Insurance Australia Group Ltd (ASX:IAG) revealed to the market pre-open this morning that it had finalised its catastrophe reinsurance for calendar 2020.
More importantly, it provided an update on net natural peril claim costs for the financial year-to-date, inclusive of bushfire events.
As at the close of 2 January 2020, IAG had received over 2,800 bushfire-related claims since the beginning of September 2019, with in excess of 1,500 of these lodged since the start of December 2019.
The majority of these claims relate to residential properties.
$400 million net peril claim costs in December half
While too early to provide a precise outcome, based on initial estimates IAG anticipates its net natural peril claim costs for the six months ending 31 December 2019 will approximate $400 million post-quota share.
This compares to a corresponding perils allowance of $320 million for the half and $641 million for the full financial year.
Overall bushfire events are anticipated to contribute over $160 million of net claim costs in the December half, post-quota share.
Insurers not the only ones exposed
Clearly insurers like IAG are exposed to the bushfires but over the coming days and weeks, they will likely not be the only ones affected.
As the February reporting season looms, bushfires are looking to be an easy blame target for company underperformance.