SUNCORP SEES ANNUAL PROFIT HALVED, SHARES BATTERED

Australia-based financial services group Suncorp Metway has reported a 50% fall in annual profits to about AUD550m ($515m), down from AUD1.06bn in the year to June 30 2007. Its share price fell nearly 14% on the news, closing at AUD11.53. In a market update statement issued today, Suncorp Metway CEO John Mulcahy said that the outlook remained “positive”. Its previous profit forecast in the banking business was maintained “at the top end”, and guidance for the non-life business was maintained. However, It was reduced for the wealth management business. In the insurance sector, claims associated with severe weather events were likely to be around AUD415m, with the December 2007 Sydney storms costing AUD170m and the February 2008 storms in Mackay costing AUD110m. Outside the seven listed events, Mr Mulcahy said that generally wetter weather across Eastern Australia had led to an increase in claims frequency. The downturn in equities “significantly impacted” the Group result. The General Insurance Shareholders Funds portfolio was marked down about AUD235m to AUD2.8bn. An AUD35m charge was taken because of the impact on the defined benefit superannuation scheme. The final dividend remained unchanged at 55¢. Suncorp confirmed that for 2008/09 it had reduced its reinsurance maximum event retention to AUD150. This provides protection for multiple events that individually may be below AUD150m but which collectively total more than AUD250m. It expects an insurance trading ratio — a common measure of profitability in Australian insurance — to be in the 10% to 12% range. Suncorp did not anticipate increasing its dividend in 2008/09 above the 107¢ a share paid out in total this past financial year.