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TWO east coast lows in June have hit Suncorp's (ASX:SUN) $1,04 billion full-year profit, which is down from $1.113 billion the previous year an 8.5 per cent drop.
The Brisbane-based bank and insurer today said natural hazard claims for the year were $60 million above the allowance following June's storms.
The General Insurance division's NPAT is down 17 per cent, to $624 million compared with $756 million the previous year. The underlying insurance trading ratio (ITR) of 10.6 per cent is down from 14.7 per cent.
The group announced a final dividend of 38 cents per share fully franked, the same as the previous year, making the total dividend for the year $0.68, representing 80 per cent of cash earnings.
Suncorp CEO and Managing Director Michael Cameron (pictured) said the reduction in working claims costs was his highest priority and the business was continuing to implement a plan to rectify performance across both home and motor working claims.
"We have made good progress with a number of proactive measures in place to reduce the volume of open claims including the utilisation of our SMART car repair centres and clearing the more complex water and fire damage claims," says Cameron in today's statement.
The drop in insurance profit overshadowed an increase in profit from the banking and life insurance divisions.
Suncorp Bank increased its NPAT by 11% to $393 million, driven by continued home lending growth, an increased net interest margin and ongoing improvement in credit quality.
Suncorp Life's NPAT increased by 14% to $142 million with the underlying profit increasing by 9.7% to $124 million as a result of higher planned margins and favourable lapse and claims experience of $21 million.
To reduce volatility in its insurance division, Suncorp has enhanced its reinsurance program for the 2017 financial year by purchasing additional cover.
SUN is trading up 0.72 per cent at $13.31 this morning.
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