News: IAG UPDATE 1-Insurance Australia Group cuts catastrophe reinsurance coverage

(Adds details on coverage and payouts, background)

Jan 3 (Reuters) - Insurance Australia Group Ltd (IAG) said on Wednesday it has finalised its catastrophe reinsurance program for the 2018 calendar year, cutting its catastrophe coverage on a net of quota share basis.

The new program means IAG's gross main cover for a so-called "first catastrophe event" drops by A$970 million ($759.32 million) to A$5.23 billion.

However, the insurer will only pay up to A$169 million in losses for such an event, instead of the A$200 million losses it paid out previously.

IAG said the amount placed under the program was 67.5 percent, compared to 80 percent for the prior year, due to new quota share agreements which came into effect on Jan. 1.

On Dec. 8, 2017, one of Australia's biggest general insurers said it would share 12.5 percent of its premiums and costs with Munich Re , Swiss Re and Hannover Re , to help release capital.

The firm, whose entities sell insurance in Australia, New Zealand and countries in Southeast Asia, added it experienced "modest upwards pressure" on reinsurance rates during the renewal process. ($1 = 1.2775 Australian dollars)