The Insurance Australia Group Ltd (ASX: IAG) share price was one of the few to rise on Thursday last week, in an otherwise bloody day of trading on the ASX. In fact, it was one of only three shares in the ASX 50 not to fall. IAG continued this strength on Friday, significantly outperforming the ASX even as the week closed on a more positive note.
Does this mean that the $18.16 billion insurer has put its recent falls behind it?
A closer look at IAG's recent performance
The ASX's falls last week came on the heels of woes in US markets. Thursday's one-day fall was the Aussie market's worst performance in 18 months, with most of the largest companies on the market dropping roughly in step with it. IAG was one of the few bright spots, with just slightly better than a half a per cent rise Thursday, and a 2.62% rise on Friday. The share price has continued its upward trajectory today, opening up 1.24% in morning trade.
This comes after weeks of suffering for IAG shares. The IAG share price began to slide in the last days of July, before falling in earnest from $8.31 on 5 August to close at $7.68 on 8 August. This slide was the result of disappointing FY19 financial results, with cash earnings down by 10%. It was only the sale of the company's interests in Thailand that allowed it to increase profits for the year.
IAG's dividend also fell to 32 cents, a 5.9% decline, and with many investors considering the large blue-chip company an income investment first, it's not surprising that the share price took a hit as a result.
So, why did IAG manage to stand strong against the tide of red in the market late last week?
IAG's new workplace flexibility technology
On 23 July, IAG announced a new system to support flexible work for its support staff and free up managerial resources. This came in the form of an app that allows employees to trade shifts in a virtual marketplace. Employees earn 'flexicoins' by switching to shifts that need covering. They can later spend these 'coins' to switch shifts to a more desirable time. More popular shifts will gradually become worth fewer flexicoins, and vice versa.
IAG Executive General Manager Amanda Whiting stated:
The process of changing shifts has previously been quite manual and often involved several conversations between the employee, their manager and colleagues. Not only is this time-consuming for the individual, but labour intensive for the business.
With some managers reportedly spending as much as 20% of their time managing this issue before the change, the benefits for IAG are obvious. This new technology may demonstrate that IAG are ahead of the curve on managing people in the modern workplace, and willing to use technology to keep operations lean.
Foolish takeaway
Despite leading the way in terms of workforce management, these efficiency gains are nothing in the face of disappointing financial results. While IAG's new tech brought the company some positive media attention recently, especially in IT circles, it didn't prevent the share price slide in early August.
It may be that IAG's share price held firm on Thursday for no better reason than it had already fallen so far in recent weeks. Investors may have been more concerned about stocks that had been rising right up until problems in the US market took hold.
Potential investors should watch the company carefully from here to see if it continues to outperform the ASX.
