Queensland flood claims affect Suncorp's, IAG's earnings
The Queensland disaster has urged analysts to review Australian major insures as flood claims take its toll. The industry as a whole could face up to $1 billion in losses, according to preliminary estimates.
Suncorp is likely to be hardest hit given its extensive exposure to Queensland. It has already received nearly 2000 claims from local residents and is expecting more in coming weeks. This could shed 10 per cent off of Suncorp's fiscal 2011 earnings, analysts said.
JP Morgan and Goldman Sachs estimated the Queensland-based financial services group share of losses would be near $200 million, pushing it over its budget for the half by $150 million.
The other major insurers in Australia, IAG and QBE, are unlikely to be hurt as badly.
Goldman, in fact, lifted IAG's earnings estimates by 9.1 per cent, compared with prior forecasts. IAG's net exposure to the floods was about $40 million. This meant it would be ahead of budget for the half by about $60 million. According to analysts, IAG could end up having its losses from this incident largely covered by reinsurance given it has dealt with other catastrophic events recently.
QBE is not likely to be as exposed to the region and is also much more globally diversified.