IAG has raised its annual profit outlook by $100 million, driven by the addition of RACQ Insurance to the business.

It expects reported insurance profit of $1.55 billion-$1.75 billion for the financial year, compared with a $1.45 billion-$1.65 billion range given to investors in August, before the deal with Queensland motoring club RACQ closed on September 1.

Gross written premium growth has also been revised – projected to increase 10% compared with a previous low to mid single digit range.

The 2025-26 guidance equates to a reported insurance margin of 14%-16% and is based on a natural peril allowance of $1.47 billion, which has been adjusted to include RACQ Insurance. The insurer previously set a peril allowance of $1.36 billion.

“What we’ve done ... with financial guidance, we’ve increased that by about $100 million, which really reflects the first 10 months of that acquisition,” IAG CEO and MD Nick Hawkins told this morning’s annual general meeting.

He says the newly acquired business is “performing slightly ahead of our expectations”.

The $855 million deal includes a 25-year distribution agreement with RACQ.

Mr Hawkins says the RACQ Insurance investment “strengthens [IAG’s] position in the Queensland market”.

On the start to the financial year, he said: “The underlying business continues the positive momentum from FY25 and is tracking in line with our expectations.

“Australian and New Zealand commercial and retail insurance markets are competitive, but our retention rates remain strong and we continue to see some positive customer growth.

“Profitability has been strong as we benefited from a relatively benign first-quarter natural perils experience.

“We’ve also had the benefit of strong investment markets, with our high-quality fixed-income portfolio providing positive active returns, with no signs of any underlying stress in any of our investment assets.”

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