Morgan Stanley believes Insurance Australia Group and Suncorp Group remain well placed to expand margins. The analysts are on watch for revenue risks to brokers AUB Group and Steadfast Group if softer commercial trends persist.
Australian direct insurance industry gross written premium (GWP) rose around 3.5% year-on-year in the September quarter, easing from 5% in June-25.
Commercial lines declined -1.5%, reversing the 2-3% growth seen in the prior two quarters. Within this segment, commercial property fell 3% year-on-year, while commercial motor held relatively steady with 4% growth, highlight the analysts.
Personal lines remained more resilient at 7% compared with the weaker commercial result.
For Insurance Australia Group: Equal-weight. Target $8.80. Industry View: In-Line.
Sector: Insurance.
Target price is $8.80.Current Price is $7.76. Difference: $1.04 - (brackets indicate current price is over target). If IAG meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).
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