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.
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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.
