Insights

Here’s why the IAG (ASX:IAG) share price is down 3% in a week

What’s dragging the IAG share price down?
The post Here’s why the IAG (ASX:IAG) share price is down 3% in a week appeared first on The Motley Fool Australia. –

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.

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.

The post Here’s why the IAG (ASX:IAG) share price is down 3% in a week appeared first on The Motley Fool Australia.

Should you invest $1,000 in IAG right now?

Before you consider IAG, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and IAG wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Here’s why the IAG (ASX:IAG) share price is up 6% in the last 3 months
If you invested $1,000 in IAG (ASX:IAG) shares a decade ago, here’s what it would be worth now
10 ASX shares we’re overweight in right now: fund

How does the IAG (ASX:IAG) earnings result compare to Suncorp?
IAG (ASX:IAG) share price falls as competitor raises $200 million

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Insurance Australia Group Limited. The Motley Fool Australia has recommended Steadfast Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!