Macquarie has upgraded IAG (ASX:IAG) to Outperform from Neutral, citing the insurer's reserving adequacy as a key driver of profitability in the future. Reserve releases have contributed 28.3% to IAG's insurance profit between FY09 and YF13. The broker also prefers IAG to Suncorp (ASX:SUN), given the level of reinsurance protection, zero exposure to life insurance and discounted P&C valuation. The price target for IAG has been raised from $6.00 to $6.20 (current price $5.59). Based on Macquarie's target price, IAG is set to deliver 11% in returns exclusive of dividends. The company's estimated price-to-earnings ratio based on last closing share price is 14.15.