The numbers look very good y/y and vs. consensus; the stock should rally at the open (cet. par.)
Net income of $832mn vs. $657mn consensus vs. $347mn in pcp.
Cash earnings +112% y/y to $452mn.
Standout was the significantly higher yield on technical reserves held as cash and short-term fixed-interest instruments, often low or negative in recent years; this helped to drive overall earnings. (see below); IAG is a net beneficiary of rising interest rates.
One negative is a 9.1% y/y decline in underlying insurance profit to $1.0bn (from $1.15bn). This was attributable (according to AR p18) 120bps impact from an increase in natural perils allowance and 250bps increase in claims ratio due to inflationary impact in the form of higher average claim size; these, in turn, were partially offset by the (aforementioned) higher yield on technical reserves.
ROE approx 14%; final profit / avg. shareholders' equity FY22 & FY23 ends; approximately double pcp.
Insurance profit guidance for FY24 is $1.2-1.4bn vs. $0.8bn in FY23.
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