Suncorp's sound underlying earnings and robust capital adequacy will help it withstand heightened disaster-related claims, S&P says.

The ratings agency revised its outlook on Suncorp last month to “positive” from “stable,” noting benefits from the sale of the Australian life business. It affirmed Suncorp’s A+' Ratings.

Last week the ratings agency said that Suncorp’s underlying earnings for the last half of 2019 – while toward the lower end of its expectations – are within “tolerances.”

Severe bushfires and weather-related claims across Australia, coupled with lower reserve releases and higher compliance costs, saw Suncorp's earnings from continuing operations decline by about 6% in the half.

“Second-half results should be stronger, reflecting the structure of reinsurance arrangements and the full year run-rate from business improvement initiatives,” S&P says.