The Suncorp Group Ltd (ASX: SUN) share price is edging lower on Tuesday. It appears investors are relatively unfazed by the financial services company's latest natural hazard update.
At the time of writing, shares in Suncorp are trading slightly lower to $12.15, down 0.37%. As a result, the company is situated 8% away from its 52-week high.
Let's take a closer look at Suncorp's latest release.
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More than expected
When it comes to being in the business of insurance, it's important to accurately forecast potential claims to price premiums effectively.
However, mother nature often doesn't abide by modelling and predictions. This can sometimes lead to insurers being left out of pocket. This is why shareholders of Suncorp pay close attention to natural hazard claims compared to provisions.
Suncorp has informed the market of the latest natural hazard claims figures since 1 July 2021. This update follows a period of wild weather across the east coast of Australia. According to the release, there have been five declared storm events in October alone, putting the Suncorp share price in focus.
Based on preliminary data, lodgement patterns, and historical average claims costs, Suncorp has updated its total estimated natural hazards costs to between $382 million and $492 million. October itself has increased this estimate by between $140 million and $220 million.
Commenting on the company's response to recent wild weather, Suncorp Group CEO Steve Johnston said:
Our customer support team is on the ground in Coffs Harbour to support our customers affected by the hail
event. Our national footprint means we have been able to respond quickly to this event and ensure our customers
get back on their feet as quickly as possible.We will continue to work with governments to ensure we can get tradespeople and assessors on the ground and
across borders as necessary.
Furthermore, Suncorp had provisioned $980 million in natural hazard costs for the full year. Based on this information, 39% to 50% of this provision has already been accounted for, only four months into the financial year.
Suncorp share price snapshot
Despite the higher than anticipated natural hazard costs, the Suncorp share price has been performing well. In the past 12 months, the financial services company has gained 40%. Comparatively, Insurance Australia Group Ltd (ASX: IAG) is up 2% year-over-year.
As covered in a previous article, Suncorp has managed to remain profitable during the last 12 months. Meanwhile, IAG suffered a net loss after tax of $427 million in FY21.
On top of that, the Queensland-based financial company raised $350 million in August. This may have quelled investors' worries of being out of pocket on insurance claims.
