IAG announces FY22 results
Our FY22 financial results reflect the quality of our underlying business as we build a stronger and more resilient IAG. We had strong GWP growth, and the performance of our business was steady despite the challenging external environment.
GWP grew 5.7% (FY21: 3.8%), and while the growth predominantly reflected rate increases to offset inflationary pressures in the supply chain and natural perils, retention rates improved over the year.
Our reported insurance margin of 7.4% was below our expectations due to higher natural perils cost of $1,119 million versus our allowance of $765 million, a $45 million negative credit spread impact and a $172 million strengthening of prior year reserves. The underlying insurance margin was 14.6% (FY21:14.7%).
Net profit after tax was $347 million (FY21: $427 million loss), reflecting the performance of the underlying core business and a $200 million pre-tax release from the business interruption provision.
GWP growth in the Direct Insurance Australia business was 4.6%, accelerating in the second half to 5.8%, while its underlying margin remained strong at 20.5%.
We continue to see good signs from our Intermediated Insurance Australia business with GWP growth at 6.0% (FY21:5.6%) while its underlying insurance margin was 5.0% (FY21: 3.9%).
Our New Zealand business performed well with 7.0% NZ currency GWP growth (FY21: 2.8%) reflecting growth across its commercial insurance and direct brands with a volume increase in commercial motor.
Executing on the strategy
We are on track to deliver against our strategic priorities. Our customer numbers in the NRMA Insurance business grew as we rolled out the brand in Western Australia and South Australia and brought customers over from our intermediated brands.
Our New Zealand business saw a solid increase in GWP over the year, and our Intermediated business has been reset and positioned for growth under a new leadership team with deep experience and expertise.
The completion of a number of delivery milestones this year has simplified the processes and technologies that underpin our business, improving enterprise efficiency and the customer experience.
We are more than halfway through the build of our Enterprise Platform in our personal lines business, adding to our now consolidated claims system. Our customer, policy, pricing and claims systems are fully operational for NRMA customers in Western Australia, South Australia and the Northern Territory and we’ve accelerated the digital transformation of our customer experience, making it easier for customers, brokers and partners to do business with us.
While it is early days, we’re pleased with the progress against our aim to deliver $400 million of value through claims and supply chain effectiveness. We launched the Online Motor Claims tracker in May, which now has more than 170,000 customer interactions. Our online digital claims lodgements have increased, and the benefits are starting to flow through from our motor repair model program.
Climate change & natural perils
Climate change and its impact on our customers and communities is one of the most important challenges we face as a business. FY22 was one of the most significant peril years we have experienced, with multiple events in Australia and New Zealand, including the February 22 floods in northern New South Wales and along the east coast. Across Australia and New Zealand, claim lodgements relating to extreme weather events in FY22, more than doubled over the prior year.
To deal with the increasing severity and frequency of extreme weather events, we have put in place our largest to date perils allowance, increasing it by 19% to $909 million for FY23.
Our strong view remains that we need a coordinated national approach from governments, businesses, and communities to build more resilient communities and reduce the impact of natural disasters. Using our expertise and knowledge of the changing environment, we will continue to play our part in protecting people and communities.
IAG Managing Director and
Chief Executive Officer