Macro Intelligence: which insurance stocks should you watch after ex-Tropical Cyclone Alfred?

Written by Juliette Saly

Ex-Tropical Cyclone Alfred

This week's IG Macro Intelligence we take a deep dive into the stocks associated with ex-Tropical Cyclone Alfred.

Insurance stocks bounced back during Monday’s trade, as the Insurance Council of Australia declared ex-Tropical Cyclone Alfred a catastrophe. The Insurance Council indicated many more thousands of claims are expected from the weather event, citing that it is too early to assess the overall cost of the devastation.

Weathering the storm

• Johns Lyng Group (ASX:JLG)

Shares in insurance repairer Johns Lyng slumped amid confirmation it would be removed from the Australia 200 during the upcoming quarterly rebalancing, after shedding a quarter of its value over the past six months.

Shares have slumped nearly 70% over the past 12 months and are down 36% since early 2025, prompting the ASX to remove Johns Lyng from the top 200 at the next quarterly rebalancing, replacing it with Life360.

Johns Lyng market summary chart

Johns Lyng is an integrated building services provider offering restoration services across Australia and the United States (US). The company's value lies in its ability to restore properties after insured events like Cyclone Alfred.

ASX Tradewatch data shows shares are following a long-term bearish trend, with the 200-day moving average (MA) declining, suggesting weak demand for the stock. The five-day MA is below both the 20-day and 50-day MAs, indicating limited investor interest in holding this stock.

Johns Lyng buy/sell indicators and analyst projections

Macquarie recently lowered its price target on the stock by 47% to $2.60, while Citigroup reduced its target to $2.70 from $3.95. The average recommendation remains a 'buy,' with a price target of $3.41, suggesting a potential rally of 40% from current lows.

On a recent episode of ausbiz’s The Call, guests labelled Johns Lyng Group a 'double buy': 'The catastrophes business shrank due to fewer events, leading to a share price drop, but guidance is above last year’s.'

John Lyng historical trends and price targets

Insuring your portfolio

Analysts are positive on the following three listed insurance stocks.

• QBE Insurance Group (ASX:QBE)

QBE Insurance (QBE) shares have risen around 23% over the past 12 months, with ASX Tradewatch data showing they are in a strong bullish trend.

QBE delivered strong half-year earnings. Despite the rise in share price, QBE remains valued with a price-to-earnings (P/E) ratio of 11.2x and a yield of 4.3%.

QBE daily chart

The average broker recommendation on the stock is a 'buy,' according to Refinitiv, with a target price of $22.98, suggesting the stock can add a further 9% from current levels.

John Lockton from Sandstone Insights prefers QBE due to less exposure to Cyclone Alfred compared to IAG and Suncorp Group: 'QBE could lift earnings out of the US and engage in capital management, including buybacks.'

However, Ord Minnett retains a 'hold' recommendation on QBE, citing greater exposure to international premium rates and macroeconomic risks.

Chief Financial Officer (CFO) Inder Singh emphasised QBE's diversification across major markets, stating: 'The US market turned around, and we're seeing growth opportunities. Diversification gives us confidence in future growth.'

QBE Insureance historical trends and price targets

• Suncorp Group (ASX:SUN)

Suncorp shares are up around 5% over the past year, with technical analysis showing a downward trend across both short and longer terms, suggesting better value is seen elsewhere by market participants.

Suncorp daily chart

Suncorp announced an additional comprehensive reinsurance program, covering significant weather events with a maximum retention of $350 million and primary catastrophe coverage up to $6.75 billion. In the first half (H1) of 2025, the insurer was $277 million below its natural hazard allowance.

The average price target is a 'buy,' according to Refinitiv, with a price target of $24.65. Ord Minnett has an 'accumulate' recommendation on Suncorp while Morgan Stanley is 'overweight' with a $22.10 price target.

Suncorp historical trends and price targets

• Insurance Australia Group (ASX:IAG)

Insurance Australia Group (IAG) announced perils cover of $680 million, offering strong downside protection against natural perils costs exceeding the FY 2025 allowance of $1.283 billion.

Shares are up almost 26% over the past year.

IAG daily chart

The average broker recommendation on Refinitiv is a 'buy,' with a price target of $8.56, suggesting IAG can rise a further 10% from current levels. Ord Minnett has an 'accumulate' recommendation on IAG.

ASX Tradewatch data indicates that the five-day MA is beneath the 50-day MA, suggesting investors see better opportunities elsewhere.

IAG historical trends and price targets