The Insurance Australia Group Ltd (ASX: IAG) share price is suffering this week.
Its struggles come amid severe weather and flooding in parts of Australia – which the company’s peer flagged could cost it $75 million.
At the time of writing, the IAG share price is $4.56, 4.8% lower than it was at Friday’s close.
For context, the S&P/ASX 200 Index (ASX: XJO) rose 0.7% on Monday and is currently 1.03% higher today.
Let’s take a closer look at the news that could be dragging the blue-chip stock lower this week.
What’s weighing on the IAG share price this week?
The IAG share price is suffering as many Australians prepare to tackle damage caused by a major flood event in southeast Queensland and northern New South Wales.
The Brisbane River peaked at 3.7 metres yesterday after heavy rain caused chaos across Queensland’s southeast over recent days.
Queensland Fire and Emergency Services have responded to more than 9,000 requests for assistance with flood damage and 600 calls for rescue.
More than 43,000 homes in the state’s south-east remain without power today as 9News reports 15,000 of the region’s homes have been flooded.
Meanwhile, the Bureau of Meteorology has issued a flood warning for Sydney as river levels in Lismore recede after the city’s worst flood event in history.
As of 5am this morning, IAG had received 6,700 claims. That number is expected to rise over the coming days.
In a release, the company stated, “after allowing for quota share arrangements, the combination of all catastrophe covers results in IAG having a maximum event retention of $95 million.”
Suncorp Group Ltd (ASX: SUN) updated the market on the impact the wild weather could have on its bottom line yesterday. It believes it could face a maximum retained cost of around $75 million for the event.
The IAG share price tumbled 7% in November when the insurer increased its expected financial year 2022 net natural perils claim costs to around $1 billion.
What else has been happening?
Additionally, over the weekend The Australian reported the company’s exposure to the failed Greensill Capital has deepened.
A claim has reportedly been filed to the Federal Court of Australia by Credit Suisse Virtuoso alleging the insurer refused to pay out compensation after guaranteeing a debt.
It’s the second time reports have emerged stating IAG is caught up in the Federal Court due to Greensill’s collapse. The Australian Financial Review reported the insurer was hit with a US$35 million claim in November.
The insurer has previously stated, “[IAG] has no net insurance exposure to trade credit policies including those sold through [Bond & Credit Co] to Greensill entities.”
IAG reportedly previously owned 50% of Bond & Credit Co.