Fitch downgrades IAG’s outlook
Fitch Ratings today affirmed the financial strength rating of IAG at AA-, but downgraded its outlook from stable to negative.
The revised outlook for both the Australia and NZ divisions follows radical changes to the organisation announced by new CEO Mike Wilkins on July 9.
IAG will cut 600 jobs in Australia including those of key executives, and is to scale back poorly performing operations in the UK in a bid to save $130 million a year.
Despite this, Fitch says IAG continues to face a number of challenges that could undermine capital and earnings. The insurer has already announced several downgrades to profit expectations, while insurance margins are expected to hit the bottom end of the projected 6-8% range.
Fitch says positive changes at IAG may strengthen performance in core markets, but it’s likely to face “keen competition”.
But it’s not all gloom. Fitch says Mr Wilkins has a successful track record in profitable growth, and IAG “has a strong and well-established franchise in Australia and NZ, underpinned by strong brands”.
The revised outlook for both the Australia and NZ divisions follows radical changes to the organisation announced by new CEO Mike Wilkins on July 9.
IAG will cut 600 jobs in Australia including those of key executives, and is to scale back poorly performing operations in the UK in a bid to save $130 million a year.
Despite this, Fitch says IAG continues to face a number of challenges that could undermine capital and earnings. The insurer has already announced several downgrades to profit expectations, while insurance margins are expected to hit the bottom end of the projected 6-8% range.
Fitch says positive changes at IAG may strengthen performance in core markets, but it’s likely to face “keen competition”.
But it’s not all gloom. Fitch says Mr Wilkins has a successful track record in profitable growth, and IAG “has a strong and well-established franchise in Australia and NZ, underpinned by strong brands”.