IAG has returned to profitability after a loss the previous year, but will be returning a smaller dividend to shareholders.
The insurance giant on Friday reported a $347 million net profit after tax (NPAT) in the 12 months to June 30, after a $427 million loss the year before, beating consensus estimates of a $248 million profit.
The NRMA Insurance and CGU Insurance brand owner said its cash earnings were up 71.5 per cent to $747 million, with gross written premiums up 5.7 per cent to $13.3 billion.
The company's profit margin on premiums dropped to 7.4 per cent in the 12 months to June 30, from 13.5 per cent the year before, in part because natural perils payouts cost the insurer $1.12 billion versus its budget of $765 million.
"Climate change and its impact on our customers and communities is one of the most important challenges we face as a business," chief executive Nick Hawkins said.
"FY22 was one of the most significant peril years we have experienced, with multiple events in Australia and New Zealand," including a severe hailstorm in Adelaide in October, thunderstorms in NSW and Queensland that much, the Queensland and NSW floods in February and July 2021 flooding in Westport, New Zealand.
IAG is raising its natural perils allowance this year to $909 million.
At 10.49am AEST, IAG shares were up 1.3 per cent to $4.67.
IAG declared a final dividend of five cents to per share, 70 per cent franked, for total dividend this year of 11c per share. In fiscal 2021 it paid a final dividend of 13c per share and a total dividend of 20c.
