Insurance Australia Group Ltd

IAG: XASX (AUS)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	A$3.70	Srhrl	Snslhzzm

We Recommend Investors Subscribe to Insurance Australia Group's SPP

, Adrian Atkins

Jan 9, 2014

We recommend investors subscribe to Insurance Australia Group's recently announced share purchase plan, or SPP. Participants in the SPP can purchase up to AUD 15,000 worth of shares at the lower of AUD 5.47 or at a 2% discount to the five-day volume weighted average price. The AUD 5.47 issue price represents a forward price earnings ratio of 11.5 times and a fully franked dividend yield of 5.7%, which we consider relatively attractive. The SPP will raise up to AUD 200 million to help finance the proposed acquisition of Wesfarmers' insurance arm. The SPP closes on 24 January 2014.

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