Insurance Australia Group Ltd [ASX:IAG] shares are getting smashed.
The company has slashed profit guidances two times in the last three weeks.
Things aren’t looking great for IAG at the moment.
The company has blamed the exceptionally harsh summer for the slash on its insurance margins.
If you’re looking to add IAG to your portfolio, you may be wondering, is this a dip-buying opportunity?
Today, we’ll take a look.
Who is Insurance Australia Group Ltd [ASX:IAG]?
Insurance Australia Group (IAG) is an insurance company.
It offers general insurance within Australian and New Zealand.
General insurance covers both the home and motor vehicle.
And due to the recent battling across Australia, IAG has said the costs of the bushfires, hailstorms and rain will cost them $135 million.
Net profit after tax has also suffered. The company has reported a 43% decline in profits to just $283 million.
Even with the large decline in profit, IAG still managed to increase net profit on insurance by 1%.
And the company still plans to pay up a 70% franked dividend of 10 cents per share.
So what does all of this mean?
To answer that, let’s take a look at the charts.
Below you can see the share price chart of IAG.
IAG Company Share Price Chart
What you’re looking at above is the weekly chart of IAG.
From the high in July 2019, the IAG share price is down 21%.
Investors sometimes buy into falling shares because they’re trying to grab a bargain.
The problem with this investment method is that you are risking further losses.
And IAG is definitely a volatile share. You can see this from its wild swings both higher and lower on the chart.
Buying in to a volatile share that’s currently in a strong downward move can wipe you out.
And for that reason, you may want to sit on the sidelines for a while.
It’s always better to move with the market than against it.
Meaning that, if you’re wanting to buy IAG, you may want to wait for positive news and momentum to return. This is currently not the case.
This is just something to be mindful of. If you want to see how this plays out. You may want to consider placing the share on your watchlist.
As always, this is not a recommendation to buy or sell IAG. It is an update only. I hope you found it useful.
Until next time,
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