IAG has confirmed the renewal of its 2.5% whole-of-account quota share arrangement with Hannover Re.
According to a news release, the agreement had been set to expire by the end of June and is now extended for another five years, effective July 1, 2023.
With this update, IAG has renewed all four whole-of-account quota share reinsurance arrangements with several major reinsurers.
Michelle McPherson, chief financial officer of IAG, said these quota share arrangements form a crucial part of IAG’s capital structure, adding that they provide “certainty for the next five to seven years.”
McPherson further explained that the quota share arrangements cover 32.5% of all gross claims costs, allowing IAG to secure coverage for only 67.5% of its main catastrophe program in the global reinsurance markets.
In the same release, the insurance giant also provided details regarding its purchased aggregate and third/fourth event reinsurance covers for the financial year ending June 30, 2024.
The FY24 aggregate cover offers protection of $250 million in excess of $600 million, according to IAG, with individual qualifying events capped at $200 million in excess of $50 million per event.
To provide further security, IAG said it also purchased third and fourth event financial year occurrence covers, offering $150 million in protection for events exceeding $200 million. These covers have been placed at 67.5% to align with the whole-of-account quota share arrangements.
Following the quota share arrangements, IAG’s maximum event retention for a first and second event has been declared at $169 million.
IAG is scheduled to announce its FY23 financial results and provide guidance for FY24 on August 21, 2023, according to the release.
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