IAG - Insurance Australia Group

[Value Collector]

It makes the announcement to die for - BERKSHIRE HATHAWAY takes a stake.

An Interesting deal Berkshire has Put together.

Key Points.

Berkshire Injects $500 Million cash into IAG to secure a 3.7% Ownership Interest.

A premium splitting deal, where Berkshire takes 20% of the premiums and pays 20% of claims, effectively makes the IAG Policy Portfolio a 20/80 joint venture between Berkshire and IAG.

IAG maintains ownership of its brands and has the responsibility for selling policies.

Berkshire to Pay IAG a commission on the 20% of premiums IAG hands over.

Berkshire to Pay 20% of IAG operating costs.

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What does Berkshire get -

1, Dividends and capital growth on the IAG shares it holds.

2, Investment profits from the float it will generate by holding it's share of premiums until it has to pay claims

3, Potential to earning a profit margin on the premiums if claims end up being less than Premiums.


What does IAG get -

1, Investment profits from the float on the 80% of premiums they retain, until they have to pay claims

2, Commission on the 20% of premiums they hand off to berkshire

3, The deal unlocks capital that they will be able to invest, and generate better earnings

4, They can write more insurance without having to pay as much reinsurance fees to outsiders.

5, Potential growth into other markets and speciality insurance areas that would not have been possible without the capital and risk spreading the Berkshire deal provides.

 

[Gringotts Bank]

About to pop.

 

[Ann]

I was looking at this as a potential buy but I am not as convinced as Gringotts Bank about a pop.
The reason I have backed away from it is the $XXJ sector is not looking too flash as it has not been able to rise above the 200 day SMA once over the last six months.
IAG which is one of the $XXJ constituents has failed to remain above the 200 day SMA for the last five trading days. Looking at Twiggs Money Flow, it appears there is a falling away of money into IAG. Possibly a stock to watch but at this stage I will not be buying in.

 

[Ann]

NRMA/IAG listed Tuesday August 8th 2000 its initial price was $2.75 today it closed at $7.60

 

[greggles]

IAG down 5.4% to $7.31 today after advising the market that it will take an earnings hit after the hailstorms that pounded Canberra, Melbourne and Sydney this week resulted in more than 28,000 claims of home and vehicle damage.

IAG expects the claims to result in an unexpected pre-tax cost of $169 million.

Insurance is a good business to be in as long as the number and quantum of claims are predictable. Not so much when natural disasters result in hundreds of millions dollars of unexpected payouts.

 

[Trav.]

Trading Halt - Does anyone know what the judgement was ?

 

[Trav.]

google is your friend...

Insurers on hook for pandemic losses after NSW Supreme Court ruling

Thousands of businesses may be covered for pandemic losses following a landmark NSW Supreme Court of Appeal ruling that found insurers may be required to pay out hundreds of millions of dollars under business interruption policies.

www.smh.com.au

 

[barney]

google is your friend...

Could get a bit sticky really.

The High Court determines the Insurance Co's have to pay up, but its the Government determines whether businesses have to go into lock down and risk going broke ...

I see a cat fight developing, and the unlucky retail punter will likely end up being the punching bag while the Instos drag things on in court for ever.

 

[barney]

IAG responds to business interruption test case judgment and announces capital raising of up to $750 million to strengthen balance sheet

IAG management acted quickly re the above HC decision and announced a $750 million Cap Raise just in case. Got to give them credit for taking quick action.

I wonder how well the CR price at $5.05 will be "welcomed" It looks like it could trade under that when it re-opens!

Pity, as IAG SP was looking like turning a corner after a pretty ordinary 2020. I don't hold but my better half does

 

[Trav.]

Well that hurt a bit.

IAG open ~ -7% down to the placement price of $5.05 level ( just a tad under ) and my profits vanished in the process.

I thought that this was an over reaction so I couldn't help myself and purchased a couple of parcels at $5.039 and $5.05 so we will see what happens but IAG was looking strong since October and hopefully this is just a minor setback.

 

[Trav.]

IAG working to close the gap, looking good and hopefully will continue

 

[Trav.]

purchased a couple of parcels at $5.039 and $5.05

I offloaded these additional buys today and made a few bucks.

I am still holding my original investment which is at break even now. I will give it another week to see what happens and then maybe offload if it stalls.

Last 5 days

 

[dead trader]

I think IAG is going to rise, as it is has bounced off a minor support level near the $4.65 zone. From a technical analysis perspective, I like to buy on support and sell at resistance.

 

[Trav.]

I think IAG is going to rise

Let's hope that you are right as I entered IAG yesterday for a trade...looks a bit oversold to me but we will see how it goes.

 

[Ferret]

looks a bit oversold to me

I agree. I picked some up on Monday at 4.725. In the red at the moment, but I'm willing to hold this for a while and take some dividends.

 

[Trav.]

IAG going strong since our last posts.

Closed @ $5.10 and I am looking at some resistance circa $5.50

 

[Trav.]

I am back in with IAG and noticed the potential W3 on the daily chart. Target ~ 5.34

Up 2.4% today so hopefully it continues

 

[peter2]

IAG scheduled to report HY21 results Feb 10 (tomorrow). Hope they're good for you.

 

[Trav.]

Thanks @peter2 lets hope today's rise is a good sign of some positive news coming

 

[Trav.]

OK - after digging into my extensive fundamental knowledge and analytical skills I have deemed that the following results from IAG are a winner
7 up arrows out of 9 - all we need is 1 more up arrow..... a bit like this one