The past week has not been kind to the Insurance Australia Group Ltd (ASX: IAG) share price.
Shares in the insurer have sunk more than 3% from an opening price of $5.46 on 25 August to $5.29 at the closing bell yesterday.
Let's take a look at why the IAG share price has taken a tumble.
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What's weighing down the IAG share price?
There are several catalysts that could explain why IAG shares have struggled this past week.
Since the company hasn't released any price-sensitive news during this period, it's important to consider the overall price action.
Leading into the past week, shares in IAG had surged more than 12% for the month of August. As a result, it could be assumed that investors might be cashing in their profits.
In addition, the IAG share price could be under pressure after its competitor Steadfast Group Ltd (ASX: SDF) raised $200 million to expand its presence.
Investors could also be re-rating the IAG share price following its full-year results.
How did IAG perform in FY21?
For the year ending 30 June 2021, IAG reported a statutory loss of $427 million for the full year.
Other notables from the insurer's full-year report included:
- Gross written premium (GWP) increased 3.8% to $12,135 million
- Insurance profit up 35.9% to $1,007 million
- Underlying insurance margin down 130 basis points to 14.7%
- Reported insurance margin up 340 basis points to 13.5%
- Cash earnings up 170% to $747 million
- Full-year dividend doubled to 20 cents per share.
IAG highlighted a 35.9% increase in its reported insurance profit of $1,007 million. The insurer cited lower natural perils costs, positive credit spreads and lower motor claims for the improved margins.
However, IAG noted that significant one-off corporate expenses had resulted in the company reporting a net loss for the year.
Snapshot of the IAG share price
Despite struggling this past week, shares in IAG have enjoyed a strong year thus far. Since the start of 2021, shares in the insurer are trading about 12% higher.
However, shares in IAG are lagging far behind the broader S&P/ASX 200 Financials Index (ASX: XFJ), which is up more than 21% year to date.
Following a disastrous 2020, several catalysts have made it tough for the IAG share price to recover.
Of note, IAG was on the receiving end of an unsuccessful court case in New South Wales last year. The landmark court case sought to exclude pandemic lockdowns from business interruption policies.
