ASX:IAG

Stock Analysis Report

Insurance Australia Group

Executive Summary

Insurance Australia Group Limited underwrites general insurance products in Australia and New Zealand.

Snowflake

Fundamentals

Average dividend payer and overvalued.


Similar Companies

Share Price & News

How has Insurance Australia Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: IAG has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-0.3%

IAG

-0.9%

AU Insurance

-0.1%

AU Market


1 Year Return

10.9%

IAG

9.6%

AU Insurance

16.5%

AU Market

Return vs Industry: IAG exceeded the Australian Insurance industry which returned 9.6% over the past year.

Return vs Market: IAG underperformed the Australian Market which returned 16.5% over the past year.


Shareholder returns

IAGIndustryMarket
7 Day-0.3%-0.9%-0.1%
30 Day-2.6%-1.5%1.5%
90 Day1.0%-0.6%3.5%
1 Year15.6%10.9%15.7%9.6%23.2%16.5%
3 Year65.8%39.1%42.4%22.5%41.1%21.9%
5 Year63.5%21.7%48.6%14.0%55.2%20.6%

Price Volatility Vs. Market

How volatile is Insurance Australia Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Insurance Australia Group undervalued compared to its fair value and its price relative to the market?

20.94x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: IAG (A$7.84) is trading above our estimate of fair value (A$6.8)

Significantly Below Fair Value: IAG is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: IAG is poor value based on its PE Ratio (20.9x) compared to the Insurance industry average (20x).

PE vs Market: IAG is poor value based on its PE Ratio (20.9x) compared to the Australian market (18.7x).


Price to Earnings Growth Ratio

PEG Ratio: IAG is poor value based on its PEG Ratio (22.1x)


Price to Book Ratio

PB vs Industry: IAG is good value based on its PB Ratio (2.8x) compared to the AU Insurance industry average (2.8x).


Next Steps

Future Growth

How is Insurance Australia Group forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

0.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: IAG's forecast earnings growth (0.9% per year) is below the savings rate (2.3%).

Earnings vs Market: IAG's earnings (0.9% per year) are forecast to grow slower than the Australian market (9.7% per year).

High Growth Earnings: IAG's earnings are forecast to grow, but not significantly.

Revenue vs Market: IAG's revenue (0.6% per year) is forecast to grow slower than the Australian market (3.6% per year).

High Growth Revenue: IAG's revenue (0.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: IAG's Return on Equity is forecast to be low in 3 years time (14.3%).


Next Steps

Past Performance

How has Insurance Australia Group performed over the past 5 years?

-4.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: IAG has high quality earnings.

Growing Profit Margin: IAG's current net profit margins (11.2%) are lower than last year (11.7%).


Past Earnings Growth Analysis

Earnings Trend: IAG's earnings have declined by -4.2% per year over the past 5 years.

Accelerating Growth: IAG's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: IAG had negative earnings growth (-8%) over the past year, making it difficult to compare to the Insurance industry average (7.2%).


Return on Equity

High ROE: IAG's Return on Equity (14%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Insurance Australia Group's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: IAG has a low level of unsold assets or inventory.

Debt Coverage by Assets: IAG's debt is covered by short term assets (assets are 5.6x debt).


Financial Institutions Analysis

Asset Level: IAG's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if IAG has a sufficient allowance for bad loans.

Low Risk Liabilities: IAG reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if IAG has an acceptable proportion of non-loan assets held.

Low Risk Deposits: IAG has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if IAG has an appropriate level of bad loans.


Next Steps

Dividend

What is Insurance Australia Group's current dividend yield, its reliability and sustainability?

4.08%

Current Dividend Yield


Dividend Yield vs Market

company4.1%marketbottom25%2.4%markettop25%5.6%industryaverage4.3%forecastin3Years4.2%

Current dividend yield vs market & industry

Notable Dividend: IAG's dividend (4.08%) is higher than the bottom 25% of dividend payers in the Australian market (2.37%).

High Dividend: IAG's dividend (4.08%) is low compared to the top 25% of dividend payers in the Australian market (5.62%).


Stability and Growth of Payments

Stable Dividend: IAG's dividend payments have been volatile in the past 10 years.

Growing Dividend: IAG's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (85.5%), IAG's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: IAG's dividends in 3 years are forecast to be covered by earnings (78.7% payout ratio).


Next Steps

Management

What is the CEO of Insurance Australia Group's salary, the management and board of directors tenure and is there insider trading?

2.3yrs

Average management tenure


CEO

PG Harmer (59yo)

4yrs

Tenure

AU$4,777,000

Compensation

Mr. Peter G. Harmer, also known as PG, has been the Chief Executive Officer, Managing Director and Executive Director at Insurance Australia Group Limited since November 16, 2015. Mr. Harmer has been an Ex ...


CEO Compensation Analysis

Compensation vs Market: PG's total compensation ($USD3.25M) is about average for companies of similar size in the Australian market ($USD3.53M).

Compensation vs Earnings: PG's compensation has been consistent with company performance over the past year.


Management Age and Tenure

2.3yrs

Average Tenure

56yo

Average Age

Experienced Management: IAG's management team is considered experienced (2.3 years average tenure).


Board Age and Tenure

2.9yrs

Average Tenure

62yo

Average Age

Experienced Board: IAG's board of directors are not considered experienced ( 2.9 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: IAG insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellAU$3,169,12506 Nov 19
Peter Harmer
EntityIndividual
Role
Chief Executive Officer
MD, CEO & Executive Director
Shares400,000
Max PriceAU$7.97
SellAU$926,41012 Mar 19
Peter Harmer
EntityIndividual
Role
Chief Executive Officer
MD, CEO & Executive Director
Shares120,000
Max PriceAU$7.72
BuyAU$49,41522 Nov 18
Helen Nugent
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares7,000
Max PriceAU$7.06

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Nick Hawkins (51yo)

    Chief Financial Officer

    • Tenure: 11.3yrs
    • Compensation: AU$2.91m
  • Mark Milliner

    Chief Executive of Australia

    • Tenure: 2.3yrs
    • Compensation: AU$2.87m
  • PG Harmer (59yo)

    MD, CEO & Executive Director

    • Tenure: 4yrs
    • Compensation: AU$4.78m
  • David Watts (56yo)

    Chief Risk Officer

    • Tenure: 1.2yrs
    • Compensation: AU$1.21m
  • Rebecca Farrell

    Acting General Counsel

    • Tenure: 1.3yrs
  • Craig Olsen

    Chief Executive of New Zealand

    • Tenure: 3.9yrs
    • Compensation: AU$1.88m
  • Julie Batch

    Chief Customer Officer

    • Tenure: 3.9yrs
    • Compensation: AU$1.65m
  • David Harrington

    Group Executive of Strategy & Corporate Development

    • Tenure: 1.6yrs
    • Compensation: AU$1.31m
  • Simon Phibbs

    Senior Manage of Investor Relations

    • Tenure: 0yrs
  • Neil Morgan

    Group Executive of Technology

    • Tenure: 1.8yrs

Board Members

  • Helen Nugent (70yo)

    Independent Non-Executive Director

    • Tenure: 2.9yrs
    • Compensation: AU$243.00k
  • Duncan Boyle (67yo)

    Independent Non-Executive Director

    • Tenure: 2.9yrs
    • Compensation: AU$292.00k
  • George Savvides

    Independent Non-Executive Director

    • Tenure: 0.4yrs
    • Compensation: AU$12.00k
  • Simon Allen (61yo)

    Independent Non Executive Director

    • Tenure: 0yrs
  • Elizabeth Bryan (73yo)

    Independent Chairman of the Board

    • Tenure: 3.7yrs
    • Compensation: AU$788.00k
  • Tom Pockett (61yo)

    Independent Non-Executive Director

    • Tenure: 4.8yrs
    • Compensation: AU$267.00k
  • PG Harmer (59yo)

    MD, CEO & Executive Director

    • Tenure: 4yrs
    • Compensation: AU$4.78m
  • Sheila McGregor

    Independent Non-Executive Director

    • Tenure: 1.7yrs
    • Compensation: AU$210.00k
  • Jon Nicholson (63yo)

    Independent Non-Executive Director

    • Tenure: 4.2yrs
    • Compensation: AU$267.00k
  • Michelle Tredenick (58yo)

    Independent Non-Executive Director

    • Tenure: 1.7yrs
    • Compensation: AU$230.00k

Company Information

Insurance Australia Group Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Insurance Australia Group Limited
  • Ticker: IAG
  • Exchange: ASX
  • Founded: 1925
  • Industry: Property and Casualty Insurance
  • Sector: Insurance
  • Market Cap: AU$17.939b
  • Shares outstanding: 2.28b
  • Website: https://www.iag.com.au

Location

  • Insurance Australia Group Limited
  • Tower Two
  • Level 13
  • Sydney
  • New South Wales
  • 2000
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
IAUG.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDAug 2000
IAGASX (Australian Securities Exchange)YesOrdinary SharesAUAUDAug 2000
NRMDB (Deutsche Boerse AG)YesOrdinary SharesDEEURAug 2000
IAGCHIA (Chi-X Australia)YesOrdinary SharesAUAUDAug 2000
IAUG.YOTCPK (Pink Sheets LLC)UNSPNSRD ADS NEWUSUSDOct 2008
IAGPDASX (Australian Securities Exchange)FRN CNV PERP AUD100AUAUDFeb 2017

Biography

Insurance Australia Group Limited underwrites general insurance products in Australia and New Zealand. The company offers short-tail insurance, including motor vehicle, home and contents, business packages ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/11/18 10:32
End of Day Share Price2019/11/18 00:00
Earnings2019/06/30
Annual Earnings2019/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.