Suncorp Group Ltd., Australia’s largest insurer by market value, plunged the most since 2009 after saying margins in its general insurance business will be hit by storm claims and increased costs due to a weaker local currency.
Its shares dropped 10 percent, the sharpest fall since March 2009, to A$11.72 [US$8.45] at 10.28 a.m. in Sydney, compared to a 1.4 fall for the benchmark S&P/ASX 200 index. Competitor Insurance Australia Group Ltd. declined 3.7 percent.
The Brisbane-based insurer has increased premiums to offset the rising claims, CEO Michael Cameron said in a statement Monday. Profit for the six months ending Dec. 31 would benefit from reserve releases of as much as A$140 million (US$101 million), the insurer said.
Claims rose in the year to June 30 amid storms in New South Wales and Queensland states, including hail in Sydney and Brisbane. The Australian currency has dropped about 12 percent this year, increasing expenses such as premiums with overseas reinsurers.
“Costs have been increasing as a result of the lower Australian dollar and the impact of the A$4 billion [US$2.884 billion] of weather events during 2015,” Cameron said. “These increased costs will have a significant impact on the underlying margin in our personal insurance business,” he said.
Suncorp will release half-yearly earnings Feb. 11. The insurer is forecast to report an adjusted net profit of A$653.3 million [US$471 million], according to the mean estimate of three analysts surveyed by Bloomberg.
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