IAG has adjusted its catastrophe reinsurance to include RACQ Insurance, which it bought for $855 million last year.

The shift comes after IAG initially kept the new business’ separate standalone reinsurance program that comprised quota share and catastrophe protections. 

“IAG has successfully integrated RACQI into its main catastrophe cover, whole of account quota share arrangements and aggregate stop-loss protection,” the company said.

“Additionally, IAG has expanded the [whole of account quota share] arrangements to now cover 35% of the consolidated business.”

The 2026 catastrophe reinsurance program, in conjunction with IAG’s whole of account quota share arrangements, provides main catastrophe cover for two events up to $10 billion, with an attachment at $500 million.

IAG says RACQ Insurance’s quota share protections have been replaced by its whole of account quota share arrangements and the business has been integrated into the multiyear aggregate stop-loss protection that IAG announced in June 2024.

IAG says the stop-loss protection, in combination with the whole of account quota share arrangements, will provide about $1 billion in downside protection annually for natural perils through to FY29.

“We are pleased to have integrated the RACQI business into the overall reinsurance program, which will achieve the targeted synergies,” CFO William McDonnell said.

“Global reinsurance markets have improved during 2025, allowing us to renew reinsurance protection favourably relative to expectations.

“In addition, IAG received strong support from reinsurance partners in expanding the overall program, resulting in a further reduction in the volatility of our earnings.”

IAG adjusted its natural peril allowance to $1.47 billion for this financial year to include RACQ Insurance, up from $1.36 billion previously.

The company will announce its first-half results on February 12.