Insurance Australia Group Ltd (ASX: IAG) shares are up 1.16% on Tuesday to $7.83 per share.
In earlier trading, the ASX financial share hit a four-year high of $7.85 per share.
Let's see what $10,000 invested in IAG shares a year ago would be worth today.
$10,000 invested in IAG shares
This time last year, IAG shares were trading for $5.84 apiece.
So, $10,000 of capital (less a $5 brokerage fee) would have purchased 1,711 shares in the insurer.
Today, IAG shares are worth $7.83, so each share has gained $1.99 in value.
So, all up, there's been a capital gain of $3,405. This takes the initial $9,992 investment up to $13,397.
This equates to a 34% lift and a vast outperformance of the benchmark S&P/ASX 200 Index (ASX: XJO), which increased by 11.5% over the year.
What about IAG dividends?
In addition to that 34% capital gain, there have been two dividend declarations over the 12 months.
During earnings season, the insurer declared a final dividend for FY24 of 17 cents per share plus 50% franking. That dividend will be paid on 26 September.
The company also paid an interim dividend for FY24 of 10 cents per share plus 40% franking in March.
Altogether, that totals $462 in passive income (plus franking) on top of that $3,405 capital gain.
Hence, the total annual return from those 1,711 IAG shares bought a year ago was 38.7%.
How did IAG's FY24 numbers look?
IAG reported a net profit after tax (NPAT) of $898 million for FY24, up 7.9% from FY23.
This included a 79.1% increase in insurance division profits to $1.44 billion. The company's net earned premiums rose by 11%, and the reported insurance margin was 15.6%, which was up from 9.6% in FY23.
IAG said the increased insurance profit and earned premiums, coupled with the 35% higher investment income on shareholder funds at $286 million, were the main contributors to its NPAT lift.
IAG managing director and CEO Nick Hawkins said:
The strategic measures we have put in place over the past few years have created a stronger and more resilient IAG.
We've streamlined our Australian business, established a clear brand strategy and launched NRMA Insurance nationally, outside of Victoria.
We have also improved our claims management capability to ensure we are well placed to support our customers when they need us the most.
Should you buy IAG shares today?
Goldman Sachs has a neutral rating on IAG with a 12-month share price target of $7.20.
The consensus rating among analysts on CommSec is a moderate buy.
They forecast that IAG will increase its earnings per share (EPS) from 36.2 cents per share in FY24 to 39.6 cents per share in FY25 and 42.7 cents per share in FY26.
They also predict IAG dividends will increase from 27 cents per share in FY24 to 30 cents per share in FY25 and 32 cents per share in FY26.
According to CBA data, IAG shares are trading on a price-to-earnings (P/E) ratio of 20.37x.
