Iag Shares

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Category: Shares Types

Insurance Australia Group Limited (IAG) is an Australian publicly-listed company with its shares traded on the Australian Stock Exchange as ASX: IAG. The company was formed by the demutualization of the NRMA Insurance business in July 2000 and a return of shares to the members of NRMA. According to its website, NRMA Insurance Group Limited changed its name to Insurance Australia Group Limited on 15 January 2002. IAG is the name of the listed entity; it is not a customer-facing retail name, however it represents the holding company that holds the many retail brands together.

IAG has a 70% shareholding in Insurance Manufacturers of Australia Limited (the other 30% being held by RACV), which issues insurance under the RACV Insurance name that is sold by RACV. In China, Insurance Australia Group owns CAA, the China Automobile Association, the largest roadside assistance provider in the country. IAG held a stake in CAA since 1999, increasing to full ownership in 2003. In India, Insurance Australia Group has a joint venture with the State Bank of India, India's largest and most recognized financial services organization?

Speculation emerged that IAG would merge with Australia's largest insurer QBE Insurance however IAG denied the merger at the time. Speculation again emerged in 2006 only to be again denied. On 10 April 2008, QBE proposed a takeover with each IAG share being exchanged for 0.135 QBE shares plus 50 cents cash (an effective value of $3.75 per IAG share at the time). This proposal was rejected by the IAG board the next day. QBE responded by increasing its proposal to 0.142 QBE shares plus 70 cents per IAG share. On 14 April 2008, IAG also rejected this proposal. On 16 May 2008, QBE increased its proposal to 0.145 QBE shares plus 90 cents per IAG share (an effective value of $4.60 per IAG share at the time). This was rejected by IAG four days later and on 21 May 2008 QBE confirmed talks had collapsed and withdrew its proposal.

Important items that were considered when QBE made its proposal: IAG’s short tail personal insurance products are distributed in Victoria under the RACV brand, via a distribution relationship and underwriting joint venture with RACV Limited. These products are distributed by RACV and manufactured by Insurance Manufacturers of Australia Pty Limited (IMA), which is 70% owned by IAG and 30% by RACV. If one of IMA’s shareholders were to experience a change of control, the other has a pre-emptive right to acquire that shareholder’s interest in IMA at market value. The duration of the arrangements governing RACV’s distribution of RACV-branded products in Victoria would be a relevant factor in determining this market value (as would the duration of the arrangements governing IMA’s reinsurance of NRMA-branded products in NSW and the ACT).