IAG will be given $34.1 million as part of a settlement of a seven-year-old dispute with a US insurer.

Under its reinsurance agreement with the insurer – which IAG won’t name – IAG was to pay a portion of claims related to a particular class of insurance. But it said it wasn’t adequately informed of the risks involved with the contract when it signed the agreement.

IAG announced in March it had been successful in an arbitration hearing but had been told the US insurer might appeal. It has now accepted a settlement of $US25 million. “This settlement… has no material impact on the group’s profit for the six months ended June 30, 2004,” an IAG statement said.

The group has disclosed the matter as a contingent liability in its financial statements since proceedings started in 1999.