IAG increases reinsurance buy by 10 percent

Citing favourable market conditions as a key driver, Australian insurance giant IAG has said that it has increased its reinsurance buy for 2014 to $5.6 billion, up from $5 billion for 2013.

IAG’s CFO, Nick Hawkins said that the Group had taken the opportunity of more favourable reinsurance market conditions to bolster key aspects of its catastrophe protection.

Hawkins said that there had been no great change in the company’s reinsurance programme, which “remains an intrinsic part of our capital management strategy”, with multi-year covers remaining in place, “notably up to the $500 million layer and above $4 billion”.

He said that the insurer had also decided to bring its AMI New Zealand operations within the main programme and one year ahead of schedule.

Commenting on the make-up of its international coverage IAG brought international covers into place with maximum first event retentions of $175 million for Australia, NZ$175 million for New Zealand, $25 million for Thailand and Malaysia, and less than $1 million for Vietnam. The overall credit quality of the programme remains high, with over 88% placed with entities rated A+ or better.