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Christchurch’s June 13 earthquake costs IAG $65 million

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IAG expects a maximum net claim cost of $65 million from the earthquakes and aftershocks that shook Christchurch on June 13.

The insurer says the figure has been calculated after allowing for a $50 million reinsurance recovery. At June 30 it had a maximum event retention of $165 million for a future event.

The impact of the quakes will be reflected in the group’s profit for the year to June 30, but will not change guidance IAG gave the market in February. MD Mike Wilkins says IAG still expects to report an insurance margin in the range of 8-10% for the year and underlying gross written premium growth of 3-5%.

He says IAG will incur estimated net natural period claim costs of around $600 million, offset by a higher contribution from reserves, which are expected to exceed the $228 million reported in the 2010 financial year.

IAG will announce its full-year result on August 25.