IAG has set its catastrophe reinsurance cover for this year at up to $7 billion, similar to last year.

The cover is placed to the extent of 80% after allowing for the 20% quota share agreement with Berkshire Hathaway that started last July.

“Gross protection is consistent with IAG’s program [last year], reflecting a stable overall aggregate exposure, with modest growth in the underlying business offset by reduced exposure to large corporate property,” the insurer says.

“Renewal rights to IAG’s large corporate property book, which carries a relatively heavy reinsurance requirement, have passed to Berkshire Hathaway as part of the strategic relationship announced in June [last year].”

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

The reinsurance cover includes an aggregate cover which reduces the cost of a second event to $175 million and a subsequent event to $25 million.

There is an aggregate sideways cover to reduce the cost of a second event to $25 million, which is $20 million post-quota share.

IAG also has a separate natural perils cover of $80 million in excess of $680 million post-quota share, which will run in line with the financial year to June 30.