IAG has extended its 2.5% whole-of-account quota share arrangement with Hannover Re, renewing the agreement past its initial expiration date of June 30.
IAG announced today that the new reinsurance program, including the renewed quota share arrangement with Hannover Re, will be effective this month and have a duration of five years.
CFO Michelle McPherson confirmed that IAG has successfully renewed all four whole-of-account quota share reinsurance agreements with major global reinsurers.
IAG’s whole-of-account program covers 32.5% of natural perils. Earlier this year, IAG secured renewal terms with Munich Re and Swiss Re for 10% of the 12.5% program that was scheduled to expire at the end of the previous month.
Ms. McPherson highlighted the significance of the 32.5% quota share arrangements within IAG’s capital structure, emphasizing their role in ensuring stability and predictability for the next five to seven years.
According to her, the renewed quota share arrangements have delivered financially consistent results and hold significant value, especially in a challenging reinsurance market.
She explained that these arrangements encompass 32.5% of total gross claims costs, thereby reducing the need to procure 67.5% of the primary catastrophe program from global reinsurance markets.
In today’s update, IAG revealed its acquisition of aggregate and reinsurance coverage for the third and fourth events until the end of the financial year on June 30, 2024.
IAG stated that the coverage has been set at 67.5% to align with the company’s whole-of-account quota share arrangements.
Considering the quota share arrangements, IAG’s maximum event retention for a first and second event stands at $169 million.
The aggregate cover will offer a safeguard of $250 million, surpassing the threshold of $600 million, with individual qualifying events capped at $200 million exceeding $50 million per event.
To address the third and fourth events, covers have been obtained to provide a protective value of $150 million for events surpassing $200 million. IAG has scheduled the release of its 2022/23 financial results and guidance for this fiscal year on August 21.
Source : insurancenews.com.au
