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Suncorp logs A$519M in natural hazards costs in H2'19

Suncorp Group Ltd. logged A$519 million in total natural hazards costs for the six months ended Dec. 31, 2019, which is A$109 million above its natural hazard allowance for the first half of 2020.

The six-month period saw total net costs of A$360 million from seven natural hazard events with net costs greater than A$10 million, including three bushfire events with A$214 million in net costs. Suncorp also recorded A$26 million of bushfire-related attritional claims and A$133 million of other attritional claims, as well as an estimated A$75 million to A$105 million in incurred bushfire claims for the period of Jan. 1 to Jan. 5.

The events from the six-month period eroded A$360 million of the A$515 million deductible for Suncorp's natural hazard aggregate protection cover, which was further eroded by the January bushfire events into the A$435 million to A$465 million range. Once the deductible is reached, the program provides coverage of A$300 million for events with net costs greater than A$10 million.

Events from the second half of 2019 also eroded A$519 million of the deductible for Suncorp's aggregate stop loss protection program, which provides an additional A$200 million coverage for all retained natural hazard losses in excess of an A$820 million natural hazards allowance.

The extent of erosion for Suncorp's additional dropdown aggregate protection will depend on the ultimate cost of the still-developing Victoria/New South Wales/Tasmania bushfire event from Dec. 30, 2019, to Jan. 5. The program provides coverage through three dropdowns.

The first provides coverage of A$50 million for events with net costs greater than A$200 million once the cumulative impact of qualifying events reaches A$50 million. The second and third dropdowns kick in when the impact of qualifying events reaches A$200 million, providing coverage of A$100 million apiece for events with net costs greater than A$150 million and A$50 million, respectively.

Suncorp said the maximum net exposure to the Victoria/New South Wales/Tasmania bushfire event will be A$250 million.

The company has received more than 2,600 bushfire-related claims with an estimated total cost of A$315 million to A$345 million since September 2019.

As of Jan. 8, US$1 was equivalent to A$1.46.