(Reuters) - Shares of Insurance Australia Group ( IAUGF ) rose 9% on Friday after the company bought reinsurance protection from a unit of Berkshire Hathaway ( BRK/A ) and Canada Life Reinsurance in a bid to minimise financial fluctuations for the next five years.

The insurance firm jumped as much as 9.3% to trade at A$7.280 by 0049 GMT, their highest level since Jan. 24, 2020. Stock emerged the top gainer in the benchmark S&P/ASX 200 index.

The Sydney-based insurer said the agreements would provide up to A$680 million ($451.86 million) of additional protection annually, and up to A$2.8 billion over the five-year period.

IAG noted that the reinsurance would effectively help limit the costs of natural perils to A$1.28 billion in FY25.

The agreements would "provide greater certainty over the cost of natural perils cover for customers, stabilise earnings and reduce capital requirements," said IAG Managing Director and CEO Nick Hawkins.

The general insurer confirmed its full-year target for insurance profit and margin around the upper-end of its outlook range.

Analysts at Citi said IAG's forecast is broadly in line with the brokerage's forecasts of 14.8%, and Visible Alpha consensus forecast of 14.6%, while suggesting "the benefit to reported margin is likely due to favourable weather."

The firm also expects its fiscal 2024 gross written premium to be consistent with the "low-double digit" forecast provided in February.

($1 = 1.5049 Australian dollars)