IAG has been tipped to benefit from tailwinds including below-budget natural peril expenses and potential for reserve releases to exceed guidance.

Morgan Stanley has an “overweight” rating on IAG, with the stock expected to outperform average returns over the next 12-18 months.

“Favourable catastrophe experience, elevated reserve releases, sustained rate increases, cost-out and potential capital returns likely see IAG continuing to outperform,” the US investment bank says in a research note.