Suncorp’s general insurance margins have been hit by a record run of natural catastrophes and the falling Australian dollar, the listed insurer announced to the market today.

The underlying insurance trading ratio (ITR) is expected to be about 10% for the six months to December 31, compared with the target of 12%.

“While the industry remains very competitive, costs have been increasing as a result of the lower Australian dollar and the impact of the $4 billion of weather events [this year],” CEO Michael Cameron said.

Increased frequency and cost of claims across the personal and commercial sectors are having a major impact, and a range of claims and pricing initiatives have been introduced.

Mr Cameron said in a teleconference today the 12% target remains in place, although it will clearly not be achieved for the half-year.

Personal Insurance CEO Gary Dransfield says a comprehensive work program is under way to further improve claims processes.

“We are also working closely with our building panel and other suppliers to better manage costs,” he said.

Commercial Insurance CEO Anthony Day says commercial pricing is under some pressure but is “approaching the bottom of the market”.

The underlying ITR has also been hit by a previously announced $75 million increase in the natural hazards allowance, increased claims frequency in NSW compulsory third party insurance, and lower investment yields.

Claims management and pricing initiatives will be backed up by the group’s optimisation program, which is on track to deliver $170 million of benefits in the 2018 financial year.

“The group is in good shape other than the short-term operational challenges in general insurance that we are highlighting today,” Mr Cameron said. “I’m confident we can address these challenges and continue to drive changes that improve outcomes for our customers, shareholders and other key stakeholders.”

Mr Cameron has rejected suggestions the announcement is a case of a new CEO “sandbagging”, or deliberately lowering expectations, so as to produce better-than-expected results further down the line.

It is simply a matter of taking seriously the commitment to keep the market informed, he says.

Mr Cameron also says it does not mark any change of philosophy, adding that while he is “not a supporter” of the allfinanz model, he is keen to move forward on the group’s “one company, many brands” strategy.

Suncorp’s financial results for the six months to December 31 will be released on February 11.