Why the Suncorp share price just lost 4%

The Suncorp Group Ltd (ASX:SUN) share price is under pressure today.

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The Suncorp Group Ltd (ASX: SUN) share price is down 4.1% to $12.39 on Friday afternoon despite the automobile and home insurer revealed it had taken 7,800 claims from customers already as a result of the Sydney hail storm that hit the city on December 20.

Suncorp reports that it has a "comprehensive reinsurance" program that limits the financial impact of the event to Suncorp to $250 million.

Prior to the hail storm Suncorp reported that it estimated "natural hazard costs for the six-month period to 31 December to be $350 million to  $360 million, compared to the natural hazard allowance of $360 million."

The scale of the claims (7,800 and rising) is probably what has put off investors today, however, while a claims surge is a negative for Suncorp over the short-term over the long-term as wild one off weather events actually encourage others to take up a policy.

In FY 2018 Suncorp posted a profit of $1,059 million and paid 81 cents in dividends including an 8 cents per share special dividend. Thanks to its strong competitive position it remains a reasonable bet for investors solely focused on income.

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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