Storms Dent Insurers' Profit Hopes
Sydney Morning Herald
Thursday June 14, 2007
THE devastating storms that swept through NSW's Hunter Valley and the Central Coast last weekend have also dampened the prospects of good results from the major insurers, IAG and Suncorp, after analysts yesterday downgraded their profit forecasts for this year.
Shares in IAG, which owns NRMA Insurance, and Suncorp, whose brands include GIO, AAMI and Vero, both fell more than 1 per cent yesterday as estimates of claims lodged to cover damage caused by the floods rose above $250 million.Analysts at Credit Suisse and Goldman Sachs JBWere cut IAG's forecast earnings by between 16 and 18 per cent to as low as $532 million for 2007. It is facing payouts of $169 million, which is its maximum liability. IAG's shares were buffeted as a result, falling 9c to $5.81.Suncorp, which recently acquired the AAMI and Vero operations through its purchase of rival Promina, has yet to put a dollar figure on its liabilities although it has received more claims than IAG.Brokers lopped 5 to 9.7 per cent off their forecast profit result which, at about $1.08 billion, will still be higher than last year's consolidated figure for both Suncorp and Promina but may well erode a substantial sum of the merger's expected benefits.Suncorp's shares slipped 22c to close at $20.69. Fellow insurer QBE actually rose 5c to $31.10 after indicating that the claims it had received would be contained within the allowances already made for losses this year.
© 2007 Sydney Morning Herald