Multinational insurance company Insurance Australia Group (ASX:IAG) reports it has renewed its largest Whole of Accounts Quota Share (WAQS) agreement with US-based Berkshire Hathaway subsidiary National Indemnity Company (NICO).
The company says it has accepted to renew the agreement with NICO, which represents 20% of the total 32.5% WAQS program. It also notes this renewed agreement is effective until 31 December 2029.
Commenting on the renewal, Insurance Australia Group Chief Financial Officer (CFO) Michelle McPherson said: “Berkshire Hathaway is a key partner of IAG and we are pleased to extend our strong relationship through to the end of the decade.
“Berkshire Hathaway is a key partner of IAG and we are pleased to extend our strong relationship through to the end of the decade”
The Berkshire Hathaway agreement delivers IAG a materially consistent financial outcome to the original agreement and supports our 15% to 17% medium-term reported margin target.”
IAG reports the strategic relationship agreement and the equity ownership subscription agreement originally announced in June 2015 will not be continuing under the new arrangements.
McPherson continued: “The terms of the renewed agreement with Berkshire Hathaway’s NICO reflect the maturing of our partnership, and the removal of supporting subscription and strategic relationship agreements provides consistency with our other quota share partner arrangements.”
The company says it has now renewed 50% of the 32.5% WAQS, with Munich Re, Swiss Re, and Berkshire Hathaway all effective as of 1 January 2023, with negotiations on the remaining 2.5% expected to be completed in the coming months.
IAG is the parent company of a general insurance group with operations in Australia and New Zealand that underwrites over $13B of insurance premiums per annum under a number of brands.
These brands include NRMA Insurance, RACV, CGU, SGIO, SGIC and WIFI in Australia, as well as NZI, State, AMI and Lumley in New Zealand.
