An Australian insurance giant has seen its stock value rise by 48% since the start of the year, making it one of the best performers on the Australian Stock Exchange. So what is driving this growth?
Insurance Australia Group (IAG) has outperformed the grand majority of listed companies, with the average index growth sitting at 10.4%.
Despite its UK business being in some trouble, with the firm keen to off-load the operation. In February IAG also reported its six monthly results with net profit falling 11% to $144 million, mainly due to falling equity markets, which resulted in less investment income.
So why is its value growing?
It seems its ambitious Asian expansion plans have swelled the value of the business. IAG has $720 million invested in operations in five Asian countries, including $500m in established businesses in Thailand and Malaysia and $220m building its presence in India, China and Vietnam. It is also looking to enter Indonesia and this is all part of IAG’s plan to generate 10% or more of its gross written premium from Asia by 2016.
In April it acquired Kurnia Insurans Berhad in Malaysia, then snapped up 30% of Vietnam-based AAA Assurance Corporation.
Then in August, the company announced a 26% increase in insurance profit to $832 million, which resulted in net profit of $207 million.
The company is forecasting performance to improve in the 2013 financial year, with gross written premium expected to grow by 9-11%.
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