SUN has disclosed it expects its net costs from the recent storms and flooding in NSW, South East Queensland and Victoria to be A$230m-A$250m. While the event is disappointing, we expect SUN’s strong reinsurance protections (for the rest of FY21) to help limit total FY21 hazards costs to only marginally above SUN’s hazard budget (MorgansE hazards = ~A$1.02bn versus A$950m hazard budget). We downgrade our SUN FY21F EPS by 3% reflecting our revised claims forecasts for the year. Our outer year forecasts are unchanged. Our SUN PT reduces to A$11.80. We think the outlook for SUN will continue to improve into FY22 as the company reprices its insurance book and with more positive macro trends assisting the bank. Trading on 13x FY22F PE, we see SUN’s valuation as undemanding. ADD.