Treasury Wine Estates Ltd (ASX: TWE) shares are falling again on Thursday.

At the time of writing, the wine giant’s shares are down 6% to $4.68.

This means they are now down 58% since the start of the year.

Is this a buying opportunity for investors? Let’s see what analysts at Macquarie Group Ltd (ASX: MQG) are saying about this fallen giant.

What is the broker saying about Treasury Wine shares?

Like everyone, Macquarie was disappointed with Treasury Wine’s update this week.

It notes that its guidance implies a sharp decline in earnings for the first half of FY 2026. It said:

At the result in Aug-25, TWE guided to EBITS growth in FY26E, driven by low-to-mid-teens growth in Penfolds. In Oct-25, guidance was withdrawn, citing the uncertain outlook for Penfolds and Treasury Americas. The midpoint of 1H26E guidance provided today implies a ~40% decline vs. pcp. The ongoing lowering of earnings forecasts in a short period of time suggests the lack of earnings visibility for the group. Positively, the new CEO has taken a more conservative view with respect to right-sizing inventory in the key China and US markets.

But it certainly isn’t game over for Treasury Wine. Macquarie believes there is still inherent value in the key Penfolds brand and thinks that the company’s decision to right-size its inventory is a smart move. It adds:

We agree with management there is inherent value in the Penfolds brand, particularly in the luxury/ultraluxury tiers. Maintaining this luxury status as distributors right-size inventories and discount to reduce stock will see the business in a stronger position long-term, contingent on managing concerns noted above.

Should you buy Treasury Wine shares?

Macquarie isn’t in a rush to buy the company’s shares just yet despite their heavy decline.

According to the note, the broker has retained its neutral rating on them with a reduced price target of $5.00.

This implies potential upside of approximately 7% for investors from current levels.

Commenting on its recommendation, Macquarie said:

Retain Neutral. Management’s focus on right-sizing inventories to more closely reflect demand while also seeking to reduce leverage are critical, albeit from a challenging startpoint. Risks will remain elevated in the near term, however there is opportunity on execution.

Valuation: TP reduces ~22% to $5.00 consistent with cashflow changes. Catalysts: Wine Australia export data (monthly); Chinese consumption trends and Government policy; Industry commentary on depletions in China and the US.

The post Does Macquarie rate Treasury Wine shares a buy the dip opportunity? appeared first on The Motley Fool Australia.

More reading

• 5 ASX shares I’m avoiding this week
• Treasury Wine Estates shares slump 56% this year. Buying opportunity or time to sell up?
• Why DroneShield, Graincorp, Treasury Wine, and Woodside shares are sinking today
• Why are Treasury Wine shares crashing 17% today?
• Treasury Wine Estates’ cost-cut plan and outlook: What investors need to know

Motley Fool contributor James Mickleboro has positions in Treasury Wine Estates. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and Treasury Wine Estates. The Motley Fool Australia has positions in and has recommended Macquarie Group and Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

These ASX shares are on investor radars for all the wrong reasons this week. And for that reason, I’m steering clear.

Australia and New Zealand Banking Group (ASX: ANZ)

ANZ shares have stormed higher over the past 12 months, but I don’t think there is any more room for the shares to run. The team at Macquarie have also flagged that the banking giant is showing early signs of revenue underperformance. It’s enough for me to stay clear right now.

ANZ shares are 0.15% higher at $36.16 at the time of writing on Thursday morning.

CSL Ltd (ASX: CSL)

CSL shares have tumbled another 6% this week as investor sentiment continues to slide. On Monday, the team at Macquarie downgraded the company’s shares to a neutral rating (from buy) and said the company is now out of its growth stage. The broker also heavily reduced its price target on the shares to $188, down from $275.20 previously. 

The ASX shares are trading at $173.20 a piece at the time of writing.

Treasury Wine Estates Ltd (ASX: TWE) 

The wine giant’s shares crashed 9.29% on Wednesday after the company released an investor update and outlook for the first half of FY26. It said that trading conditions have weakened in recent months, particularly in the US and China. This means near-term improvement is unlikely. 

Macquarie analysts lowered their target price on Treasury Wine Estates shares to $5 (down from $6.40) this morning. More analyst updates on the stock are likely to come in over the next few days. I’m quietly optimistic that the latest result is mostly priced in by the market already, but I’d sit tight on the shares until the dust has settled.

At the time of writing on Thursday morning, the ASX wine giant’s shares have dropped another 4.22% to $4.77 a piece.

Commonwealth Bank of Australia (ASX: CBA)

It’s no secret that I’m keeping well clear of CBA shares right now. I still think the bank stock’s premium share price is far too expensive, and could correct sharply from here. Discussions about tighter monetary policy and the return of rate-hike talk will continue to put pressure on the banking giant’s shares, too.

At the time of writing, the ASX banking giant’s shares are 0.25% lower for the day at $153.48 a piece.

Lendlease Group (ASX: LLC)

Lendlease shares have faced several headwinds this year, and according to DP Wealth Advisory’s Andrew Wielandt, the company could continue to struggle in the near term. He explained that the company has reduced debt and risk by divesting overseas projects and operations, but is concerned that this may lead to fewer development opportunities because it has less capital to recycle.

At the time of writing on Thursday morning, Lendlease shares are trading at $4.95 a piece, unchanged for the day so far.

The post 5 ASX shares I’m avoiding this week appeared first on The Motley Fool Australia.

More reading

• Why these 2 battered ASX 200 stocks could shine in 2026
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• Alert! Analysts name 3 ASX 200 shares to sell today
• Why DroneShield, Graincorp, Treasury Wine, and Woodside shares are sinking today

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Macquarie Group, and Treasury Wine Estates. The Motley Fool Australia has positions in and has recommended Macquarie Group and Treasury Wine Estates. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Boss Energy Ltd (ASX: BOE) shares are back from their trading half and crashing deep into the red.

In morning trade, the uranium producer’s shares are down 22% to a multi-year low of $1.22.

Why are Boss Energy shares crashing 22%?

Investors have been rushing to the exits today after the company released its eagerly anticipated Honeymoon project review.

Short sellers have been loading up on Boss Energy’s shares this year on the belief that this review would disappoint. And it seems that they were spot on.

According to the release, the Honeymoon review has indicated an expected material and significant deviation from the assumptions underpinning its 2021 Enhanced Feasibility Study (EFS).

This deviation is expected to impact life of mine production and costs from FY 2027 onwards, primarily due to less continuity of higher-grade mineralisation, mineralisation not overlapping, less leachability, and smaller wellfields.

In light of this, the company has now formally withdrawn the EFS and confirms that it should no longer be relied upon as a guide to future operational performance.

What now?

One small positive is that Boss Energy has identified a potential pathway forward based on its updated understanding of the resource, deposit characteristics, and an alternative wide-space wellfield design that could be suitable to Honeymoon.

The company has initiated a series of accelerated work programs to assess the potential economic benefits of the wide-spaced wellfield design.

An initial update will be provided in first quarter of 2026, with completion of a scoping study targeted for the second quarter and completion of a new feasibility study in the third quarter.

Management believes that a wide-spaced wellfield design could potentially deliver lower costs and improved lixiviant grades compared to the current wellfield design. This is by increasing leaching time, lowering reagent use, and utilising wellfield infrastructure over a larger surface area and more uranium under leach.

With $212 million of cash and liquid assets (as of 30 September 2025), it believes it is positioned to self-fund the key work programs associated with the new feasibility study, a potential change to wellfield design, and the potential early development of Gould’s Dam and Jason’s Deposit.

Boss Energy’s managing director, Matthew Dusci, said:

Although Boss acknowledges this disappointing outcome, the Honeymoon Review and delineation drilling programs have enabled the identification of a potential pathway forward through a new wide-spaced wellfield design. While additional work is necessary to finalise a New Feasibility Study, this development presents an opportunity for Boss to potentially lower operating costs, optimise production profiles, and extend mine life compared to the current wellfield design.

We acknowledge there is a significant amount of work required for Boss to restore shareholder value. The team is committed to delivering on this important measure through optimising what we see as a robust uranium production asset, if a new wide-spaced wellfield design can be successfully implemented.

The post Boss Energy shares crash 22% on devastating news appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Shares in BetMakers Technology Group Ltd (ASX: BET) were trading higher on Thursday after the company announced a multi-year agreement with global gambling operator Stake.

Under the agreement, BetMakers will deliver its RaceOdds+ solution to Stake to drive that company’s global horse racing expansion, BetMakers said in a statement to the ASX.

The agreement is for an initial three-year period with a two-year extension option.

Full tech suite provided

The company said other details included Stake gaining access to “BetMakers’ full pricing and trading capability, global racing content, the BetStream racing vision player, and the Racelab suite of products – Insights, Live, Stories and Informatics”.

BetMakers added:

Additionally, the agreement will see BetMakers’ proprietary Global Tote Hub provide tote pool access to stake.com customers, allowing them to wager on a global wagering menu of bet types from the world’s premier racecourses – highlighting a unique feature of BetMakers’ RaceOdds+ product offering.

BetMakers said the contract terms included a combination of fixed and variable revenue, with the contract to go live in the second half of the financial year.

BetMakers Chief Executive Officer Jake Henson said the company was thrilled to team up with Stake.

They are one of the fastest growing wagering platforms globally, with a reputation for speed and innovation. Securing this agreement is a strong validation of the depth and quality of our RaceOdds+ product and the broader BetMakers global racing strategy. We are excited and confident that providing stake.com with our full suite of racing technologies, including pricing and trading, rightsholder content, global tote access, streaming and the Racelab portfolio, will enable them to deliver a world-class racing experience to their modern customer base.

The news follows BetMakers striking a major deal with CrownBet earlier this month. BetMakers shares were trading 5.7% higher at 18.5 cents early on Thursday.

The company was valued at $195.7 million at the close of trade on Wednesday.

Bad news for competitor

But while the news was positive for BetMakers, it came at a cost to fellow listed operator RAS Technology Holdings Ltd (ASX: RTH), which was previously providing its Complete Racing Solution to Stake.

RTH said its contract with Stake would not be renewed when the contract finished in May next year.

The company went on to say:

The non-renewal is not expected to have a material impact on RAS’s financial performance in FY26. The Company maintains a strong pipeline of opportunities for FY27, including the recently announced deal to provide a complete racing solution to the LeoVegas Group, and remains confident in its growth trajectory.

RTH shares were 11.9% lower at 85 cents in early trade.

The post Gaming tech company’s tie up with global operator Stake sends shares higher appeared first on The Motley Fool Australia.

More reading

• Why are BetMakers shares charging higher today?

Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Betmakers Technology Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Ras Technology. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is in focus today after the bank received a $50 million operational risk capital charge from APRA and revealed it is subject to an AUSTRAC enforcement investigation into AML/CTF compliance.

What did Bendigo and Adelaide Bank report?

• Received a $50 million operational risk capital charge from APRA effective 1 January 2026
• The capital charge is expected to lower the Level 2 Common Equity Tier 1 (CET1) ratio by about 17 basis points
• CET1 ratio was 11.19% as at 30 November 2025, still above the board’s target
• AUSTRAC has begun an enforcement investigation relating to serious potential contraventions of AML/CTF laws
• The bank continues to uplift its approach to non-financial risk management

What else do investors need to know?

APRA’s decision means Bendigo and Adelaide Bank must hold extra capital against operational risk, but its CET1 ratio remains above both board targets and regulatory minimums for ‘unquestionably strong’ banks.

On the regulatory front, AUSTRAC has not yet decided whether it will take enforcement action following its investigation, leaving some future uncertainty for shareholders. The bank has committed to ongoing engagement with the regulator and ramping up risk management efforts.

Cost estimates for potential remediation or additional compliance are not yet available, with the bank saying further updates will be provided when they are determined.

What did Bendigo and Adelaide Bank management say?

Bendigo Bank CEO and Managing Director Richard Fennell said:

Bendigo Bank has taken a number of steps to improve its risk capability and strengthen its risk culture over the last 12 months however I recognise the need to intensify our focus and our efforts.

What’s next for Bendigo and Adelaide Bank?

The board and executive team are prioritising a broader uplift in non-financial risk maturity, particularly in response to regulators’ feedback and evolving expectations around compliance. The bank says it will provide investors with cost estimates and more information on remediation plans as details are finalised.

In the near term, the bank is focused on constructive engagement with AUSTRAC, strengthening frameworks, and maintaining capital strength. Investors will be watching for more guidance as further regulatory outcomes emerge.

Bendigo and Adelaide Bank share price snapshot

Over the past 12 months, Bendigo and Adelaide Bank shares have declined 24%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 3% over the same period.

View Original Announcement

The post Bendigo and Adelaide Bank hit with APRA capital charge, faces AUSTRAC probe appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

Woodside Energy Group Ltd (ASX: WDS) shares are under pressure on Thursday.

In morning trade, the energy giant’s shares are down over 2% to $22.86.

Woodside shares fall on CEO exit

Investors have been selling the company’s shares today after it announced the shock exit of its CEO.

According to the release, Woodside’s CEO, Meg O’Neill, has resigned after accepting the role of CEO of BP Plc (LSE: BP).

The board has appointed Liz Westcott as acting CEO, effective today. The company notes that Westcott is a widely respected senior executive with deep global operational leadership.

Ms Westcott has led Woodside’s Australian Operations as executive vice president and chief operating officer Australia since joining Woodside in June 2023.

She was previously chief operating officer at Energy Australia, following a 25-year career at ExxonMobil working in Australia, the United Kingdom and Italy.

Woodside highlights that her career has spanned roles in strategic planning, operations, project management, and safety, technical and commercial leadership.

Speaking about the exit of Ms O’Neill, Woodside’s chair, Richard Goyder, congratulated her on her appointment as BP CEO. He said:

The Board’s appointment of Meg as CEO in 2021 set the foundation for Woodside’s transformational growth over recent years. This strong business performance has been translated into approximately $11 billion in dividends paid to shareholders since 2022, and a growth trajectory which is expected to deliver significant value.

Meg leaves Woodside in a strong position, having led the company through the merger with BHP Petroleum, final investment decision on the Scarborough Energy Project, startup of the Sangomar Project, final investment decision for the Louisiana LNG Project, the Beaumont New Ammonia acquisition, introduction of a number of high quality partners in those projects and continued high performance across Woodside’s global operations portfolio.

Goyder was pleased with the appointment of Westcott as acting CEO and believes Woodside is in safe hands. He adds:

Liz’s appointment as Acting CEO provides strong continuity for our business and its people. She will lead and work with Woodside’s highly capable Executive Leadership Team to continue to execute against Woodside’s strategy to deliver shareholder value through disciplined decision-making and operational excellence.

The Board’s ongoing focus on CEO succession planning means Woodside is fortunate to have a number of highly qualified internal candidates as we also assess external talent options to ensure the best possible CEO appointment. We are well positioned to conclude this process efficiently with the intention of announcing a permanent appointment in the first quarter of 2026.

Following today’s move, Woodside shares are down 8% since the start of the year.

The post Woodside shares tumble on shock CEO exit appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended BP. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Paladin Energy Ltd (ASX: PDN) share price is in focus after the company announced a major restructure of its syndicated debt facility, reducing total debt capacity from US$150 million to US$110 million and securing greater flexibility for its balance sheet after recent equity raisings.

What did Paladin Energy report?

• Restructured debt facility reduces total debt capacity to US$110 million (from US$150 million)
• Term Loan Facility now US$40 million (down from US$79.8 million balance as at 30 Sept 2025)
• Undrawn Revolving Credit Facility increased to US$70 million (previously US$50 million, undrawn)
• Significant A$300 million equity raise and A$100 million Share Purchase Plan completed earlier in 2025
• Debt facility maturity extended: Term Loan to 28 Feb 2029; Revolving Credit to 28 Feb 2027, with extension options
• Scheduled US$39.8 million repayment to reduce the Term Loan Facility on completion

What else do investors need to know?

The new facility strengthens Paladin’s position as it ramps up uranium production at the Langer Heinrich Mine (LHM) and beds down its acquisition of Fission Uranium Corp. The enhanced balance sheet flexibility may offer Paladin more room to manoeuvre as it progresses its long-term growth plans.

The restructure features senior secured facilities, customary financial covenants, and options for early repayment or extension. The undrawn revolving facility can be redrawn as needed, providing working capital support if required.

What’s next for Paladin Energy?

Paladin is expected to keep focusing on ramping up LHM production, integrating the Fission Uranium assets, and optimising its capital structure. The company’s improved liquidity and reduced debt costs could position it to take advantage of opportunities in the uranium sector as market conditions evolve.

The updated facility may also provide flexibility for future investments or shareholder returns, depending on Paladin’s production performance and uranium price movements.

Paladin Energy share price snapshot

Over the past 12 month, Paladin Energy shares have risen 13%, outperforming the S&P/ASX 200 Index (ASX: XJO) which has risen 3% over the same period.

View Original Announcement

The post Paladin Energy announces US$110M debt restructure to boost liquidity appeared first on The Motley Fool Australia.

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• 2 ASX 200 shares that could be top buys for growth

Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

Shares in GrainCorp Ltd (ASX: GNC) were sold down sharply this week after the company said that its winter crop receivals would be down for the year and that it would incur a loss on an asset sale.

But according to the team at Macquarie, the stock still remains undervalued, with its strong balance sheet a positive, with net cash of $321 million, and the potential for share price upside from here, along with a healthy dividend yield.

Challenging harvest 

The grain handler said in a statement to the ASX on Wednesday that both harvest volumes and grain prices were under pressure.

As the company said:

GrainCorp’s FY26 receival volumes are being impacted by an expected lower year-on-year ECA crop. Prevailing commodity prices are resulting in less grain being brought to market and, together with near-record international grain and oilseed production, are continuing to place pressure on margins for grain handlers. GrainCorp’s preliminary estimate of total receival volumes for FY26 is 11.0 – 12.0 million tonnes, compared to 13.3 million tonnes received in FY25.

GrainCorp said the winter crop harvest activity was largely complete in Queensland and northern New South Wales, while further south weather interruptions continued to affect the harvest.

In response to the challenging conditions, GrainCorp said it was “maintaining a strong focus on cost management while continuing to deliver industry-leading customer service and reliability”.

The company said it would provide earnings guidance at its annual general meeting on February 18.

Asset sale to notch up a loss

GrainCorp also said it had entered into an agreement to sell GrainsConnect Canada, which it would recognise a loss of $5-$10 million on.

GrainCorp Managing Director Robert Spurway said the divestment followed a strategic review of the company’s assets.

He went on to say:

This transaction reflects GrainCorp’s ongoing commitment to portfolio optimisation and our readiness to rationalise assets where necessary to improve returns. Divestment of GrainsConnect allows GrainCorp to focus on alternative value-creating opportunities that are in the best interests of our shareholders.

That transaction is expected to be finalised in the first half of 2026.

GrainCorp shares plummeted following the company’s market updates, falling as much as 25.1% at one point to $6.70 before recovering to close at $7.09 on Wednesday.

Shares looking cheap

The team at Macquarie lowered their price target on the shares from $8.80 to $8.30 on this week’s news; however, they said the company’s strong balance sheet was a positive, supporting its investment needs, “healthy dividends”, and the $75 million share buyback announced last financial year.

Once dividends are factored in, Macquarie is predicting a total shareholder return from GrainCorp shares of 21.2%.

They are also forecasting the dividend yield to stay healthy, predicting a 4.9% yield this financial year.

The post Macquarie tips more than 20% returns for this ASX 200 stock after a sharp sell-off this week appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

For more than a decade, investors grew accustomed to falling interest rates, low inflation, and cheap capital. That backdrop shaped portfolio construction, valuation frameworks, and expectations about which businesses could thrive.

That era now appears firmly behind us.

The Reserve Bank of Australia’s latest decision to hold rates came with clear guidance that inflation remains sticky and further tightening cannot be ruled out. Since then, both two-year and ten-year Australian government bond yields have drifted higher, reinforcing the idea that we are living in a structurally higher-rate, higher-debt world.

In this environment, investors seeking steady compounding are often drawn to businesses with two powerful characteristics: pricing power and balance sheet resilience. 

One industry that quietly ticks both boxes is insurance.

Pricing power in an inflationary world

At its core, pricing power refers to a company’s ability to pass higher costs onto customers without suffering a material loss of demand. While many industries struggle to do this consistently, insurance stands apart.

Insurance is rarely loved, but it is widely required. 

Whether it’s home and contents, motor, health, life, or business protection, many policies are essential rather than discretionary. As a result, insurers have historically been able to lift premiums in line with — and often ahead of — inflation, with limited impact on overall policy volumes.

This dynamic has been on full display over the past few years. Premium rates across multiple insurance lines have increased meaningfully as claims inflation, natural catastrophe costs, and reinsurance expenses have risen. Yet demand has largely held firm, supporting revenue growth and margin recovery for the better-run insurers.

Higher rates can be a tailwind, not a headwind

Insurance businesses have another structural advantage that is often overlooked. Unlike many capital-intensive companies, insurers typically benefit from rising interest rates.

Premiums are collected upfront, while claims are paid later. In the interim, insurers invest this “float” in conservative portfolios dominated by cash and fixed income. When interest rates rise, the yield on those investments increases, flowing directly through to higher investment income.

Not all insurers are created equal

That caveat is crucial. Insurance is not a one-way bet, and history is littered with examples of poor underwriting, mispriced risk, and capital mismanagement destroying shareholder value.

This is why investors need to differentiate between industry leaders and laggards.

On the ASX, companies such as Insurance Australia Group (ASX: IAG) and QBE Insurance Group (ASX: QBE) are frequently cited as bellwethers for the sector. Broker commentary has pointed to improving margins, rising premium rates, and the potential for earnings upgrades if catastrophe experience normalises over time.

Lessons from Warren Buffett

No discussion of insurance investing would be complete without mentioning Warren Buffett. Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) owned insurance businesses have been a central pillar of its success for decades, providing a steady stream of low-cost capital that Buffett has redeployed into high-quality investments.

That structure is unlikely to be directly replicable by everyday investors. However, the principle is highly relevant.

Buffett has long emphasised the importance of owning quality businesses with durable competitive advantages, strong balance sheets, and management teams that understand risk. Well-run insurers can meet those criteria when they combine disciplined underwriting with the intelligent use of float.

Foolish Takeaway

In a world where inflation remains elevated and interest rates stay higher for longer, insurance may not be exciting, but it can be effective.

For patient investors focused on steady compounding rather than short-term market narratives, high-quality insurers offer a combination of pricing power, defensive demand, and potential upside from higher rates.

As always, selectivity matters. But for those willing to look beyond the obvious growth stories, insurance could remain one of the market’s quiet beneficiaries in the years ahead.

The post Investing in a higher-for-longer world and the ASX sector built to cope appeared first on The Motley Fool Australia.

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Motley Fool contributor Leigh Gant owns shares in  Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.