The prospect of higher inflation is a big threat to IAG. What is even more of a threat is hyperinflation which occurs when a catastrophe happens, they are experiencing this now with the floods and storms that occurred up north, this will be putting pressure on claims costs. IAG is the biggest writer of domestic insurance as well as farm insurance and most probably motor.There is currently a shortage in AUS for vehicle parts, bulidng materials and agriicultural equipment which will all put upward pressure on cliam costs and the bottom line.
It doesnt look like interest rates are going up anytime soon so bar a very good year with minimal catastrophes I dont see IAG improving tremendously in the short term.
At least they have got rid of the previous CEO Peter Harmer who was death riding IAG, the new CEO is making some good moves to bring IAG back to a traditional insurance company and providing demarcation between the Intermediary business and the direct business.
I can only see IAG moving in line with the ASX at the moment with their price being underpinned by their dividends.
IAG Price at posting:
$4.85 Sentiment: Hold Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)