IAG CEO Nick Hawkins says the business has a “good handle” on countering the inflation challenge as the insurer today provided more details of its results for the 2021/22 financial year, after releasing preliminary figures last month.

The insurer achieved a net profit of $347 million, recovering from a year-earlier loss of $427 million, and gross written premium (GWP) grew 5.7% to $13.3 billion, in line with the numbers flagged in last month’s initial release.

Cash earnings dropped 71.5% to $213 million and the insurance profit declined 41.8% to $586 million but Mr Hawkins says the business is experiencing “really positive underlying momentum” despite the weaker numbers.

“Our FY22 financial results reflect the quality of our underlying business as we build a stronger and more resilient IAG,” Mr Hawkins said. “We had strong GWP growth, and the performance of our business was steady despite the challenging external environment.”

While IAG is “experiencing inflation” throughout the business, he says “we are managing and we are on top of that”.

“We're sort of seeing inflation flow through our company at that sort of mid to high single digits everywhere, you know, in various forms,” Mr Hawkins said.

“The flip of that is we're also seeing rates flow through the portfolios.

“We’ve got a good handle on it. We’re repricing… there night be some small timing differences but I think we can manage that.”

In the full-year results released today, IAG provided details on how the three key divisions fared in the 2021/22 financial year.

Direct Insurance Australia, the largest division, grew its GWP 4.6% to $6 billion and added 100,000 new customers in the last 12 months.

“Retention rates are high and we got comfortable with inflation levels in our portfolio,” Group Executive Direct Insurance Julie Batch said.

Intermediated Insurance Australia (IIA) reported an insurance loss of $103 million, reflecting a higher natural peril cost and prior year reserve strengthening of $151 million, driven by the commercial liability class.

But IAG says the division remains on track to achieve a $250 million profit by FY24 as targeted, despite the loss.

Mr Hawkins says Jarrod Hill, who heads IIA, has spent time “strengthening” underwriting and building up the division.

“We can see a little bit of momentum there,” Mr Hawkins said. “Our premiums are up on average across the entire business unit 9% over the last 12 months.”

The New Zealand division achieved GWP growth of 7% to $NZ3.2 billion ($2.9 billion), driven by rate increases across all key portfolios.

“Retention rates remained strong and improved on prior year levels across all key commercial lines portfolios,” IAG said.

For the current FY23 year, IAG is expecting GWP growth in the “mid-to-high single digit" range, primarily driven by rates adjustments to cover claims inflation, higher reinsurance costs and an increased natural peril allowance.

The business is projecting insurance margin guidance of 14% to 16% which assumes, among other things, continued momentum in the underlying performance of its operations.