Own IAG shares? Here's what to expect from the insurance giant's FY23 results

Is IAG going to deliver something special this month?

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Insurance Australia Group Ltd (ASX: IAG) shares are having another positive session.

In afternoon trade, the insurance giant's shares are up 2% to $5.99.

This leaves the company's shares trading within a couple of cents of their multi-year high.

Clearly, expectations are high for IAG when it releases its full-year results later this month. But what is the market actually expecting?

IAG results preview

According to a note out of Goldman Sachs, its analysts are expecting IAG to deliver a strong full-year result on 21 August.

Its analysts have pencilled in cash earnings of $527 million for the 12 months. This will be an increase of almost 150% on the $213 million it reported in FY 2022.

But if you thought that this was the peak, think again. Goldman is then forecasting another huge increase to $892 million in FY 2024. So, investors may want to look out for any guidance that is provided to indicate whether this is achievable or not.

As for dividends, the broker expects IAG's strong form to underpin a 15 cents per share dividend in FY 2023 (and then 25.9 cents per share in FY 2024).

Could anything disappoint?

One thing that Goldman has warned could disappoint the market and weigh on IAG shares is the company's underlying margins. It warns:

We think underlying margins for 2H23 will likely disappoint guided expectations. While the 2H23 exit running margin should be strong, higher perils allowances / reinsurance into 1H24 will pressure margins (GS at 14.2%) with 2H24 seeing most of the benefit of the earn through of strong rate (GS at 15.2%). We think affordability / competitive pressures alongside a medium term volume focus should act to broadly keep margins in check in our view.

Goldman goes into these results with a neutral rating and a $5.87 price target on IAG's shares.

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 positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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