Insurance Australia Group Ltd (ASX: IAG) shares are having a good session on Thursday.
In morning trade, the insurance giant's shares are up 4% to $8.20.
This compares favourably to a 0.3% decline by the ASX 200 index.
Why are IAG shares pushing higher?
Investors have been scrambling to buy the company's shares this morning after it released a trading update ahead of its annual general meeting.
According to the release, the company has upgraded its guidance following the successful completion of the acquisition of the Royal Automobile Club of Queensland's (RACQ) insurance business.
IAG now expects FY 2026 gross written premium (GWP) growth of approximately 10%. This is up from its previous guidance range of low-to-mid single digits.
In addition, its reported insurance profit is now expected to be in the range of $1,550 million to $1,750 million for FY 2026. This is up $100 million from its previous guidance range of $1,450 million to $1,650 million.
Management notes that this broadly equates to a reported insurance margin range of 14% to 16%.
It assumes an FY 2026 natural peril allowance of $1,470 million, which has been adjusted to include RACQ, no material prior period reserve releases or strengthening, and no material movement in macro-economic conditions. This includes foreign exchange rates or investment markets.
Commenting on the acquisition and subsequent guidance upgrade, IAG's managing director and CEO, Nick Hawkins, said:
We're pleased to confirm that the RACQI business is performing slightly ahead of our expectations. The internally funded acquisition is strategically aligned with our growth ambitions, and the integration process is progressing smoothly. It strengthens our position in the Queensland market and supports our 'through the cycle' targets of a 15% reported insurance margin and 15% return on equity.
At the annual general meeting, the company's CEO spoke about another acquisition that is waiting to complete.
If the $1.35 billion deal for RAC Western Australia's insurance business completes successfully, it will have over 10 million customers and over $21 billion in annual premiums. Hawkins explains:
While we have completed the acquisition of RACQ's insurance business, the transaction with RAC in Western Australia is still awaiting ACCC approval. Together, in combination with RACQ and RAC, we will be supporting over 10 million Australians and New Zealanders and writing over $21 billion in annual premiums.
Following today's move, the IAG share price is now up a modest 6% since this time last year.
