The Insurance Australia Group Ltd (ASX: IAG) share price has been on somewhat of a rollercoaster ride over the past 12 months. This has been characterised by the insurance giant's ongoing challenges to navigate its way through COVID-19.
At Monday's market close, IAG shares finished the day up a healthy 4.61% to $5.22. Despite the fact the company's shares have gained more than 6% in the past week, when comparing to this time last year, IAG shares are just 4% higher.
With the August 2021 reporting season now heating up, we take a closer look to see if investors can learn anything from the performance of the IAG share price last earnings season.
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What happened in the first half of FY21?
In February 2021, IAG delivered its half-year results to the market, reporting growth across the board.
This surprised investors as gross written premiums (GWP) grew 3.8% to $6,188 million and the level of claims declined. The company's bottom line delivered a 33.1% increase in insurance profit to $667 million. Clearly, the market had been anticipating that IAG would report a significant loss for the period. This is because the company had previously announced $1.15 billion in pre-tax charges for business interruption claims.
Consequently, the IAG share price rose by more than 6% to an intraday high of $5.38 on the day, and then to $5.49 the day after. However, this rise was short-lived, with IAG shares tumbling soon after for a number of weeks. In mid-March, the company's share price hit a low of $4.30, reflecting a 22% decline from its intraday high on 10 February.
What should investors look out for?
With IAG due to report its full-year results tomorrow, investors may be wondering what to expect.
In late July, the company released a preliminary FY21 result which was underscored by some interesting numbers that missed the mark with Goldman Sachs.
According to the update, GWP is expected to grow at 3.8%, while net earned premium is forecast to increase 1.5% to $7,473 million.
The underlying insurance margin is also predicted to come in at 14.7% for FY21. This metric recorded a 16% fall in the first half but is projected to bounce back by 13.5%.
Cash earnings is anticipated to be $747 million, reflecting a 168% jump on the prior corresponding period (FY20).
In line with the earnings, analysts at Goldman Sachs believe the company will pay a full-year dividend of 22 cents per share. When factoring in the FY21 interim dividend payment of 7 cents, this equates to 15 cents for the second half.
IAG share price snapshot
In 2021, the IAG share price has moved 11% higher thanks to its recent run since early August.
Based on valuation grounds, IAG commands a market capitalisation of around $12.8 billion, with more than 2.4 billion shares outstanding.
