The Insurance Australia Group Ltd (ASX: IAG) share price could be one ASX share to perform well according to the fund manager Wilson Asset Management.
Readers may already know that IAG is one of the biggest insurers in Australia and New Zealand. It has a number of brands including NRMA Insurance, CGU, SGIO, SGIC, Swann Insurance, WFI and ROLLiN' in Australia. The New Zealand brands include NZI, State and AMI.
A few months ago, the company announced its FY23 half-year result which showed that gross written premium (GWP) rose by 7.5% to $7 billion, the insurance profit increased by 24.1% to $350 million, cash earnings rose 26.7% to $223 million and net profit after tax (NPAT) grew by 170.5% to $468 million.
It has been a good 12 months for the company, with the IAG share price going up by over 30%, as we can see on the chart below.
The fund manager WAM believes there could be more gains to come.
A turning point?
The investment team at the listed investment company (LIC) WAM Leaders Ltd (ASX: WLE) noted that in June, IAG held an investor day for shareholders where the business told the market about its medium-term aspirations and re-iterated its shorter-term expectations.
The WAM Leaders team thought this represented a "turning point" for a "beleaguered stock" that has suffered from management transitions, business interruption test case judgements and elevated natural catastrophes over the last few years.
The fund manager said:
We remain optimistic on Insurance Australia Group as premium rate increases exceed claims inflation and we are likely entering an El Nino weather event, which is typically associated with less frequent natural catastrophes.
El Nino describes a period of drier (and hotter) weather, while La Nina describes a period of wetter weather.
IAG share price valuation snapshot
It has been a period of strong performance for the ASX share – in just the last six months, it has risen by 14%.
Looking ahead to the 2024 financial year, IAG shares are valued at 16x FY24's estimated earnings, according to the projections on Commsec, which would be a 70% or so jump in earnings compared to the forecast earnings for FY23 (which is finished but not yet reported).
