IAG FY26 half-year result: profit down, revenue up, dividend steady

The Insurance Australia Group Ltd (ASX: IAG) share price is in focus today after the insurance giant posted a 23% jump in revenue to $11.14 billion, while net profit after tax (NPAT) fell 35.1% to $505 million for the half year ended 31 December 2025.

What did Insurance Australia Group report?

• Revenue: $11.14 billion, up 23.3% from 1H25
• Net profit after tax (NPAT): $505 million, down 35.1%
• Gross written premium (GWP): $8.93 billion, up 6.0%
• Reported insurance margin: 13.5%, down from 19.4%
• Interim dividend: 12 cents per share, franked to 25%
• Return on equity (ROE): 13.8%, down from 22.7%

What else do investors need to know?

The result was impacted by severe weather events, particularly in the newly acquired RACQ Insurance Limited (RACQI) portfolio, contributing to higher than expected claim costs. Excluding RACQI, insurance profit was stronger, and the reported margin was 17.7%.

IAG completed its $855 million acquisition of 90% of RACQI in September 2025. The half-year results include four months of contribution from this business. IAG also announced an on-market share buy-back of up to $200 million, reflecting its strong capital position.

The board determined to pay an interim dividend of 12 cents per share, payable on 13 March 2026, with a 25% franking rate. The dividend reinvestment plan will apply.

What’s next for Insurance Australia Group?

IAG is maintaining its FY26 profit guidance, expecting high single-digit GWP growth and an insurance profit between $1,550 million and $1,750 million. The integration of the RACQI business is expected to strengthen IAG’s Queensland footprint, with further improvements in the reported insurance margin anticipated as RACQI is fully integrated into IAG’s reinsurance program.

The company has announced a buy-back of up to $200 million in shares, and continues to invest in technology and claims transformation to help offset inflationary pressures and improve efficiency.

Insurance Australia Group share price snapshot

Over the pat 12 months, IAG shares have declined 18%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 6% over the same period.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.