Potential COVID impact swells above $1 billion for insurers
The provisioning from the insurance sector for the impacts of COVID-19 has reached about $1.5 billion after IAG announced an impact of $865 million.
Business interruption claims have hit insurance companies
Suncorp has provisioned $195 million for the impacts which relate to a test case in the NSW courts that ruled that business interruption insurance policies did recognise pandemics. QBE has provisioned $US335 million ($460 million)
IAG announced a $750 million capital raising in response. That will include a placement of $650 million and a share purchase plan of $100 million.
The impact on IAG’s profit could be as much as $805 million.
IAG said it had received only a small number of claims related to business interruption but based on its underwriting exposure it estimated a post-tax provision of $865 million was required to reflect the potential impact of the NSW Court of Appeal judgment.
The ruling is expected to be appealed to the High Court.
IAG shares are in a trading halt on the ASX. Suncorp shares were sitting at $9.43 before the market opened.
