The Insurance Australia Group Ltd (ASX: IAG) share price has rebounded more than 6% over the past week despite the recent flooding events.
At the time of writing, the insurance giant's shares are swapping hands for $4.545, up 0.11%.
What happened with IAG?
Last week, the company provided the ASX with an update regarding the severe weather impacting Australia's east coast, sending IAG shares initially lower.
In its 9 March release, IAG advised it received more than 24,000 claims across southeast Queensland and New South Wales.
And while strong weather continued to hit the eastern seaboard, the number of claims was expected to rise.
Nonetheless, management called for calm saying that it has extensive reinsurance protection in place.
Current estimates of the net claims cost from the storm and flooding events are at approximately $74 million. This is lower than the $95 million forecast disclosed in early March, due to development on previous claims.
As such, IAG has utilised roughly $95 million of the $236 million of aggregate cover following the weather-related event.
From February 2022, the company increased its expectation for FY22 net natural perils claims costs to approximately $1.1 billion. Previously that number stood at an estimated $1.045 billion.
Pleasingly, IAG reaffirmed its reported margin guidance range of 10% to 12% for FY22. However, given the increase in estimated net natural perils claims costs, the lower half of the guidance range is more likely.
Is it time to sell?
The team at UBS maintained its sell rating on IAG shares, given the severe impact of the floods.
Its analysts have given the insurance giant's shares a price target of $4.20, implying a downside of around 7%.
It appears the broker believes that IAG is currently overvalued.
UBS predicts the company's earnings will fail to meet the market's expectations for FY22 and FY23.
IAG share price summary
The IAG share price has gained around 6.5% in 2022, however, it's a different story when looking over a longer timeframe.
Since January 2020, before the onset of the COVID-19 pandemic, the company's shares are down more than 40%.
Based on valuation grounds, IAG presides a market capitalisation of roughly $11.2 billion, with approximately 2.47 billion shares on issue.
