Insurance Australia Group has increased its FY21 natural peril cost estimate to $720-743m. As estimates assume the stop-loss protection is fully utilised UBS assesses downside risk if there are any large events for the remaining two weeks of FY21.
With the stop-lost not likely to be renewed into FY22, the broker expects the company will face a sharp increase in its natural perils budget next year. Buy rating and $6 target retained.
Sector: Insurance.
Target price is $6.00.Current Price is $5.17. Difference: $0.83 – (brackets indicate current price is over target). If IAG meets the UBS target it will return approximately 14% (excluding dividends, fees and charges – negative figures indicate an expected loss).
