Australian insurers fall on flood claims concerns

Shares in Australian general insurers fell as much as 3.5% on concerns of mounting claims triggered by record floods in Queensland state, but investors said insurance companies could cope and hefty profit warnings were unlikely.

Queensland-based Suncorp Metway Ltd led losses, dropping as much as 3.5% to a four-month low, while rivals Insurance Australia Group and QBE Insurance fell more than 2.5%.

Suncorp has received 1,800 claims and IAG 600 so far with more expected to come as waters recede and customers assess damage, spokeswomen for the two firms said. However, investors and analysts said claims would not be large enough to trigger profit warnings. Officials at QBE could not be reached immediately.

"The market is just pre-empting what may happen in the worst case. It will be a while before insurers can clarify the final claim and how they are covered, till then there may be some impact," Simon Burge, fund manager at ATI Asset Management, which owns shares in all three insurers, said.

It may be a few weeks before the insurers tally the claims with water still rising in some areas such as Rockhampton sending furniture cascading down torrents of flood water.

Suncorp, which has the biggest market share in the region, and IAG which provides insurance products in Queensland primarily through NRMA and CGU brands have adequate catastrophe allowances or reinsurance protection, analysts said.

Suncorp has a natural hazard allowance of A$460 million (USD 467.6 million) and an aggregate reinsurance cover of A$400 million if events over A$10 million exceed A$300 million.

Last year ,the insurer saw total claims of A$473 million, which included A$200 million for storms in Melbourne in March that saw about 35,000 claims.

Weather related claims were among reasons for IAG to cut its profit outlook several times last year, though it has raised its cover since then.

(USD 1 = 0.984 Australian Dollars)