IAG reported net profit after tax of US$505 million in the first half of fiscal 2026, down from US$778 million in the same period in 2025.
Results were impacted by a $174 million one-off RACQI impact arising from severe seasonal weather following the acquisition and before the business was integrated into IAG’s comprehensive reinsurance program in January 2026.
In contrast, growth in the previous period was driven by favorable risk experience of $250 million and BI provision releases of $200 million.
IAG reported insurance profits of $724 million for the first half of fiscal 2026, including $66 million in RACQI risk costs and the release of reserves in the previous year, down from $957 million in the same period in 2025.
However, underlying insurance profit in the first half of fiscal 2026 was US$804 million, up from US$747 million in the same period in 2025, equivalent to an underlying insurance profit margin of 15.1%.
IAG said this reflected improvements in underlying claims and expense ratios, partially offset by lower investment yields on technology reserves.
Excluding the impact of the one-time RACQI risk, the company’s underlying insurance margin improved to 16.3% in the period, and the reported insurance margin was 17.7%.
Reported gross premiums increased by 6% in the first half of FY26, including four months of contributions from RACQI, with the Australia and New Zealand retail business delivering underlying growth of approximately 4% and maintaining strong margins.
Nick Hawkins, managing director and chief executive of IAG, commented: “Today’s results demonstrate the work we have done to achieve a more stable earnings profile, maintain strong underlying margins and ensure Australia and New Zealand are well protected through our comprehensive reinsurance program, which now includes RACQI.
“Our reinsurance arrangements are a core component of our capital platform and reduce earnings volatility for customers and shareholders. These arrangements, combined with an efficient capital structure, support our business and enable us to fund future growth.
“At the same time, we continue to transform our technology. We accelerated the delivery of our commercial enterprise platform in the middle business, improved the way we underwrite and distribute insurance, and we have now migrated more than 6 million policies to our retail enterprise platform.”
Hawkins continued: “A key achievement was the completion of the acquisition of RACQI in September, launching a valuable long-term alliance.
“Consolidation of the RACQI portfolio is underway and its members are benefiting from our financial stability, technology and global reinsurance arrangements.
“Queensland was affected by 17 separate weather events between September 1 and December 31, causing total losses to RACQI in excess of $800 million. Net risk allowance for the period was $72 million.
“With effect from January 1, RACQI is fully integrated into IAG’s global reinsurance arrangements, strengthening our ability to deal with future extreme weather and delivering the transaction’s targeted reinsurance cost synergies.”
With all this in mind, IAG maintained its fiscal 2026 insurance profit guidance range of $1.55 billion to $1.75 billion, which is in line with its goals of achieving a reported insurance margin of 15% and a reported ROE of 15% on a “through-cycle” basis.
Despite absorbing the one-off impact of RACQI in the first half of fiscal 2026, the company said it expected reported insurance profits in fiscal 2026 to be around the lower end of the reported profit range.
Assuming net natural catastrophe costs in fiscal 2026 of $1.617 billion, the corresponding reported insurance margin range is 14% to 16%.
“Maintaining our reported profit and margin range reflects the strength and resilience of our business and is further evidence of our momentum,” Hawkins concluded.