One of the high quality dividend paying stocks, although delivered on profits fell short of expectations on dividend, which led to its fall.
Insurance Australia Group (ASX: IAG)
Insurance Australia Group (ASX: IAG) has made significant strides in building customer loyalty, a key factor driving its financial growth. The company’s focus on providing proactive support and paying out over $5.2 billion in claims to over 10,000 customers facing financial hardship has strengthened its position in a competitive market. This approach not only fosters trust but also helps retain existing customers while attracting new ones, contributing to increased market share and improved financial performance.
For the half-year ending December 31, 2024, IAG reported impressive financial results, reflecting the positive impact of its customer-centric approach. The company saw a substantial 91.2% increase in net profit after tax (NPAT), reaching $778 million, compared to $407 million in 1H24. This was driven by a 55.9% increase in insurance profit, totaling $957 million, underscoring IAG's effective claims management, underwriting, and operational efficiency.
Gross Written Premium (GWP) grew by 6.0% to $8,426 million, with strong contributions from the Intermediated Insurance Australia (IIA) segment, which saw a 10.3% rise in premiums. Retail Insurance Australia (RIA) also performed well, posting GWP growth of 6.1%, while New Zealand showed a more modest 1.2% growth due to regional challenges. Net earned premium (NEP) rose by 9.7%, reaching $4,930 million, highlighting the company’s effective premium conversion and solid pricing strategies.
The company’s strong cash flow generation was reflected in a 20% increase in its interim dividend to 12 cents per share. IAG's strong capital position, with a Common Equity Tier 1 (CET1) ratio of 1.42 times the Prescribed Capital Amount (PCA), ensures stability and flexibility for continued growth.
Looking ahead to FY25, IAG, one of the quality dividend stocks, remains optimistic, with expected insurance profits between $1,400 million and $1,600 million. GWP growth is forecast to be in the low-to-mid single-digit range, signaling steady progress. The company’s strategic partnership with RACQ is expected to further strengthen its market presence and enhance its retail insurance offerings, paving the way for future growth. With its strong capital base and a focus on customer loyalty, IAG is well-positioned for continued success in FY25.
Source: Company’s Report
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