The Insurance Australia Group Ltd (ASX: IAG) share price has dropped lower in early trade after announcing that it has been made aware of a representative proceeding filed by Johnson Winter & Slattery in the Federal Court of Australia against it.
At the time of writing the insurance giant's shares are down 0.5% to $7.55.
What has happened?
According to the announcement, a representative proceeding has been filed by Johnson Winter & Slattery in the Federal Court against it and its subsidiary, Swann Insurance, on behalf of Jones Asirifi-Otchere.
The company provided no further details and will update the market as and when it receives more information and as appropriate.
At this stage it is unclear what the proceeding relates to, but is presumably related to motorcycle insurance or finance given Swann Insurance's inclusion.
Swann is a subsidiary of Insurance Australia and a specialist in motorcycle insurance. It divested its motor dealer, finance broker, and fleet network operations at the beginning of August 2016 and ceased participation in the motorcycle dealer channel from July 2017.
What now?
As details of the proceeding are limited at best, shareholders will need to be patient with this one. Though, they can take heart from the relatively small decline in its share price today, especially given how the market is down by a similar amount.
This could be a sign that investors are not overly worried by the news and it is business as usual.
Should you invest?
Whilst insurance shares like Insurance Australia, QBE Insurance Group Ltd (ASX: QBE), and Suncorp Group Ltd (ASX: SUN) are attractive for their generous dividend yields, I'm not a big fan of them due to their inconsistent performances over the last decade.
While things may be better over the next decade, I intend to focus on opportunities elsewhere on the market.
