Insurance Australia Group

Insurance Australia Group’s forecast insurance margin of between 10% and 12% for the 2012 financial year is in jeopardy. Floods in Thailand and the Christmas hailstorms in Victoria are expected to cost between $134m and $154m net of reinsurance protection. IAG’s comprehensive reinsurance program for 2012 has bought more protection, but it’s expected to increase annual insurance costs to between $700m and $720m, up from $600m in 2011. With lower interest rates reducing investment returns in Australia, a profit downgrade seems likely without large reserve releases.   We’re also watching IAG’s regulatory capital levels closely. IAG is awaiting regulatory...

Insurance Australia Group’s forecast insurance margin of between 10% and 12% for the 2012 financial year is in jeopardy. Floods in Thailand and the Christmas hailstorms in Victoria are expected to cost between $134m and $154m net of reinsurance protection. IAG’s comprehensive reinsurance program for 2012 has bought more protection, but it’s expected to increase annual insurance costs to between $700m and $720m, up from $600m in 2011. With lower interest rates reducing investment returns in Australia, a profit downgrade seems likely without large reserve releases.  

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