The Insurance Australia Group Ltd (ASX: IAG) share price is in the red amid the company's annual general meeting (AGM) being held on Wednesday.
IAG shares are currently trading at $5.50, down 0.45%. Conversely, the S&P/ASX 200 Index (ASX: XJO) is 0.45% higher and the S&P/ASX 200 Financials Index (ASX: XFJ) is also in the green today.
Shareholders who missed this morning's meeting can view a webcast of it here.
Let's see what IAG chair, Tom Pockett, and CEO, Nick Hawkins, had to say at today's gathering.
IAG share price lower on Wednesday
Hawkins reiterated the company's general long-term strategy this morning.
He mentioned the goal of one million extra customers (achieving 210,000 to date), reducing operation expenses as the company scales up, creating value through technology, and improving risk maturity.
Hawkins said:
We have goals to achieve a 15% insurance margin and 13–14% return on equity on a 'through the cycle' basis.
What the CEO said about rising insurance premiums
Hawkins said the company had remained mindful of the impact of its significantly increased premiums on customers.
He said:
To help counter some of the increased costs that affect premiums, we are working to improve our
efficiency and increase our use of digital solutions.For example, we have simplified the range of products we offer our customers and increased the
ways they can engage with us about their policies and claims.Expanding our Motorserve and Repairhub sites means we can get customers' cars back on the
road quicker. We are also progressing our artificial intelligence motor total loss assessment across
our businesses. That is reducing claims cycle times from weeks to days.
He said the company was currently achieving high customer retention and growth rates despite the increased premiums.
FY24 guidance confirmed
Hawkins confirmed the company's FY24 guidance today.
The insurer expects low double-digit growth in gross written premiums (GWP) and a higher insurance profit margin this financial year.
IAG reported a 10.6% increase in GWP to $14.7 billion in FY23. Its net profit after tax (NPAT) rose by 140% to $832 million.
The company expects to achieve a reported insurance margin of between 13.5% and 15.5% on an anticipated insurance profit of between $1.2 billion and $1.45 billion in FY24.
This compares to a reported margin of 9.6% on an insurance profit of $803 million in FY23.
Hawkins commented:
We have experienced a relatively benign start to FY24 from a natural perils perspective.
Inflationary trends continue to be elevated across our business, particularly within our Motor claims
costs. This is expected to result in some prior period development in our first half result as we
finalise the settlement of short-tail claims for amounts more than we expected at 30 June.Combined with additional reinsurance reinstatement costs of around $70 million following the New
Zealand events earlier this year, it is likely that our first half underlying margin will be around the
lower end of our guidance range.We expect a stronger second half as we benefit from the earnthrough of pricing.
What's next for IAG shares?
At the AGM today, Pockett pointed out that total shareholder returns were 33% in FY23.
Hawkins summed up the company's performance and the outlook ahead, saying:
… we are seeing positive financial signals; we have improved our underlying performance; retention rates remain very strong; we're growing customer numbers; and we have continued to invest in our business, and in our people.
Morgan Stanley says it finds ASX insurance shares generally attractive, but regulation risks could emerge in 2024. At the end of FY23, IAG received a $40 million fine in the largest-ever penalty against an insurer for breaches of financial services consumer laws.
