The Insurance Australia Group Ltd (ASX: IAG) share price has moved in circles over the past 11 months. This comes as the insurance giant has faced challenging trading conditions amid the COVID-19 pandemic.
At market close on Tuesday, IAG shares finished down 1.93% to $4.58 apiece. This means that its shares have fallen almost 12% in the past month alone.
What's going on with IAG shares?
There are a couple of possible catalysts as to why the IAG share price has failed to produce decent gains over the last 12 months.
At its most recent trading update, the company revealed a rise in net natural perils claim costs. It blamed severe storm and hail activity experienced in October, mainly across South Australia and Victoria.
As such, net natural perils claim costs for FY22 are estimated to be around $1,045 million. This is a significant increase from the previous assumption of $765 million.
Following the $280 million setback, IAG was forced to downgrade its FY22 insurance margin guidance range between 10%-12%. Previously, the insurance margin level was in the 13.5%-15.5% range.
In addition, the Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings against IAG in the Federal Court of Australia.
The allegations relate to IAG's failure to pass on the full discounts to a large number of NRMA Home, Motor, Caravan, and Boat Insurance customers between March 2014 and September 2019.
It's worth noting that IAG self-reported the issue to ASIC when it conducted a review in 2019. Since then, IAG has embarked on a remediation program for the affected policyholders. More than 80% of the impacted customers have been provided refunds.
How does the IAG share price compare to the ASX 200?
Over the last 12 months, the IAG share price has lost more than 8% with year-to-date down 2%. The company's shares have lost 50% of their value since July 2019, particularly when COVID-19 hit.
In contrast, the S&P/ASX 200 Index (ASX: XJO) has gained 20% from this time last year and is up 13% year-to-date. The ASX 200 also reached a record high of 7,632 points in mid-August.
Based on today's price, IAG presides a market capitalisation of roughly $11.35 billion, with approximately 2.47 billion shares on issue.
