Credit Suisse expects the increased natural hazards allowance and reinsurance cover for FY20 will reduce the downside risk to earnings. This should be a benefit by way of a reduced discount to Insurance Australia Group ((IAG)).
While encouraged by the additional allowance, the broker assesses this is effectively another re-set of the insurance margin. Moreover, at a time when the company is looking to provide increased earnings certainty it has left the market in the dark in regards to regulatory costs.
Credit Suisse maintains a Neutral rating and raises the target to $14.00 from $13.25.
Sector: Insurance.
Target price is $14.00.Current Price is $13.69. Difference: $0.31 – (brackets indicate current price is over target). If SUN meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges – negative figures indicate an expected loss).
