IAG faces $53.5m bill on Christchurch earthquake

The Christchurch CBD was devastated by yesterday's earthquake. Photo / Getty Images

Insurance Australia Group, the ASX-listed insurer that owns State Insurance and NZI, says the latest earthquake in Christchurch will cost it up to A$40 million (NZ$53.5m).

Managing director Mike Wilkins said it's "far too early to determine the extent of the damage," though reinsurance coverage will mean the maximum financial impact to the group would be A$40 million.

The insurer revised its insurance margin guidance down to 8 per cent to 10 per cent from 9 per cent to 11 per cent, reflecting an increased natural peril cost assumption of A$540 million.

"Our primary concern is for the people affected by this catastrophe and we are focused on providing assistance to our customers and staff as quickly as possible," Wilkins said.

"This event is particularly devastating, given the region is still rebuilding following the previous major earthquake in September 2010."

The 6.3 magnitude quake, which has killed at least 75 people, comes just five months after a 7.1 magnitude quake rocked the city, causing an estimated $5 billion.

Shares in IAG fell 1.9 per cent to A$3.63 in trading yesterday, and it will announce its first-half result tomorrow.

Local insurer Tower Ltd. yesterday said the latest quake will probably trigger reinsurance arrangements, capping its costs payable to $5 million. Its shares rose 2.6 per cent to $1.95 on the NZX today.