Last week saw Insurance Australia Group Ltd (ASX: IAG) report its earnings for the 2021 financial year. As we covered at the time, this release saw the IAG share price take a post-earnings hit.
But with an insurer like IAG, it can be useful to see how its numbers compare to its direct competitors – its fellow insurance peers. Even if two companies in the same industry have vastly different numbers, we can still gather some useful insights in pitting them head to head.
So let's take a look at how IAG's recent results compare to its arch-rival Suncorp Group Ltd (ASX: SUN).
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IAG share price slides despite boost to dividend
If you didn't catch IAG's report, here are some of the highlights:
- Cash earnings rose 170% to $747 million
- Insurance profits climbed 35.9% to $1,007 million
- Net loss after tax of $427 million
- Full-year dividend bumped by 100% to 20 cents a share (66% payout ratio)
- Reported insurance margin up 340 basis points to 13.5%
As mentioned above, the release of these earnings saw an initial share price slump for IAG. However, investors have since decided to be more accommodating, and the IAG share price is now up around 2.3% since the day before the report was released. Much of those gains have actually come today, with IAG shares putting on another 1.79% to $5.40 a share this Thursday.
How does this compare to the Suncorp earnings result?
Suncorp released its own FY21 numbers just before IAG, on 9 August to be precise. Although Suncorp does differ from IAG in some ways (including a large banking division), the two companies are still relatively similar. As ASX financials, they both operate in the same environment with overlapping customer bases, and they both have insurance businesses with a significant market share in Australia. So here's a summary of what Suncorp reported:
- Cash earnings rose 42.1% to $1,064 million
- Insurance profits up 42.4% to $547 million
- Net profit after tax of $1,033 million
- Full-year dividend increased by 83% to 66 cents per share (not including special dividend of 8 cents per share)
- Net insurance margin down 110 basis points to 15.1%
- $250 million on-market share buyback program announced
As is evident, both companies reported some stellar numbers for FY21. Cash earnings and insurance profits were both solid, with big rises over the previous year's metrics. Both companies were able to give their investors large dividends hikes too, which will no doubt please income investors out there. Suncorp did take this one step further with its share buyback program though, which its shareholders will no doubt appreciate.
It is interesting to note that IAG did report a net loss of $427 million for the year though. That's in stark contrast to Suncorp's net profit of over $1 billion. In saying that, IAG did tell investors that this loss was mainly due to significant one-off corporate expenses. As such, it's probably more worthwhile comparing cash earnings growth or insurance profits here.
Long story short, both IAG and Suncorp have seen a significant recovery across their businesses compared to the prior year.
IAG share price snapshot
The IAG share price is having a pretty decent day this Thursday, up 1.8% to $5.40 a share. The company is up a healthy 14.3% year to date in 2021 so far, and is also up 6% over the past 12 months.
In saying that, this company has so far been a poor long-term performer. IAG shares are still down around 0.5% over the past 5 years. If an investor picked up this company's shares back in October 2004, they wouldn't see too much of a difference in their value today aside from dividends.
At the current pricing, IAG has a market capitalisation of $13.3 billion, and a trailing dividend yield of 2.6%.
