Most insurance companies generate revenue in two ways: Charging premiums in exchange for insurance coverage, then reinvesting those premiums into other interest-generating assets.
Insurance firms receive money from the premiums that policyholders pay. Investors may benefit from the dependability and stability this steady source of income can offer, as this cash flow stream is often fixed and potentially locked into long-term agreements.
Key points
Insurance industry profits rose 42% in 2022 to $4.95 billion
Major ASX 200 insurance company IAG reported a huge boost in profit in the first half of FY23
Industry insurance profit overall rose 42% year on year to $4.95 billion in 2022.
IAG reported a net profit after tax (NPAT) of $468 million in the first half of FY23, 171% higher than the prior corresponding half. The company delivered an interim dividend of 6 cents per share, 30% franked.
