The Insurance Australia Group Ltd (ASX: IAG) share price is in focus today after telling investors about the damage from the Brisbane floods.
IAG is one of the largest insurance businesses in Australia and New Zealand with a number of brands such as NRMA Insurance, CGU, SGIO, SGIC, Swann Insurance, WFI, Lumley Insurance, NZI and State.
IAG share price in focus after floods
There has recently been widespread flooding in southeast Queensland and northern New South Wales.
As a major insurance business, IAG is one of the most exposed companies to whatever insurance payouts happen.
IAG said that it’s too early to determine the extent and financial impact of the weather event.
As at 5am on 1 March 2022, IAG has received approximately 6,700 claims across its brands, with NRMA Insurance representing almost three quarters of total claims. The number of claims is expected to rise in the coming days, with the event still unfolding and as customers identify damage to their property.
After allowing for quota share arrangements, the combination of all catastrophe covers result in IAG having a maximum event retention of $95 million, as it indicated in its FY22 half-year result. It will be interesting to see how the IAG share price reacts over the next few days.
Management commentary
The IAG Managing Director and CEO Nick Hawkins said:
The tragic loss of life and devastation from this disaster is heartbreaking.
Ensuring the safety of residents is our priority and we urge everyone to follow the directions of the emergency services who, once again, are doing an incredible job rescuing people from floodwaters.
Our dedicated major events team is supporting customers with emergency help such as temporary accommodation and ensuring properties are safe and secure. Our teams are assessing properties wherever possible and will love into the flood impacted areas as soon as waters recede.
Summary thoughts on the IAG share price
IAG seems to be seeing more damaging storms and floods these days. In the longer-term, I’m not sure what this will mean for profitability.
I’m not a fan of investing in insurance businesses because of the fact they can fall after a difficult weather-affected year and when the ASX share market goes down.
There are other ASX dividend shares that I would rather be looking at for dividends.
