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IAG announces quota share deal

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IAG has entered into quota share agreements with three reinsurers to improve capital efficiency and reduce earnings volatility. 

The agreements ­– with Munich Re, Swiss Re and Hannover Re – are on a whole-of-account basis and cover IAG’s consolidated business in Australia, New Zealand and Thailand. They have an average initial period of more than five years.

From January 1 the reinsurers will receive a combined 12.5% of IAG’s consolidated gross earned premium and pay 12.5% of claims and expenses.

In addition, IAG will receive an exchange commission that recognises the value of accessing IAG’s franchise.

IAG says the agreements build on the 10-year, 20% whole-of-account quota share arrangement with Berkshire Hathaway that has been in place for more than two years.

More details in our regular bulletin on Monday.