IAG Delivers a Strong Fiscal 2013 Result at the Top End of Guidance

Insurance Australia Group reported fiscal 2013 cash net profit after tax of AUD 1,156 million, up 98% on fiscal 2012. Reported insurance margin came in at an impressive 17.2% versus 11.5% in fiscal 2012, at the top end of guidance. After several tough years, everything that could go right did. The huge profit increase reflects double-digit gross written premium growth, natural peril claims below allowance, higher-than-expected reserve releases, and a positive credit spread impact. The 13 cent-per-share increase in the final dividend, to 25 cents fully franked, was a feature. Fiscal 2014 guidance is for an insurance margin range of 12.5% to 14.5%. In our opinion, near- to medium-term profitability will likely be more in line with longer-term trends rather than a repeat of 2013's stellar result.