What’s happening with the IAG (ASX:IAG) share price today?

The insurance giant has provided an update on its catastrophe reinsurance program

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The Insurance Australia Group Ltd (ASX: IAG) share price is moving into the green in morning trade after opening down some 1%. At the time of writing, IAG shares are up 0.91% at $4.43.

The S&P/ASX 200 Index (ASX: XJO) remains down just under 1% at this same time.

Below we take a look at the Aussie insurance giant’s catastrophe reinsurance program update, released this morning.

What did IAG announce?

The IAG share price is edging higher after the company reported it has finalised its catastrophe reinsurance program for the 2022 calendar year. IAG’s gross reinsurance protection covers the company for losses of up to $10 billion, including one prepaid reinstatement, just as in 2021.

Also in line with the previous year, the insurance group will retain the first $250 million of each loss, with second and third event drop-down covers of $50 million. IAG said this will reduce the cost of these events to $200 million.

Commenting on the development, IAG chief financial officer Michelle McPherson said:

Our catastrophe reinsurance program remains an intrinsic part of IAG’s capital management strategy. The structure of the new program is similar to that of prior years, and we received strong support from our reinsurance partners with whom we have long-term relationships.

The credit quality of the reinsurance program increased from the previous year, with 90% of covering entities rated A+ or higher. Additionally, some 60% of the 2022 program is protected by multi-year coverage, which the company says provides it with the assurance of reinsurance coverage in the future.

IAG noted that, after allowance for the quota share arrangements, “the combination of all catastrophe covers at 1 January 2022 results in IAG having a maximum event retention of $95 million”.

IAG share price snapshot

The IAG share price has been on a bit of a rollercoaster over the past 12 months, one that’s left shares down 6% since this time last year. By comparison, the ASX 200 is up almost 14% over that same time.

Over the past month, IAG shares have gained 3%.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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