Insurance Australia Group has an agreement for the sale of its 49% interest in the Malaysian joint venture AmGeneral Holdings. The company’s share of the proceeds is $340m. UBS assesses the sale multiples are underwhelming and dilutive.
The sale is consistent with the company’s strategy to divest Asian businesses and represents the last major divestment.
UBS notes the capital position is strong and Insurance Australia should be well-placed to consider capital initiatives in a post-pandemic environment. Buy rating maintained. Target is reduced to $5.80 from $6.00.
Target price is $5.80.Current Price is $4.83. Difference: $0.97 – (brackets indicate current price is over target). If IAG meets the UBS target it will return approximately 17% (excluding dividends, fees and charges – negative figures indicate an expected loss).