Insurance Australia Group Ltd

IAG: XASX (AUS)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	A$6.60	Clw	Sclbkpgr

Our Outlook for IAG Remains Upbeat

, Adrian Atkins

Jul 15, 2014

Wesfarmers has completed the sale of its insurance underwriting operations to Insurance Australia Group (IAG) following approval from Australia’s competition regulator in March, and regulatory approvals from the Reserve Bank of New Zealand and the Commonwealth Acting Assistant Treasurer in June. The acquisition was funded from internal sources and AUD 1.44 billion in new capital. We’ve previously incorporated the acquisition in our forecasts. The deal should see IAG’s market position strengthen. At current prices, the stock trades at a 16% discount to our fair value estimate of AUD 7.

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