(Adds details on capital raise, charges) Nov 20 (Reuters) -...

(Adds details on capital raise, charges)

Nov 20 (Reuters) - Insurance Australia Group (IAG) said on Friday it will raise up to A$750 million ($545.7 million) after an Australian court ruled that pandemic exclusions should not be used to reject claims from businesses affected by the coronavirus.

The New South Wales Supreme Court of Appeal this week ruled in favour of policyholders in a test case examining the application of insurance companies' business interruption policies on closures caused by the COVID-19 pandemic.

IAG said it expects to take a A$805 million hit to 2021 earnings, as the insurer and its peers, including QBE Insurance (QBE) and Suncorp (SUN) , face the prospect of having to pay out millions of dollars in pandemic-driven claims.

"IAG is in discussions with the Insurance Council of Australia to consider whether the insurers that were party to the action will seek special leave to appeal the NSWCA's judgment," it said in a statement.

To shore up its balance sheet, IAG said it will look to raise A$650 million through an underwritten institutional placement and another A$100 million in a non-underwritten retail share purchase plan.

The new capital will help offset a drop of more than A$950 million in IAG's regulatory capital due to the recognition of the business interruption claims provision.

The company said it had identified items, including an expected increase to refunds over multi-year pricing issues on premiums, which may lead to a pre-tax charge of between A$70 million and A$90 million in its first-half results.

($1 = 1.3744 Australian dollars)