(Reuters) – Australia’s Suncorp Group Ltd on Wednesday forecast headwinds from higher reinsurance and natural hazard costs in the near term, while its first-half cash earnings rose 63% helped by strong underlying margins and positive investment returns.
Suncorp flagged a modest upward trend in the number of natural hazard events in near term, adding that the more recent La Niña conditions looks to be turning neutral.
“However, indications are that global reinsurance markets (will) remain in a hardening cycle with higher return hurdles and capital constraints impacting the cost of reinsurance and risk retention,” the company said in a statement.
For the first-half ended Dec. 31, Suncorp logged strong top-line growth across the group on improved underlying margins and positive investment returns, as well as release of provision of A$150 million for potential business interruption claims.
That boosted the insurer’s half-year cash earnings to A$588 million ($408.37 million), up from A$361 million a year ago. However, that missed an UBS estimate of A$674 million.
Suncorp said it received around 53,000 claims related to weather events during the period, leading the group to exceed its natural hazard allowance by A$99 million ($68.83 million).
Suncorp, which announced the sale of its banking arm to lender Australia and New Zealand Banking Group last year, declared an interim dividend of 33 Australian cents per share, up from 23 Australian cents per share last year.
The insurer, however, said global geopolitical events remain uncertain with inflationary pressures expected to stay in the near term.
($1 = 1.4399 Australian dollars)
(Reporting by Roushni Nair and Nausheen Thusoo in Bengaluru; Editing by Shailesh Kuber)
