Insurers Suncorp Group (ASX:SUN) and QBE Insurance Group (ASX:QBE) are set to benefit from favorable weather conditions, Citi said, according to a Monday report by The Australian.

Suncorp is likely to post strong first-half results, with a AU$165 million upside from mild weather, Citi analyst Nigel Pittaway reportedly said.

The Queensland-based insurer may face potential increases in its compulsory third-party insurance claims, as inflation continues to pressure costs, Pittaway noted.

However, Pittaway believes that the impact of inflation is expected to ease more quickly in Suncorp's New Zealand market compared with its Australian operations.

Meanwhile, Pittaway also expects QBE to report a favorable result due to similar weather conditions, with an estimated $80 million benefit.

However, he cautioned that the ongoing fires in California could pose some risk, although QBE's exposure to home insurance in the region remains limited at $49 million.

Pittaway noted that easing reinsurance rates could pressure commercial premiums as sector competition intensifies.

Shares of Suncorp and QBE each rose almost 1% in recent Monday trade.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)