The Suncorp Group Ltd (ASX: SUN) share price will be one to watch on Thursday after the release of an update this morning.
What did Suncorp announce?
This morning Suncorp provided an update on its natural hazard costs following recent storms across the eastern states of Australia.
According to the release, Suncorp has declared two storm events since the start of the second half.
These are hailstorms in the South East states of Australia that impacted parts of Victoria, the ACT, and NSW from January 19 to 20; and heavy rain in South East Queensland and NSW from January 17 to 18.
As of January 28, Suncorp had received over 25,000 claims in relation to the hailstorms and in excess of 1,400 claims in relation to the heavy rain. These events are expected to continue to develop over the coming weeks as claims are lodged and processed.
The net natural hazard costs for these events and the recent bushfires (after reinsurance recoveries) is expected to be limited to $300 million. This will be achieved through a combination of protections from the main catastrophe program, recoveries under the drop downs, and recoveries under the Natural Hazard Aggregate Protection (NHAP).
Suncorp's NHAP cover for FY 2020 provides $300 million of protection for events greater than $10 million once aggregate costs have reached $515 million. Following the FY 2020 events year to date, it is anticipated the $515 million deductible will be fully eroded and Suncorp expects to commence making recoveries under the program.
Management also advised that an additional premium will be payable proportionate to the first $100 million of recoveries made under the NHAP, which is capped at $35 million.
Reserve releases.
Following finalisation of actuarial valuations, Suncorp expects the group's reserve releases for the first half to be between $50 million and $70 million. This is notably lower than this time last year and approximately 1.3% of its group net earned premium.
Suncorp's CEO Steve Johnston said: "This has been an unprecedented start to the bushfire and storm season in Australia. At a time when the industry is responding to multiple large events, Suncorp's focus is on making the claims process as simple and efficient as possible with customers making good use of our online claims lodgement facility."
