Warren Buffett-backed IAG shares flat on $640m sale of Indian business

Insurance Australia Group Ltd (ASX: IAG) continues its retreat into home markets.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Insurance Australia Group Ltd (ASX: IAG) share price is marginally higher at $8.01 this morning after the insurance giant revealed a deal to sell its entire 26% interest in Indian insurer SBI General Insurance Company.

According to the announcement IAG is expecting to receive an FX-adjusted $640 million for the sale that will result in a net profit around $300 to be reflected in IAG's bottom line over FY 2020. T

he insurer also reported that the deal will improve its regulatory capital adequacy position by more than $400 million. 

IAG is guiding for gross written premium (GWP) growth around 3% in FY 2020 with underlying margins (GWP – claims and other costs) across its Australian operations expected to tick marginally higher. 

The group has divested many of its Asian and overseas operations recently as it found it hard to maintain acceptable profit margins as risk was hard to price and claims costs and had a tendency to blow out in exotic markets. 

In a similar way to QBE Insurance Group Ltd (ASX: QBE) it's now focusing on the more profitable and reliable home markets of Australia and New Zealand. 

Motley Fool contributor Tom Richardson 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.

More on Share Market News

rising gold share price represented by a green arrow on piles of gold block
Share Gainers

Here are the top 10 ASX 200 shares today

It was a horrible way to end the trading week today for ASX investors.

Read more »

Piggy bank sinking in water symbolising a record low share price.
52-Week Lows

9 ASX 200 shares tumbling to 52-week lows today

Israel's strike on Iran on Friday dragged several ASX 200 shares to new depths.

Read more »

Female miner smiling at a mine site.
Share Gainers

Up 834% in a year, guess which ASX mining stock is hitting new all-time highs today

The ASX mining stock has gone from strength to strength over the past year.

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why COG, Karoon Energy, Netwealth, and Pilbara Minerals shares are dropping today

These ASX shares are ending the week deep in the red. But why?

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Fiducian Group, Northern Star, Paradigm, and Santos shares are charging higher

These shares are avoiding the market selloff.

Read more »

Dollar sign in yellow with a red falling arrow in front of a graph, symbolising a falling share price.
Share Market News

Why did the ASX 200 just sink to new 2-month lows on Friday?

It’s been a rocky week for the ASX 200. But why?

Read more »

Woman looking at a phone with stock market bars in the background.
Opinions

I'm buying these quality ASX shares to capitalise on the decline

These are the shares I'd buy if the markets get any worse.

Read more »