Post by Fletchsmile on Jun 19, 2015 22:12:19 GMT 7
Worth a thought for people wondering where to put some AUD to generate yield, hold for long term and be prepared to take some risk with capital. Particularly Aussies
I own the stock myself, and see it as a long term hold. Will probably add to it at some point too. Insurance industry there seems to be slowing, but per BBerg, the company still has a P/E of 10.9 and forward P/E of 13.6, which isn't exactly expensive, even if slower growth. Div yield is 9.7%, and they aim to pay out a significant part of cash earnings to maintain that on an ongoing basis. Which is a nice payout in today's low yield world
Always nice to see Warren Buffet buying into one of your stocks
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Buffett’s Berkshire Hathaway Pays $388 Million for Stake in Australia's IAG
Warren Buffett’s Berkshire Hathaway Inc. will pay A$500 million ($388 million) for a stake in Insurance Australia Group Ltd. as part of a plan to expand in the region.
The agreement will give Berkshire 20 percent of IAG’s insurance premium payments and make it liable to pay 20 percent of claims over a decade, IAG said in a statement Tuesday. Buffett’s company will get a 3.7 percent stake in the Sydney-based firm through a placement of new shares.
Buffett, 84, has been focused on building Berkshire’s commercial-insurance operations globally. In 2013, he hired four executives from American International Group Inc. to start a company called Berkshire Hathaway Specialty. That unit began operations in Australia this year.
“The transaction gives Buffett a significant long-term exposure to the Australian market at a reasonable risk,” said T.S. Lim, a Sydney-based analyst at Bell Potter Securities Ltd. “For Insurance Australia, it is about a long-term play. That is, having the resources and scale to frustrate the smaller players in the retail market.”
The deal also frees up as much as A$700 million in capital over five years for IAG, it said, allowing it to focus on opportunities to expand in China, Thailand and Malaysia.
IAG has an option to place up to a further 5 percent with Berkshire within 24 months, according to the statement. Under a so-called standstill agreement, Berkshire will not increase its shareholding in the Australian insurer above 14.9 percent for 10 years.
continues..
www.bloomberg.com/news/articles/2015-06-15/buffett-s-berkshire-hathaway-pays-a-500-million-for-stake-in-iag
I own the stock myself, and see it as a long term hold. Will probably add to it at some point too. Insurance industry there seems to be slowing, but per BBerg, the company still has a P/E of 10.9 and forward P/E of 13.6, which isn't exactly expensive, even if slower growth. Div yield is 9.7%, and they aim to pay out a significant part of cash earnings to maintain that on an ongoing basis. Which is a nice payout in today's low yield world
Always nice to see Warren Buffet buying into one of your stocks
========================================================================================
Buffett’s Berkshire Hathaway Pays $388 Million for Stake in Australia's IAG
Warren Buffett’s Berkshire Hathaway Inc. will pay A$500 million ($388 million) for a stake in Insurance Australia Group Ltd. as part of a plan to expand in the region.
The agreement will give Berkshire 20 percent of IAG’s insurance premium payments and make it liable to pay 20 percent of claims over a decade, IAG said in a statement Tuesday. Buffett’s company will get a 3.7 percent stake in the Sydney-based firm through a placement of new shares.
Buffett, 84, has been focused on building Berkshire’s commercial-insurance operations globally. In 2013, he hired four executives from American International Group Inc. to start a company called Berkshire Hathaway Specialty. That unit began operations in Australia this year.
“The transaction gives Buffett a significant long-term exposure to the Australian market at a reasonable risk,” said T.S. Lim, a Sydney-based analyst at Bell Potter Securities Ltd. “For Insurance Australia, it is about a long-term play. That is, having the resources and scale to frustrate the smaller players in the retail market.”
The deal also frees up as much as A$700 million in capital over five years for IAG, it said, allowing it to focus on opportunities to expand in China, Thailand and Malaysia.
IAG has an option to place up to a further 5 percent with Berkshire within 24 months, according to the statement. Under a so-called standstill agreement, Berkshire will not increase its shareholding in the Australian insurer above 14.9 percent for 10 years.
continues..
www.bloomberg.com/news/articles/2015-06-15/buffett-s-berkshire-hathaway-pays-a-500-million-for-stake-in-iag
