Ann: Auckland flooding and financial update, page-6

"I absolutely hate this stock. It’s like a magnet, whenever it starts to go up it aalways come crashing back down again."


For the life of me, I can't understand why anyone would own a general insurer - given the ever-present torpedoes which can - and frequently do - cripple insurance margins, when you can own a business positioned differently on the insurance industry structure, where the upside of premium increases can be enjoyed, without also being exposed to the downside factors which cause premiums to rise in the first place.

From this post (https://hotcopper.com.au/posts/54715124/single), some 18 months ago:

"I used to be an IAG shareholder a number of years ago, but it is a total black box business, and a perpetual "gunnah" company, but one which almost never does.

The volatile and unpredictable underwriting business, combined with the translational impacts of investment markets on IAG's profits render investing in IGA a bit of a crap shoot, in my view.

I note that the FY2022 Outlook in today's update has commentary about positive rate environment across both personal and commercial lines.

If that is the case then I wonder why anyone wouldn't instead invest in an insurance product distributor, such as an insurance broker, rather than an insurance product manufacturer like IAG.

Because with an insurance broker you still get to participate in the favourable rate cycle, but without the often knee-capping vagaries of the business that is general insurance and insurance underwriting.

(Also, with an insurance product distributor you don't have to wrestle with the arcane insurance accounting practices, such as reserve releasing/padding or having to constantly mark policy holder floats to market.)"

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