UPDATE 1-Australia’s Suncorp Group H1 profit falls on natural hazard claims

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(Adds CEO comment, background)

Feb 14 (Reuters) – Australian insurer Suncorp Group Ltd posted a 45 percent fall in its first-half profit on Thursday, hurt by losses arising from a surge in natural hazard claims following a hailstorm in Sydney and lower investment returns.

Net profit for the six months ended Dec. 31 was A$250 million ($177.15 million), compared with A$452 million the year earlier.

The firm declared an interim dividend of 26 cents per share.

“Natural hazards, investment performance and unforeseen regulatory costs will impact our full year cash Return on Equity,” Chief Executive and Managing Director Michael Cameron said.

The insurer in January flagged a A$178 million upper-limit cost from the Sydney hailstorm, which was declared a catastrophe by the Insurance Council of Australia.

The Brisbane-based company said it would increase its natural hazard allowance from A$720 million to A$820 million and purchase an additional A$200 million natural perils reinsurance cover to on top of the allowance.

In the aftermath of the Royal Commission inquiry into misconduct in the finance industry, the company conceded that it has “at times, fallen short of community expectations”.

Suncorp, whose portfolio includes brands like AAMI, GIO and APIA, has announced a delay in the A$725 million divestment of its life insurance arm to Dai-ichi Life Holdings Inc which is expected to result in stranded cost of A$10 million, which will reflect in the full-year 2019 results. ($1 = 1.4112 Australian dollars) (Reporting by Shreya Mariam Job and Aby Jose Koilparambil in Bengaluru; editing by Susan Thomas and Marguerita Choy)

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