Intelligent Investor

Austbrokers under review

The insurance broking industry is rapidly changing. It's time for a closer look.
By · 20 Apr 2015
By ·
20 Apr 2015 · 1 min read
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Recommendation

AUB Group Limited - AUB
Current price
$27.79 at 16:40 (19 April 2024)

Price at review
$8.36 at (20 April 2015)

Max Portfolio Weighting
5%

Business Risk
Medium-Low

Share Price Risk
Medium-High
All Prices are in AUD ($)

Austbrokers' share price has fallen 8% since Austbrokers: Interim result 2015 from 26 Feb 15 (Hold – $9.06), when the company reported a 15% fall in net profit due to a significant drop in premium prices reducing Austbrokers' share of commissions. The industry is changing rapidly due to the rise of online brokers and aggressive competition from rival Steadfast, not to mention our ongoing concern that margins at insurers like Insurance Australia Group and Suncorp are unsustainable. With Austbrokers' current share price hovering just below our Buy price, we want to review the situation in depth before making any changes to our recommendation. We expect to publish our findings late next week and, until then, Austbrokers is UNDER REVIEW.

Note: Our model Income and Growth Portfolios own shares in Austbrokers.

IMPORTANT: Intelligent Investor is published by InvestSMART Financial Services Pty Limited AFSL 226435 (Licensee). Information is general financial product advice. You should consider your own personal objectives, financial situation and needs before making any investment decision and review the Product Disclosure Statement. InvestSMART Funds Management Limited (RE) is the responsible entity of various managed investment schemes and is a related party of the Licensee. The RE may own, buy or sell the shares suggested in this article simultaneous with, or following the release of this article. Any such transaction could affect the price of the share. All indications of performance returns are historical and cannot be relied upon as an indicator for future performance.
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