INSURANCE Australia Group cut its full-year earnings guidance today following the expected impact on claim costs from the recent severe storms in Victoria.

In a statement, IAG said it now expected an insurance margin for the year to June 30 of 10.5-12 per cent, down from its previous forecast of 11.5-13 per cent.

Australia’s largest home and car insurer said it had received in excess of 24,000 claims related to the weather events between March 6 and March 9, and expected the costs for this event to reach its $135 million cap before reinsurance cover kicked in.

“While this event will take almost 2 per cent off our reported full-year margin, for FY10 we are confident we can achieve an insurance margin between 10.5-12 per cent given the continued improvement in the underlying performance of the business,” chief executive Mike Wilkins said in a statement.

(www.theaustralian.com.au)