Is the IAG (ASX:IAG) share price bouncing back in September?

The IAG share price is steadily gaining this month. We take a closer look at why.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Insurance Australia Group Ltd (ASX: IAG) share price has been pushing higher this month.

This is despite CMC Hospitality filing an application starting a representative proceeding against IAG in the Federal Court.

It appears investors are willing to put the company's FY21 woes aside and are focusing on the FY22 financial outlook.

At Friday's market close, the IAG share price finished the day up 1.33% to $5.33. This added to its gain of 2.5% in September so far.

During the week, IAG peaked at $5.49 — not far off its 52-week high of $5.51 reached on 13 August.

A young woman wearing glasses and a red top looks at her laptop smiling

Image source: Getty Images

What's driving IAG higher lately?

A likely catalyst is that investors are bullish on the company's anticipated performance for FY22.

In its full-year results, IAG highlighted that it achieved a mostly solid scorecard, with growth across key metrics.

The biggest downside of the report was the company's bottom line, registering a net loss after tax of $427 million.

However, it was the result of significant one-off corporate expenses, mainly relating to business interruption, customer refunds, and payroll remediation.

Looking ahead, IAG reintroduced its guidance, given its sound underlying financial numbers in FY21.

Gross written premium (GWP) is expected to produce "low single-digit growth" and an insurance margin of between 13.5% and 15.5% for FY22.

The company said the guidance aligns with its aspirational goal to achieve a 15% to 17% insurance margin over the medium term. IAG believes an insurance profit of at least $250 million is achievable over the next 3 to 5 years.

IAG managing director and CEO, Nick Hawkins commented:

The strength of our core business and its sound underlying performance in FY21, our new operating model with clear, embedded executive responsibilities, as well as greater certainty in the economic outlook, mean that we are confident that IAG's underlying performance will continue to improve.

IAG share price summary

Over the past 12 months, IAG shares have moved about 10% higher, with year-to-date gains of close to 15%.

The IAG share price has underperformed the S&P/ASX 200 Index (ASX: XJO), which is 26% higher over the 12 months and almost 11% higher year to date.

Based on today's price, IAG has a market capitalisation of roughly $13.11 billion, with 2.46 billion shares on its registry.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Financial Shares

asx share price resignation represented by man kicking miniature man through the air
Financial Shares

Australian Ethical just dumped 1.6 million shares of this ASX 200 company. Here's why

Australian Ethical has made a major ESG call on this large business.

Read more »

two dogs, a golden one and a black one, together carry a stick in their mouths as the run side by side with contented, happy looks on their faces.
Broker Notes

2 ASX 200 shares to rocket from same booming industry: expert

Most sectors will struggle when the economy slows down, but maybe not this one.

Read more »

Woman looking at her smartphone and analysing share price.
Financial Shares

AMP shares drop then pop amid ex-dividend and delay of $225 million sale

The sale of Collimate Capital's domestic leg looks to be split in two amid regulatory delays.

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Dividend Investing

Why is the AMP share price sinking today?

In announcing its full year financial results, the AMP board declared a dividend payout for the first time since 2020.

Read more »

A woman shows her phone screen and points up.
Financial Shares

Hub24 share price up 9% on record half-year results and turbocharged dividend

The financial services provider is flying high today on the back of stellar results.

Read more »

Woman relaxing and using her Apple device
Financial Shares

For $1,000 in monthly passive income, buy 1,770 shares of this ASX 200 stock

This ASX blue chip could unlock enormous passive income for investors.

Read more »

Woman on her laptop thinking to herself.
Financial Shares

Are AMP shares finally cheap enough to buy following Thursday's 13% crash?

A return to dividend hasn't convinced this top broker.

Read more »

Man pointing at a blue rising share price graph.
Earnings Results

QBE share price leaps 10% amid explosive dividend growth

QBE boosted its final dividend payout by a whopping 58% from the prior year.

Read more »