IAG - Insurance Australia Group

[bigdog]

SMH today included below under heading:
Tables may turn on Suncorp
Jessica Irvine
October 13, 2006

http://www.smh.com.au/news/business/tables-may-turn-on-suncorp/2006/10/12/1160246260379.html

Insurance takeover fever also sparked a rally in IAG shares on speculation QBE could seize the chance to make a bid for the nation's biggest general insurer.

"The general feeling is that QBE will have to move quickly now," Aequs Securities institutional dealer Ric Klusman said.

IAG shares jumped 7 per cent to a year high, before closing 3 per cent up for the day at $5.75.

 

[Dutchy3]

Ok .... so following on from my post a month ago this one pokes its nose up. Bit sad with the selling at the end of this week yet on the whole worth a plug. Perhaps a half or third size position to start with as it could of done better on the close

 

[bigdog]

Australian on Saturday

M&A the only way ahead in insurance
The most surprising aspect of Suncorp's $7.9 billion bid is that it didn't come sooner, write Tim Boreham and Tim Blue

October 14, 2006
SUNCORP Metway's conditional merger approach to Promina may have been unsolicited, but hostile it was not.

It's one factor for the ACCC to consider. The more seminal one is whether the regulator adopts a national or state-based market definition.

Currently, IAG holds more than 40 per cent of its (home) NSW market in car insurance.

As a result, NSW and Queensland (where Suncorp has a natural bias) emerge as key regulatory stumbling blocks.

Fitzgerald notes the ACCC generally took a state-based approach to previous insurance mergers, notably IAG's purchase of CGU in 2002 and Suncorp's purchase of GIO from the AMP in 2003.

"If this turns out to be the case once more, we would expect the ACCC to oppose the deal," Fitzgerald says.

While there are arguments in both directions, ABN AMRO's analysts are more confident than not the ACCC will pass the deal.

The firm notes that in the case of the IAG-CGU merger, concentration thresholds were breached in some regions, but the regulator focused on aggregate shares across the national market.

Should the merger eventuate, the repercussions will be felt across the sector but it's not clear what the end results would be.

IAG could benefit from Suncorp-Promina's merger distractions or, conversely, be faced with a gorilla with an equal share of the national market.

Some observers think IAG is now more likely to be taken over, even though two mergers would raise serious regulatory barriers.

Suncorp itself might be raided in a pre-emptive strike by an institution such as Westpac.

Whatever the case, says KPMG's Terblanche, all insurers need to think long and hard about growing in a sector which, unlike its product proposition, offers little security and peace of mind. "I would expect boards of all insurers to ask some very hard questions about how they are going to respond in this changing landscape," he says.

 

[Dutchy3]

This is a reasonably safe buy now. Tried to breakout and failed yet plenty of support below the market not going to see 5.40 again before 6.00 +

 

[marklar]

I'm holding a large percentage of my portfolio as IAG, it's not done too bad so far, but I'm starting to get a little nervous. Share price seems to be hovering since it was bumped up on takeover rumour that hasn't eventuated (yet).

m.

 

[bigdog]

Great article on IAG today

IAG AGM This Week November 13 2006 - Australasian Investment Review – (AIR)

http://www.aireview.com.au/index.php?act=view&catid=8&id=4668&setSub=1

Article included:
Brokers Goldman Sachs JB Were see IAG's prospects on the up according to a note to clients on Friday.

The brokers upgraded IAG from "underperform" to "marketperform" on the expectation of improved newsflow in the near-to-medium term.

"The company has indicated that its personal lines market share has begun to recover and that it may be in a position to provide some evidence of this at its AGM."

"A Strategy Briefingnext week (Wed, 22 Nov) initiated by the company with the goal, we assume, of getting back on the frontfoot (after having taken a PR/newsflow battering for some time). We are not banking on (new) positive news, but it should give an 'unloved' company the chance to promote its strengths/opportunities.

"China deal due for completion ("by November"): While the market will continue to debate the pros and cons of the China Pacific deal, it seems unlikely that the initial announcement will be taken badly – because the price range has already been announced and management has stated that any deals it does will need to be accretive (on an EPS basis and relative to its WACC) by year 2."

"IAG likely to benefit from the SUN/PMN deal: If SUN’s proposed takeover of PMN proceeds, we believe this would be a clear at-the margin plus for IAG – because it would improve IAG's medium-term revenue growth opportunities and be good for industry structure," said GSJBW."

But GSJBW outlined some telling points against getting too enthused about IAG.

It pointed out that "We are still not enthused with the valuation equation; (2) We still believe there is downside risk to the group’s dividend payout ratio over the medium-to-longer term; (3) Commercial lines pricing is unlikely to reach a floor (let alone bounce) for some time; (4) While IAG’s personal lines momentum is picking up, its financial results are likely to continue lagging its peers for at least one more reporting season; and (5) If the SUN/PMN deal does not proceed, the market may "take something out" of the IAG price to reflect this."

IAG's 2006 profit wasn't one to write home about.

It earned $759 million after tax, down on the $781 million earned in 2005, its insurance margin was 14.4 per cent compared to 2005's 15.5 per cent and it resorted to that hoary old tactic of sticking up dividends to keep shareholders sweet when the earnings picture wasn't all that flash.

"The Group also declared its highest ever final dividend of 16 cents per share and, following renewed momentum in the second half, expects gross written premium (GWP) to increase 5-10% in the full year ended 30 June 2007," the company said in its profit announcement.

Shareholders will be looking for confirmation that the profit guidance will be met, at least in the first half, and some idea of how the company will lift performance in 2007.

 

[bigdog]

Trading Halt for IAG ASX ANN today pending release of ANN

Are there any rumours or knowledge of what is to be ANN?

http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00674591

 

[bigdog]

ANN IAG Acquires Equity Insurance Group UK
http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00674620

Analyst Presentation Equity Insurance Group
http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00674623

Which way will SP jump?

 

[Buster]

Hey Bigdog

ANN IAG Acquires Equity Insurance Group UK
http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00674620

Analyst Presentation Equity Insurance Group
http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00674623

Which way will SP jump?

Thankfully the way I expected.. I just may be getting a handle on this stuff..

I'm no expert by any strech of the imagination, but I think that the SP reaction may be a little over the mark.. I mean only a couple of months ago analysts were bagging the stock for over extending itself.. then we we this SP movement when they spend even more??

I hold (and will do so for the long term) so am more than happy, but personally feel that this move is a little over zealous.. will probably move back to the 5.87 mark..

Opinions??

Regards,

Buster.

 

[Buster]

G'Day Fellow ASF'ers,

Punters like IAG's foray into UK
December 7, 2006

The shares re-opened with a roar and a placement was lapped up quicksmart.
IF THE chief executive of IAG, Michael Hawker, had any doubts about how the market would receive his latest foray into the UK, they were quickly dispelled yesterday when strong buying propelled IAG shares to their biggest gain in almost four years and their highest level on the boards since August 2005.
With analysts scurrying to update their forecasts on the prospect that the $1.4 billion acquisition of Equity Insurance will transform the group's fledging British operations, IAG's stock returned yesterday from Monday's pre-suspension price of $5.64 to climb as high as $6.10 before some late profit-taking saw them end the day at $6.06, a 7.5 per cent rise.
More than 56 million shares changed hands as investors scrambled for the stock after missing out in the discounted fund-raising offer that was aimed at paying for part of Equity.
In a sign of confidence in Hawker's growth strategy, institutions bid for the stock at the very top of the $5.10-$5.50 range at which the placement had been pitched. It also meant that IAG was able to pocket $750 million instead of the $600 million it was looking to raise, making it less likely that it will have to proceed with the planned interim dividend re-investment scheme.
Smaller shareholders, who will have their chance early next month to take part in a share placement plan issue, will be hoping for a similarly generous discounted offer.
Support for the shares came from Merrill Lynch, which upgraded their recommendation from "neutral" to "buy" on the likelihood of higher earnings during 2007.

The Insto's bought up big in the 5.10 - 5.50 range.. Why then does the Share Price not fall back to those levels??

Don't get me wrong, I'm happy that they haven't, it's just that it doesn't make a lot of sense to me..

Should I be selling all my shares now at around the $6 mark and buy back into the placement offer at (hopefully) similar discounts?? Assuming of course that holding 'today' will see me 'on the books' for the offer..

Cheers,

Buster

 

[Dutchy3]

I'll revise my forecast again ... will see 6.50+ before 5.40 ...

 

[Buster]

Hey Fella's (and ladies!!),

languished most of the day, then finished real strong.. is this Insto's buying up more, surely the smallie investors couldn't produce that sort of finish..

Why would the Insto's buy up more?? Will they get a second bite of the cherry with the 'retail' offer??

Regards,

Buster.

 

[bigdog]

Volume and SP has been really on the increase over the past weeks

Agree something is happening

Date----- Open High Low Close Volume
12-Dec-06 6.01 6.12 6.01 6.12 12,861,915
11-Dec-06 6.01 6.05 6.00 6.03 8,358,482
08-Dec-06 5.99 6.00 5.93 5.98 10,344,081
07-Dec-06 6.03 6.07 5.94 5.98 13,859,722
06-Dec-06 5.90 6.11 5.84 6.06 56,174,817
05-Dec-06 5.64 5.64 5.64 5.64 73,804
04-Dec-06 5.64 5.64 5.64 5.64 -
01-Dec-06 5.80 5.80 5.64 5.64 2,461,035
30-Nov-06 5.73 5.80 5.65 5.78 4,373,090
29-Nov-06 5.58 5.74 5.56 5.70 3,816,659
28-Nov-06 5.68 5.68 5.58 5.61 8,018,451
27-Nov-06 5.70 5.76 5.65 5.69 3,494,053
24-Nov-06 5.80 5.84 5.64 5.65 13,909,835
23-Nov-06 5.67 5.85 5.67 5.75 6,118,787
22-Nov-06 5.65 5.71 5.58 5.69 3,360,680
21-Nov-06 5.62 5.64 5.56 5.62 4,784,207
20-Nov-06 5.70 5.70 5.54 5.54 5,599,322
17-Nov-06 5.68 5.70 5.58 5.65 3,695,464
16-Nov-06 5.73 5.78 5.60 5.64 6,200,425

 

[austcomp]

most analysts have upgraded their recommendation on the stock and the aquisition has been seen as a positive move for the company, could retest all time highs in the next twelve months in my opinion but I am not a financial analyst

 

[maffu]

On the 15th of December IAG announced a share purchase plan with shares on offer in parcels of $1500, $3000, $4000 or $5000 for a purchase price of $5.50 which is about a 15% discount on the current market price of 6.35.

At the moment im leaning towards applying for $3000 - $5000 in the offer, but have no practical experience in rights issues so would love to know how others are treating the offer.

Im assuming with shares sold at $5.50 it will dilute the share price lower then the $6.30's its currently at, so if i avoid the issue my current position would shrink, but if i take up the offer then would the share price drop roughly equal the gain on my new shares and leave my profit the same but with a larger position size? I believe thats the theory behind share issues, but id love someone with experience to help me out here.

Thanks.

 

[theasxgorilla]

Do you mean that you work at IAG and the SPP has been offered to you??

 

[mmmmining]

I believe thats the theory behind share issues, but id love someone with experience to help me out here.

Thanks.

No rocket science. You have a free option to by up to 909.09 IAG share at $5.5. The current price is $6.35. To me, there is an risk free opportunity to make $772 by simply replace existing IAG shares with shares through the purchase plan. Of course, I need to consider my tax situation very carefully. I would rather paying tax to make money than let the opportunity go.

 

[barney]

No rocket science. You have a free option to by up to 909.09 IAG share at $5.5. The current price is $6.35. To me, there is an risk free opportunity to make $772 by simply replace existing IAG shares with shares through the purchase plan. Of course, I need to consider my tax situation very carefully. I would rather paying tax to make money than let the opportunity go.

Howdy Lads (and Merry Xmas to all), I'll stick my neck out here and say that IAG (Imo) is likely to retrace fairly substantially at some point over the next month or so, for the simple reason you've descibed M............... My wife owns a few IAG and I have tried to talk her into selling 1000 of them at the moment and then buy back her $5000 allottment to replace what she has sold, and make a quick few hundred profit .............. I think it would be unlikely that many others are not thinking the same "plan", and that being the case, the sp will have to drop as people take their "quick" profits ............ I could be totally wrong (maybe there is a takeover in the wings .... but why then would the Co be offering a discounted share entry??), but human nature tells me this share must drop (and quickly) at some point in the near future ........... Anyone game to short it???? All the best, and don't drink TOO much over the xmas break!!! Barney.

 

[mmmmining]

I think it would be unlikely that many others are not thinking the same "plan", and that being the case, the sp will have to drop as people take their "quick" profits ............ I could be totally wrong (maybe there is a takeover in the wings .... but why then would the Co be offering a discounted share entry??), but human nature tells me this share must drop (and quickly) at some point in the near future

Barney, Merry Christmas! (You cannot hear this anymore in US. They have invented "Happy Holiday, Stupid")

I don't know how much a bunch of mum and dad investors can do to move the market. The institute have got a lot at $5.5 already a few weeks ago. But the price is keeping up. Some situation in ORG. There are a lot other factors in the SP

 

[barney]

Barney, Merry Christmas! (You cannot hear this anymore in US. They have invented "Happy Holiday, Stupid")

I don't know how much a bunch of mum and dad investors can do to move the market. The institute have got a lot at $5.5 already a few weeks ago. But the price is keeping up. Some situation in ORG. There are a lot other factors in the SP

Merry Xmas to you as well M, I cant help it ... I'm a pessimistic contrarian ...... I actually hope the sp keeps going up, but I cant help but think that the alternative (be it short term ) might just happen!! ........... Cheers.