2025 Insurance Australia Group – Interim Results Summary
Overall Tone
Insurance Australia Group’s interim report presents a strong but mixed outlook, with significant profit growth and improved margins. However, a slowdown in gross written premium (GWP) growth, a lower-than-expected dividend, and cautious forward guidance have led to a negative market reaction despite improved profitability.
Financial Performance
| Metric | 1H25 | 1H24 | % Change |
|---|---|---|---|
| Revenue | $9.04bn | $8.69bn | ▲ 4.0% |
| Net Profit After Tax (NPAT) | $778m | $407m | ▲ 91.2% |
| Insurance Profit | $957m | $614m | ▲ 55.9% |
| Reported Insurance Margin | 19.4% | 13.7% | ▲ 5.7pp |
| Underlying Insurance Margin | 15.1% | 13.7% | ▲ 1.4pp |
| Operating Cash Flow | $324m | $805m | ▼ 59.7% |
| Earnings Per Share (EPS) | 32.88c | 16.77c | ▲ 96.1% |
| Dividend Per Share | 12.0c (60% franked) | 10.0c (40% franked) | ▲ 20.0% |
Key Takeaways
- Profitability Up, But Revenue Growth Slowing: NPAT nearly doubled, and margins improved, but GWP growth slowed to 6.0%, compared to 12.5% in the prior corresponding period.
- Dividend Below Expectations: The 12.0c dividend was lower than analyst expectations of 13.9c, contributing to investor disappointment.
- Premium Growth Concerns: Management indicated GWP growth is likely to be at the lower end of its mid-to-high single-digit forecast range.
- Cautious Forward Outlook: Slower premium growth and continued investment in digital transformation and claims handling may weigh on future earnings.
Outlook & Guidance
- FY25 NPAT Guidance: Expected in the range of $1.4bn – $1.6bn.
- Reported Insurance Margin: 13.5% – 15.5%, expected toward the upper end.
- Premium Growth: Likely to be at the lower end of previous expectations.
- Business Interruption Provision Release: $140m post-tax release, not expected to be recurring.
Market Positioning
As of February 12, 2025, Insurance Australia Group Limited (ASX: IAG) is trading at $8.92 per share. The current price is about 3.1% below its 52-week high of $9.21, reached on January 31, 2025.
Market Expectations
- The results delivered strong profit growth but fell short on revenue expansion and dividends, leading to a significant share price decline.
- Investors appear concerned that growth in premium income is slowing, which may impact future revenue and earnings potential.
Final Thought: Quick Take: H1FY25 ASX:IAG
While IAG posted strong profitability and margin expansion, the market’s focus on slowing premium growth and cautious guidance has overshadowed the result. Investors will likely watch how management balances growth, cost control, and capital returns in the coming quarters.
“This information is provided purely for educational purposes. It takes no account of an individual’s personal financial circumstances and hence can in no way constitute financial advice. The above data may be subject to errors or inconsistencies for which the author takes no liability. It is imperative that all investors do their own research or if they need advice, seek it from a qualified financial adviser.”
Quick Take: H1FY25 ASX:IAG