Aug. 25 (Bloomberg) -- Suncorp-Metway Ltd., Australia’s third-largest insurer, said fiscal-year profit plunged 40 percent as the company set aside more money to cover bad debts.

Net income in the 12 months ended June 30 fell to A$348 million ($292 million) from A$583 million a year earlier, the Brisbane-based company, also the nation’s fifth-biggest bank, said in a statement today to the stock exchange. Suncorp reported preliminary results for the period on Aug. 7.

The company’s earnings have been dented by slowing economic growth, natural disasters such as the Victoria bushfires, and volatile financial markets. The impairment charge on soured loans soared 10-fold to A$710 million. The company called the results “extremely disappointing,” and the stock extended this year’s decline, dropping 2.8 percent in Sydney trading today.

“The group expects economic conditions to remain volatile for some time as investment markets look for signs of economic recovery,” Suncorp said. “It is still too early to declare the end of uncertainty,” it said in an analyst presentation.

Suncorp fell to A$7.58 and has dropped 3.9 percent in 2009.

The economy in Suncorp’s home state of Queensland has been worst hit by the global recession. The fires in Victoria in February killed 173 people and triggered about A$1.2 billion worth of losses claimed, according to insurance data from the state government.

Chris Skilton, Suncorp’s acting chief executive officer, is due to hand over to Patrick Snowball on Sept. 1.

To contact the reporter on this story: Angus Whitley in Sydney at awhitley1@bloomberg.net

Last Updated: August 25, 2009 03:07 EDT