IAG (ASX:IAG) share price rises following solid start to FY22

Here’s how IAG is performing in FY 2022…

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The Insurance Australia Group Ltd (ASX: IAG) share price is on the move on Friday morning.

At the time of writing, the insurance giant’s shares are up slightly to $5.06.

Why is the IAG share price rising?

The catalyst for the rise in the IAG share price today has been the release of a trading update at its annual general meeting.

According to the release, the insurance giant has started FY 2022 positively and remains on track to achieve its previously announced guidance of low single-digit gross written premium (GWP) growth.

IAG’s Managing Director and CEO, Nick Hawkins, commented: “The first quarter of the year has started well, and I affirm guidance for FY22 that we provided at the results in August. We recorded mid single-digit gross written premium growth in the quarter. GWP guidance remains ‘low single-digit growth’ for the full year.”

Mr Hawkins notes that this guidance factors in portfolio management in Intermediated Insurance Australia. He expects this to constrain volume growth over the balance of the year.

In addition, the CEO revealed that the company is on track to achieve its reported insurance margin guidance of 13.5 -15.5%.

He said: “IAG is also on track to meet reported insurance margin guidance of 13.5 -15.5%. We have observed lower motor vehicle claims frequency, driven by the lockdowns in Australia and New Zealand. This has been partly offset by inflationary pressure on claims costs and conservative reserving assumptions in our motor and home portfolios, and recognises increased uncertainty in claims inflation as lockdowns end.”

One thing that dragged slightly on its performance during the first quarter was its natural perils costs due partly to the Victorian earthquake. Though, positively, its natural perils allowance of $765 million for FY 2022 remains unchanged at this time.

The IAG share price is up almost 7% in 2021.

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Motley Fool contributor James Mickleboro 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.

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