The Westpac Banking Corp (ASX: WBC) share price is rising on Thursday.

In morning trade, the banking giant’s shares are up 1% to $24.12.

Why is the Westpac share price rising?

The catalyst for the rise in the Westpac share price has been the release of an update on the bank’s superannuation business.

According to the release, Westpac and BT Funds Management have entered into an agreement to merge BT’s personal and corporate superannuation funds with Mercer Super Trust through a successor fund transfer (SFT).

The merger of BT’s personal and corporate superannuation funds includes the Westpac employee default plan, Westpac Group Super Plan. BT employees who support these funds will be offered employment by Mercer as part of the agreement.

Not included in the agreement is superannuation held on Westpac’s BT Panorama and Asgard platforms.

Anything else?

Westpac also revealed that it has entered into an agreement to sell its Advance Asset Management business (Advance) to Mercer Australia.

Advance is a multi-manager investment business which provides specialist funds management services and products, including for certain investment options available through BT Super’s personal and corporate superannuation funds.

It had $43.7 billion funds under management at end of March and manages a number of products available through BT Panorama.

What will the financial impact be?

The SFT will result in a small loss as a result of transaction and separation costs, whereas the sale of Advance will result in a gain.

The net effect of both over the remainder of FY 2022 and FY 2023 is expected to be an after-tax gain of $225 million.

Westpac’s Specialist Businesses Chief Executive, Jason Yetton, commented that these agreements were part of the bank’s simplification strategy. He said:

This is a further step in the simplification of Westpac and supports the Group’s focus on banking in Australia and New Zealand. It also provides significant benefits for BT Super members, new opportunities for our people and redefines the landscape of superannuation in Australia.

Since the formation of Westpac’s Specialist Businesses Division around two years ago we have made significant headway on our portfolio simplification agenda, having announced eight business sales, of which five have now completed.

The post Here’s why the Westpac share price is pushing higher today appeared first on The Motley Fool Australia.

More reading

• Own Westpac shares? Here’s why the bank’s $45b super business is hitting headlines
• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?
• Is the Westpac share price the cheapest in the bank sector today?
• 2 high quality ASX 200 dividend shares analysts have named as buys
• Why Nufarm, Pendal, Wesfarmers, and Westpac shares are sinking

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Bank of Queensland Limited (ASX: BOQ) shareholders will have something to cheer about today as the company pays out its latest dividend.

The regional bank is rewarding eligible investors with a fully franked interim dividend of 22 cents per share.

At Wednesday’s market close, the Bank of Queensland share price finished 0.66% lower to $7.52.

For context, the S&P/ASX 200 Index (ASX: XJO) climbed yesterday with a 0.37% gain to 7,155.2 points.

Let’s take a look below at all the details regarding the company’s dividend.

Bank of Queensland pays out H1 FY22 dividend

Bank of Queensland reported growth across key metrics in its results for the first half of the 2022 financial year.

In summary, statutory net profit after tax (NPAT) rose 38% to $212 million when compared to the prior corresponding period. This was driven by an increased non-interest income and credit to loan impairment expense along with disciplined costs.

Management noted the careful execution of the ME integration and digital transformation program through the period of ongoing economic uncertainty.

The company is aiming for all of its retail brands to operate under a common cloud-based digital platform.

Moving on, the board opted to increase its interim dividend by 29% on H1 FY21’s 17 cents per share.

When looking at the current share price, Bank of Queensland is trailing on a forecast fully franked dividend yield of 5.87%.

Bank of Queensland share price snapshot

Over the past 12 months, the Bank of Queensland share price has fallen by roughly 15%.

Notably, its shares hit a 52-week low of $7.31 on 12 May before quickly rebounding in the days after.

Bank of Queensland has a price-to-earnings (P/E) ratio of 12.08 and commands a market capitalisation of roughly $4.86 billion.

The post The Bank of Queensland dividend is being paid today. Here’s the lowdown appeared first on The Motley Fool Australia.

More reading

• Is the Bank of Queensland share price a buy as an inflation hedge?
• Analysts name 2 ASX dividend shares to buy with juicy yields
• Could Bank of Queensland shares deliver 46% upside AND a 4.5% dividend yield in 2022?
• How does the Bank of Queensland dividend compare to the other ASX 200 banks?
• 2 high-yield ASX 200 dividend shares to fight inflation according to brokers

Motley Fool contributor Aaron Teboneras 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.

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The Appen Ltd (ASX: APX) share price is squarely in focus on Thursday morning following news the AI training data company has received a takeover proposal.

Before the opening bell, Appen laid to rest the rumours this morning, confirming the receipt of an unsolicited, conditional, and non-binding indicative proposal from TELUS International. The Canadian technology company is looking to acquire 100% of Appen at a price of $9.50 per share.

This would put an extra ~48% in the pockets of shareholders from yesterday’s $6.40 closing price.

Appen share price on watch amid acquisition news

The Appen share price might be in for an exciting session today following a $1.2 billion offer from one of the company’s competitors.

According to the release, TELUS is pursuing a takeover of Appen by way of a scheme of arrangement. The initial offer is for $9.50 per share. However, the former tech darling is already tapping Telus on the shoulder and asking for a better offer.

In hopes of a sweetened deal, the board is offering TELUS limited business and financial information upon the Canadian company entering a confidentiality agreement. From here, Appen’s board intends to carefully consider any revised proposals put on the table.

Notably, TELUS acquired Lionbridge AI for roughly US$935 million last year. At the time, the company highlighted that Lionbridge was one of only two globally-scaled managed training data and data annotation services providers in the world.

Today’s news suggests TELUS is attempting to secure somewhat of a monopoly by adding Appen under its umbrella.

From here, Appen will be looking to ensure it gets a worthwhile payout for the business. Given the suppressed Appen share price, the TELUS bid looks opportunistic to many.

What else?

Appen provided shareholders with a trading update in addition to the takeover news. Unfortunately, the details continued to paint the picture of slowing performance. Namely first-half earnings before interest, tax, depreciation, and amortisation (EBITDA) being ‘materially’ lower than the prior corresponding period.

Furthermore, the company’s year-to-date revenue is approximately 14% lower than the prior year. The impacted EBITDA has been attributed to investment in transformation, product, and technology. This news comes ahead of the annual general meeting that will be held tomorrow.

The Appen share price is down 43% since the beginning of the year.

The post Appen share price on watch amid $1.2 billion takeover bid appeared first on The Motley Fool Australia.

More reading

• If you’d invested $10,000 in Appen shares 7 years ago, lucky you! Here’s what you’d have now
• These are the 10 most shorted ASX shares
• These are the 10 most shorted ASX shares
• ASX 200 midday update: Brambles rockets, Goodman upgrades guidance
• Here’s why I think ASX-listed Appen could be a potential takeover target

Motley Fool contributor Mitchell Lawler has positions in Appen Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd. 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.

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If you’re looking for some blue chip ASX 200 shares to buy, then the two listed below could be top options.

Here’s why analysts at Morgans believes these blue chips are in the buy zone and have major upside potential over the next 12 months:

Macquarie Group Ltd (ASX: MQG)

This investment bank could be a blue chip ASX 200 share to buy right now according to analysts at Morgans. Its analysts like the bank due to its positive long term prospects thanks to its exposure to structural growth markets.

We continue to like MQG’s exposure to long-term structural growth areas such as infrastructure and renewables. The company also stands to benefit from recent market volatility through its trading businesses, while the company continues to gain market share in Australia mortgages.

Morgans currently has an add rating and $215.00 price target on its shares. Based on the current Macquarie share price, this implies potential upside of 20%.

QBE Insurance Group Ltd (ASX: QBE)

Another blue chip ASX 200 share that has been tipped as a buy by the broker is insurance giant QBE. Morgans likes the company due to its exposure to rising rates and its cost reduction plans. In addition, it feels the company’s shares are trading on undemanding multiples at the current level.

With strong rate increases still flowing through QBE’s insurance book, and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years. The stock also has a robust balance sheet and remains relatively inexpensive overall trading on ~14x FY22F PE.

Morgans has an add rating and $14.45 price target on the company’s shares. Based on the current QBE share price, this implies potential upside of approximately 18% for investors.

The post Broker names 2 ASX 200 shares with major upside potential appeared first on The Motley Fool Australia.

More reading

• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?
• What’s going on with the Challenger share price today?
• Is Macquarie a quality ASX dividend share worth buying?
• Broker names 2 ASX 200 dividend shares to buy this week
• Is QBE considered an ASX dividend share?

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 recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Catapult Wealth portfolio manager Tim Haselum picks whether he would cut or keep three ASX shares that have plummeted in value this year.

Cut or keep?

The Motley Fool: Let’s take a look at three fallen stars of the ASX. Firstly, would you keep or cut A2 Milk Company Ltd (ASX: A2M)?

Tim Haselum: For us it’s a hold. I know it’s continuing to get smashed, but for us it’s not cheap particularly. When you look at other consumer staple stocks, its [price to earnings ratio] P/E‘s still relatively high.

I think we just have to ignore the China story. We know they’ve got supply chain issues and we know all the China bad side, but for us, one, it’s consumer staples, and two, we will likely see some recovery as things reopen with supply-side issues dropping away. 

But it’s a growth opportunity outside of China we like. New Zealand, the US, Malaysia, Singapore, and Vietnam, they’ve launched new products, they’ve got a net cash position of around $800 million, they’ve got the firepower to wait this out. 

And even though the A2 moniker, if you look at the science, is a bit dubious, the brand clearly has value. Clearly, the punters do like it. 

Yes, there’s competition and, yes, it’s not going to go back up to previous highs, for sure, but we do think there’s growth in it. For us, it’s a hold and let’s see what that can do.

MF: Another one heavily influenced by the Chinese market — would you cut or keep Treasury Wine Estates Ltd (ASX: TWE)?

TH: Treasury Wines, for us, I think it’s too much of a struggle. For us, it’s a cut. 

Their last financials they said they expect zero sales into China. We saw Penfolds saying that they’re going to try and bypass this by opening a winery in China. We just think that it’s just too hard to replicate a Chinese market in the short term. Even though maybe in the long term they can claw it back, this is a pretty major shift for them in the wine industry. 

Australian wine has got a good brand name, but it’s very highly competitive. For us, because they have those issues where they had to dump out cheap wine because nobody wanted it, they’ve tried to shift to the more expensive market at the worst possible time.

When we think about wine versus milk, it’s a very different story. Wine for us, when you have rates rising and you might see mortgage distress and inflation is destroying real wages, that’s a bit of a tough one. For us, I think that wine is one where we’re happy just to cut it out and maybe look at it later on. 

Certainly could turn it around, but at this stage, we just put this one into the ‘too hard’ basket.

MF: Travel is back in a big way. So would you cut or keep Flight Centre Travel Group Ltd (ASX: FLT) shares?

TH: When you look at its market cap, it’s about where it was pre-COVID. If you think the share price is going to go up from here because the other side seems to be priced in, you’re expecting growth beyond pre-COVID. I just think that’s one where that’s a tough argument. 

You’ve got to remember there’s a petrol price story here and inflation is turning everyone. 

The argument for corporate travel, for example, is that corporates are going to jump back onto planes and do meetings. Well, maybe. I don’t think it’s going to fully recover anytime soon. 

There’s going to be a level of both consumer and corporate that’s going to be held back here. I think the whole interest rate rise story, there’s a big psychological effect on that across the board.

For us, looking at the market cap and looking at what’s priced in, I would say it’s one where it’s probably around about close to fair value normal times. 

In a situation like this, I’d say the market’s ignoring downside risk.

The post These 3 ASX shares have plunged this year: Expert reveals what to do appeared first on The Motley Fool Australia.

More reading

• Why is the Flight Centre share price still attracting so much short interest in May?
• Could the new Labor Government herald better days for Treasury Wine shares?
• The Flight Centre share price has taken off 5% in a week. Is travel really ‘back, baby’?
• Can A2 Milk shares benefit from the US baby formula shortage?
• These are the 10 most shorted ASX shares

Motley Fool contributor Tony Yoo 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 recommended A2 Milk, Flight Centre Travel Group Limited, and Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) was a positive performer and pushed higher. The benchmark index rose 0.4% to 7,155 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to rise

The Australian share market looks set to rise on Thursday following a positive night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 11 points or 0.15% higher this morning. On Wall Street, the Dow Jones rose 0.6%, the S&P 500 climbed 0.95%, and the Nasdaq stormed 1.5%. This was driven by the release of the US Fed’s minutes which revealed plans for further rate hikes to tame inflation.

Champion Iron full-year results

The Champion Iron Ltd (ASX: CIA) share price will be one to watch on Thursday when the iron ore miner releases its full-year results. According to a note out of Goldman Sachs, it is expecting Champion to report revenue of C$1,466 million and EBITDA of C$924 million. This will be a 14% and 12.8% increase, respectively, over the prior corresponding period.

Oil prices rise

It could be a good day for energy shares including Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) after oil prices pushed higher overnight. According to Bloomberg, the WTI crude oil price is up 0.95% to US$110.80 a barrel and the Brent crude oil price is up 0.75% to US$114.41 a barrel. Optimism over demand boosted prices.

Tabcorp downgraded

The Tabcorp Holdings Limited (ASX: TAH) share price could be almost fully valued according to analysts at Goldman Sachs. According to a note, the broker has downgraded the wagering company’s shares to a neutral rating with a $1.07 price target. While Goldman is reasonably positive on new Tabcorp and notes that it offers “a unique business mix,” it just doesn’t see enough value to keep its buy rating.

Gold price tumbles

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a tricky day after the gold price tumbled lower overnight. According to CNBC, the spot gold price is down 0.7% to US$1,852.10 an ounce. The release of the US Federal Reserve’s minutes weighed on the precious metal.

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• This is the top ASX 200 share I wish I’d bought when starting out
• Woodside share price steady on first day trading under new name
• These 3 shares are topping the ASX 200 volume charts on Wednesday
• Why are ASX gold shares leaping today?

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.

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Looking for a blue chip ASX 200 share or two for your portfolio following the market selloff? Listed below are two that have been given buy ratings recently.

Here’s what you need to know about them:

Goodman Group (ASX: GMG)

The first ASX 200 share to look at is Goodman Group. It is a leading integrated commercial and industrial property company with a portfolio of warehouses, large scale logistics facilities, and business and office parks.

Goodman recently released its third-quarter update and revealed that it continues to experience strong demand for its properties. This is being driven by increased intensification of use, long-term supply chain requirements, tight supply in urban infill locations and the quality of its assets.

Demand has been so strong, that last week management upgraded its earnings guidance for the second time in FY 2022. Its latest guidance reveals expectations for annual growth of at least 23%.

The good news is that its growth looks unlikely to stop here. Goodman has $13.4 billion of development work in progress, which is expected to underpin further solid growth over the coming years.

Citi is a fan of the company and sees the recent weakness in the Goodman share price as a buying opportunity. Following its third quarter update, the broker said: “We re-iterate Buy and see the -25% YTD share price decline as a good entry point.”

Citi currently has a buy rating and $29.50 price target on the company’s shares. This implies potential upside of 51% for investors.

Xero Limited (ASX: XRO)

Another ASX 200 share that has been sold off is Xero. The leading cloud-based business and accounting software provider’s shares are down 40% since the start of the year due to weakness in the tech sector.

While this is disappointing, analysts at Goldman Sachs believe this could be a buying opportunity for long term focused investors. Particularly given its view that Xero is a “compelling global growth story” with potential for multi-decade strong growth. This is being underpinned by its global expansion and platform strategy, which Goldman highlights is “showing positive signs.”

The broker recently reiterated its buy rating on the company’s shares with a $118.00 price target. This suggests potential upside of 35% for investors over the next 12 months.

The post Analysts name 2 ASX 200 shares to buy after the selloff appeared first on The Motley Fool Australia.

More reading

• What’s happening with ASX 200 tech shares today?
• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?
• Here’s why ASX 200 tech shares are under pressure on Tuesday
• Do experts think the Xero share price is a buy?
• ‘We see value’ in this dividend ASX share: expert

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 positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re looking for an easy way to invest in international shares for diversification purposes, then exchange traded funds (ETFs) could be the answer.

But which ETFs should you look at right now? Listed below are three high quality ETFs that could be worth considering:

BetaShares Global Energy Companies ETF (ASX: FUEL)

The first ETF to look at is the BetaShares Global Energy Companies ETF. With oil prices at sky high levels and looking unlikely to pullback materially any time soon, the companies included in this ETF appear well-placed to deliver bumper profits in the near term. Among the fund’s holdings are a range of energy giants including BP, Chevron, ExxonMobil, and Royal Dutch Shell.

BetaShares NASDAQ 100 ETF (ASX: NDQ)

Another ETF for investors to look at is the BetaShares NASDAQ 100 ETF. This high quality ETF gives investors access to many of the world’s greatest companies. This includes iconic companies such as Alphabet, Amazon, Apple, Facebook, Microsoft, Netflix, and Tesla. While these companies have been sold off this year amid weakness in the tech sector, this could have created a buying opportunity for long term focused investors.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

A final ETF for ASX investors to look at is the VanEck Vectors Video Gaming and eSports ETF. As its name implies, this popular ETF gives investors exposure to the biggest companies in a global video game market estimated to comprise 2.7 billion active gamers. Among the shares that are included in the fund are AMD, Electronic Arts, Nintendo, Nvidia, Roblox, and Take-Two. VanEck notes that these companies are well-placed to benefit from the increasing popularity of video games and eSports.

The post 3 high quality ETFs for ASX investors to buy now appeared first on The Motley Fool Australia.

More reading

• Here’s why the Betashares Nasdaq 100 ETF (NDQ) is sinking today
• Are these 2 sold-off ASX growth shares now cheap bargains?
• 3 top ETFs for ASX investors to buy now
• Here are 2 quality ETFs that are now a lot cheaper
• 2 high quality ETFs for ASX investors to buy after the market meltdown

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 positions in and has recommended BETANASDAQ ETF UNITS and BetaShares Global Energy Companies ETF – Currency Hedged. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Woolworths Group Ltd (ASX: WOW) is undoubtedly a popular ASX share. This could be for one or more of many possible reasons.

For one, chances are highly likely that many prospective Woolworths shareholders are also customers. Woolworths is, after all, the grocer with the highest market share in the country. Woolworths has also been on the ASX boards for decades, and its size and scale in the consumer staples sector means that many investors consider Woolworths to be an ASX 200 blue-chip share.

This is only accentuated by Woolworths’ long history of paying dividends. The company hasn’t missed a dividend for decades now. But its history of dividend payments certainly hasn’t been perfect. For one, the company has yet to beat its 2015 annual total of $1.39 in dividends per share. 2021 saw the company dole out $1.08 in dividends.

So how safe is the Woolworths dividend if it can be cut so dramatically?

Is the Woolworths dividend a safe bet?

Well, that’s a complex question. Just because Woolworths hasn’t been increasing its dividends year in, year out doesn’t mean the company’s dividend isn’t safe.

As my Fool colleague covered a few months ago, Woolworths’ 2021 dividends represented a payout ratio of 65.45% of the company’s earnings per share (EPS). That means the company kept almost 35% of its earnings within the business.

If Woolies had a payout ratio of 90-95%, we could say that its dividend safety was under a cloud. But on these metrics, it looks as though Woolworths can easily afford to keep the dividend taps open.

But for investors looking for income certainty, Woolworths shares might not be the best bet, going off of history.

We’ve already examined the company’s patchy dividend record over the past decade. And the ongoing COVID-19 pandemic has played havoc with Woolies’ costs in recent years. This is probably partly why 2022’s interim dividend of 39 cents was less than 2021’s 53 cents.

At the closing Woolworths share price today, this ASX 200 blue-chip share has a market capitalisation of $41.8 billion, with a fully franked dividend yield of 2.68%.

The post How safe is the Woolworths dividend? appeared first on The Motley Fool Australia.

More reading

• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?
• Leading brokers name 3 ASX shares to buy today
• Is the Woolworths share price a buy following the latest acquisition or a no deal?
• 5 things to watch on the ASX 200 on Monday
• Woolworths share price lifts following $218m online marketplace deal

Motley Fool contributor Sebastian Bowen 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.

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Shares of Insurance Australia Group Ltd (ASX: IAG) traced lower today and finished trading down 0.44% at $4.51 apiece.

The loss eclipses a 9% downfall for the insurance giant in the last 12 months, amid a difficult two years for the insurance industry across 2020/21.

How might IAG hold up in another catastrophe?

Analysts at Goldman Sachs forecast that ‘catastrophe risks’ are likely to worsen before normalising back to positive trends in a recent note.

Whilst IAG is investing substantial amounts in mitigating climate change and catastrophe risks, “an issue of this magnitude is difficult to manage,” Goldman says.

Ultimately, the broker says, insurers like IAG will need to reflect this risk premium in their price setting and to factor in inflation.

Meanwhile, analysts at Morgan Stanley see the ‘volatility’ of catastrophe risk to be a going concern for IAG.

The investment bank quotes research from Swiss insurance and reinsurance firm Swiss Re, which now sees natural catastrophes growing at a long-term rate of 5-7%.

On this basis, Morgan Stanley reckons that Australian insurers like IAG will have to absorb more catastrophe risk in their earnings profile, which could ultimately impact its share price.

So to answer the question, judging by the analysis of these brokers, is that another catastrophe is certain to have some kind of impact on insurers like IAG.

Just what that impact might be, remains to be seen.

IAG share price snapshot

According to Bloomberg data, 58% of analysts covering IAG rate it a buy right now, whereas 25% have it as a hold. The remaining coverage – around 17% – says to sell IAG shares.

This year to date IAG shares have snaked around 6% into the green following another positive month of trade.

The post How might the IAG share price fare with another ‘catastrophe’? appeared first on The Motley Fool Australia.

More reading

• The IAG share price has tumbled 27% in 5 years. Have the dividends been worth it?
• How does the IAG share price stack up against analyst ratings?
• Top brokers name 3 ASX shares to sell today
• What is the dividend yield on IAG shares in May?
• The IAG share price has gained 6% in a month. Is this just the beginning?

Motley Fool contributor Zach Bristow 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 Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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