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Suncorp profits 'down by nearly half'

Date Published : Friday, August 29, 2008

Australia's second-largest home and car insurance group Suncorp has posted net profits of $556 million for the full year ended June 30th, it has announced.

This represents a fall in net profit after tax of 47.7 per cent and caps a poor run of earnings for the Australian insurance sector with QBE and Insurance Australia Group also fighting harsh market conditions, Reuters has reported.

Suncorp claimed the year has been a "particularly challenging period for all financial services organisations".

The group's general insurance operations generated profit before tax of $307 million.

Despite the sizeable fall in profits, Suncorp's chief executive officer John Mulcahy claimed the firm was "well placed to ride out any further deterioration in the market, as well as take advantage of any improvement in the industry cycle".

Last week, Suncorp rival Insurance Australia Group published losses of $261 million for the 2008 fiscal year while QBE Insurance also posted reduced earnings.

For the six months ended June 30th, QBE saw its net earnings slip seven per cent from $921 million to $859 million.

Suncorp's shares are down by over 20 per cent so far this year and its close of $11.42 on August 29th is 47 per cent below its 52-week high of $21.5.

Current market conditions have led Suncorp to renew its focus on cost management by cutting discretionary spending and reducing duplication, Mr Mulcahy said.

Pursuant to this process, Suncorp has decided to merge its retail and business banking businesses, with existing retail bank group executive David Foster heading up the combined enterprise.

Suncorp provides a range of banking, insurance, superannuation and funds management products and services to customers in the retail, corporate and commercial sectors, according to the Australian Stock Exchange.

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