Macro
Alex Cowie

One of the most engaging parts of my role at Livewire is working with Australian fund managers to discuss their views and bring you great content. With over 400 managers now contributing to the platform, overseeing the content can feel like being at the epicentre of the market. So with... Show More

Blake Henricks

Last week, I presented a stock idea at the Future Generation Investment Forum. Despite being the biggest beneficiary of the oil and gas industry investing to maintain its wells, this company trades on just a PE of 12x. Here, I outline why WorleyParsons could be set to soar as the... Show More

Thanks Mr T. Insurance is an inherently volatile business with reasonably opaque disclosures. However, these characteristics are already reflected in the valuations of stocks like IAG and SUN, which is one of the reasons why they don’t trade at similar multiples to other oligopolistic industries like supermarkets. Our current view is that when comparing the insurance sector to the ASX200, we believe it is in a relatively more attractive position than it has been historically given a stronger revenue and earnings growth outlook than many other sectors in the market. It is true that we will see some mark-to-market investment losses on the equity and corporate bond portfolios of IAG and SUN at the upcoming results. However the ongoing profitability of the insurance business is to a large extent protected by the fact that both insurers match the duration of their bond portfolios to the duration of their claims liabilities, so that interest rate movements have similar impacts on both sides of the balance sheet. Management disclosures on investment portfolios have also improved markedly over the past decade so we at least have some information on the split of investments across asset classes and credit rating bands.

On Weathering the storm: An opportunity in Australian Insurance -