Investors punish Suncorp

SUNCORP shares have hit a five-month low after its firsthalf profit fell 16 per cent to $452 million, with investors seemingly underwhelmed by the insurance giant’s rosy outlook.

Suncorp said Melbourne’s December 19 hail storm contributed to a blowout in natural hazards costs that was only partially offset by targeted premium increases.

Total insurance premium revenue for the six months to December 31 rose 1.8 per cent, but the elevated claims and investment designed to lift future performance dragged the Australian general insurance segment’s net profit down 35 per cent to $234 million.

The Australia-wide decline was a less dramatic 28.5 per cent when life insurance was included.

Citi analysts said Suncorp’s cash earnings of $472 million were seven per cent below expectations.

“Although the guidance is upbeat, apart from strong bank earnings it largely only formalises what the market was already expecting” Citi said in a note. “The poor result in the key Australian General Insurance business is thus likely to weigh on investor sentiment.” Suncorp shares ended the session down 32 cents, or 2.4 per cent, at $13.00.