The Suncorp Group Ltd
(ASX: SUN) share price is in focus today after providing a natural hazard update about claims since 1 July 2021.
Storms affecting Suncorp
There have been five declared storm events in October to date, including a hailstorm in Coffs Harbour on the NSW North Coast last week. While it is too early to estimate the ultimate costs of these events, preliminary ranges have been provided for how much it will cost have been provided.
Suncorp’s CEO Steve Johnston encouraged affected customers to lodge their claims online so they can be processed quickly. Customers can also visit the customer support at the Apia branch in Coffs Harbour from 26 October to 30 October.
The insurance business provided an estimate of the costs for FY22 to date. The estimates exclude any associated risk margin or claims handling expenses.
Suncorp said that for events costing over $5 million, the total cost is a range of between $288 million to $398 million. Including other natural hazard attritional claims below $5 million with a total cost of $94 million, the overall total natural hazards cost was a range of between $382 million to $492 million.
Is this a lot for Suncorp to handle?
Suncorp said that its full year natural hazard allowance is $980 million. This allowance is divided equally between the first and second halves of the financial year.
It also said that it has a comprehensive reinsurance program in place for major events. The maximum event retention on the main catastrophe program is $250 million. There is also “dropdown aggregate protection and aggregate excess of loss (AXL) protection” which provides additional cover for small and medium events. The full limits remain available on all of the group’s reinsurance covers.
Summary thoughts about the Suncorp share price
Suncorp shares are currently down around 0.6%. I’m not sure how much to read into this. Insurance companies are expecting storms and things of that nature, they just need to make sure they are pricing the premiums correctly.
The business normally offers a decent dividend yield, however the danger of recessions and major storms often puts a dent in profits.
I prefer to look at other ASX dividend shares for investment income for reliability and growth.
