Australian insurer Wesfarmers has almost doubled its reinsurance excess of loss program for Australia and New Zealand for the next financial year.
The event limit for the company's property catastrophe excess of loss program has increased to AU$750m from $400m, with net retention limits increasing from $10m to $30m in Australia and NZ$20m for New Zealand.
Wesfarmers managing director Rob Scott said reinsurers pushed for price increases and higher retention levels for catastrophe reinsurance in Australia and New Zealand following heavy losses in the region in late 2010 and early 2011.
Scott said aftershocks in New Zealand, including 13 June, has resulted in further claims above the companies allowances and will result in a profit slump for Wesfarmers' insurance division in full year earnings ending 30 June 2011.
In a statement, Wesfarmers Insurance announced that earnings before interest, tax, depreciation and amortisation for the 2011 financial year were expected to come in at $25m to $30m, down from previous estimates of between $60m and $80m.
“While the financial effect of these events has been significant, we have been pleased by the response of our claims teams to our clients in their time of need. The underlying performance of our underwriting businesses continues to improve and our broking operations are performing in line with internal expectations and ahead of the prior year,” Scott added.