Insurance Australia Group (ASX: IAG) has upped its insurance margin expectations for fiscal year 2013, according to a report released yesterday. From the corporation's previous range of 12.5% to 14.5%, IAG has moved its mark up to between 16.8% and 17.2%. Taking the averages of the two ranges, that's equivalent to a 25.9% increase.
IAG Managing Director and CEO Mike Wilkins pointed to natural peril, reserve release, and credit spread outcomes as the major movers behind this year's positive push. "Compared to our previously held assumptions, these factors have caused the Group's insurance margin to exceed our earlier guidance," said Wilkins in a statement. "Meanwhile, the underlying performance of the Group has remained strong over the course of the financial year."
These factors alone aren't the only boost IAG has seen. The company now expects its gross written premium growth to clock in at 11.8% (higher than its previous 9.5% to 11.5% guidance), due primarily to favourable exchange rates. In absolute terms, expected net earned premium for fiscal 2013 is around $8.3 billion.
As a final nod to shareholders, IAG reconfirmed its intention to distribute a dividend equal to 50% to 70% of the corporation's cash earnings.
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Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.
