Here's why ASX 200 insurers are underperforming the market this Wednesday

The 5.9 magnitude quake may cost the industry billions of dollars.

| More on:
Stressed business woman sits at desk with head resting on her hand

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

Investors of ASX 200 insurance companies may not be too pleased today.

The sector is underperforming the market as The Australian reports the industry is bracing for a wave of claims in the wake of this morning's Melbourne earthquake.

At the time of writing, shares in Insurance Australia Group Ltd (ASX: IAG) are $4.92 – down 1.99%, QBE Insurance Group Ltd (ASX: QBE) shares are $11.31 – up 0.31%, and Suncorp Group Ltd (ASX: SUN) is trading for $12.31 – down 1.01%. The S&P/ASX 200 Index (ASX: XJO) is 0.84% higher.

Let's take a closer look at today's news.

Earthquake strikes Victoria

Just after 9 this morning, a 5.9 magnitude earthquake struck 10km from the Victorian town of Mansfield. Heavy shaking was felt in Melbourne with tremors felt in Tasmania, the ACT, and even Sydney.

A video circulating social media shows the damage experienced by at least one building on Melbourne's popular Chapel Street.

While the extent of the damage is unclear following the earthquake and subsequent aftershocks at the moment, investors in ASX 200 insurance companies aren't taking any chances.

For FY22, IAG increased its natural perils (i.e., disasters) allowance from $658 million to $765 million. QBE was already above its allocated amount when it released its half-year results and Suncorp also increased its allowance for the current financial year to $980 million.

Considering this is the most powerful earthquake in Victoria since European settlement, at least according to one seismologist, this may not have been the forecasts of these ASX 200 insurers.

According to The Australian, insurers lost $3.2 billion the last time Australia had such a powerful earthquake – the 1989 tremor that hit Newcastle.

ASX 200 insurers share price snapshot

Over the past 12 months, the IAG share price has increased 10.1%, the QBE share price lifted 29.6%, and the Suncorp share price jumped 46.3%.

QBE and Suncorp have overperformed the S&P/ASX 200 Index (ASX: XJO) over the same period while IAG has underperformed the index by about 16 percentage points.

The market capitalisations of these companies range from $12-$17 billion.

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Financial Shares

Shot of a young businesswoman looking stressed out while working in an office.
Financial Shares

Challenger shares fall on big APRA news

Let's see what is weighing on this stock on Friday.

Read more »

Buy and sell written on silver cubes on a stock market chart.
Broker Notes

2 buys and 2 sells in the ASX 200 financials sector: analysts

We reveal what the experts think of these ASX 200 financial shares.

Read more »

Man smiling at a laptop because of a rising share price.
Financial Shares

Macquarie tips around 40% upside for GQG Partners shares

This stock could deliver big returns.

Read more »

Three happy office workers cheer as they read about good financial news on a laptop.
Financial Shares

Macquarie tips 17% return for this ASX 200 stock

The broker is feeling bullish about this stock. Let's find out why.

Read more »

A female financial services professional with a manicured black afro hairstyle turns an ipad screen to show a client across the table a set of ASX shares figures in graph format.
Share Market News

Record CBA share price and blockbuster merger push ASX 200 financials sector to the top

ASX financial stocks led the 11 market sectors last week with a 1.95% gain.

Read more »

Man with rocket wings which have flames coming out of them.
Financial Shares

Up more than 900% in 5 years, can this ASX All Ords financials stock go higher?

The share price of this company has left others behind in the dust.

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Financial Shares

HMC Capital shares are down 50% in 2025, can they turn around?

HMC Capital shares have plunged more than 50% this year, but with solid investments in energy, private credit, and data…

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Financial Shares

Forget the Big 4 banks and buy these 2 compelling ASX 200 financials stocks

The Big 4 banks might be steady, but if you’re after real growth in financials, here are two modern, scalable…

Read more »