NZ quake could cost IAG $40m

Insurance Australia Group has confirmed that its New Zealand businesses, which include State and NZI, could be hit by insurance claims worth $40m from the Christchurch earthquake on 22 February.

IAG added its team in New Zealand was “rapidly mobilising” in response to the 6.3 magnitude earthquake, which has left hundreds of people feared dead.

IAG managing director and chief executive Mike Wilkins said: “Our primary concern is for the people affected by this catastrophe and we are focused on providing assistance to our customers and staff as quickly as possible.”

“This event is particularly devastating, given the region is still rebuilding following the previous major earthquake, in September 2010.

"While still far too early to determine the extent of damage from this latest event, our reinsurance covers mean that the maximum financial impact on the group would be $40m.”

In a statement, the IAG added that it has revised its FY11 insurance margin guidance down to 8%–10% (from 9%–11%) to reflect an increased natural peril cost assumption of $540m (from $500m) and the estimated cost of reinstatements in respect of its catastrophe reinsurance cover.

IAG will be releasing its detailed 1H11 results tomorrow (24 February 2011).