 cents per share in FY24. This brought the full-year dividend to 31.0 cents per share, up from 27.0 cents per share in the previous year. At the current share price of AUD 8.65, the partly franked dividend yield is approximately 3.6% on a trailing and pending basis.

The stock will trade ex-dividend on 21 August 2025, with payment scheduled for 18 September 2025.

FY26 Guidance and Acquisitions

For FY26, IAG has forecast GWP growth in the low-to-mid single digit range. This outlook incorporates premium increases to address moderating claims inflation and direct customer growth. At the divisional level, RIA growth is expected in the mid-single digit range, IIA growth in the low-single digit range, and New Zealand GWP is forecast to remain relatively flat.

Reported insurance profit is projected between AUD 1,450 million and AUD 1,650 million, corresponding to a reported insurance margin of 14.0% to 16.0%. The forecast assumes a natural peril allowance of AUD 1,316 million and no significant prior period reserve changes or macroeconomic impacts.

The FY26 guidance does not include contributions from the RACQI and RACI acquisitions. The RACQI acquisition is scheduled to complete on 1 September 2025 and is expected to lift GWP growth to approximately 10%.

IAG stated that the FY26 guidance and acquisitions align with its target to deliver a 15% reported insurance margin and a 15% reported return on equity on a through-the-cycle basis.