Goldman working with IAG

Newly appointed CEO Nick Hawkins of IAG - Insurance Australia Group poses in Sydney, Australia, on SEPTEMBER 21 2020. Picture: NCA Newswire / Gaye Gerard

Investment bank Goldman Sachs is preparing to tap the market for Insurance Australia Group.

The insurer is expected to raise between $400m and $500m through Goldman Sachs as it remained in a trading halt Thursday.

IAG said the halt was to consider the impact of the judgement of the NSW Court of Appeal on November 18 in relation to business interruption insurance as a result of COVID-19 and to assess the financial impact and capital requirements.

Shares last traded at $5.46, with its market value at $12.61bn. Shares traded over $7 in January.

Amid the grip of the Covid-19 pandemic, rival QBE tapped the market for $1.3bn.

It comes after IAG recently announced Nick Hawkins as its new chief executive.

The Australian reported at the start of the month that several insurance analysts have estimated IAG’s stock is pricing in heavy $1bn to $2bn losses from business interruption claims.

Analysts have estimated that IAG has between $500m and $1bn of excess capital.

IAG is also expected to line up for a potential acquisition of the $1bn CBA general insurance business when it is expected to soon come up for sale, along with Westpac’s $700m general insurance operations if they are not first sold to Allianz, which is working on a potential acquisition.

Westpac is advised by investment bank JPMorgan as Allianz remains in exclusive talks with the bank about a deal.

Allianz and Westpac have a strong relationship, with Allianz the provider of Westpac’s insurance products.