May 11, 2020 / 12:18 AM / 24 days ago

UPDATE 2-Australia's Suncorp underpays workers, takes $87 mln hit from coronavirus

* Fixing and reimbursing worker underpayment to cost up to A$70mln

* Takes A$133mln provision in banking unit

* Banking CEO Halton re-assessing commuting commitments, resigns

* A$205 mln mark-to-market losses “much better than expected”-GS (Recasts, adds shares, CEO quote, Goldman Sachs comment)

SYDNEY, May 11 (Reuters) - Suncorp Group on Monday revealed it was the latest of several large companies in Australia to underpay its workers, while announcing its banking unit expects to take a A$133 million ($87 million) hit from the coronavirus pandemic.

Australia’s second largest insurer also said the wider group had taken a A$205 million in mark-to-market losses in the six months to March 31, while confirming its banking unit chief executive would depart after just three months.

The COVID-19 crisis has added to the woes of Australian insurers, which have yet to recover from a tumultuous summer as raging wildfires, drought and hailstorms led to a surge in claims that weighed on their margins.

Suncorp Group Chief Executive Steve Johnston said the insurer has provided discounts and premium waivers to 12,300 insurance customers in Australia and New Zealand and approved A$4.05 billion in loan deferrals. The A$133 million provision included expected losses from its exposure to commercial properties, which accounts for 12% of its loan book.

Suncorp shares, whose value has fallen by about a third this year, were 4.9% higher on Monday afternoon, as the market had expected deeper virus-related losses at the Brisbane-based company.

“Investment losses were tracking much better than we had anticipated,” Goldman Sachs analysts said. “And an earlier reopening of the economy may limit the need for further customer benefits.”

WORKER UNDERPAYMENTS

The insurer said a six-month review in November had found errors in its payments of overtime and public holiday pay rates. It said it would reimburse workers and implement better systems at a cost of between A$40 million and A$70 million.

“As a Suncorp employee of long standing I am incredibly disappointed that we have let our people down - there is no excuse and we need to get this right,” Johnston said. “I want to offer my sincere apologies to those who may have been affected.”

Supermarket owner Woolworths and Qantas Airways have also admitted in recent months to underpaying employees.

In a separate statement, Suncorp also said Lee Hatton, who had started her role as CEO of the banking and wealth unit earlier this year, had “re-assessed the demands of commuting” from Sydney to Brisbane and decided to take a new role at a Sydney-based fintech company.

Bruce Rush, general manager of deposits and payments, would become acting CEO until a permanent appointment is made, it added.

$1 = 1.5328 Australian dollars Reporting by Paulina Duran in Sydney and Shruti Sonal in Bengaluru; Editing by Muralikumar Anantharaman and Jane Wardell

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