Insurance Australia Group Limited [ASX:IAG] closed up 2.15% higher on Thursday.
IAG is a general insurer with operations in Australia, New Zealand and Asia. Currently they offer insurance under several brands, including CGU, Swann Insurance, NRMA, NZI and AMI Insurance (NZ) and Safety and NZI (Thailand). IAG also has joint ventures in India, China and Malaysia.
The share price rose today when IAG released preliminary 2014 financial year estimates.
The forward guidance early in the financial year estimated the insurance margin to be between 14.5–16.5%. Preliminary data surprised the market today. The insurance margin for FY 2014 is more likely 18–18.3%.
In addition, the net earned premium is likely to be under just under 3%. Initial expectations were for around 3%. Net earned premium, or NEP, is how much an insurer has ‘earned’ during the year for each policy taken out.
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Given the preliminary results, investors will be looking for to the full 2014 financial data, which will be available on 19 August. In addition, IAG estimates ‘peril’ claims will be around $555 million instead of the estimated $640 million. In other words, the weather hasn’t been that bad this year, so there have been fewer claims on premiums.
Finally, even though the share price has only gained 3.45% during the past 12 months, the company pays a solid dividend of 36 cents.
Shae Smith+
Editor, Money Weekend
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