The Suncorp Group Ltd (ASX: SUN) share price is on watch today after a severe weather update about Victoria.
Severe weather
There has been days in strong winds in Victoria, as well as flooding in some areas.
As of 6:30pm on Monday, 14 June 2021, Suncorp has received approximately 3,750 claims predominately for property damage. As the full extent of damage caused by the heavy rain, severe winds and flash flooding is unfolding, claims are expected to rise further in the coming days.
Suncorp’s total natural hazard costs across Australia and New Zealand year to date to 31 May 2021 was $955 million, approximately $40 million above the year to date allowance of $915 million. Those estimates exclude any associated risk margin or claims handling expenses.
The group’s full year natural hazard allowance is $950 million. The group has a comprehensive reinsurance program in place and given the group’s remaining covers, the maximum potential loss from this event is $50 million, this might give support for the Suncorp share price.
Management comments
Suncorp CEO Steve Johnston said: “Victorians have already been through a lot, and we are moving as quickly and as safely as we can to help our customers and communities affected by this severe weather.
“The sooner we have customer details, the sooner we can arrange emergency repairs, organise temporary accommodation for customers whose homes have been severely damaged and provide cash payments for emergency purchases.
“What we’re seeing in Victoria should again act as a reminder to the devastation which can be caused by severe weather events.
“More needs to be done to better protect homes in flood-prone regions across the country, including improved town planning and government investment in mitigation infrastructure.”
Summary thoughts about Suncorp and the share price
The Suncorp share price has continued to recover since the COVID-19 crash – it’s up 25% over the last year.
However, bad weather seems to be becoming a more regular and costly occurrence. Insurance companies like Suncorp seem to hit by weather and recessions regularly, hurting profit and dividend potential. Suncorp is not one of the ASX dividend shares on my watchlist at the moment.
