Suncorp suffers hit from virus crisis

Insurance and banking giant Suncorp will take a hit of $133 million on account of the COVID-19 crisis and has revealed incorrect payments to staff will cost it up to $70 million.

Suncorp said COVID-19 will have a range of impacts across its businesses due to an expected sharp deterioration in GDP and a slow recovery, increased unemployment and a decline in residential and commercial property prices.

“We have already received thousands of requests for financial hardship from both our bank and insurance customers and have provided discounts and premium waivers to 12,300 insurance customers in Australia and New Zealand and approved $4.05 billion in loan deferrals,” group chief executive Steve Johnston said.

It is also expecting an increase in claims across its landlord policies for loss of rental income but has seen a decline in claim lodgements in the consumer motor insurance business since the introduction of mobility restrictions in March. 

It expects gross written premium to be negatively affected by hardship and lower economic activity. 

The company said group costs for the year are estimated to be to be slightly above $2.7 billion, including pay and leave entitlements remediation to some employees of $40 million to $70 million.

It said an internal review of pay and leave practices started in November 2019 had found inconsistencies in rostering and pay systems, which may have led to errors in payments of overtime, shift penalties and public holiday loadings.

Suncorp outlined a pre-tax net loss of $205 million in its investment portfolio for the March quarter on account of volatility due to the COVID-19 crisis, although it said some of the losses had been recouped in April.

Suncorp Bank will also take a non-cash impairment charge of $90 million to write down the value of the deposit and transaction modules of the core banking platform.

In February, Suncorp said a surge of bushfire and hailstorm claims had hit first-half profit, with the insurer’s bottom line also hurt by higher regulatory costs and an increasingly competitive mortgage market. 

By 1030 AEST, Suncorp shares were up 1.9 per cent to $9.08 each.

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