Australian primary insurance group IAG has renewed its main catastrophe reinsurance tower for 2026 at the same size as the prior year providing occurrence protection for two events of up to $10 billion, while also expanding its quota share reinsurance to now cover 25% of its consolidated business including the recently acquired RACQ Insurance.
The insurer has now integrated its recent acquisition into its main catastrophe reinsurance cover, its whole-account quota share and its aggregate stop-loss reinsurance arrangement at the January 2026 renewal.
IAG noted improved reinsurance market conditions at this renewal, which it suggests resulted in a better than expected outcome for the company.
IAG agreed to acquire 90% of RACQ’s insurance underwriting business for $855m in November 2024, under a 25-year exclusive partnership between the two companies.
When the acquisition of RACQ Insurance was completed in September 2025, IAG said it was maintaining that firms standalone reinsurance program that comprised additional quota share and catastrophe protections.
With the 2026 catastrophe reinsurance renewal, the main IAG program now includes cover for RACQ as well to provide integrated protection across its businesses, and in conjunction with its whole-account quota share protection the tower provides a main catastrophe cover for two events up to $10 billion, with an attachment at $500 million.
That is the same level of main occurrence catastrophe reinsurance protection that IAG renewed a year ago.
IAG has increased the size of its main whole-account quota share reinsurance by 2.5%, to now cover 35% of its business, with RACQ consolidated under that cover as well and its separate quota shares now replaced.
In addition, IAG has also brought the RACQ business under its multi-year aggregate stop-loss reinsurance arrangement.
IAG entered into that long-term natural peril reinsurance agreement with Berkshire Hathaway and Canada Life Re back in June 2024.
At inception of that multi-year aggregate stop-loss cover, IAG said it provided up to $680m of additional reinsurance protection annually, and up to $2.8 billion over the entire five-year period, limiting the insurers natural perils costs, so helping to keep it to budget and providing a kind of frequency protection.
In combination with the quota share arrangements, this provides IAG around $1 billion in downside protection annually for natural perils through to fiscal year 2029.
William McDonnell, IAG Chief Financial Officer, commented on the reinsurance renewal, saying, “We are pleased to have integrated the RACQI business into the overall reinsurance program which will achieve the targeted synergies. Global reinsurance markets have improved during 2025, allowing us to renew reinsurance protection favourably relative to expectations.
“In addition, IAG received strong support from reinsurance partners in expanding the overall program, resulting in a further reduction in the volatility of our earnings.”
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