IAG has purchased an additional $1 billion of gross catastrophe protection in excess of its existing catastrophe tower of up to $7 billion.

The additional cover includes one prepaid reinstatement, placement to the extent of 80% to reflect quota share arrangements and a contractual period of 19 months, starting on June 1.

CFO Nick Hawkins says the insurer is always looking to strengthen its reinsurance protection in a cost-effective manner, and this purchase fits the bill.

“It significantly extends the upper end of our gross protection,” he said.

The existing catastrophe tower operates on a calendar-year basis and will be subject to renewal on January 1 2018.

This January IAG set its catastrophe reinsurance cover at up to $7 billion, placed to the extent of 80% after allowing for its 20% quota share agreement with Berkshire Hathaway.

Under the 10-year quota share arrangement, Berkshire Hathaway pays 20% of claims and takes 20% of IAG’s consolidated gross written premium.