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Suncorp tallies the cost of underpaying staff with $60m fund

Business

Suncorp will pay back up to $60 million to staff and former employees it underpaid.

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The company said its pay and leave entitlements review had been completed and remediation payments would start this month.

It did not report the amount that would be repaid but said the $60 million provision which was reported in the company’s 2020 results would cover all project and remediation costs. The underpayments were also being investigated by the Fair Work Ombudsman after Suncorp self-reported.

The company has also continued its asset sales with a decision to sell its 50 per cent stake in Tasmania’s RACT Insurance to its joint venture partner RACT for $83.75 million.

The pre-tax profit on sale is expected to be in the range of $65 to $70 million. The total capital release, including the profit on sale, is expected to be approximately $50 million. 

It follows the sale of its wealth business in April and its decision to scrap its personal loans business.

Suncorp chief executive Steve Johnston said the RACT transaction was in the best interests of customers, shareholders and the business. Suncorp would continue to operate in Tasmania with its own brands. 

The company said it had also placed its 2022 reinsurance program and the structure of the main catastrophe program was unchanged from FY21, with an upper limit of $6.5 billion covering the Home, Motor and Commercial property portfolios across Australia and New Zealand. Suncorp’s maximum event retention remains at $250 million. 

The natural hazard allowance for 2022 was expected to be $980 million

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