Amy Horn


Iag Quota Share Agreement

As for benefits, IAG says the 12.5% quota share will help reduce earnings volatility, which has been a problem in recent years as disaster damage has devoured profits, reduced catastrophe reinsurance needs in future renewals, reduced the need for regulatory capital by $435 million over three years, and only have a largely neutral impact on EPS. and ROE. For reinsurance undertakings that support quota shares, it is indeed a way to get closer to risk without the need for their own primary insurance arms, while ensuring a significant share of the diversified business without having to compete for it in the reinsurance restructuring market. In addition to its calendar-based civil coverage, IAG has reinsurance coverage for retained natural damage, which runs on a year-for-year basis (stop-loss) and offers equity protection for the 12 months to June 30, 2020, with a $101 million share of more than $675 million. This is approximately $34 million above the GJ20`s IAG allocation for natural hazards of $641 million. The 1H20 risk estimate includes three ongoing bushfire events, which were limited by reinsurance recovery as part of the overall coverage after the complete erosion of the corresponding deductible. All bushfire events in 1H20, based on the ratio of over $160 million, are expected to contribute to the net costs of the damage. Peter Harmer, Managing Director and Managing Director of IAG, and Nick Hawkins, Chief Financial Officer, shared the agreements. An archived recording of the briefing is available here. From 1 January 2018, reinsurers will together receive 12.5% of IAG`s consolidated gross premium and will pay 12.5% of damages and charges. In addition, IAG receives a stock exchange commission recognizing the value of access to IAG`s core business. Most of the stock exchange commission will take the form of a fixed fee (as a % of the premium), with an additional element in the form of a profit-benefit agreement that will depend on IAG`s future profitability.

The combined 12.5% quota share agreements will further reduce IAG`s dependence on civil reinsurance coverage and the future volatility of reinsurance rates. . . .

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