Top ASX Insurance Stocks for 2024

Team Veye | 31-Jan-2024 Insurance Stocks asx

Businesses and individuals in Australia can choose from a wide range of health, life, and property and casualty insurance coverage offered by the insurance industry. It acts as a sizable buffer for the Australian economy and lessens the financial impact of departures from the private sector. The insurance industry has seen global disruption, but an emerging optimism is fuelled by an emphasis on innovation, which is increasing confidence in the sector's growth. Over the previous three years, the insurance industry's total earnings have increased, and the sector is currently profitable. The revenue growth rate is about 10%.This suggests that the industry is generating more sales overall, which raises profits.

Let’s take a look at some of the 5 ASX companies’ strongly involves in the insurance business in Australia. These are as follows:

Note: The market cap and the share price of the selected ASX companies below are mentioned as of 24 January 2024.

Insurance Australia Group Limited (ASX: IAG)

Market cap: $14.45 billion
CMP: $6.015

The company exhibited substantial profit growth, with an NPAT of $832 million, marking an impressive 140% increase. This was further supported by the release of a significant post-tax business interruption provision totaling $392 million. Additionally, IAG paid out a substantial $10.2 billion in total claims, reflecting a 20% increase. The company's capital position remained robust, with a Common Equity Tier 1 (CET1) ratio of 1.12, surpassing both the previous year's ratio of 0.97 and the target range of 0.9 to 1.1. The group's expenses were within the targeted range of $2.5 billion, demonstrating IAG's efficient cost management strategies.

Atlantic Lithium Limited (ASX: A11)

Market cap: $220.65 million
CMP: $0.35

The company moved towards Ewoyaa facility development during the quarter in addition to carrying out aggressive exploration and evaluation. As can be seen from the above chart, the entire capital expenditure requirement and a substantial amount of funding requirements for the same are already met or committed to, which significantly eliminates the need for organic funding from the company and the cash crunch. Consequently, of the $185 million total capital expenditure required for the project, Atlantic will only need to contribute US$38 million in capital. The size of the project, as seen through its revenue- and profit-generating capabilities in multiple billions, along with an NPV of $1.3 billion, demonstrates the high value for money for the company and its shareholders.

Tower Limited (ASX: TWR)

Market cap: $222 million
CMP: $0.585

With a $750 million catastrophe cover and a $75 million prepaid third event cover purchased, the company successfully implemented a renewal reinsurance program that will shield it from the volatility of major events in FY2024. The gross written premium in FY2024—which is anticipated to range from 10% to 15%—will be upgraded thanks to robust rating actions and organic growth. The organization intends to enhance its management expense ratio to between thirty and thirty-two percent by means of ongoing digitization and efficiency initiatives. Tower Limited projects a combined operating ratio in FY2024 between 95% and 97%.

Nib Holdings Limited (ASX: NHF)

Market cap: $3.88 billion
CMP: $8.01

NHF is the second-biggest private health insurer in New Zealand, and policyholder growth was 3.2% for the entire NZ business, according to the 2023 annual report. The company improved its support for medical and related treatments through its private health insurance business.

The business in New Zealand funded 417,370 hospital admissions and over 4 million allied treatments, such as dental and optical. Total group coverage accounted for $2.2 billion in benefits paid, up from $2.1 billion the previous year. In FY2023, NHF continued to invest in technology to deliver key improvements in member experience as well as strategic roles to support its Payer to Partner (P2P) strategy. 

Medibank Private Limited (ASX: MPL)

Market cap: $10.29 billion
CMP: $3.735

The company expects moderate resident industry growth in FY2024 relative to FY2023 and is setting a goal to achieve a resident policyholder growth range of 1.5%–2.0% in FY2024. The Medibank Health growth momentum is in line with the predetermined FY2024–2026 target. The strong capital position of the company will enable it to continue to target $150 million to $250 million in inorganic investment in Medibank Health. The company is targeting $20 million in productivity savings across FY2024 and FY2025. The underlying claim per policy unit growth is estimated at 2.6% for FY2024 among resident policyholders. The company further expects costs of between $30 million and $35 million in FY2024 for further IT security uplifts and legal and other costs related to regulatory investigations and litigation.

Reference: *All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters

Frequently Asked Questions (F.A.Q)

What are the best ASX companies serving the insurance industry?

•    Insurance Australia Group Limited (ASX: IAG)
•    Atlantic Lithium Limited (ASX: A11)
•    Tower Limited (ASX: TWR)
•    Nib Holdings Limited (ASX: NHF)
•    Medibank Private Limited (ASX: MPL)

What is the future prospect of Suncorp Group Limited?

Suncorp is strategically restructuring its operations to enhance customer focus and efficiency. The creation of three cores insurance functions—consumer, commercial and personal injury, and New Zealand—will lead to comprehensive end-to-end responsibilities, ultimately improving both customer experiences and financial outcomes. Suncorp Bank's structure remains unaffected. In the FY2024 outlook, Suncorp anticipates a 10% GWP growth in insurance, driven by premium adjustments. 

What are the strategic priorities for Steadfast Group Ltd.?

Steadfast has continued to execute an outstanding acquisition strategy, especially in FY22 and FY23, and it is anticipated that this will continue to a large extent in FY24 as well. The company's recent acquisitions of ISU and Sure Insurance continue to be focal points of this strategy, with the ISU acquisition potentially enabling a significant geographic expansion into the US insurance market. The technologies and underwriting firms that Steadfast currently has would also be very helpful to the acquisition. In a similar vein, the acquisition of Sure Insurance will enable the business to improve its market position in Australia. Steadfast projects that, in the first full year following the acquisitions, both will increase EPS.


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