Suncorp Group Ltd (ASX: SUN) shares will be in focus when trading opens this morning after the financial services giant provided an update on the financial impact of the recent floods on its business. At close of trade yesterday, the Suncorp share price finished the day at $9.75, down 1.32%. For comparison, the S&P/ASX 200 Index (ASX: XJO) ended the day down 0.9%.
Let's take a closer look at what Suncorp announced today.
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Suncorp's natural hazard update
The Suncorp share price will be one to watch today. In a statement to the ASX, the company provided an update on "the expected financial impact" from the recent flooding on the Australian east coast.
Suncorp estimates it will lose between $230 and $250 million in payouts to customers as a result of the floods. The group will cap flood payments at $250 million.
By midday yesterday, 7,600 customers had lodged claims to Suncorp's insurance arm. The company expects that number to rise further over the coming days as residents return to their properties. Three-quarters of all claims are from New South Wales, one-fifth are from Queensland and the rest originate from Victoria and the ACT. The extent of the damage varies significantly between regions.
Suncorp states it has a "comprehensive" reinsurance program to help mitigate its exposure to the flood event and provide protection over the remainder of the financial year.
Words from the CEO
Speaking on today's announcement, Suncorp CEO Steve Johnson says the government needs to do more to protect Australians from flooding.
Suncorp continues to work with our customers, particularly in the hardest-hit areas of the Mid-North Coast of NSW and Western Sydney.
Floods too frequently devastate communities across Australia, which is why as a country we must address this risk. Unfortunately, many homes in Richmond, Windsor, Penrith, Port Macquarie and Taree are in medium to very high flood risk areas.
As a country, we need to address how we can protect homes in flood-prone regions through government investment in mitigation infrastructure. We must also improve planning decisions to ensure we are not building new homes in high-risk areas.
The risk of extreme weather events, like flooding, is increasing every year due to climate change.
Suncorp share price snapshot
Over the last 12 months, the Suncorp share price has increased by 6.79%. Suncorp shares have already taken a hit recently due to the flooding.
In November last year, the share price hit its 52-week low, before rallying to hit its 52-week high at the beginning of this year.
Suncorp has a market capitalisation of $12.5 billion.
