The Insurance Australia Group Ltd (ASX: IAG) share price has had a rough run over the last couple of weeks, driven by news regarding 2 major legal battles.
The company has released updates on both February's second business interruption test case and a legal suit brought against it in the Federal Court.
As of Tuesday's close, the IAG share price is $4.40. That's 4.55% lower than it was a fortnight ago.
For context, the S&P/ASX 200 Index(ASX: XJO) has gained 2.54% in that time.
Let's take a closer look at the news that's been weighing on the insurance giant's stock lately.
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What's been dragging the IAG share price lower?
Second business interruption test case
The IAG share price has been slipping since it released an update on the second business interruption test case 2 weeks ago.
In that update, the company noted that the 28-day deadline for policyholders to lodge an application to seek leave to appeal the judgment from the Federal Court, handed down on 21 February, had passed.
It stated that some policyholders had appealed for special leave regarding some aspects of the judgement. Additionally, IAG had filed an application for special leave to appeal the finding on JobKeeper payments.
IAG stated that it believes a release from the provision will go ahead. The company said that will probably be recognised over time.
However, it's not adjusting its $1,222 million net provision for business interruption claims. Though, it said it will adjust its predicted claims costs and provision accordingly as more certainty emerges.
The IAG share price slipped 1.3% on the release of the update.
Plot twist in Greensill drama
Though, the IAG share price was in the green yesterday following a plot twist regarding claims made against it in the Federal Court, reportedly worth nearly $300 million.
The company is battling against claims that it's liable to payout insurance policies connected with the now-defunct Greensill Capital.
The insurance policies were covered by Bond and Credit Co, of which IAG used to own a 50% stake. It sold the stake to Tokio Marine in 2019.
However, Tokio Marine made headlines yesterday when it announced it believes the policies were fraudulently obtained by companies connected to Greensill's founder, Lex Greensill.
"In light of those fraudulent misrepresentations and fraudulent breaches of an insured's duty of disclosure, Tokio Marine has today advised counterparties that these policies and related obligations are void from inception," the insurer said in a statement.
"Tokio Marine will vigorously defend any claims against it and against BCC relating to any policies purportedly issued to Greensill."
In response to Tokio Marine's statement, IAG released a price sensitive announcement to the market yesterday.
It once again maintained it had no net insurance exposure to trade credit policies sold through BCC.
It also said that it's continuing to work with Tokio Marine to defend claims and litigation asserting otherwise.
IAG share price snapshot
Following its recent tumble, the IAG share price is back into the year to date red.
Right now, it is 1.3% lower than it was at the start of 2022. It has also slumped nearly 9% since this time last year.
