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Suncorp targets claims after profit hit

AAP logoAAP 3/08/2016

Suncorp's full year profit has been hit by a drop in the value of its investments and an increase in insurance claims following east cost storms in June.

The insurer said profit in the year ended June 30 slipped eight per cent to $1.04 billion, slightly below analyst expectations of $1.08 billion.

Most of the decline came from its insurance operations, with natural hazard claims about $60 million above the annual $670 million allowance, following June's storms.

The company received about 8,000 home, motor and commercial claims following the low pressure systems that hit Queensland, NSW, Victoria and Tasmania, coming at a cost of $118 million.

The financial services provider has purchased an additional $300 million of reinsurance for the 2016/17 financial year, and chief executive Michael Cameron said he was targeting a reduction in working claims costs.

"Reducing working claims cost has been my highest priority," he said.

"We are putting in place a number of proactive measures to reduce the volume of open claims."

Underlying insurance trading ratio (ITR), a key measure of profitability, dropped from 14.7 per cent to 10.6 per cent, but Mr Cameron said the company still believes a full year underlying ITR of at least 12 per cent is achievable in the medium term.

Things were brighter at Suncorp Bank, which lifted net profit 11 per cent to $393 million thanks to 5.9 per cent growth in home lending, a stronger net interest margin to an above target 1.86 per cent, and improved credit quality.

The bank also benefited from a further 5.5 per cent reduction in gross impaired assets.

An unchanged fully franked dividend of 38 cents followed an interim dividend of 30 cents and took the company's payout to 80 per cent of cash earnings.

It is targeting a range of 60 to 80 per cent in 2016/17 and a lift in underlying profit.

"We are committed to our dividend strategy and to returning excess capital to shareholders," Mr Cameron said, adding he would not rule out paying a special dividend to shareholders in future.

Suncorp shares gained nine cents to $13.30.

BAD WEATHER HITS SUNCORP

* Net profit down 8.3pct to $1.04b

* Revenue down 7.4pct to $15.5b

* Final dividend unchanged at 38 cents, fully franked

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