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IAG sees Australia storm costing up to $200 million Australian

Posted On: Jan. 10, 2012 12:00 AM CST

SYDNEY (Reuters)—Insurance Australia Group Ltd. on Tuesday said a hailstorm in the state of Victoria would push up the cost of natural peril claims for the first half well ahead of its allowance, sending its shares down as much as 4%.

Australia's top car and home insurer said in a statement the hailstorms and severe weather in Victoria in late December would trigger net claims of between $180 million Australian ($184.10 million) to $200 million Australian ($204.56 million).

It added it has received 24,000 claims so far and the event could send net natural perils claim cost for the opening half to $400 million Australian ($409.12 million) to $420 million Australian ($429.58 million), compared to natural peril allowances of $266 million Australian ($272.06 million).

Last week, rival Suncorp Group said it saw the hailstorm costing it as much as $250 million Australian ($255.7 million) and natural hazard costs for the half year to go up to $420 million Australian ($429.6 million) compared with an allowance of $240 million Australian ($245.5 million).

Australian insurers faced storms, floods and earthquakes in 2011, a year which saw global disaster losses of more than $100 billion, sending reinsurance costs higher.

Earlier this month, IAG said it had finalized its reinsurance cover. It saw total reinsurance expenses of $700 million Australian ($716.0 million) to $720 million Australian ($736.4 million) for the 2012 financial year. That compared with $620 million Australian ($634.1 million) for the previous year.