ASX 200 shares are off to a shaky start on Wednesday despite some positive economic indicators in recent days. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) is trading 0.47% lower at 6,638.20 points with some big names heading lower.

Why are ASX 200 shares trending lower?

Financials and health care shares are trading lower this morning with the major banks all dragging on the index’s performance.

The Commonwealth Bank of Australia (ASX: CBA) share price is down 0.4% to $82.89 while CSL Limited (ASX: CSL) shares have slumped 1.6% to $280.97.

These are two of the biggest names that have contributed to Wednesday’s losses. This is despite oil prices reaching a 10-month high.

What was the good economic indicator?

According to an article in the Australian Financial Review (AFR), the jobs market is entering the new year with some significant momentum.

An Australia and New Zealand Banking Group Ltd (ASX: ANZ) Australian job advertisement series published on Tuesday showed a continued recovery in demand for Aussie workers. More than 159,000 vacant positions were advertised in December which was the highest in 18 months and 4.1% above pre-coronavirus levels in February 2020.

ASX 200 shares have slid this morning despite the positive leading indicator news from the ANZ survey. ANZ senior economist Catherine Birch was cautiously optimistic on the news, saying “we should see pretty solid employment gains in December and going into 2021.”

CommSec chief economist Craig James was quoted saying, “a healthier job market will support overall economic activity, confidence and spending.”

The latest ANZ job series survey could bode well for unemployment statistics due out later this month. That, in turn, could be good news for several ASX 200 shares as investors hope for the strong momentum seen in the fourth quarter of 2020 to continue into the new year.

Foolish takeaway

All eyes will be on the economic data due out in coming weeks to kickstart the new year. ASX 200 shares have had a soft start to the year with the index falling 0.7% since Monday.

More reading

• ASX 200 down 0.5%: Energy shares jump, big four banks fall, Zip climbs higher
• This is the latest speculative ASX tech buy from Citigroup
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 falls on Tuesday
• Here’s which ASX bank share this leading broker thinks you should buy

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL 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 Bruce Jackson.

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The Sensen Networks Ltd (ASX: SNS) share price has been up and down this morning after the software company announced a successful placement.

The company’s shares opened 15% lower at 15 cents. However, at the time of writing, the Sensen share price has since lifted 2.86% to trade at 18 cents.

Why is the Sensen share price up today?

In today’s release, Sensen advised it has raised $7.15 million from professional and sophisticated investors through a placement. The issuance of 57,200,000 new ordinary shares at a price of 12.5 cents each were allotted to participating shareholders yesterday. Sensen noted that the offer price reflected a 9.2% discount on the 30-day volume weighted average price of its shares.

The moneys raised from the placement will be used to support a variety of initiatives. The company will seek to recruit new personnel for key executive roles such as sales and marketing, and project management.

In addition, Sensen will also use the new capital to fund its strategic business objectives to generate revenue and fine-tune its global delivery capabilities. Some of the funds will be allocated to its R&D department to ensure the company maintains a competitive advantage.

What did the CEO have to say?

Commenting on the placement, Sensen CEO Dr Subhash Challa said:

Following a strong 2020 growth year for the company despite the global effects of COVID-19, this capital raising means we are now extremely well positioned to execute the company’s aggressive expansion plans in 2021 and beyond.

Sensen is delighted to welcome global equities manager VGI Partners to the company. The fund’s focus on investing in businesses with a competitive advantage for the long-term clearly aligns with SenSen’s strategic plans.

Similarly, we are delighted to enter a new phase of institutional and sophisticated investor support for the company as we aggressively pursue expansion in our target markets and rapidly grow our revenue profile especially in the US.

A year in review for the Sensen share price

The Sensen share price has gone through peaks and troughs during the past 12 months. Reaching as low as 5.5 cents in March, the company’s shares have stormed higher only in the past few days.

Based on the current Sensen share price, the company commands a market capitalisation of around $82.9 million.

More reading

• Are heads in the clouds with these sky high P/E ratios?
• What’s in store for the Scentre (ASX:SCG) share price in 2021?
• ASX 200 down 0.5%: Energy shares jump, big four banks fall, Zip climbs higher
• 20% of Aussie investors would take high returns over personal ethics
• How MRNA stock performed in 2020

Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

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The humble price-to-earnings (P/E) ratio is also known as the earnings multiple. Value investors swear by it, speculators trash it. Truthfully, the earnings multiple doesn’t necessarily define whether an investment is a buy or not. It is simply another tool in the arsenal of an investor.

Over the long term, it is typical that a company’s earnings multiple trends towards the market average. For relevance, the S&P/ASX 200 Index (ASX: XJO)’s P/E ratio is 22.96 according to Blackrock.

But today we’ll take a look at a handful of ASX shares that are trading on sky-high P/E ratios.

4 ASX shares with lofty P/E ratios

REA Group Limited (ASX: REA)

You have likely used a service of REA Group before, either when house hunting (realestate.com.au) or looking for a new housemate (flatmates.com.au). The online real estate advertising company currently boasts a daily audience of 1.9 million people, up 61% from a year ago.

At the moment, REA Group trades on a staggering earnings multiple of 175x. This is significantly higher than the interactive media and services industry average of 36.9x.

This begs the question, why is REA trading on such a rich P/E ratio compared to others in the industry? Earnings per share actually fell by 9% in REA Group’s last posted full-year results, dampened by the impacts of COVID-19.

Potentially investors are placing significant value on the growth in eyeballs to the platform, which can translate to additional monetisation. Average monthly traffic on the Australian realestate.com.au page increased by 18% to 90 million for FY2020. In addition, June saw the platform pull a record 114.3 million views – 3.2 times the traffic of its nearest competitor.

REA Group has also been undertaking a rapid growth strategy in Asia, America, and India. This has mostly been facilitated through acquisitions in what are newly developing markets for the company.

Pro Medicus Limited (ASX: PME)

Pro Medicus offers a suite of health imaging software solutions to hospitals, imaging centres, and healthcare groups. Since 2014, the company has been growing annual earnings at a blistering pace of 34.8% historically.

Currently the shares are trading on a P/E ratio of 154x. This is 2.48 times more than the healthcare services industry average of 63.8x.

The company reported double-digit growth in revenue, earnings, and cash reserves in its FY2020 results back in October. Chairman Peter Kempen described the result:

The success of the company, despite the challenge of COVID-19, has been due to the quality of the management team, the resilience of all of our staff, the flexibility of our leading-edge technology and the robustness of our business model.

The company believes its operating leverage is in its highly scalable offering, due to its product being purely software-based. As noted in the presentation, management expects this will enable a contained cost base, which will result in margin growth as the business expands. 

Pro Medicus is currently paying a dividend of 12 cents per share, an increase of 14.3% from last year.

The company has signed several deals over the last few months alone, including a 5 year contract with MedStar Health, a renewal with Zwanger-Persiri, and a 7 year contract with Ludwig-Maximilians University.

Xero Limited (ASX: XRO)

The well-known cloud-based accounting software provider has grown to become a global entity. Xero provides its solutions in the United Kingdom, North America, Singapore, and of course, across Australia and New Zealand.

The Xero share price at the time of writing is commanding an unbelievable earnings multiple of 625x. Keep in mind that the company only turned to profitability in late 2019.

Taking a look at Xero’s investor presentation for the first half of FY2021, the company managed to grow despite the challenging conditions. Earnings before interest, tax, depreciation and amortisation (EBITDA) leapt 86% to $120.8 million. Likewise, free cash flow increased by 49.4% to $54.3 million from $4.8 million in the prior corresponding period.

One of Xero’s strategic priorities is to continue to harness the benefits of scalability, while driving its cloud accounting platform. 

Nanosonics Ltd (ASX: NAN)

Nanosonics is an Australian infection prevention company that offers an automated disinfection technology known as Trophon. This product delivers a modern means of disinfecting ultrasound probes.

At present, Nanosonics’ P/E ratio is a massive 243.9x. This is in contrast to the average 41.2x multiple for the broader medical equipment industry.

It seems the potential for this company to disrupt an arguably stagnant disinfection industry has investors excited. Although Nanosonics’ operating profit after tax fell for FY2020, down 25% to $10.137 million, revenue continues to grow. In its 2020 annual report, Nanosonics reported that company revenue rose 18.65% to just over $100 million.

Nanosonics continued to increase its investment in R&D by 37% to $15.6 million in FY2020. This was a part of the company’s strategy to expand its product portfolio and open up future opportunities. Shareholders will be watching attentively to see if any new innovations are sprout from these investments over the coming years.

More reading

• ASX 200 down 0.5%: Energy shares jump, big four banks fall, Zip climbs higher
• Why the REA Group (ASX:REA) share price thumped the market in 2020
• 2 blockbuster blue chip ASX shares to buy in January
• Which ASX 200 healthcare shares delivered the top returns in 2020?
• 5 things to watch on the ASX 200 on Tuesday

Mitchell Lawler owns shares of Pro Medicus Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Nanosonics Limited and REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Scentre Group (ASX: SCG) share price has lost almost 30% of its value over the past year, with coronavirus restrictions curbing various social activities, including physical shopping, across Australia. 

However, with the rollout of an effective vaccine now possibly only months away, can the Scentre share price rebound to its pre-COVID levels in 2021?

A recap of what happened to Scentre Group in 2020

Scentre Group was created in mid-2014 when the Australian assets of the Westfield Group and those of the Westfield Retail Trust were combined.

It owns a portfolio of all the 42 Westfield shopping centres across Australia, among other retail assets.

The company is predominantly a passive rent collector, and hence a real estate investment trust (REIT) share, though it does also undertake new development activities.

With government restrictions seeing many of Scentre’s tenants shut up shop periodically during the first half of 2020, the company faced reduced rent collection levels during this time. As restrictions began easing, however, Scentre reported improvements in trading conditions. For the 10 months of trading ending 31 October the company advised it had collected $1,621 million of rent, an increase of $746 million since 30 June 2020.

Customer visits during the September 2020 quarter were 90% of the same time the previous year (excluding Victoria).

Portfolio occupancy was also at a surprisingly high 98.4% at the end of September 2020.

What of the prospects for the Scentre share price in 2021?

Given 90% of its shopping centre consumers, outside of Victoria, had returned by September 2020, the company believes that once the vaccine rollout is complete, it can roughly return to pre-coronavirus trading conditions.

Also, according to Scentre Group, it owns many properties among the most strategic retail locations in Australia, which are integrated with major transport hubs. As such, the company hopes it can maintain full occupancy across all its centres in 2021.

However, Scentre Group has acknowledged it is facing rather stiff competition from online retailers.

To this end, Scentre is attempting to evolve in response to this competition by shifting to categories less exposed to online players. For example, it has tried to increase the mix of its food retail tenants as well as boosting its entertainment and service categories.

Notwithstanding this, Scentre has reported that restaurants typically involve comparatively short leases and costly fit-outs. Furthermore, they are generally unable to command the premium rental rates that high-margin fashion and electronics retailers usually do.

Scentre also faces the challenge of attempting to continue its recovery as government stimulus payments are phased out, which could possibly put some of its tenants under renewed pressure.

Foolish takeaway

As mentioned, the Scentre share price has lost more than 28% of its value over the past twelve months. The share price plummeted to as low as $1.35, its 52-week low, back in March last year.

Since then, however, it has partially recovered and is currently trading at $2.80, up a little over 1% for the day so far.

The REIT has announced its intention, subject to unforeseen circumstances, to pay a distribution in early 2021.

More reading

• Investors caught in crossfire as ASX retailers battle ASX property stocks in 2021
• The ASX sectors hardest hit by COVID-19 in 2020
• The Unibail Rodamco Westfield (ASX:URW) share price has dipped 3% today
• ASX retail shares in the spotlight: Cashed up consumers unfazed by “uneven and bumpy” rebound
• Top brokers name 3 ASX shares to sell today

Motley Fool contributor Eddy Sunarto 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 Bruce Jackson.

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At lunch on Wednesday the S&P/ASX 200 Index (ASX: XJO) is on course to record a decline. The benchmark index is currently down 0.5% to 6,646.5 points.

Here’s what has been happening on the market today:

Energy shares storm higher.

One area of the market performing very strongly on Wednesday is the energy sector. The likes of Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) are recording strong gains after oil prices jumped higher overnight. According to Bloomberg, the WTI crude oil price rose 5.1% to US$50.06 a barrel and the Brent crude oil price stormed 5.1% higher to US$53.70 a barrel. This was driven by news that Saudi Arabia will cut production by 1 million barrels a day.

Bank shares lower.

The big four banks are all trading lower on Wednesday and are acting as a drag on the ASX 200’s performance. Once again, the worst performer in the group has been the National Australia Bank Ltd (ASX: NAB) share price. Its shares are down 0.6% at the time of writing. However, despite this decline, NAB’s shares are still up 24% over the last three months.

Zip’s AsiaPay partnership.

The Zip Co Ltd (ASX: Z1P) share price is pushing higher on Wednesday after signing a partnership with AsiaPay. It is the leading digital payment service and technology player in Asia. According to the release, the deal will see AsiaPay offer merchants the ability to accept digital mobile wallet payment via Zip.

Best and worst performers.

The best performer on the ASX 200 on Wednesday has been the Oil Search Ltd (ASX: OSH) share price. Its shares are up 5% at lunch after oil prices jumped. The worst performer has been the Nanosonics Ltd (ASX: NAN) share price with a 6% decline. This is despite there being no news out of the infection prevention company.

More reading

• Are heads in the clouds with these sky high P/E ratios?
• Why Fortescue, Nick Scali, Santos, & Zip shares are charging higher
• How to invest in ASX shares in a post-COVID world 
• This is the latest speculative ASX tech buy from Citigroup
• Why the Zip (ASX:Z1P) share price is pushing higher today

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

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One-fifth of Australian share investors would own shares that went against their personal beliefs if it meant reaping a higher return.

The finding came out of an international study conducted by UK company SaveOnEnergy, which showed US and Japanese investors were the most concerned about holding sustainable investments.

The data, sourced from investment firm Schroders (LON: SDR), showed Australians were ranked 5th.

Although 80% of Australian investors would never buy into a company that went against their moral code, 20% were willing to go for it in the search for higher returns.

The environmental issue that the most Australian investors thought companies should be focusing on this year was global warming.

Environmental priorities for Australian investors

Rank	Issue	% of Australian investors
1	Global warming (climate change)	59%
2	Plastic pollution	55%
3	Air pollution	52%
4	Biodiversity loss	47%
5	Food waste	44%
6	Deforestation	40%
7	Water pollution	36%
Source: SaveOnEnergy; Table created by author

Plastic pollution and air pollution were not far behind, with 55% and 52% respectively judging it as a high priority in 2021.

Almost 2-in-3 Australian investors thought companies can do “much more” this year to improve environmental sustainability.

World is moving on to a new era

Despite the significant number willing to sacrifice the environment for higher returns, the world seems to be moving on with finances and sustainability increasingly linked to each other.

The rise-and-rise of Tesla Inc (NASDAQ: TSLA) shares is a case in point.

Investors savvy enough to bet that zero-emission electric cars are the way of the future saw their stocks rise almost 700% during 2020. Tesla shares have soared another 4% on top of that in the first few days of this year.

A more local example is AGL Energy Limited (ASX: AGL)’s Liddell power plant.

Last month investor groups called for the coal-powered station to be shut down.

An AGL employee suffered a serious injury after an incident at one of Liddell’s power generation units, causing it to be temporarily closed. The unit could be inactive for 2.5 months, skipping over the entire high-demand summer season.

Australasian Centre for Corporate Responsibility director Dan Gocher said at the time maintenance costs for ageing coal plants increased from 25% of AGL’s total capital spend in 2013 to 74% in the 2020 financial year.

“Investors must question whether this expenditure is in the long-term interests of shareholders,” he said.

“AGL intends to operate Bayswater beyond 50 years, and Loy Yang A beyond 64 years. It’s ridiculous and completely out of step with Australia’s climate goals and it will continue to risk the safety of its workers.”

More reading

• Why ASX lithium shares are running hot in 2021
• Why the AGL Energy (ASX:AGL) share price is climbing today
• Tesla’s Q4 deliveries soar
• Forget Tesla. Facebook is a better buy now
• These were the worst performers on the ASX 200 last week

Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. 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 Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Coming into 2020, Moderna Inc (NASDAQ: MRNA) was a $6.5 billion biotech with the goal of using messenger RNA (mRNA) — the molecule that tells cells what proteins to make — to fight and prevent disease. Not much was known about the company’s technology or even the diseases its drugs would target, but that changed in 2020 as the company became one of the leaders in the fight against COVID-19. 

A breakout year

Moderna’s stock rose 434% during 2020, but that number doesn’t capture how eventful the year was, or the ups and downs shareholders experienced. After receiving funding from the Coalition for Epidemic Preparedness Innovations in late January, the company worked with the National Institute of Allergy and Infectious Diseases to deliver a COVID-19 vaccine candidate a month later.

Positive phase 1 data were released in mid-May, and management promptly raised $1.34 billion through a secondary share offering. On 30 November, the company provided analysis from phase 3 data showing its vaccine was 94.1% effective at preventing COVID-19. Three weeks later, on 18 December, the Food and Drug Administration (FDA) granted emergency use authorization (EUA). 

Although the stock’s rise has been tremendous, its overall uneven progress offers a lesson in perseverance for shareholders. While everyone would welcome a more than 400% rise in a stock, holders had to endure a 25% sell-off (or more) four different times.

MRNA data by YCharts

Looking ahead, the company is well positioned for the future. Moderna had $3.3 billion in cash and investments on its balance sheet as of 30 September and recently increased the number of COVID-19 vaccine doses it expects to make in 2021 from 500 million to 600 million. The company has already supplied 18 million of an agreed-upon 200 million doses to the US Government and has additional deals with Canada, Israel, South Korea, and the European Commission, among other recipients . Despite this good news already priced into shares, the company has said it could produce as many as a billion doses this year. If so, last year’s gains in the share price could continue through 2021.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• The worst mistake Moderna investors can make right now
• Why Moderna stock fell 32% in December
• Moderna’s stock has surged 488% in 2020: Is it a buy for 2021?
• Here are the US shares ASX investors are buying
• How the 21st century actually started in 2020

Jason Hawthorne 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 Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Wesfarmers Ltd (ASX: WES) share price has rallied in recent weeks to a record all-time high of $51.90.

Its diversified business has proved to be resilient and in demand throughout COVID-19, as reflected by its strong earnings growth and dividend. At the time of writing, the Wesfarmers share price is trading 0.74% down at $50.87.

Wesfarmers share price higher on strong earnings 

The Wesfarmers business generated revenue growth of 10.5% to $30.85 billion with net profit after tax increasing 8.2% to $2.1 billion in FY20. Bunnings, Kmart, Officeworks and Catch delivered strong sales growth for the year. Earnings in Bunnings and Officeworks were particularly strong and demonstrated the ability of these businesses to rapidly adapt to the changing needs of customers. 

Bunnings achieved strong sales and earnings growth as customers spent more time at home and undertaking projects at home. Bunnings contributed $14.99 billion, or almost half the group’s revenue in FY20.

Throughout the year, Bunnings continued to execute its strategic agenda and accelerate the development of its digital offer. The Australian rollout of Click and Deliver was completed, the New Zealand e-commerce platform was launched and Drive and Collect offering was developed. 

Kmart Group’s revenue from continuing operations increased 7.2% over the year. However, earnings were impacted by significant items associated with the restructure of target and payroll mediation costs. Kmart generated $9.2 billion in revenue, or 29.8% of the Group’s revenue. 

In contrast, the financial performance of Target has been unsatisfactory and loss-making in FY20, said Wesfarmers managing director, Rob Scott. In May 2020, the company announced a number of actions to address its structural challenges, simplify Target’s operating model and deliver more value from the store network. 

Officeworks was a standout performer in FY20 with earnings increasing 13.8%, driven by strong sales growth in stores and online. Officeworks contributes just under 10% of the Group’s total revenue. In the second half, it saw significant demand for technology, office furniture and learning and education products, as people spent more time working and learning from home. 

Foolish takeaway

The Wesfarmers share price went from strength to strength in 2020. Its strong earnings meant that the company could continue to pay a dividend, in a year where many companies had to slash or defer payments.

While Wesfarmers could not provide an outlook for FY21, it did note that the performance of Bunnings is expected to moderate following the extraordinary growth in the second half of 2020. 

More reading

• Investors caught in crossfire as ASX retailers battle ASX property stocks in 2021
• 5 ways to lose your money forever
• How does fiscal stimulus impact ASX share prices?
• Why the Wesfarmers (ASX:WES) share price is up 24% in 2020
• 3 ASX shares that were unlikely winners in 2020

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) has failed to follow the lead of U.S. markets and is dropping lower. The benchmark index is currently down 0.2% to 6,669.1 points.

Four shares that have not let that hold them back are listed below. Here’s why they are charging higher:

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price is up 2% to $25.69. This appears to have been driven by another rise in the iron ore price. According to CommSec, the spot iron ore price rose by a further 1.6% overnight to US$167.15 a tonne. Robust demand for the steel making ingredient in China has helped drive prices higher.

Nick Scali Limited (ASX: NCK)

The Nick Scali share price has jumped a further 9.5% higher to $11.51. Investors have been fighting to buy the furniture retailer’s shares after it provided guidance for the first half of FY 2021. Nick Scali revealed that it has performed very strongly during the half and expects to report a net profit of $40.5 million for the six months. This will be double what it recorded in the prior corresponding period.

Santos Ltd (ASX: STO)

The Santos share price is up over 4% to $6.60. This follows a jump in oil prices overnight after Saudi Arabia announced a surprise plan to cut its oil production in February and March. The world’s second largest energy producer plans to cut production by 1 million barrels per day to combat lower demand because of COVID-19 lockdowns.

Zip Co Ltd (ASX: Z1P)

The Zip share price has risen 3% to $5.47. This appears to have been driven by news that it has signed a partnership with AsiaPay. AsiaPay is the leading digital payment service and technology player in Asia. The deal will see AsiaPay offer merchants the ability to accept digital mobile wallet payment via Zip, with a simple, secure, and private way to pay that’s fast and convenient.

More reading

• How to invest in ASX shares in a post-COVID world 
• Why the Zip (ASX:Z1P) share price is pushing higher today
• Insiders have been buying these ASX shares
• ASX energy shares on watch after oil prices surge higher
• 5 things to watch on the ASX 200 on Wednesday

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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 Bruce Jackson.

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Insurance Australia Group Ltd (ASX: IAG) shares are on the rise this morning after the company announced the finalisation of its catastrophe reinsurance program for 2021. As part of the same update, the company also clarified its business interruption provisions on its balance sheet.

At the time of writing, the Insurance Australia Group (IAG) share price is trading 0.43% higher at $4.68.

Reinsurance program finalised

Insurance Australia Group revealed today it has finalised its catastrophe reinsurance program for the 2021 calendar year, maintaining its gross reinsurance protection cover at up to $10 billion, the same level as 2020.

Reinsurance is basically insurance for insurers. It’s the practice whereby insurers transfer portions of their risk portfolios to other parties to reduce the likelihood of paying a large obligation resulting from an insurance claim.

The main features of this program include Insurance Australia Group retaining the first $250 million of each loss, as well as an aggregate sideways cover for the 12-month period to 30 June 2021, which provides $350 million of protection in excess of $400 million.

Also, with effect from 1 January 2021, qualifying events are capped at $50 million per event.

The company says it experienced a modest increase in reinsurance rates during this renewal process, with the overall expense outcome in line with expectations.

Business interruption provisions update

For the purposes of preparing its management reports, IAG has reported it will include the $1.15 billion pre-tax earnings impact from the provision for business interruption claims announced on 20 November 2020 as part of net corporate expenses.

Insurance Australia Group says it will report this expense item during its FY21 first half reporting on 10 February 2021.

About the IAG share price

Insurance Australia Group surprised the market in November by announcing a $750 million capital raising to repair the capital damage expected from business interruption claims related to COVID-19.

The company said it has provided its best estimate for potential claims, but the risk that claims have been underestimated, or additional lockdowns occur before old policies are replaced with new wording, has left a degree of uncertainty.

As a result of potential COVID-19 claims, the IAG share price has lost almost 40% of its value over the past year. At the current price, the company commands a market capitalisation of around $11.5 billion.

More reading

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Motley Fool contributor Eddy Sunarto 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 Bruce Jackson.

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