February 13, 2019 / 9:50 PM / 5 months ago

UPDATE 2-Australia's Suncorp H1 profit slumps on hazard claims, regulatory costs

* Suncorp H1 NPAT A$250 mln vs A$452 mln prior year

* Cuts interim dividend by 21 pct

* Shares set for biggest one-day fall in 18 months (Recasts to add regulatory costs, adds share fall)

SYDNEY, Feb 14 (Reuters) - Australian general insurer Suncorp Group Ltd said on Thursday its first-half net profit fell 45 percent due to payouts for a Sydney hailstorm, weaker investment returns and rising regulatory costs, sending its shares sharply lower.

Net profit for the owner of the AAMI and GIO insurance brands dived to A$250 million ($177 million) in the six months to end-December, from A$452 million in the prior year, and Suncorp said the headwinds would continue for the rest of the financial year.

The company slashed its interim dividend to 26 cents per share, from 33 cents previously.

“Natural hazards, investment performance and unforeseen regulatory costs will impact our full year cash Return on Equity,” Chief Executive Officer Michael Cameron said in a statement.

Shares in Suncorp fell 5.1 percent in early trading, on track for their biggest intraday decline since August 2017, while the broader market was flat.

The insurer in January flagged a A$178 million cost from a wild Sydney hailstorm which was declared a catastrophe by the Insurance Council of Australia.

The Brisbane-based company said it would increase its natural hazard allowance to A$820 million from A$720 million and buy another A$200 million of natural perils reinsurance cover.

Suncorp was largely unaffected by a year-long misconduct inquiry into the Australian financial sector, which wrapped up this month, but has previously said it had “at times fallen short of community expectations”.

On Thursday the company showed the extent of the inquiry’s impact on its earnings, upping the estimated cost of “regulatory projects and system enhancements” to about A$140 million, from A$50 million.

The rise came “as a consequence of an increase in regulatory projects and following a preliminary assessment of the Royal Commission recommendations,” Suncorp said.

$1 = 1.4112 Australian dollars Reporting by Byron Kaye in SYDNEY and Shreya Mariam Job and Aby Jose Koilparambil in BENGALURU; editing by Marguerita Choy and Richard Pullin

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