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0348 GMT – Australia’s comparatively drier weather should help protect insurer profitability due to lower catastrophe costs, say Morgan Stanley analysts in a note. With rainfall in Australian capital cities at 10-year lows in the year to date, IAG and Suncorp are being set up to over-earn in FY 2024, MS says. History shows that a 2%-3% change in domestic motor vehicle insurance loss ratios is possible from an increase or reduction in rainfall, although this will also depend on how well insurers manage pricing versus claims inflation, says MS. At the same time, a new government reinsurance pool should protect insurers from Cyclone Jasper, and help them come in below their catastrophe budgets. MS reckons Suncorp, which is skewed toward customers in Queensland, is most exposed to Cyclone Jasper, while IAG has limited exposure to northern Australia.(alice.uribe@wsj.com)
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