IAG has raised its reported margin guidance for the past financial year after a better than expected claims experience on long-tail classes.

The company says a preliminary review suggests reserve releases will amount to at least 5% of net earned premium (NEP), compared with previously held guidance of at least 2%.

As a result, IAG has raised its reported margin guidance to 13.5-15.5%. Previously, it forecast 10.5-12.5%.

“The reserve releases predominantly relate to Australian long-tail classes, comprising compulsory third party, liability, professional risks and workers’ compensation,” it says.

“The higher indicated outcome, compared to previous expectations, reflects further favourable experience against underlying assumptions for claim size and inflation.”

IAG’s long-term expectation is for reserve releases of about 1% of NEP in any given year.

The company will report its financial results on August 23.