IAG swings to $460 million loss after preparing for COVID-related claims

“However, following the Supreme Court of NSW Court of Appeal decision on the COVID-19 business interruption test case, we conducted a detailed review to determine our potential exposure, and took action to strengthen our balance sheet,” he said.

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Following the court loss, IAG immediately launched a $750 million capital raising and put aside $865 million to prepare for claims from business owners seeking to recover their losses from the lockdowns.

The insurer, which owns brands such as NRMA and Swann Insurance, said premiums had grown by 3.8 per cent in the December half, mostly in commercial and home insurance businesses in Australia and New Zealand. Its underlying insurance margin – the difference between claims paid out and premiums received – was 15.9 per cent, a 1 per cent improvement on the corresponding period last year.

Mr Hawkins said the group had benefited from lower-than-expected natural perils and motor vehicle claims, citing the company’s premium and margin growth as signs of its strong fundamentals.

“We have seen a strong underlying performance across our businesses over the last six months and we will build on this performance as we sharpen our focus to deliver a stronger, more resilient IAG,” he said.