After severe storms in October, Insurance Australia Group has lifted estimated claims costs to $535m from $280m for the first four months of FY22. The FY22 expected natural perils claims costs to $1.04bn versus $765m.
As a result, Morgans downgrades its FY22 EPS forecast by -26% and reduces its target price to $5.36 from $5.64. The analyst remains upbeat due to valuation and continuing insurance price increases and retains an Add rating.
Sector: Insurance.
Target price is $5.36.Current Price is $4.50. Difference: $0.86 – (brackets indicate current price is over target). If IAG meets the Morgans target it will return approximately 16% (excluding dividends, fees and charges – negative figures indicate an expected loss).
