IAG shares higher on deal with reinsurers

December 08, 2017

Insurance Australia Group signs a reinsurance agreement to share a portion of its premiums and costs

Insurance giant IAG has signed a reinsurance agreement with three businesses to share a portion of its premiums and expenses from next year.

Under the deal, due to start in January, reinsurers Munich Re, Swiss Re and Hannover Re will receive a combined 12.5 per cent of IAG's gross earned premium and will pay the same percentage of claims and expenses across its Australia, New Zealand and Thailand divisions.

IAG says the deal will help manage capital and reduce earnings volatility - with a portion of insurance risk effectively exchanged for a more stable fee income stream.

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