IAG will not quit large commercial business following its partnership with Warren Buffett’s Berkshire Hathaway, a spokesman has told insuranceNEWS.com.au.

“Brokers will see very little impact as a result of this deal,” he said.

In June Berkshire announced it had bought a 3.7% stake in IAG to help it expand into Asia, and the two companies signed a quota share agreement.

The deal involved a swap of businesses, with Berkshire Hathaway acquiring renewal rights to IAG’s large corporate property and liability business and IAG gaining Berkshire’s local personal and SME lines.

The spokesman says IAG is exiting a component of the large corporate property and liability market and will transfer its book of mostly Australian Securities Exchange (ASX) top 250 companies to Berkshire Hathaway.

IAG has agreed not to compete with Berkshire Hathaway in this sector, and Berkshire will not compete with IAG in the SME space.

“The transfer of this business represents less than half of our large commercial lines book,” the spokesman said.

IAG will continue to write large commercial property and commercial liability, except for the ASX 250 companies.

“We are also continuing to write large commercial business, including for ASX top 250 companies, in all other areas including construction and engineering, marine, workers’ compensation, fleet motor and professional risks – professional indemnity and directors’ and officers’ – and we have a strategy to grow this business.”

Although the partnership has been hailed as giving IAG extra capital flexibility, the Australian group’s appetite for local commercial risk is unchanged.

“We will continue to assess our appetite for local commercial risks based on their merit,” the spokesman said.

The long-term goals of the IAG-Berkshire partnership are analysed in the August/September edition of Insurance News (the magazine).