Is the IAG (ASX:IAG) share price bouncing back in September?

The IAG share price is steadily gaining this month. We take a closer look at why.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Insurance Australia Group Ltd (ASX: IAG) share price has been pushing higher this month.

This is despite CMC Hospitality filing an application starting a representative proceeding against IAG in the Federal Court.

It appears investors are willing to put the company's FY21 woes aside and are focusing on the FY22 financial outlook.

At Friday's market close, the IAG share price finished the day up 1.33% to $5.33. This added to its gain of 2.5% in September so far.

During the week, IAG peaked at $5.49 — not far off its 52-week high of $5.51 reached on 13 August.

A young woman wearing glasses and a red top looks at her laptop smiling

Image source: Getty Images

What's driving IAG higher lately?

A likely catalyst is that investors are bullish on the company's anticipated performance for FY22.

In its full-year results, IAG highlighted that it achieved a mostly solid scorecard, with growth across key metrics.

The biggest downside of the report was the company's bottom line, registering a net loss after tax of $427 million.

However, it was the result of significant one-off corporate expenses, mainly relating to business interruption, customer refunds, and payroll remediation.

Looking ahead, IAG reintroduced its guidance, given its sound underlying financial numbers in FY21.

Gross written premium (GWP) is expected to produce "low single-digit growth" and an insurance margin of between 13.5% and 15.5% for FY22.

The company said the guidance aligns with its aspirational goal to achieve a 15% to 17% insurance margin over the medium term. IAG believes an insurance profit of at least $250 million is achievable over the next 3 to 5 years.

IAG managing director and CEO, Nick Hawkins commented:

The strength of our core business and its sound underlying performance in FY21, our new operating model with clear, embedded executive responsibilities, as well as greater certainty in the economic outlook, mean that we are confident that IAG's underlying performance will continue to improve.

IAG share price summary

Over the past 12 months, IAG shares have moved about 10% higher, with year-to-date gains of close to 15%.

The IAG share price has underperformed the S&P/ASX 200 Index (ASX: XJO), which is 26% higher over the 12 months and almost 11% higher year to date.

Based on today's price, IAG has a market capitalisation of roughly $13.11 billion, with 2.46 billion shares on its registry.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Financial Shares

Nervous customer in discussions at a bank.
Financial Shares

Why NAB shares are slipping today despite a major business reset

NAB shares drift lower amid broader pressure on the banking sector.

Read more »

Worried woman calculating domestic bills.
Mergers & Acquisitions

Challenger jumps 4%, Pepper Money sinks as takeover collapses

Bid rejected, premium gone. Here's why one stock fell while the other rallied

Read more »

A woman in a red dress holding up a red graph.
Financial Shares

Which ASX financial stock could deliver 30% upside?

A recent share price dip could signal an opportunity.

Read more »

A senior couple discusses a share trade they are making on a laptop computer.
Financial Shares

Are these battered ASX financials stocks finally bouncing back?

Is it time to buy low?

Read more »

A man surrounded by huge piles of paper looks through a magnifying glass at his computer screen.
Financial Shares

2 beaten-down ASX financial stocks worth a closer look

Falling share prices, rising fundamentals. Are these financials mispriced?

Read more »

Businesswoman holds hand out to shake.
Financial Shares

How high does Macquarie think this ASX 200 stock will go after its wealth sale?

This financial stock is a bargain, if the team at Macquarie are right.

Read more »

A shocked man holding some documents in the living room.
Financial Shares

IAG shares jump 12%: Buy, sell or hold?

Here's what the experts are tipping next.

Read more »

Worried woman calculating domestic bills.
Financial Shares

Pepper Money shares plunge 10% after Challenger slashes takeover offer

The revised proposal comes just over a month after the original takeover approach sparked a strong rally in Pepper’s share…

Read more »