The above graph, figure 3, demonstrates growing confidence by shareholders and the market for both IAG and Suncorp shares over the last two years. However, when reflecting on the last three months (figure 2), IAG share prices have been falling at a considerable rate. The possible contributing factor for this decline is the impact of storm activity in NSW, resulting in an excess of 30000 claims being lodged. Consequently, CEO Mike Wilkins announced a reduction in the annual profit margin of 10.5 per cent to 12.5 per cent, down from 13.5 to 15.5 per cent (SMH 2015)
4. External Factors
4.1 Local and global conditions
The current economic climate of low interest rates is impacting the returns on investments for insurance companies. As a consequence this has a direct impact on the profits, as a
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A profitable business is a key indicator for where investors should place their funds.
According to Ibis World (2015), general insurers profitability over the last five years has been impacted due to a number of external factors. These include heightened competition to lower premiums, an increase of natural disasters in Australia and the flow-on effect of the global financial crisis.
IAG’s recovery commenced in 2013, with the announcement of $1428 million insurance profit, an increase of 69% from FY12. Continuing the strong operating performance, a profit of $1579 million was recorded in 2014, up by 10.6% (IAG Media Release 2014).
In contrast, Suncorp’s full year profit announcement for 2013 was $491 million, a reduction of 32% from the FY12 results. Although this could be viewed as a significant loss, Suncorp’s Chairman Dr Ziggy Switkowski, stated the sale of the Non-core Bank will release capital in support of shareholder returns (Suncorp Media Release 2013). Following this loss, Suncorp made a considerable improvement to record a 2014 profit of $730 million.
5.2.1 Return on Assets
Revenues of $10,161 million in the fiscal year ended December 2014 was seen by the organization, an increase of 5.3% over 2013.The company 's operating profit was $419 million in fiscal 2014, as compared to an operating loss of $22 million in 2013. Its net profit was $402 million in fiscal 2014, an increase of 34% over 2013 (Sutter Health, 2016).
Which sense that, Sun Life earns more net income per $1 of sales than some or even most of its competitors. Sun life’s days’ sales uncollected 58.8days7 is favorable when compared to its industry’s average of 98.59 days. This means that Sun Life access its money in receivables faster than some or most of its competitors. Sun life’s equity ratio shows that the owners of the company only owns 10.18%8 of the company’s assets. Compared to its industry average, Sun Life can be rated as more favorable. Sun life’s debt ratio of 90.35%9 is higher than its equity ratio this is considered risky because the huge percentage of its asset is supported by debt. However, Compared to its industry average of 93.2% it is still considered favorable. Sun life’s return on total assets is 0.798%10 this favorable compared to its industry average of
Another highlight of the company was the company’s gross margin, which was 32.8 in 2012, just a little more than the 31.9 in 2011 and their selling rate went down by 20.9
The key results of NAB’s performance over last 2 years are $5.3b net profit attributable to the owners of the Company 1.1% decrease from 2013. $5.18b cash earnings, 9.8% decrease from 2013. $1.98 dividend per share, 4.2% increase from 2013.11.8% cash return on equity, 2.3 percentage point decrease from 2013. $67.6m community investment, 1.7% increase from 2013.69% employee engagement , 1 percentage point increase from 2013.100,000+ microfinance loans to people on low incomes since 2005. NAB has provided project finance for around 65% of Australian utility scale renewable energy projects since 2000.
While Mine101 has suffered a net loss in every year since opening, its revenues and performance is still trending upward. Mine101’s actual income statement display a net loss of -$39,174 for the 2012 and -$5,329 for 2013 (Exhibit A). Revenues have also increased 37.4% in 2012 to 2013 from $91,572 to $125,857 (Exhibit B).
The main contributing factor to the decline in the return on stockholders’ equity (25.37% to 8.73%) was the decline in the profit margin (11.79% vs. 5.08%). The decrease in asset turnover (1.11 to 1.00) made a small contribution to the decline, as did the decline in the debt ratio (48.4% to 41.8%).
Recently, there has been speculation regarding the recent amid poor performance of the managed future industry. Consequently, initiating the question “is recent performance of managed futures a cyclical trough or a structural impairment”, and with interest rates reaching all-time lows, “how will manage futures perform in a rising interest rate environment?” This paper will explore possible implications that may have caused the recent struggles of the managed future industry, and discuss what the future may hold for such strategies in a rising interest rate environment.
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Therefore, IPG’s debt to equity ratio is above industry average (“Financial Strength Information & Trends”, n.d.). In the future, IPG should be equipped to continue to effectively manage the money it borrows. Measures of profitability enable a company to evaluate its profits with respect to a given level of sales, a certain level of assets, or the owners’ investment (Gitman et al., 2015). Companies use the price/earnings (P/E) ratio to assess the owner’s appraisal of share value since it measures the amount that investors are willing to pay for each dollar of a company’s earnings (Gitman et al., 2015).
Analyzing the company’s gross profit margin over the last three to five years, not much has changed. In 2010, the gross profit margin reached its height in the fourth quarter, with 41.56%. In 2011, the
Banks have responded in recent years to these problems by diversifying away from interest sensitive products and services. But interest rates are the fundamental aspect of any financial services. Therefore, I believe the financial services industry will be deeply affected by rising interest rates. Banks have experienced good business factors over the past two years. Interest rates were low, credit quality was good, and inflation was low. These factors are usually predictive of the types of earnings banks should report. But good times can't continue because interest rate hikes cause reduced lending activity, damaged credit quality, and reduced values of bond portfolios.
Insurance is a very important part of modern life and business. In this paper I will discuss the basic concepts of insurance, claims-made and occurrence liability policies, factors for selecting an insurance company and policies, and the difference between workers compensation and liability insurance.
Being a business education major, I am very interested in the different structures of the education systems in the world. Not only do I think it is important to teachers to understand the different education systems, but also everyone else. Because of our world growing into a more global world, we all need to understand the culture and customers of different countries.
The underwriting cycle is the tendency of property and casualty insurance premiums, profits, and availability of coverage to rise and fall with some regularity over time. A cycle begins when insurers tighten their underwriting standards and sharply raise premiums after a period of severe underwriting losses or negative stocks to capital (e.g., investment losses). Stricter standards and higher premium rates lead to an increase in profits and accumulation of capital. The increase in underwriting capacity increases competition, which in turn drives premium rates down and relaxes underwriting standards, thereby causing underwriting losses and setting the stage for the cycle to begin again. All industries experience cycles of growth and decline, 'boom and bust'. These cycles are particularly important in the insurance and re-insurance industry as they are especially unpredictable. Lloyd's of London research in 2006 revealed, for the second year running, that Lloyd’s underwriters see managing the insurance cycle as the top challenge for the insurance industry, and nearly two-thirds believe that the industry at large is not doing enough to respond to the challenge. The Insurance Cycle affects all areas of insurance except life insu...
From 2015 to 2016 the gross profit had a 16% change from R3 283 342 to R 4 308