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The news sent the company’s shares up 4% to A$4.74, their highest in more than two months.
Adverse weather conditions in Australia have triggered a wave of claims, prompting many insurers to bump up their cost forecasts to cover natural perils claims for the full year.
Earlier this week, peer Suncorp reported a 29% drop in first-half cash earnings.
IAG (LON:ICAG), Australia’s top general insurer, said costs related to net natural perils claims were A$681 million ($487.94 million) for the half year, nearly A$299 million above the allowance it had set aside for the period.
The company posted cash earnings of A$176 million for the six months ended Dec. 31, compared with A$462 million a year ago, but declared a dividend of 6 Australian cents per share.
Citi had estimated cash earnings of A$129 million and a dividend of 5 Australian cents.
($1 = 1.3957 Australian dollars)