IAG swings to net loss in fiscal H1'21 as COVID-19 expense hits profitability

Insurance Australia Group Ltd. reported a net loss attributable to shareholders of A$460 million for the first half of fiscal 2021, compared with a net profit of A$283 million in the prior-year period.

The results included posttax provisions of A$805 million for potential COVID-19-related business interruption claims, A$54 million for customer refunds and A$48 million related to the Swann class-action lawsuit settlement.

Pretax insurance profit climbed to A$667 million from A$501 million. The company attributed the 33.1% year-over-year improvement to favorable net COVID-19 effects, lower net natural perils loss experience and a positive impact from the narrowing of credit spreads and a turnaround in contribution from investment income on shareholders' funds.

The company booked underwriting profit for the fiscal half ended Dec. 31, 2020, of A$566 million, compared with A$420 million in the prior-year period.

Gross written premium for the fiscal first half increased to A$6.19 billion from A$5.96 billion, primarily due to rate increases in the company's commercial and home insurance businesses in Australia and across all key classes in New Zealand. Net earned premium for the period was A$3.72 billion, compared with A$3.71 billion in the fiscal first half of 2020.

In addition, the company's board approved an unfranked interim dividend of 7 Australian cents, for the period, compared with a 70% franked dividend of 10 cents for the period ending Dec. 31, 2019. The dividend will be paid March 30 to shareholders of record as of Feb. 17.