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3 insurance stocks holding their own despite industry headwinds

Many investors consider their share portfolio as insurance for their retirement, and that makes sense.

But there are other types of insurances we must have to get by in a day-to-day sense; for our cars, homes, contents and health which means those providing such products have a pretty good opportunity to net some decent dollars from the average Australian over their lifetime.

These 3 insurance stocks are having a decent run of late, despite an Australian Competition and Consumer Commission (ACCC) report into insurance rates putting pressure on margins and other industry headwinds.

Here’s why.

Insurance Australia Group Ltd (ASX: IAG)

Shares in general insurance group with operations across Australia, New Zealand and Asia, Insurance Australia Group Ltd have been on a steady incline in the last 12 months – up 0.7% to $8.48 at the time of writing a rise from $6.53 at this time last year.

IAG has recently entered into a $525 million sale agreement with Tokio Marine and Nichido Fire Insurance Co. Ltd for its operations in Thailand and Indonesia.

The sale covers IAG’s interests in 98.6% of Safety Insurance in Thailand and 80% of PT Asuransi Parolamas in Indonesia with the transaction expected to be completed by June 30, 2019 – raking in an after-tax profit of at least $200 million for IAG’s FY19 results, something that has obviously made shareholders quite happy.

IAG logged an impressed half-year result earlier in the year, with NPAT rising by 23.5% and a dividend increase of 7.7% and with a grossed-up dividend yield of around 6% things are looking pretty rosy for IAG right now.

Suncorp Group Ltd (ASX: SUN)

Shares in financial services conglomerate Suncorp Group Ltd have recovered nicely from its most recent dip, with share prices up 0.5% to $14.47 at the time of writing.

While Suncorp’s share price has been subject to some volatility in the last year, things appear to be on the up for the household name retail banker – getting on the right side of customers back in May when it was the first bank to lower interest rates on investor loans in housing.

Macquarie has an underperform rating on Suncorp right now but lifted its price target to $13.35 late last week.

While I wouldn’t consider a buy-in right now, Suncorp has been performing well despite a variety of peripheral pressures and that is something the $18.7 million market cap company has tended to prove itself as capable of doing, historically.

Steadfast Group Ltd (ASX: SDF)

Shares in general insurance broker network Steadfast Group Ltd have had an up and down 12 months, but are up 0.5% to $2.89 at the time of writing.

Steadfast has been focused on harnessing technological advancements to improve its pricing competition and increase return on investment with a good run of new brokers joining its network.

Steadfast’s half-year results reported back in February were solid, with underlying revenue up 7.8% to $269.6 million and underlying NPAT rising 8.4% to $32.5 million.

With a $2.2 billion market cap, Steadfast is still a far cry from asserting itself as a leading ASX-listed insurer, but it sure seems “steadfast” in its approach to achieving such a goal.

Elsewhere in the sector, QBE Insurance Group Ltd (ASX: QBE) shares have tumbled in the last 12 months, at $9.58 today – a fair drop from its share price of $13.23 at this time last year.

AMP Limited (ASX: AMP) shares have also dwindled in price, with today’s price of $3.62 well down from its $5.12 share price at this time last year.

In the insurance space IAG is certainly considered by many as a bluechip stock.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Insurance Australia Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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