Among ASX listed companies there are certain stocks whih besides being dividend paying stocks are positioning for growth. Two such top ASX 50 stocks are
Insurance Australia Group Limited (ASX: IAG)
Insurance Australia Group Limited (ASX: IAG) and RACQ have announced a long-term, 25-year exclusive partnership to provide general insurance services to RACQ members and Queenslanders. IAG will acquire 90% of RACQ’s existing insurance underwriting business for a total consideration of $855 million, which includes an upfront payment for entry into an exclusive distribution agreement. The acquisition includes a net tangible asset value of approximately $522 million, and IAG has an option to acquire the remaining 10% in two years. This strategic partnership is expected to add around $1.3 billion to IAG's Gross Written Premiums, with synergies, primarily through adopting IAG’s reinsurance strategy, projected to exceed $50 million annually. The transaction is funded through surplus capital and is expected to be EPS accretive in the first year. Regulatory approvals, including clearance from the Australian Competition and Consumer Commission, are pending, and the deal is anticipated to complete by the third quarter of 2025. IAG also expects one-off transaction and integration costs of about $70 million over the next two years, which will include capitalised software integration.
The alliance leverages Queensland’s strong economic growth and potential as a key market for IAG. The state has outperformed pre-pandemic economic levels and continues to recover robustly. Queensland’s population growth is driving demand for insurance products, especially in motor vehicle registrations and property prices. IAG’s expansion in Queensland is seen as an opportunity to deepen its market presence, especially as it has been underweight in the region historically. Additionally, the company’s involvement in the Federal Government Cyclone Pool highlights its ongoing commitment to supporting risk transfer mechanisms that help protect Australians, particularly in areas prone to natural disasters like Queensland. The alliance will allow IAG to offer a combination of local brand presence with its global scale, ensuring that Queenslanders have access to top-tier insurance services.
QBE Insurance Group Limited (ASX: QBE)
QBE has reaffirmed its FY24 outlook, projecting Group constant currency gross written premium (GWP) growth of 3% and a Group combined operating ratio (COR) of 93.5%. For the nine months to September 30, GWP grew 2% year-over-year on both reported and constant currency bases. Underlying growth was driven by 5.9% Group-wide renewal premium rate increases, partially offset by a 2% decline in ex-rate growth due to non-core portfolio exits. Adjusting for these exits, GWP grew 5%, or 9% excluding Crop. Renewal rate increases in 3Q24 averaged 4.9%, slightly lower than 1H24, reflecting renewal mix in North America and International segments, which are skewed toward inflation-sensitive classes like property and accident & health.
The active 2024 hurricane season and secondary perils are driving insured industry losses well above $100 billion. Against this backdrop, QBE’s catastrophe claims for 2H24 are tracking in line with expectations, with a net cost of $425 million through October versus a 2H24 allowance of $671 million. Exposure to hurricanes Milton and Helene was notably reduced due to portfolio exits and optimization. North America’s performance remains aligned with expectations despite the region's outsized share of global catastrophe costs in 2024. QBE anticipates a FY24 Crop COR of 94%, supported by favourable prior-year development. While yields are trending below pre-harvest projections, they remain strong enough to mitigate the impact of lower commodity prices.
Investment performance in 3Q24 was robust, driven by strength in both fixed income (yielding 4.4%) and risk assets. Total funds under management (FUM) rose to $33.4 billion, up from $30.5 billion at 1H24, with risk assets comprising 13% of the portfolio. The $1.6 billion reserve transaction completed in October will reduce claims reserves and FUM in 4Q24. QBE’s performance year-to-date is encouraging. FY24 GWP growth of 3% remains achievable despite a $600 million headwind from portfolio exits, slightly higher than the $550 million expected at 1H24. The FY24 COR target of 93.5% assumes catastrophe claims remain within the 2H24 allowance and Crop outcomes remain steady.
Source: Company’s Report
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