Here's why the IAG (ASX:IAG) share price is slumping today

COVID-19 has interrupted businesses across Australia.

| More on:
sad child holds paper and leans with head in hand near a computer looking downcast.

Image source: Getty Images

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

sdf

The Insurance Australia Group Ltd (ASX: IAG) share price is sliding today, down 1% in early afternoon trade to $5.34 per share.

Below we take a look at the insurance giant's latest market announcement.

What did IAG announce?

The IAG share price is slipping lower today after the company reported CMC Hospitality has filed an application starting a representative proceeding against it in the Federal Court of Australia.

The S&P/ASX 200 Index (ASX: XJO) listed insurance giant could not yet provide details of the application as it had not been served with it. However, IAG noted the application "appears to relate to insureds who hold policies with CGU and business interruption losses related to COVID-19".

CGU Insurance Limited is an intermediary-based insurance company that is part of IAG.

With a new wave of lockdowns impacting business operations across Australia's most populous states, business interruption losses are growing into the multiple billions of dollars.

IAG stated it is among a number of other insurers who will be part of "an industry test case" in Federal Court hearings that are commencing today. It said the test case is "the most efficient process to obtain clarity and to resolve issues for customers with business interruption claims".

The insurance company said it will follow the court's final rulings and assess any business interruption claims "as quickly as possible" once the case is resolved.

As it stands, IAG said it "remains satisfied with the adequacy of its provision for business interruption claims".

IAG share price snapshot

The IAG share price is up just over 13% in 2021, compared to a year-to-date gain of just under 12% for the ASX 200.

Over the past month IAG's share price has gained 7%. The past month's returns are largely credited to a strong results reported in early August for the 2021 financial year. That included a 170% increase in cash earnings from FY20 and a doubling of its dividend payout.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Financial Shares

Woman and man calculating a dividend yield.
Financial Shares

Australian insurance sector: Does Macquarie prefer IAG or Suncorp shares?

Here’s an expert’s views on the insurance sector.

Read more »

A woman sits on a chair smiling as she shops online.
Financial Shares

Which ASX 200 financial share delivered better returns in FY25: IAG, AMP, or Zip?

We compare share price movements and dividend payments for these 3 ASX 200 financial stocks.

Read more »

a man sits in unhappy contemplation staring at his computer on his desk in a home environment, propping his chin on his hand.
Financial Shares

Did Suncorp or QBE insurance shares perform better in the last year?

These insurance providers brought solid returns for investors in the last 12 months. 

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Financial Shares

Up 58% since April, this ASX 200 financial stock just reported record results

The ASX 200 wealth management and technology company has been on a tear since April. Here’s the latest.

Read more »

A young woman smiles as she rides a zip line high above the trees.
Financial Shares

5 best ASX 200 financial shares of FY25 (CBA didn't make the cut!)

These stocks were well and truly 'in the black' for share price growth last financial year.

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Financial Shares

Does Macquarie rate IAG Insurance shares a buy, hold or sell?

The insurer's share price has slumped this week.

Read more »

Worried woman calculating domestic bills.
Financial Shares

What's the outlook for household deposit growth for the big 4 banks?

Household deposit growth has accelerated over the past two years.

Read more »

A man looking at his laptop and thinking.
Broker Notes

After crashing more than 21% yesterday, does Macquarie rate Helia shares a buy?

Should I buy the big dip on Helia shares? Here’s Macquarie’s latest share price forecast.

Read more »