Shares in Insurance Australia Group spiked in early trade after it increased its 2019 catastrophe reinsurance program by $1 billion, to $9 billion.
IAG was trading 11 cents, or 1.5 per cent, higher at $7.05 in the first half-hour of trade on Thursday after announcing the move, which will provide the NRMA, RACV and Coles Insurance owner with additional protection for extreme events throughout the year.
IAG shares had cooled somewhat by the afternoon, but were still ahead 0.65 per cent at $6.955 at 1405 AEDT.
The group said its 2019 catastrophe program was similar to previous years but with an expectation of more claims from New Zealand.
‘Consistent with 2018, the program has been placed to the extent of 67.5 per cent to reflect the cumulative whole-of-account quota share position of 32.5 per cent,’ IAG said.
‘This comprises the original 20 per cent quota share agreement with Berkshire Hathaway, which commenced 1 July 2015, and the combined 12.5 per cent quota share agreements with Munich Re, Swiss Re and Hannover Re which came into force from 1 January 2018.’
Australia’s other major insurers were in the black on Thursday, with QBE ahead 1.62 per cent to $10.01, and Suncorp Group up 1.7 per cent to $12.52, even as costs from last month’s devastating Sydney hail storm continue to roll in and threats of cyclones and heatwave conditions in Queensland looming.
IAG said it expected the bill from the NSW hailstorm to hit $169 million, while Suncorp confirmed on Thursday its comprehensive reinsurance program for the fiscal year would limit the impact of the storm to a maximum of $250 million.
Suncorp said it had received about 24,800 claims following the storm and expects this number to rise over the coming weeks as customers return from holidays.