AA Insurance collected more than $1 billion in premiums in the June-2026 year, but its net profit after tax dropped by over $25 million.
The general insurer is a joint venture between the New Zealand Automobile Association (NZAA) and Vero Insurance. Vero has a 68% shareholding in AA Insurance and the NZAA holds 32%. Vero is owned by Suncorp, the second-largest general insurer across Australia and NZ.
AA Insurance provides home, contents, car and commercial small business insurance. The insurer has over 560,000 customers who have more than 1.1 million insurance policies.
The general insurer received $1.01 billion in premiums, according to AA Insurance’s financial statements for the 12 months ending June 30, which were published by the Companies Office on Tuesday.
Premiums are the total amount of money customers are required to pay for insurance coverage on policies issued by an insurer. Premium revenue for AA Insurance in its 2026 financial year increased by 1.8%, or $18 million, year-on-year.
AA Insurance confirmed that this is the first time the insurer has surpassed $1 billion in insurance premium revenue annually. AA Insurance's chief financial officer (CFO) Peter Gudsell wouldn’t comment on how much of this premium growth came from new customers joining the insurer versus higher premium rates for existing AA Insurance customers.
“[...] the primary driver of our revenue increasing in FY26 was customer growth,” Gudsell told interest.co.nz in a statement on Thursday.
Despite the growth in premium revenue, AA Insurance's annual net profit after tax (NPAT) dropped by around 15%, or $21.6 million, to $144.1 million from $170.2 million last year. AA Insurance’s net investment income fell even further, down 48%, or $18.2 million, to $19.2 million.
Gudsell attributed the 15% decline in AA Insurance’s annual net profit to increased claims costs, a number of significant weather events during FY26 and higher claims costs across the insurer's home and motor portfolios.
“Our focus remains on maintaining a strong, sustainable business that can continue to support customers while appropriately managing the risks we insure,” he said, adding that the fall in investment income had also contributed to the decline in net profit.
“The reduction in net investment income largely reflects volatility in investment markets over the year, against a backdrop of heightened geopolitical and economic uncertainty. Investment returns will naturally fluctuate from year to year depending on market conditions,” he said.
Gudsell wouldn't provide a forecast on AA Insurance's FY27 net profit, as he said the insurer doesn't provide forecasts on future profitability.
AA Insurance paid out $698 million in claims and other insurance service expenses during its June year, a 7.9% or $50.7 million increase from the $647.3 million the insurer paid out the year before. The insurer didn’t provide details in the report on which specific categories were the biggest drivers behind these costs.
“Claims costs increased due to more frequent weather and natural hazard events, inflation in repair and parts costs, and portfolio growth. The impact was most significant in home insurance, while motor claims costs also increased,” Gudsell said.
AA Insurance increased its annual dividend payout by $30 million to $160 million in FY26. Asked why the insurer had prioritised a higher dividend payout during a year of lower earnings, Gudsell responded that profit and dividends “naturally vary” year to year as claims experience, major events and other factors change.
“There is also a timing difference between profit and dividends. Dividends are paid after profits are recognised, so the dividends paid in any one year do not relate exclusively to the profit earned in that same year,” he said.
Reinsurance premiums for the insurer dropped to $76 million in the June year, from $107.4 million the prior year. In the report, AA Insurance said it had entered into a multi-year aggregate excess of loss reinsurance contract that commenced on June 30 for a five-year coverage period.
The insurer said the five-year contract will provide “aggregate protection” against natural peril losses over the coverage period.
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