IAG Posts Cash Earnings Growth Driven by Pricing Increases and Fewer Claims

Insurance Australia Group reported a 22% increase in first-half fiscal 2021 cash NPAT to AUD 462 million. The result was stronger than we expected but largely due to items that are unlikely to repeat. These included lower motor claims as customers drove less during COVID-19 lockdowns, higher investment income on policyholder and shareholder funds, and natural peril costs below allowances. These items have no bearing on our long-term forecasts. Our fiscal 2021 profit forecast is increased 8% to AUD 890 million, but this alone is not material enough to move our AUD 6 fair value estimate.