Insurance Australia Group (ASX:IAG), Australia's top home and car insurer, has revised its FY11 insurance margin guidance down to 8 to 10 per cent from 9 per cent to 11 per cent in the wake of the disastrous event in Christchurch, New Zealand.

This is to reflect an increased natural peril cost assumption of $540 million from $500 million and the estimated cost of reinstatements in respect of its catastrophe reinsurance cover.

“While still far too early to determine the extent of damage from this latest event, our reinsurance covers mean that the maximum financial impact on the group would be $40 million,” said IAG managing director and chief executive Mike Wilkins.

IAG said its New Zealand businesses, which include State and NZI, were rapidly mobilising in response to the destructive 6.3 magnitude earthquake that struck the Christchurch region yesterday.

“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,” Mr Wilkins said.

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

IAG will be releasing its detailed 1H11 results tomorrow, 24 February 2011.