Market Mover | Insurance Australia Group shares rise 7% on strategic reinsurance agreements and robust FY24 outlook
June 28th, 2024 - Today, $Insurance Australia Group Ltd (IAG.AU)$ shares jumped 7.06% to A$7.130 after Insurance Australia Group (IAG) announced two strategic reinsurance agreements designed to mitigate earnings volatility and confirmed it is on track with its financial forecasts.
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Two strategic agreements with global reinsurers:
1. Natural Perils Volatility Protection: IAG has secured a comprehensive five-year reinsurance agreement that provides up to $680 million annually, and up to $2.8 billion over the term, ensuring protection against the cost volatility of natural perils.
2. Adverse Development Cover: An additional layer of protection has been purchased from Enstar, offering $650 million of cover for IAG's long-tail reserves, which stand at approximately $2.5 billion at 1 January 2024.
The reinsurance strategies are expected to yield a capital benefit of around $350 million, reinforcing IAG's capital base and enhancing its capacity to grow its business in Australia and New Zealand.
Additionally, IAG also confirmed its financial forecasts in this announcement.
"We're also pleased to confirm that we're on track to achieve FY24 Reported Insurance Profit and Margin around the upper end of guidance ranges we set at the beginning of the financial year," Mr Hawkins said.
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