Insurance Australia Group (IAG) has finalized its 2025 catastrophe reinsurance program, securing protection for two major events up to US$10 billion, with coverage attaching at US$500 million.
This arrangement aligns with the company’s whole of account quota share (WAQS) agreements, which distribute risk across its portfolio.
In addition to the main catastrophe cover, IAG has implemented long-term natural perils volatility protection for fiscal years 2025 to 2029. Announced in June 2024, this program provides up to US$1 billion in additional annual protection for natural peril event costs below US$500 million.
Over the five-year period, the total protection could reach US$4 billion, further enhancing IAG’s ability to manage the financial impact of smaller-scale natural catastrophe events.
IAG chief financial officer William McDonnell (pictured above) noted the level of support from reinsurance partners in securing the program.
“Reinsurance is a key component of our low volatility strategy providing downside protection against natural perils costs exceeding our FY25 allowance of US$1,283 million.”
The company is scheduled to release its financial results for the six months ending Dec. 31, 2024, on Feb. 13, 2025. These results are expected to provide further insights into IAG’s financial performance and the role of its reinsurance strategies in managing risk exposure.
The 2024 catastrophe reinsurance program, in alignment with IAG’s whole of account quota share (WAQS) arrangements, which account for 32.5% of natural perils, includes several key components. The program offers main catastrophe cover for two events up to US$10.5 billion, with an initial attachment point at US$500 million.
Additionally, there is drop-down cover of US$150 million, which reduces IAG’s retention on the first two events to US$236 million. This is equivalent to 67.5% of US$350 million, with an extra premium payable if the drop-down cover is activated for a first event. The program also provides specific drop-down cover for a second event in New Zealand, and third and fourth event covers.
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