Suncorp cash earnings jump on strong margins and investment returns, shares up

By Roushni Nair

(Reuters) -Australia’s Suncorp Group posted a 63% jump in first-half cash earnings on Wednesday, helped by strong underlying margins and investment returns, while the insurer flagged higher reinsurance and natural hazard costs as near-term risks.

Shares of the insurer, which rose more than 9% during the first half to Dec. 31, climbed as much as 4.7%, while the broader market was up 0.3%.

Suncorp logged strong top-line growth across verticals, with the release of a A$150 million ($104.43 million) provision for potential business interruption claims also boosting its performance.

First-half cash earnings rose to A$588 million from A$361 million a year ago, but missed UBS and Citi estimates of A$674 million and A$593 million, respectively.

“Most of the difference vs consensus seems to be due to items between the underlying and reported margin, suggesting the miss is unlikely to be too serious,” analysts at Citi said.

“Overall, we see this as a solid result, with underlying trends largely in line with expectations… Suncorp seems to be a little cautious on outlook, but overall we expect the result to support the stock.”

Separately, Suncorp flagged a modest rise in the number of natural hazard events in near term. “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.

The company said the sale of its banking arm to lender ANZ Group Holdings was on track and subject to regulatory approvals.

Suncorp declared an interim dividend of 33 Australian cents per share, up from 23 Australian cents per share a year earlier.

($1 = 1.4364 Australian dollars)

(Reporting by Roushni Nair and Nausheen Thusoo in Bengaluru; Editing by Shailesh Kuber and Subhranshu Sahu)