QBE, SUN, IAG: Why are these ASX insurance stocks trading higher today?

Image Source: © Cammeraydave | Megapixl.com

Highlights

  • After the RBA hiked interest rates by 50bps on Tuesday to combat inflation, the share prices of insurance stocks have caught investors' attention.
  • Inflation impacts both life insurers, where interest rates are a benefit and non-life insurers due to rising claim costs.
  • It is believed that a rise in interest rates is directly proportional to government bond yields as it leads to an increase in government bond yields.
  • The shares of three ASX-listed insurance stocks QBE Insurance Group Limited, Suncorp Group Limited, and Insurance Australia Group Limited, were trading in green today.

Inflation, the rise in interest rates and recession woes have become hot topics of discussions these days. And the Reserve Bank of Australia (RBA) left everyone surprised on Tuesday (7 June) after it decided to hike interest rates by 50 basis points, the highest in 22 years. Amidst this, speculations are rife about a further aggressive stance by the Federal Reserve, which is likely to announce another hike in rates in the upcoming days. US stocks will be carefully watched this Friday when the US consumer price index data for May will be out, signalling whether the inflation is weakening or not. 

The discussion on inflation becomes more important when discussing the insurance sector, as rising inflation and insurance sector share a complicated relationship. Some believe that inflation has a positive impact on insurers. It is believed that a rise in interest rates is directly proportional to government bond yields as it leads to an increase in government bond yields which are usually positive for insurers and pension funds. This is because the adverse short-term impact of the rise in interest rates on the value of owning government bonds is mostly mitigated by insurers’ ability to hold investments until they mature.

In this context, let’s take a look at three ASX-listed insurance companies, including QBE Insurance Group Limited (ASX:QBE), Suncorp Group Limited (ASX:SUN), and Insurance Australia Group Limited (ASX:IAG). This article will talk about today’s share market performance of these three stocks and their past one-year performance.  

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Image Source: © Cammeraydave | Megapixl.com

QBE Insurance Group Limited (ASX:QBE)

The shares of QBE Insurance Group Limited traded 1.851% higher at AU$12.375 per share on ASX at 11:29 AM AEST today. QBE Insurance Group Limited is an ASX-listed company counted as one of the world’s leading insurance and reinsurance companies with a presence in 27 countries. The Group’s growth in gross written premium remained strong in 1Q22, up 19% on the prior corresponding period, or 22% in constant currency. In the last one year, QBE shares have gained almost 9.96%, while the stock is up 3.78% on year-to-date (YTD). 

Suncorp Group Limited (ASX:SUN)

The share price of Suncorp Group Limited traded 2.150% higher at AU$11.165 per share on ASX at 12:42 PM AEST today. Suncorp Group Limited is an ASX-listed Australian company which provides various services, including insurance, banking, and superannuation. Suncorp Group shares have fallen almost 0.71% in the last one year, while the stock is down up to 2.96% on YTD. 

Insurance Australia Group Limited (ASX:IAG)

Insurance Australia Group shares traded 2.380% higher at AU$4.300 per share on ASX at 12:45 PM AEST today. The company has a market capitalisation of AU$10.35 billion. The company claims to be the largest general insurance company in Australia and New Zealand. In the last one year, the share price of Insurance Australia Group Limited has fallen nearly 18.10%, while the stock is down almost 3.59% on YTD. 

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