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Suncorp lifts profit during calm weather

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February 20 2013, 11:48AM

Another period of benign weather conditions has helped Suncorp Group grow its first half profit by 48 per cent.

The insurance and banking firm made a net profit of $574 million in the six months to December 31, up from $389 million in the previous corresponding period.

Profit from its insurance operations was a main driver of the result, which at $564 million was more than three times the $162 million profit it made in the previous corresponding period.

"Up until Christmas it was good to see a set of results where we could compare results without the impact of weather," chief executive Patrick Snowball told analysts on Wednesday.

Up until December 31, Suncorp had not incurred large costs from a natural disaster since 2010 and 2011, relating to Cyclone Yasi, Queensland floods, Christchurch earthquakes and hailstorms in Melbourne in Perth.

The company has also benefitted from higher premiums, particularly on home insurance.

But since the end of calender 2012, Suncorp has taken claims worth up to $270 million relating to floods caused by ex-tropical cyclone Oswald and bushfires.

That has taken total claims in the financial year to date to up to $417 million, which remains below its full year allowance of $520 million.

"Our outlook is one of cautious optimism," Mr Snowball said.

There is continued volatility in financial markets and the global economy, and there is a risk of more weather events, he said.

But Suncorp is making good progress on its transformation strategy, he said, which will deliver an additional $200 million in annual savings from the 2015/16 financial year, on top of the targeted $235 million in savings.

Analysts said Suncorp's underlying performance was strong, with growth in cash earnings, insurance margins and dividends to shareholders.

"The outlook is promising, with management committed to delivering an underlying insurance margin at or above 12 per cent, despite an increasingly competitive market and likely higher reinsurance costs and allowances for natural disasters," Morningstar analyst David Ellis said.

But Suncorp's shares fell, down 50 cents, or 4.3 per cent, at $11.17 at 1120 AEDT.

The company's fully franked interim dividend of 25 cents per share was up from 20 cents for the previous corresponding period.