The Insurance Australia Group Ltd (ASX: IAG) share price has been suffering lately amid lawsuits, weather events, and business interruption claims.
In fact, the company's stock is only 3% higher than its 52-week low of $4.21.
As of Tuesday's close, the IAG share price is $4.34. And at that price, one expert believes the company is in a prime position to be acquired.
Here's why Joseph Koh, portfolio manager of Schroders' Australian equities team, has reportedly picked the company has "an appealing takeover target".
Could the IAG share price herald takeover offers?
According to Koh, the IAG share price has been damaged by numerous happenings, but it's not beyond repair.
That means it might be a tempting takeover target for other businesses.
Koh told the Australian Financial Review (AFR) court decisions from business interruption cases that have plagued the company were "at worst mixed". He continued:
[E]ven in cases where IAG may be liable, damages may well be quite limited given the large government handouts that supported businesses during COVID-19 lockdowns. On top of all that, IAG has already set aside a sizeable provision for potential business interruption claims.
The New South Wales Court of Appeal ruled that insurance companies have to pay businesses claims for pandemic related disruptions last year.
Additionally, a class action is being brought against the company for its handling of the business interruption case. Its subsidiary is also facing court action brought about by the Australian Securities and Investments Commission (ASIC).
Finally, the IAG share price was dragged 7% lower in early November when the company announced that severe weather events had put a bigger than anticipated dint in its bottom line. The AFR quoted Koh as saying:
On weather-related claims costs, it's clear that some years will be worse than others, and over time this should either even out, or premiums in the industry will rise to reflect more disruptive weather patterns.
Right now, the IAG share price is 7.6% lower than it was at the start of 2021. It has also fallen 1.3% over the last 30 days.
