IAG’s loss-making UK motor underwriter Equity Red Star continues to cost the group money, its 2010/11 accounts show.

The accounts reveal a £60 million ($92 million) charge in the year to June 30 2011 for reserve strengthening for 2009 and prior years of account, following a review by actuaries Towers Watson.

Just before the end of the previous financial year, on June 30 2010, a £186 million ($285 million) loan from fellow IAG UK subsidiary Equity Insurance Group was needed to fund extra reinsurance covers and a £151 million ($231 million) cash call on its Lloyd’s Syndicate 218.

Equity bought two programs of adverse development cover reinsurance, one to protect against the 2009 and prior years of account, and one to protect against the 2010 year of account.

Further loans totalling £113 million ($173 million) were injected in 2010/11 from Equity Insurance Group, with £80 million ($123 million) of that money put into additional funds at Lloyd’s in anticipation of losses on its open years of account.

Equity Red Star made a £73.8 million ($113 million) loss in the year to 30 June 2011, for a combined operating ratio (COR) of 132.4%, a significant improvement on its £243.6 million ($373 million) loss and 177.9% COR in 2009/10.