Australian primary insurance giant IAG has renewed its aggregate catastrophe reinsurance layer for its fiscal year 2022, which began July 1st, resulting in a maximum catastrophe event retention of $169 million.
IAG transitioned its aggregate reinsurance to a fiscal year, rather than calendar year, in 2020, when it bolstered its catastrophe reinsurance arrangements with both aggregate and stop-loss covers in reaction to a few years of losses.
IAG had been eroding its aggregate reinsurance deductibles and recovered A$90 million from its calendar year aggregate cover in 2020.
But the shift in inception to the start of the fiscal (or financial) year, means that IAG is now more likely to see summer events, such as storms and bushfires, as thee ones which result in any aggregate reinsurance recoveries.
For the financial year ending June 30th 2022, IAG now has a similar aggregate reinsurance cover that attaches at $350 million of losses in excess of $400 million of retention.
The contribution of individual qualifying loss events is capped under the aggregate reinsurance at $200 million in excess of $50 million per event.
IAG’s quota share reinsurance arrangements come first again, meaning the aggregate has only been placed to 67.5% this year.
IAG said that, after accounting for its quota share reinsurance, its catastrophe protection at July 1st 2021 means that it has a maximum event retention of $169 million.
Which is higher than the prior year, when IAG said it had an estimated maximum event retention of $41 million (after the quota share) as well as a gross next event retention of $250 million.