Morningstar | IAG’s 1H19 Result Hampered by Higher Natural Peril Costs
Insurance Australia Group is one of the two largest domestic general insurers operating in Australia and New Zealand. Despite heritage brands and high market shares, its products are commoditised and sustainable competitive advantages are elusive, hence the pressure from competition on revenue and margins. The firm exited its U.K. business several years ago to focus on its core business in Australia and New Zealand. The insurance market is mature, with cyclical, price-competitive, premium rates. Large insured events occur without warning, and claims trends are largely beyond the control of management in the short term. Reinsurance protection and capital management mitigate risks to some extent. General insurance is inherently risky, with volatile earnings, but recent quota share deals reduce earnings volatility, release capital, and increase more-stable fee based income. The Asian growth strategy has been cut.Insurance Australia Group is engaged in the underwriting of general insurance and related corporate services and investing activities. Co.'s business divisions are: Consumer, which includes short tail insurance such as motor vehicle and long tail insurance such as compulsory third party, as well as travel insurance, life insurance, income protection and funeral products; Business, which provides business and farm insurance, and workers' compensation services; New Zealand, a general insurance provider in New Zealand; Asia, which provides personal and commercial insurance products through local brands in Asia; and Corporate and other, which includes placement of Co.'s reinsurance program.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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