Suncorp (ASX:SUN) shares gain on flood recovery update

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Suncorp (ASX:SUN) shares gain on flood recovery update

Suncorp Group Limited (ASX:SUN) shares
Image source: © Terovesalainen | Megapixl.com

Highlights

  • Suncorp has provided an update on the flood recovery in Queensland and New South Wales (NSW).
  • Few days ago, the company had announced to pay a fully franked 23 cents dividend per share to its shareholders on 1 April 2022.
  • Suncorp's net retained loss from these natural events has remained unchanged at around AU$75 million.

Insurance giant Suncorp Group Limited (ASX:SUN) has released an update about the flood recovery in Queensland and New South Wales (NSW).

On the back of the news, the company's shares were up 0.36% on ASX at AU$11.07 apiece at the time of writing this article. The ASX 200 Insurance Index was also 2.87% higher, trading at 3,459.71.

On 14 March 2022, Suncorp had announced to pay a fully franked 23 cents dividend per share to its shareholders on 1 April 2022.

What's the flood recovery update?

Suncorp has received over 34,000 claims, with around 60% in Queensland and about 40% in NSW as of 14 March 2022. The company informed that over 80% of total claims are related to home damage.

Before this, Suncorp had provided an update on 28 February 2022 that it had received over 5000 applications claiming insurance against damages caused by heavy rainfall and flooding across southeast Queensland and northern New South Wales.

Also Read: Why is Suncorp (ASX:SUN) garnering attention today

Weather impact on Suncorp

The extreme weather occurred for 15 days in a row in late February and early March, resulting in four separate natural hazard incidents.

Suncorp's net retained loss from these events has remained unchanged at around AU$75 million, with recoveries triggered under a combination of Suncorp's various reinsurance covers, including the Aggregate Excess of Loss (AXL) treaty, dropdown covers, main catastrophe program, and quota share arrangement in the Queensland home portfolio, according to early provisional forecasts.

Suncorp informed that it is well protected for the rest of the year due to these events.

Given recent events, the group's current estimate of natural hazard expenses for the whole year has grown to roughly AU$1.1 billion (earlier AU$1,075 million), indicating the strength of the remaining reinsurance cover.

Flood update

On Monday (14 March 2022), the NSW government announced the opening of two more flood recovery centres in Sydney's northwestern suburbs, increasing the total number of such centres in the state to 10.

Source: © Rik57 | Megapixl.com

The NSW State Emergency Service reported on Sunday (13 March 2022) that the floods had rendered 3,396 dwellings uninhabitable, and 6,708 homes swamped across the state.

According to a Deloitte Access Economics study, natural disasters already cost Australia an average of $38 billion per year, with that amount rising to $94 billion by 2060 in a high-emissions scenario.

Bottom line

Suncorp has also announced an AU$1 million support package to aid the long-term rehabilitation efforts of flood-affected communities in Queensland and New South Wales, in addition to the Group's claims response.

Also Read: IAG, QBE, SUN: Insurance stocks to watch as floods wreak havoc in Australia

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