By Alice Uribe
SYDNEY--Insurance Australia Group Ltd. said it expects to report a 427 million Australian dollar (US$315.2 million) loss in the 2021 fiscal year, as it reintroduced guidance for the coming 12 months.
IAG said the forecast loss for the 12 months through June compares to a net profit of A$435 million in the previous year.
The Australian insurer on Friday also said a preliminary assessment of its cash earnings--a measure tracked by analysts that excludes certain costs and one-time items--for fiscal 2021 is A$747 million, up from A$279 million the previous year.
"Our underlying financial results for the year are sound and within expectations," said Chief Executive Nick Hawkins. "However, we have had challenges with issues that have been identified and provisioned for in our preliminary results."
Still, IAG restarted guidance for fiscal 2022, citing confidence in the business and its outlook.
It expects "low single-digit" gross written premium growth in fiscal 2022, and a reported insurance margin of 13.5-15.5%.
The gross written premium guidance reflects modest growth in customer numbers in Direct Insurance Australia, ongoing rate increases across personal and commercial lines and further portfolio remediation.
"I'm confident that, with the steps we have in place, we will deliver business and customer growth," said Mr. Hawkins. "Our direct insurance businesses in Australia and New Zealand are growing and we expect this growth to continue as we build out our premium brands across Australia."
For fiscal 2021, IAG said its preliminary assessment pointed to gross written premium growth of 3.8%, including a second-half growth rate of 3.9% that was negligibly impacted by Covid-19. The insurer signaled an underlying insurance margin of 14.7%, compared with 16.0% in fiscal 2020.
"The predominant impact from the Covid-19 pandemic occurred in 1H 2021, where it is estimated to have had a modestly negative effect on IAG's gross written premium and a net positive impact on its insurance profit. No material overall impact was experienced in 2H 2021," said IAG.
IAG expects to record a pretax net corporate expense of A$1.51 billion in fiscal 2021, which includes a A$1.15 billion business interruption insurance provision.
It said this figure was reached after "extensive scenario testing" of the adequacy of the provision in the second half of fiscal 2021.
Mr. Hawkins became CEO on November 2, succeeding Peter Harmer whose retirement was announced in April last year.
Write to Alice Uribe at [email protected]