S&P Global Ratings says Suncorp’s update on COVID-19 related impacts has moderated its expectations for full-year earnings but has not undermined its view of the company’s underlying operations.

The Suncorp update last week outlined a deterioration in its insurance portfolio investments due to market volatility and included a $133 million banking operations provision.

“In our view, the investment portfolio losses in its insurance operation are relatively modest and largely unrealised,” S&P said in a note.

Capital adequacy remains very strong, a proposed conversion of up to $194 million in hybrid securities to equity provides an additional buffer and solid business fundamentals and sound underlying earnings have allowed the group to largely absorb pandemic effects, it says.

“COVID-19 impacts have been moderate, reflecting the group’s relatively low risk appetite and mitigating actions by management, with the group able to absorb the effects on operating performance at current rating levels year to date,” S&P says.