Insights

Could insurance be the most underrated sector in the ASX 200?

Tech, big banks and mining are often crowd-favourite ASX 200 shares. However, insurers have been quietly outperforming the market.
The post Could insurance be the most underrated sector in the ASX 200? appeared first on The Motley Fool Australia. –

business man adjusting suit and tie on his young son representing a family business

Tech, mining and the big four banks typically dominate the spotlight for most traded ASX 200 shares

But amongst the S&P/ASX 200 Index (ASX: XJO), there’s an overlooked sector that has been quietly outperforming the broader market. 

Say hello to insurance. 

Brokers think insurers can outperform the ASX 200 

Back in March, brokers delivered a flurry of buy recommendations towards insurers. This was on the basis that the insurance market was moving through a “hard cycle”, where premiums increase and the capacity for most types of insurance decreases.

Multiple insurers, including Insurance Australia Group Ltd (ASX: IAG) and Suncorp Group Ltd (ASX: SUN), were upgraded with the view that premiums will increase, driving higher margins and revenues. 

A number of insurers continue to meet with bullish broker notes, including: 

AUB Group Ltd (ASX: AUB)

AUB is the largest equity-based insurance network in Australia and New Zealand. Macquarie comments that the company’s March quarter results were strong with improvements in both revenue and margins. The broker highlighted the 5.9% increase in premium rates, which were at the top of the company’s estimates and well ahead of Macquarie forecasts. 

An outperform rating was retained, with the target price increasing from $20.40 to $23.13. AUB shares are up more than 30% year-to-date into record territory. Its shares are currently fetching $20.63. 

Steadfast Group Ltd (ASX: SDF)

Steadfast is also a major general insurance broker network and the largest group of insurance underwriting agencies in Australia. The company recently upgraded its FY21 guidance, increasing FY21 underlying NPAT to $127 million – $132 million from its previous guidance of $120 million – $127 million. 

Macquarie observes that stronger operating conditions have driven the guidance upgrade. The broker retained an outperform rating while edging its target price higher from $4.60 to $4.70. Steadfast shares have had a relatively quiet year-to-date performance, up a steady 4%. Its shares are currently trading at $4.17. 

QBE Insurance Group Ltd (ASX: QBE)

UBS observes that QBE’s first-quarter performance shows an average premium increase of 8.9%, slightly lower than 2020 figures but within the broker’s expectations.

Despite a slower increase in premiums, the broker observes that volume growth appears ahead of expectations. A buy rating was retained with an increase in target price from $10.25 to $11.50.

It’s been a volatile 12 months for the QBE share price, with its shares losing 50% in value during the initial COVID-19 sell-off. From a year-to-date perspective, its shares have pushed 30% higher to $10.81 but are still another 40% from pre-COVID highs. 

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Steadfast Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Could insurance be the most underrated sector in the ASX 200? appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!