So far, 2021 has been brutal for the Insurance Australia Group Ltd (ASX: IAG) share price.
The company has battled against paying business insurance claims for COVID-19 disruptions and intense storm activity.
Additionally, IAG's subsidiary and operator of NRMA Insurance is facing a lawsuit brought about by the Australian Securities and Investments Commission (ASIC), while the company is the subject of a shareholder class action.
As of yesterday's close, the IAG share price is $4.25, 9.96% lower than it was at the start of this year.
For context, the S&P/ASX 200 Index (ASX: XJO) has gained 9.15% year to date.
But does the future look greener for the insurance company's stock? Here's what experts are saying.
What might 2022 bring for the IAG share price?
For bullish investors, experts' outlook for the IAG share price in 2022 could be worrying.
Morgans slapped the stock with an 'underweight' rating and a $3.75 price target last week. However, earlier this month, the broker weighed in on the company's growth strategy.
IAG recently outlined its plan to generate a cash return on equity of 12% to 13%, driven by customer growth. It's also aiming for a $250 million profit improvement for its Intermediated Insurance Australia (IIA) business and $400 million of value creation for its Direct Insurance Australia (DIA) division.
Morgans analyst, Richard Coles commented on the company's plan, saying:
IAG's overall strategy sounds logical, although history shows it is one thing improving margins in IIA and another thing being able to maintain them. We also retain some skepticism on customer growth targets given IAG has been losing personal lines market share in recent times.
UBS is also feeling bearish.
The broker recently dropped its price target for IAG shares to $4.20 – 21% lower than its previous prediction, made in October – popping a 'sell' rating on the stock.
UBS is reportedly worried about ASIC's lawsuit, which came about due to NRMA overcharging some customers. It's also concerned about a "substantial 'claims catch up'" that could hit the company as COVID-19 restrictions ease.
All in all, the two brokers predict the IAG share price currently has a downside of between 1% and 11%.
However, as Livewire reports, Perpetual Investment Management, alongside its portfolio manager and head of equities, Paul Skamvougeras has picked the stock as a winner for 2022.
The fund believes next year will see fewer major weather events, leading to higher margins for the insurance group.
