You are using an older browser version. Please use a supported version for the best MSN experience.

'Stable' IAG keeps $7bn catastrophe cover

AAP logoAAP 3/01/2017

Insurance Australia Group says reducing its commercial portfolio has allowed it to hold its annual catastrophe reinsurance at $7 billion.

IAG, which owns NRMA Insurance, CGU, SGIO, SGIC, Swann Insurance and WFI, said on Wednesday that commercial cutbacks in Australia and New Zealand mean its exposure is stable in 2017 despite growth in personal insurance lines.

Its catastrophe reinsurance cover will be the same as the previous two years, reflecting the quota share agreement with US billionaire Warren Buffet's Berkshire Hathaway that has been in place since July 2015.

IAG cedes 20 per cent of all premiums to Mr Buffett's firm, which then pays 20 per cent of IAG's claims.

The catastrophe reinsurance covers IAG's operations in Australia, New Zealand, Thailand, Malaysia, Vietnam and Indonesia, but not its joint venture in India, which has its own reinsurance arrangements.

IAG paid out natural disaster claim costs of $659 million in 2015/16, exceeding its allowance by $59 million after east coast storms battered Queensland, NSW, Victoria and Tasmania at the end of the period.

image beaconimage beaconimage beacon