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IAG has finalised its catastrophe reinsurance program for the 2019 calendar year, increasing its gross reinsurance protection by $1 billion to $9 billion.
“Consistent with 2018, the program has been placed to the extent of 67.5% to reflect the cumulative whole-of-account quota share position of 32.5%,” IAG said. “This comprises the original 20% quota share agreement with Berkshire Hathaway, which commenced July 01, 2015, and the combined 12.5% quota share agreements with Munich Re, Swiss Re and Hannover Re which came into force from January 01, 2018.”
The integrated catastrophe reinsurance program consists of main catastrophe cover for losses up to $9 billion, including one prepaid reinstatement, and an aggregate sideways cover which will help lower the cost of a second event to $175 million and a subsequent event to $25 million.
The reinsurance boost aims to provide additional protection for the anticipated modest increase in the underlying aggregate exposure in Australia and the approximate 5% growth in New Zealand.
IAG said the overall quality of the 2019 program is strong, with more than 92% placed with entities rated A+ or higher.
The combination of all catastrophe covers in place as of January 01, 2019 results in post-quota share first-event retentions of $169 million for Australia and NZ$169 million for New Zealand.
The insurance group said it experienced relatively flat reinsurance rates during the renewal process and that its overall expense outcome was in line with the associated assumption in its FY19 reported margin guidance.
