By Alice Uribe

SYDNEY--Insurance Australia Group Ltd. posted a half-year net loss, driven in part by expenses for potential business interruption pandemic-related claims.

The general insurance company on Wednesday recorded a net loss of 460 million Australian dollars (US$356.0 million) for the six months through December, compared to a A$283 million profit a year earlier.

Cash earnings at IAG, a measure tracked by analysts that excludes certain costs and one-time items, rose to A$462 million from A$380 million a year earlier.

"While our business has been relatively stable, our profitability was affected by the pretax A$1.15 billion expense we announced in November for potential business interruption claims relating to Covid-19," said Chief Executive Nick Hawkins.

The insurer in November launched a A$750 million capital raising after local insurers lost a business interruption test case.

The test case considered the issue of policy wordings that refer to the Quarantine Act, which has been repealed and replaced. The court in November ruled in favor of policyholders. Peak insurance body, the Insurance Council of Australia in December applied for special leave to appeal to the High Court of Australia.

Directors of the company declared an interim dividend of A$0.07 cents a share, down from a payout of A$0.10 a year earlier.

IAG's insurance profit climbed 33% to A$667 million from A$501 million the year prior, which it said equated to a higher reported insurance margin of 17.9%, up from 13.5% on year.

"This result benefited from a relatively benign natural perils period," said Mr. Hawkins.

IAG's gross written premium increased by 3.8% to A$6.2 billion, up from A$5.96 billion the year prior.

"We have seen a strong underlying performance across our businesses over the last six months and we will build on this performance as we sharpen our focus to deliver a stronger, more resilient IAG," said Mr. Hawkins.

Mr. Hawkins became CEO on November 2, succeeding Peter Harmer whose retirement was announced in April 2020.

Write to Alice Uribe at alice.uribe@wsj.com

(END) Dow Jones Newswires

02-09-21 1754ET