ASX-listed IAG has finalised its catastrophe reinsurance program for 2018, cutting its catastrophe coverage on the back of its quota-share agreements with three major reinsurers.

From Jan. 1, IAG's main catastrophe cover dropped by 16% to $5.23b from the prior year, which means that insurer will fork out $169m for the first $250m of each loss, compared to the $200m in the 2017 arrangement.

The amount IAG placed under the program was reduced to 67.5% from last year's 80%, due to its combined 12.5% quota-share agreements with Munich Re, Swiss Re, and Hannover Re, which came into force on Jan. 1. The amount also reflects the 20% quota-share deal with Berkshire Hathaway which has been in place since July 2015.

The 2018 program covers IAG's operations in Australia, New Zealand, Malaysia, Thailand, Vietnam, and Indonesia; and excludes its joint-venture interest in India which has its own reinsurance arrangements.

During the renewal process, the insurer also reported “modest upwards pressure” on like-for-like reinsurance rates, with the overall expense outcome in line with the associated assumption in its FY18 guidance.


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