IAG has increased its annual insurance profit forecast to as much as $1.8 billion after natural catastrophe expenses came in well below what was budgeted.

Natural peril costs for the year to June 30 totalled about $1.08 billion – roughly $200 million lower than the insurer’s allowance.

The estimate includes about $100 million from more than 4000 claims lodged after May floods in the NSW Mid North Coast and Hunter regions.

“Based on the natural perils cost favourability, IAG’s reported insurance profit guidance range increases,” a statement to the Australian Securities Exchange said.  

IAG now expects a profit of $1.6-$1.8 billion, up from an earlier prediction of $1.4-$1.6 billion.  

The reported insurance margin is now forecast to be near 17.5%, up from about 15.5%.

IAG says gross written premium growth is solid in direct home and motor segments in Australia. GWP for fiscal 2025 is forecast to be up at least 4%, with 8% gains in the retail insurance direct business based on “positive customer and unit momentum”.  

IAG New Zealand is expected to report broadly flat GWP as the commercial business experiences softer market conditions.  

The insurer will announce its results on August 13.