The company's shares rose 4% to A$4.74, the highest level in over two months.
Many insurers have increased their cost forecasts for natural perils claims in Australia due to adverse weather conditions.
Suncorp, a peer, reported earlier this week a 29% decrease in cash earnings for the first half.
IAG (LON ICAG), Australia’s largest general insurer, reported that net natural perils costs amounted to A$681million ($487.94million) for the half-year, almost A$299million more than the allowance it had allocated for the period.
The company reported cash earnings of A$176 millions for the six-months ended Dec. 31, compared to A$462,000,000 a year ago. However, it declared a dividend of 6 Australian Cents per share.
Citi estimated cash earnings of A$129 Million and a dividend in the range of 5 Australian cents.
($1 = 1.3957 Australian dollars)