IAG has reported net profit after tax for H1 of the 2026 financial year of AU$505m, down from AU$778m in the same period of 2025.
The result was impacted by the one-off RACQI impact of AU$174m from severe seasonal weather immediately following the acquisition, and before the business was integrated into IAG’s comprehensive reinsurance program in January 2026.
In comparison, the prior period was boosted by AU$250m favourable perils experience and a AU$200m BI provision release.
IAG’s reported insurance profit in H1 of FY26 was AU$724m, which included the RACQI perils costs and a $66m release of prior year reserves, down from AU$957m in the same period of 2025.
However, underlying insurance profit in H1 of FY26 was AU$804m, up from AU$747m in the same period of 2025, equating to an underlying insurance margin of 15.1%.
IAG said this reflects an improvement in the underlying claims ratio and expense ratio, partially offset by a lower investment yield on technical reserves.
Excluding the one-off RACQI perils impact, the firm’s underlying insurance margin for the period improved to 16.3%, and the reported insurance margin was 17.7%.
Reported gross written premiums rose 6% to AU$8.929bn in H1 FY26, including a four-month contribution from RACQI, with Australian and New Zealand retail operations generating around 4% underlying growth and maintaining strong margins. Net earned premium was also up 8.5% to $5.348bn.
IAG Managing Director and CEO, Nick Hawkins, commented, “Today’s results show the work we’ve done to deliver a more stable earnings profile, maintain a strong underlying margin, and ensure Australia and New Zealand are well protected through our comprehensive reinsurance program, which now includes RACQI.
“Our reinsurance arrangements are a core component of our capital platform, reducing earnings volatility for customers and shareholders. These arrangements sit alongside an efficient capital structure that supports our businesses and enables us to fund future growth.
“At the same time, we’ve continued our technology transformation. We’ve accelerated delivery of the Commercial Enterprise Platform in our Intermediated business, improving how we underwrite and distribute insurance, and we have now migrated over six million policies onto our Retail Enterprise Platform.”
Hawkins continued, “A key achievement was the completion of the RACQI acquisition on September, commencing a valuable long-term alliance.
“Integration of the RACQI portfolio is underway and its members are benefiting from our financial stability, technology and global reinsurance arrangements.
“Between 1 September and 31 December, Queensland was impacted by 17 separate weather events, with a gross cost to RACQI of more than AU$800m. The net perils allowance for the period was AU$72m.
“From 1 January, RACQI was fully integrated into IAG’s global reinsurance arrangements, strengthening our resilience against future extreme weather and delivering the transaction’s targeted reinsurance cost synergies.”
With all this in mind, IAG has maintained its FY26 insurance profit guidance range of AU$1.55bn to AU$1.75bn, which aligns with its targets to deliver a 15% reported insurance margin and a reported ROE of 15% on a ‘through the cycle’ basis.
Despite absorbing the one-off RACQI impact in H1 of FY26, the firm said it also expects its FY26 reported insurance profit to be around the bottom end of the reported profit range.
This assumes FY26 net natural peril costs of $1.617bn and corresponds with a reported insurance margin range of 14% to 16%.
“Maintaining our reported profit and margin ranges reflects the strength and resilience of our businesses, and further demonstrates our momentum,” Hawkins concluded.
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