After reviewing March quarter results for Allianz Group, Morgan Stanley sees positive implications for both Insurance Australia Group and Suncorp Group relating to both pricing and loss ratios.

Allianz Australia reported a 11.8% pricing increase versus 10% in the prior December and September quarters, while premium growth rose by 14% year-on-year, up from around 11.5% by comparison to the same two quarters.

Management at Allianz noted a better attritional loss ratio following price action against high claims inflation.

The $5.45 target and Equal-weight rating are unchanged for Insurance Australia Group. Industry view: In-line.

Sector: Insurance.

Target price is $5.45.Current Price is $6.51. Difference: ($1.06) - (brackets indicate current price is over target). If IAG meets the Morgan Stanley target it will return approximately -19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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