Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

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Equity Bottom-Up

Profit growth for Insurance Australia Group, or IAG, in fiscal 2017 is under pressure from a combination of tough conditions in commercial insurance markets, higher allowances for natural peril costs, the sale of subsidiary Swann Insurance, lower reserve releases, additional costs to implement operational and systems simplification, reversion to a more "normal" tax rate, and continued historically low interest rates. On a positive note, pricing in commercial markets appears to be recovering from an extended period of weakness, and there are good signs that conditions in both countries are starting to improve, with fiscal 2018 likely to see the start of solid earnings growth.Our AUD 6.00 fair value estimate and high uncertainty ratings are unchanged. At current levels, IAG is modestly undervalued, trading at a 9% discount to our valuation. IAG’s investor briefing, scheduled for Dec. 8, will provide more detail on the firm’s strategy and could provide a catalyst for a share price rerating closer to our valuation. IAG’s strong balance sheet and surplus capital underpinned the mid-August announcement of a AUD 300 million off-market buyback following the special dividend of fully franked AUD 0.10 per share, paid in March.Analyst: David Ellis

Profit growth for Insurance Australia Group, or IAG, in fiscal 2017 is under pressure from a combination of tough conditions in commercial insurance markets, higher allowances for natural peril costs, the sale of subsidiary Swann Insurance, lower reserve releases, additional costs to implement operational and systems simplification, reversion to a more "normal" tax rate, and continued historically low interest rates. On a positive note, pricing in commercial markets appears to be recovering from an extended period of weakness, and there are good signs that conditions in both countries are starting to improve, with fiscal 2018 likely to see the start of solid earnings growth.Our AUD 6.00 fair value estimate and high uncertainty ratings are unchanged. At current levels, IAG is modestly undervalued, trading at a 9% discount to our valuation. IAG’s investor briefing, scheduled for Dec. 8, will provide more detail on the firm’s strategy and could provide a catalyst for a share price rerating closer to our valuation. IAG’s strong balance sheet and surplus capital underpinned the mid-August announcement of a AUD 300 million off-market buyback following the special dividend of fully franked AUD 0.10 per share, paid in March.Analyst: David Ellis

IAG Faces Short-Term Headwinds, but Long-Term Outlook Remains Positive