Reinsurance expenses to rise within predicted 10-12 pct range

SYDNEY, Jan 4 (Reuters) Insurance Australia Group
, the country's top car and home insurer, said its reinsurance expenses
for 2012 should rise within an expected 10-12 percent range as
AsiaPacific insurers emerge from a disaster filled 2011.
IAG,
which dominates the Australian market along with QBE Insurance and
Suncorp, has seen record claims from floods and storms in Australia and
earthquakes in New Zealand forcing it to raise reinsurance cover to up
to A$4.7 billion ($4.88 billion) from A$4.1 billion a year ago.
The
insurer forecast in a statement total reinsurance expenses of A$700
million to A$720 million for the 2012 financial year. That compared with
A$620 million for the previous year.
"In challenging market
conditions, we are pleased to have concluded a programme which provides
us with increased coverage and the additional security of some multiyear
protection," Chief Executive Mike Wilkins said in the statement.
Australian
insurers were among the worst hit in 2011, a year which saw global
disaster losses of more than $100 billion, and look set to struggle to
keep a lid on reinsurance costs.
Insurers have sought to contain a
blowout by spreading the risk and arguing to reinsurers that while 2011
was a recordbreaking disaster year, the floods and earthquakes were
probably oneoffs.
Under the programme, IAG would be covered for losses up to A$4.2 billion and it retains the first A$250 million of each loss.
It
also encompasses an upper layer cover from $4.2 billion to $4.7
billion, providing earthquake loss protection in respect of Australia
and New Zealand for a period of three years at agreed prices, IAG said.
IAG shares were up 0.7 percent in morning trade, against a broader market trading up 2 percent.
($1 = 0.9634 Australian dollars)