UPDATE 1-Suncorp's profit before tax seen down 18pct

* Suncorp forecasts up to 18 pct drop in profit before tax

* Final dividend seen at 20 cents

* Shares fall about 4 percent (Recasts with profit announcements)

SYDNEY, Aug 7 (Reuters) - Suncorp-Metway Ltd (SUN.AX), an Australian insurance and banking group, expects its full-year profit before tax to fall as much as 18 percent due to volatile financial markets and major insurance claims.

Suncorp, Australia's second-biggest car and home insurer, expects full-year profit before tax and items related to its purchase of rival insurer Promina, completed in 2007, will be between A$790-$A810 million ($663-$680 million).

That compares with A$967 million profit reported in last fiscal year.

"While Suncorp expects its banking and general insurance businesses to report results broadly in line with guidance, volatile investment markets have reduced underlying profits in Suncorp Life and resulted in lower returns in the general insurance investment portfolios," Suncorp said in a statement on Friday.

Shares in Suncorp, which has been exploring sale of its banking business, fell about 4 percent to A$7.68, far more than a 0.8 percent fall in the benchmark S&P/ASX 200 index .AXJO.

Suncorp expects to pay a final dividend of 20 cents per share, in line with previous forecasts. Suncorp will release full-year earnings on Aug. 25.

Earlier this year, Suncorp raised about A$1 billion in new equity to boost its capital and announced a surprise departure of its chief executive. Last month the company named Patrick Snowball as new CEO from Sept. 1.

Acting chief executive Chris Skilton said the 2009 financial year had been particularly challenging due to combined effects of volatile investment and credit markets, subdued domestic economic growth and major insurance claims events across Australia and New Zealand impacting its businesses. ($1=A$1.19) (Reporting by Denny Thomas;)