Credit Suisse has upgraded IAG’s stock, citing potential in Australian personal lines and its UK motor acquisitions.

Credit Suisse analysts Arjan van Veen and Jumana Nahhas have put a 12-month price target of $5 on the insurer’s stock.

IAG’s share price has shed more than a third of its value since a high of $6.63 at the start of the year to a low of $4.35 last month; but it has since recovered slightly to close yesterday’s trading at $4.61.

IAG has experienced teething problems with its $350 million UK acquisitions – motor broker Hastings and underwriter Advantage – as a result of the continuing soft market and operational issues uncovered since the purchase late last year.

But the Credit Suisse analysts believe there is potential value locked away in IAG’s UK businesses.

“While the overall market is competitive, IAG has the capacity, in our view, to significantly improve these operations – in particular, Hastings,” they said.