Own IAG (ASX:IAG) shares? Here's what to expect when it reports next week

The Insurance Australia Group Ltd (ASX: IAG) share price will be one to watch next week.

On 11 February, the insurance giant is scheduled to release its half year results.

Ahead of the release, let's take a look to see what the market is expecting from IAG.

What should you expect from IAG's first half results?

While IAG has not provided guidance for the first half, it has given the market guidance for FY 2022. In light of this, investors may want to look to see if this guidance remains achievable based on its first half performance.

According to its recent business update, IAG's FY 2022 guidance is for a 10% to 12% reported insurance margin and low single-digit gross written premium (GWP) growth. This is based on estimated full year natural perils costs of $1,045 million.

What about its profits?

According to a note out of Morgans, at present the market consensus estimate is for a first half cash profit of $285 million and an interim dividend of 8 cents per share. However, it is worth noting that Morgans doesn't expect the insurance giant to deliver a result that matches the market's expectations.

The broker commented: "IAG's 1H22 result will be heavily affected by a large level of natural hazard claims, with IAG disclosing A$535m in natural hazards for the first 4 months of the year versus an initial FY22 hazard budget of A$765m. We forecast 1H22 cash NPAT of A$210m (consensus = A$285m) and a dividend of ~A6cps (consensus = A8cps)."

Nevertheless, its analysts still see enough value in the IAG share price to recommend it as a buy. Morgans currently has an add rating and $5.32 price target on its shares. This compares to the latest IAG share price of $4.30.

Its analysts commented: "IAG had a difficult FY21 and FY22 is set to be a weather affected year. However, we believe for the patient investor the stock is cheap trading on ~13x FY23F earnings, and we expect continuing insurance price increases, combined with management's strategy to improve performance, to drive improved profitability over time."