Suncorp Group shares have been an investor favorite. The stock’s total return over the last 12 months has been 61 per cent, according to Bloomberg data. Today the shares continued their run, up 2.71 cent to $12.51 at 1333 AEST against benchmark index increase of 1.53 per cent, after Brisbane-based Suncorp told the ASX its gross lending increased 2 per cent to $46.7 billion in the March quarter. Impaired assets in the three months to March 31 were $221 million compared with $216 million in the three months to December 31 and $235 million in the three months to September 30 last year.
“There is improving confidence in Queensland,” Suncorp spokesperson Michelle Barry says. The property market remain volatile, but Queensland businesses are enjoying the clarity of the state’s political direction under Premier Campbell Newman, Barry adds.
Still, all is not bright in the sunshine state. Barry says there is a possibility Suncorp may have to boost its natural hazard claim allowance. The town of Roma has been flooded three times in the last four years and will build a levy, beginning in July. Suncorp’s allowance for natural hazard claims for the 12 months to June 30, 2013 is $520 million. At the end of March Suncorp’s natural hazard claims were $537 million. Significant weather events included ex tropical cyclone Oswald, which cost the company’s insurance unit $250 million. The Tasmanian bushfires in January and the New South Wales storms and flooding in February will each cost the company about $30 million in claims.
Volatile weather is set to continue to the extent that World Bank President Jim Yong Kim has made tackling climate change a top priority. Barry says the damage caused by storms and flooding has increased in recent summers. In fact, she says Suncorp is having “ongoing discussions” about its hazard claim allowance. It means there’s a chance the company may have to deal with more than inclement weather.