Some of the leading ASX financial shares are insurance giants. Investors can choose between Insurance Australia Group Ltd (ASX: IAG) shares or Suncorp Group Ltd (ASX: SUN) shares. But which is better?
Leading analysts from Macquarie have reviewed the two companies and decided which one is more appealing at their current valuations.
Suncorp has a number of brands, including AAMI, GIO, Bingle, Apia, Shannons, Terri Scheer, CIL Insurance, Vero, Essentials by AAI, and AA Insurance.
IAG also has a number of brands, including NRMA Insurance, CGU, WFI, ROLLiN', Swann Insurance, AMI, State, and Lumley Insurance.
Let's take a look at what Macquarie thinks of the insurance giants and recent pricing changes.
Insurance sector analysis
First, let's look at home insurance. Macquarie said that pricing for new home insurance increased 5.7% year over year after looking at over 1,000 price points by state and brand, weighted to reflect each business mix. The analysis serves as a "strong indicator of new business pricing trends", according to Macquarie. The broker noted that Australian home insurance is made up 21% of IAG's group gross written premium (GWP), and 22% of Suncorp's GWP.
The financial institution's analysis of pricing for the small and medium enterprise (SME) showed a price rise of 7.8% in the three months to June 2025, compared to the prior corresponding period. Australian commercial lines accounted for 24% of IAG's GWP and 20% of Suncorp's GWP.
Compulsory third party (CTP) pricing increased by an average of 4.2% in the June 2025 quarter, according to Macquarie. The primary driver for IAG was price increases in IAG's brands in NSW. CTP accounts for 5% of IAG's GWP and around 8% of Suncorp's GWP.
Does Macquarie prefer IAG shares or Suncorp?
In terms of the outlook, Macquarie said the premium rate cycle peaked in the June 2023 quarter. The broker then said:
As the tail end of peak repricing contributes to margins, this may represent as good as it gets for insurers, prompting us to proceed with caution.
Macquarie currently has a neutral rating on both ASX financial shares, so it is not bullish on either.
But, it's expecting more share price growth from one than another.
A price target is the broker's estimate of the share price 12 months from the time of the investment call.
Macquarie has a price target of $9.20 on IAG shares, which suggests a possible rise of 9.25%.
For Suncorp shares, Macquarie has a price target of $19.60, which suggests a possible decline of 4%.
Therefore, the broker appears to be far more optimistic on IAG shares.
