Insurance Australia Group (IAG) Shares Recommendation

Submitted by Craig Strzelecki on 18 January, 2007 - 20:28

Insurance Australia Group (IAG) have a Buy 2 shares recommendation and a share price target of $7.05 from shares analyst UBS. AA British Insurance Premium Index has been updated for 4Q06 and the Index has showed a 4.35% increase in average annual comprehensive motor premiums (to c£806m) over 4Q06 (with yr on yr increase of 5.7%). The quarterly rise was the biggest since Apr 2001, while the annual increase was the highest since 2002. UBS anticipate a continued upward trend in UK motor rates over the coming 12 months. UBS view this news as incrementally positive for IAG post recent UK acquisitions (Equity Insurance in Dec 07 and Hastings Insurance & Advantage Insurance in Sep 07). UK business now accounts for c14% of group gross written premium and we estimate that a 5% lift in UK revenues would lift FY08E forecast group earnings by c0.5%. Initial signs of improvement in domestic personal lines are encouraging and UBS maintain a positive view on IAG, noting further upside potential if the SUN/PMN integration is poorly executed. UBS identifies key risks as: (i) stalling of domestic turnaround; (ii) extended delay or failure to complete stake in CPPI; and (iii) international expansion execution risk.

Insurance Australia Group Limited is listed on the Australian Stock Exchange (ASX) under stock code IAG. You can view their investor website here. IAG was listed on the ASX on 8 August, 2000. Michael Hawker is the CEO of Insurance Australia Group and James Strong the Chairman. IAG is a provider of general insurance, including full range of personal and commercial insurance products. Also provider of financial services products. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade IAG. Check your charts and good luck with your share trading!