Insurance Australia Group Ltd (ASX: IAG) shares fell 2% in early trading to an intraday low of $7.44, while the S&P/ASX 200 Index (ASX: XJO) slipped 0.21% to 8,518.9 points.
But don't worry, there's a simple explanation for why the ASX insurance juggernaut is in the red today.
Image source: Getty Images
Why are IAG shares falling on Tuesday?
It's ex-dividend day. Simple as that.
We commonly see ASX stocks lose value on their ex-dividend days.
Going ex-dividend means IAG shares are no longer trading with the 1H FY25 dividend attached. So, they're worth less to new investors from today.
IAG released its FY25 half-year results last Thursday.
The insurer revealed a staggering 91% surge in net profit after tax (NPAT) to $778 million.
IAG also announced an interim dividend of 12 cents per share, with 60% franking.
This is 20% higher than last year's interim dividend and will be paid on 7 March.
Investors who own IAG shares and wish to take advantage of the automatic dividend reinvestment plan (DRP) have until 5pm AEST on Thursday to submit their DRP elections.
Now, let's recap the rest of IAG's half-year results.
IAG profit spikes as company collects $8 billion in premiums
For the six months ended 31 December, IAG reported a 6% increase in gross written premiums (GWP) to $8,426 million.
There was also a 9.7% increase in net earned premiums to $4,930 million.
IAG's pre-tax insurance profit was $957 million, up 56%, with a reported margin of 19.4%.
Natural perils came in $215 million below the allowance because of favourable weather during the period.
IAG said other contributing factors to its big NPAT included the $140 million post-tax release of the COVID Business Interruption provision and strong investment markets.
IAG's managing director and CEO, Nick Hawkins, commented:
These more favourable periods allow us to build up reserves to pay future claims when we need to.
IAG expects a full-year FY25 reported insurance profit of between $1,400 million and $1,600 million. It expects a reported insurance margin at the high end of the 13.5% to 15.5% range.
But it flagged GWP growth at the lower end of its forecast mid to high single-digit range.
IAG said this was partly due to falling reinsurance costs, which meant it would pass on these savings to customers in the form of lower premiums.
Dutton puts insurers 'on notice'
Rising insurance premiums have been a hot topic during the cost of living crisis.
Over the weekend, Federal Opposition Leader Peter Dutton highlighted the issue and spoke of the need for insurers to make premiums affordable for homeowners and small businesses.
According to news.com.au, Dutton said:
I just put the insurance sector on notice right now that when we win the election, I expect them to bring down insurance premiums significantly by the time we form a government.
And if they don't, then I will deal with the industry afterwards because we can't have people who can't afford to insure against public liability.
We can't have businesses who can't conduct their tourism operations because they can't get insurance.
And we can't have people going without car insurance because their premiums have gone up by 20 or 30 or 40 per cent. It's unacceptable.
