IAG has folded RACQ Insurance (RACQI) into its main catastrophe cover, whole of account quota share (WAQS) arrangements and aggregate stop-loss protection. In an ASX announcement, the big insurer also said it has now expanded the WAQS arrangements to cover 35% of the consolidated business. The change follows IAG’s acquisition of RACQI in September with its separate standalone reinsurance program.
The move underscores how scale carriers are using integrated, capital‑light reinsurance structures to stabilise nat cat‑exposed earnings.
IAG’s chief financial officer, William McDonnell, said the improvement in global reinsurance markets during 2025 allowed IAG “to renew reinsurance protection favourably relative to expectations.”
“IAG received strong support from reinsurance partners in expanding the overall program, resulting in a further reduction in the volatility of our earnings,” he said.
The ASX release also said IAG’s catastrophe reinsurance program for 2026 has been successfully placed, which now also protects the RACQI business. This program provides a main catastrophe cover for two events up to $10 billion, with an attachment at $500 million.
RACQI’s quota shares are now replaced by IAG’s WAQS arrangements. The total proportion ceded has increased by 2.5%, representing 35% of IAG’s consolidated business.
The announcement said RACQI’s business has been integrated into the multi-year aggregate stop-loss protection originally announced on 28 June 2024, which in combination with the WAQS arrangements provides around $1 billion in downside protection annually for natural perils through to FY29.
Read more: IAG's buyout of RACQI can go ahead
For primary insurers, especially those in cat‑exposed markets, the announcement could validate the benefit of scale: folding acquisitions into a larger reinsurance structure to unlock material cost and capital synergies. It may also raise competitive pressure: players without similar reinsurance depth could face more earnings volatility and possibly higher capital strain.
From an industry perspective, this announcement reinforces the sector’s move toward capital‑light, volatility‑managed earnings models, with IAG using higher whole‑of‑account quota share cessions and a multi‑year aggregate stop‑loss to stabilise natural peril results.
