Credit Suisse notes Insurance Australia Group is suffering from some degree of uncertainty due to business interruption claims from COVID-19.
While these claims are meant to be excluded, a wording error is being legally challenged, notes the broker. Should the group be found liable, Credit Suisse expects claims to be in millions and not billions.
While the group now takes on more weather risk than Suncorp Group ((SUN)), the broker does not foresee any major renewal concerns for it. The group is viewed by the broker as a quality name trading at an attractive entry price.
Credit Suisse maintains its Outperform rating with a target price of $6.40.
Sector: Insurance.
Target price is $6.40.Current Price is $5.77. Difference: $0.63 – (brackets indicate current price is over target). If IAG meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges – negative figures indicate an expected loss).
