Australian primary insurance giant Insurance Australia Group (IAG) has renewed its aggregate catastrophe reinsurance protection at a higher attachment point and extended the term of its quota share with Munich Re.
Having renewed its main occurrence catastrophe excess-of-loss reinsurance tower at January 1st, the Australian insurers tend to come back to market to complete their annual renewals at July 1st.
As we reported the other day, Suncorp had renewed its aggregate reinsurance at a higher attachment level and now IAG has reported the same.
All the Australian insurers have been tapping their aggregate protection in recent years, as the frequency of catastrophe events has been high and severity also.
At the July renewal, IAG has renewed its catastrophe aggregate reinsurance for the coming fiscal year to provide it $350 million of cover in excess of $500 million, while each individual qualifying event will be capped at $200 million of losses in excess of $50 million per event.
So the amount of aggregate reinsurance has not changed for the 2023 fiscal year, but the attachment point has risen by $100 million.
For the coming year, IAG said that ihird and fourth event occurrence covers have been purchased to provide $100 million of protection for events greater than $150 million, the same as a year ago.
Again, the aggregate reinsurance has been 67.5% placed, reflecting IAG’s whole-of-account quota share arrangements.
After factoring in the quota share reinsurance, IAG has catastrophe covers in force at 1 July 2022 that mean a maximum event retention of $135 million.
That is down on the prior year’s $169 million maximum event retention, thanks to the combination of the occurrence, aggregate and quota share reinsurance.
IAG has also extended a 2.5% whole-of-account quota share that was due to expire on 30 June 2022 for twelve more months, while at the same time extending its Munich Re quota share reinsurance arrangement, that covers 30% of the combined compulsory third party (CTP) book has been extended for three years to 30 June 2025.