The Insurance Australia Group Ltd (ASX: IAG) share price is on the rise today, slowly erasing the pains felt by shareholders this week.
At the time of writing, the insurance giant's shares are up 2.52% to $4.47. It's worth noting, however, that its shares are still slightly down 1% in the past week following 7 consecutive days of losses.
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What's going on with IAG?
With the company not making any new announcements since its trading update on November 2, investors have been buying up IAG shares. It appears its shares were oversold in the last few days, registering a value of 30 on the relative strength index (RSI).
The RSI is a momentum oscillator that is used to assess the strength or weakness of a share price.
In its trading update — which negatively affected the IAG share price — the company revealed it is expecting a significant rise in net natural perils claim costs for FY22. Severe storm and hail activity experienced in South Australia and Victoria during October were blamed for the increased costs.
In total, net natural perils claim costs for the current financial are forecasted to be around $1,045 million. This is a hefty rise from the company's previous estimates of $765 million. It is worth noting this includes $510 million for perils events for the remainder of the financial year.
The seasonally unexpected claims made this year to date have forced IAG to downgrade its FY22 insurance margin guidance. As such the company is forecasting an insurance margin guidance range of between 10% to 12%. Previously, the insurance margin level stood in the 13.5% to 15.5% range.
Inflationary pressure on claims costs in the company's motor and home portfolios were partly offset by lower vehicle claims.
Undoubtedly, the concerning update affected the IAG share price, which fell 7% on the day of the release alone. Now, after recording 7 business days of consecutive losses, it's finally looking to finish in the green for the first time since November 8.
While still trying to navigate through tough trading conditions, IAG shares are trading close to multi-year lows.
IAG share price recap
Over the last 12 months, the IAG share price has lost around 18% and is down 5% year to date. The company's shares have fallen 60% since July 2019, with heavy losses attributed to the COVID-19 pandemic.
Based on today's price, IAG presides a market capitalisation of roughly $10.97 billion, with approximately 2.47 billion shares on issue.
