By Nausheen Thusoo
(Reuters) -Insurance Australia Group (IAG (LON:ICAG)) said on Monday its cash earnings for fiscal 2023 more than doubled, buoyed by a rise in premiums in Australia and New Zealand but missed market expectations, sending its shares down 1.2% in early trade.
The country's top general insurer posted cash earnings of A$452 million ($290.00 million) for the year ended June 30, up from A$213 million a year ago but missing analysts' average estimate of A$656.7 million, according to Refinitiv Eikon data.
IAG also declared a final dividend of 9 Australian cents per share, up from 5 cents per share a year ago.
Citi analysts said the result is a "little disappointing" and the dividend is also lower than consensus.
IAG added that it expected lower double-digit growth in gross written premiums (GWP) for fiscal 2024 on a likely modest volume growth and an increase in customer numbers due to the company's desire to cover claims inflation, higher reinsurance costs and an increased natural peril allowance.
GWP rose 10.6% to A$14.73 billion ($9.4 billion) for fiscal 2023, matching the Refinitiv estimate.
IAG's topline guidance (for GWP) looks "solid" for FY24 and is ahead of consensus of 8%-9%, UBS analysts wrote in a note.
"We enter FY24 with positive momentum across the company and confidence that the strategy we have in place will deliver long-term benefits for our shareholders and the customers we serve," CEO Nick Hawkins (NASDAQ:HWKN) said.
Australian insurers have seen their profits soar this year, as they incur higher premiums in an elevated interest-rate environment, while also benefiting from a rebound in investment income.
The company also expects an insurance margin in fiscal 2024 of 13.5%–15.5%, higher than the 12.6% margin last year.
However, elevated inflation in home and motor claims costs, as well as the higher natural perils allowance, impacted the underlying insurance margin, IAG said in a statement.
($1 = 1.5586 Australian dollars)