The Insurance Australia Group Ltd (ASX: IAG) share price has been a strong performer in June.
The insurance giant's shares just closed the month at $5.70.
This means its shares gained an impressive 10% over the period, which is significantly better than the 1.6% gain recorded by the ASX 200 index.
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Why did the IAG share price outperform in June?
The main driver of its outperformance in June was the company's investor day update in the middle of the month.
That update revealed that the company has been performing strongly in FY 2023. So much so, its CEO, Nick Hawkins, is confident that IAG will achieve its guidance of around 10% gross written premium (GWP) growth in FY 2023.
In addition to its strong GWP performance, Hawkins advised that the company is trending towards a 10% reported insurance margin for the full year.
IAG's CEO revealed that its Australian businesses were behind the strong form. He explains:
Our Australian businesses are expected to deliver improved second half results reflecting strong top-line growth, increased earned premiums, and improving claims trends.
Outlook update
The good news is that this positive form is not expected to end any time soon. In fact, management is feeling so upbeat about its outlook that it increased its medium-term return on equity (ROE) target by one percentage point to 13%-14%.
This improved ROE is based on a medium-term insurance margin target of 15%, which is well ahead of current levels. Hawkins explains:
The strong top-line growth we're achieving, and the improved investment returns we are seeing on shareholder funds, means an increased ROE target of 13% – 14% is realistic and achievable over the medium term.
FY 2023 performance
Finally, following today's session, the IAG share price is up approximately 31% over the financial year.
