Insurer warns of equity hit from two major events

by Maryvonne Gray 04 Mar 2015

Insurer warns of equity hit from two major events

Suncorp Group says the double whammy of tropical cyclone Marcia coming so soon after the Brisbane hailstorm in November had put pressure on the Group’s return on equity target of 10% for the 2015 financial year, which was now unlikely to be achieved.

CEO Patrick Snowball announced the costs from Cyclone Marcia were expected to be between AU$120-150 million (pre-tax), net of the 30% proportional quota share arrangement covering the Queensland home portfolio.

The number of claims was expected to reach approximately 10,000 across its insurance brands including Suncorp, AAMI, Apia, GIO and Vero.

Including the costs of this event, Suncorp expected its natural hazard expense for the financial year to date to be in the range of AU$690-720 million. The Natural Hazard Allowance for the full year to 30 June 2015 is AU$595 million.

Said Snowball: “It’s disappointing that our return on equity target will unlikely be met, however, the Group remains well placed with a resilient balance sheet, solid underlying earnings and a strong culture focused on supporting customers.

He said the Group had more than 30 assessors on the ground in affected areas assessing around 100 properties a day, with building work commencing on some properties already. Priority was being given to displaced, elderly and infirm customers.

“Our immediate and efficient response during these events allows us to deepen relations and attract new customers,” he said.

“We have a long and proud history of supporting Queenslanders through major weather events and this is no exception.”