Australia's IAG cash earnings plummet 62% due to natural hazard claims rising

Insurance Australia Group beat profit estimates and dividends on Friday for the first quarter, even though higher claims related to natural disasters such as severe storms or hail last October led to a 62% decrease in cash earnings.

Australia's IAG cash earnings plummet 62% due to natural hazard claims rising

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)

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