The cost of natural disasters has proven to be more than Suncorp was prepared for during the first half, with hazards accounting for a dive in the group's profit and earnings.
At the end of 2018 Suncorp's reported NPAT was down 44.7 per cent to $250 million.
This downturn, from $452 million in 1H18, can be attributed to a number of factors.
Whilst the write down of the group's life insurance business goodwill of $145 million and lower returns on the group's other investments totalling $140 million definitely hit hard, it was the natural hazard spending increase to $167 million that hurt the most.
Despite the factors mentioned above, CEO and managing director Michael Cameron says the company is in good shape.
"While the interim result includes natural hazard costs significantly above our allowance, as well as the impact of volatile investment markets, our underlying business remains resilient," says Cameron.
"The core of our insurance portfolios are performing well and in banking, strong deposit growth and very low losses helped to counter the slow down in lending across the industry."
During the banking and finance Royal Commission Suncorp was one of many entities grilled by the commissioner. With the findings of the Commission recently delivered Cameron says that there is work within the business that still needs to be done to regain customer trust.
"The financial services industry today faces a great deal of change," says Cameron.
"This includes future policy settings, shifts in regulation, and material impacts on business and distribution models. I acknowledge the importance of the Royal Commission process, and accept that Suncorp has, at times, fallen short of community expectations."
The company also announced today that its investments back into the business are expected to exceed its original estimate of approximately $90 million by $50 million.
Suncorp says that because of this increase this year that it will continue to invest in the company's systems to bring the standards of its products up for the community and its customers.
The insurer will also raise its natural hazard allowance from $720 million to $820 million in FY20 and will purchase an additional $200 million natural peril reinsurance cover to sit on-top of this extra allowance to protect further against natural hazard budget blowouts.
Both the Australian insurance business and its banking & wealth business saw their NPAT down 43.2 per cent and $1.1 per cent respectively.
Suncorp's New Zealand business saw its NPAT rise by 82 per cent to $111 million in the first half thanks mostly to benign weather in the country.
The company will pay a dividend of 26 cents per share.
Shares in Suncorp are down 4.23 per cent to $12.92 per share at 10.42am AEDT.
Business News Australia
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