We recently switched from IAG into QBE for the Flagship Growth Portfolio and retained the position in the income portfolio given its strong yield, I wish we had of sold it here too! Recent weather events in October saw IAG increase their natural perils estimate up by $280m to $1,045b and that now gives IAG very little wiggle room if further events unfold this summer, which has prompted us to become more cautious on this position. The original thesis was around improving margins (no longer the case) & excess capital on their books which would support high dividend payouts. Our preferred analyst on the stock has downgraded earnings and dividend forecasts by ~20% as a result of this week’s update.
MM is now cautious IAG & may cut the position from the Income Portfolio
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