Shivangi Lahiri
(Reuters) – Insurance Australia Group shares rose 9% on Friday after the company bought reinsurance protection from a unit of Berkshire Hathaway (NYSE:) and Canada Life Reinsurance in a bid to limit financial swings over the next five years.
The insurer’s shares jumped as much as 9.3% to trade at A$7,280 by 0049 GMT, its highest level since Jan 24, 2020. Shares became the top gainers in this indicator.
The Sydney-based insurer said the agreements will provide additional protection worth up to A$680 million ($451.86 million) annually and up to A$2.8 billion over a five-year period.
IAG noted that reinsurance will effectively help limit catastrophe costs to A$1.28 billion in FY25.
The agreements will “provide greater certainty on the cost of catastrophe insurance for customers, stabilize profits and reduce capital requirements,” IAG managing director and CEO Nick said. Hawkins (NASDAQ:).
The general insurer confirmed its annual underwriting profit and margin target at the high end of its forecast range.
Citi analysts said IAG’s forecast was broadly in line with the brokerage’s forecast of 14.8% and Visible Alpha’s consensus forecast of 14.6%, while suggesting that “the reported margin benefit is likely due to favorable weather.” .
The firm also expects its fiscal 2024 gross premiums written to be in line with the “low double-digit” forecast it provided in February.
($1 = 1.5049 Australian dollars)