Australia-based IAG Group says it has increased its catastrophe reinsurance protection for calendar 2019 by A$1 billion to A$9 billion.
That includes the 20 percent quota share with Warren Buffett’s Berkshire Hathaway which began on July 1, 2015 and the combined 12.5 percent quota share agreements with Munich Re, Swiss Re and Hannover Re which came into force from Jan. 1, 2018.
IAG, which commands about 46 percent of New Zealand’s general insurance market, operating through the NZI, State, AMI and Lumley brands, said it retains two-thirds of the first A$250 million exposure to each loss for catastrophes covering losses of up to A$9 billion.
The insurance company also has additional cover for smaller events costing less than A$250 million.
It said its underlying aggregate exposure to claims is expected to modestly increase in Australia and to rise about 5 percent in New Zealand.
More than 92 percent of its reinsurance has been placed with entities with credit ratings of “A+” or higher.
“The combination of all catastrophe covers in place at Jan. 1, 2019 results in post-quota share first event retentions of A$169 million for Australia and NZ$169 million for New Zealand.”
Overall, reinsurance rates were flat and the overall expense was in line with the assumptions in its full-year 2019 margin guidance, IAG said.
At the AGM in October, chief executive Peter Harmer said he expects IAG’s reported insurance margin to be 16-18 percent.
In the year ended June last year, IAG’s New Zealand earnings almost doubled to A$218 million from A$125 million the previous year.
IAG shares are trading at A$6.98 on ASX, near their A$6.53 recent low but well down from their A$8.685 high in the middle of last year.