Worry over Larry loss clouds Suncorp

Winds of 290km/h tore through Innisfail, north of Brisbane, as Cyclone Larry hit. Picture / Reuters

Suncorp-Metway, Australia's third-largest car and home insurer, may have A$100 million ($117 million) of pretax losses from Cyclone Larry, the most powerful storm to hit the nation in 30 years, Merrill Lynch said.

"With near 40 per cent market share, we believe this event is going to be a maximum loss event for Suncorp," Andrew Kearnan, a Merrill analyst, said in a report.

He cut his 2006 earnings-per-share estimate for Suncorp by 5.5 per cent to A$1.50.

Suncorp is the biggest property and casualty insurer in Queensland state, where Larry, a category 5 storm, packed winds of 290km/h as it tore through Innisfail, a town 1700km north of Brisbane, last week.

"We're currently assessing the overall situation in Far North Queensland and will update the market with accurate financial information as soon as is practical," said Suncorp spokesman Jamin Smith.

Standard & Poor's estimates insured losses from the storm of between A$300 million and A$400 million.

The combined effects of Cyclone Larry, softening premium rates and further possible losses from Cyclone Glenda in Western Australia will see insurance industry profit forecasts for 2006 moderate from 2005, Michael Vine, an S&P analyst, said yesterday.

He said insured losses from Larry will be lower than the A$1.5 billion from a hailstorm in Sydney in 1999 and A$1.1 billion from an earthquake in Newcastle in 1989.

Cyclone Larry insurance claims had reached A$250 million, the Insurance Disaster Response Organisation said this week.

Suncorp stock closed 2c lower to A$19.51 in Sydney.

- BLOOMBERG