Suncorp New Zealand result reflects strong investment performance and absence of major events

26 February 2024

Suncorp New Zealand has today reported half year profit after tax of $94 million, an increase of 3.3% from the previous period.

General Insurance profit after tax of $80 million increased 6.7%. The first half of FY24 benefitted from an absence of major weather events and improved investment income from strong underlying yields and equities returns.

The business’ Life Insurance profit of $14m was a decrease of 12.5% on the pcp, due to discount rate impacts and modest net unfavourable experience.

The period marked something of a milestone for Vero Insurance’s dedicated disaster recovery team, with more than 90% of claims paid out to customers from the 2023 North Island flooding and Cyclone Gabrielle events.

Top line growth was driven through the premium growth needed to cover the costs of increased reinsurance costs and claims inflation, and through customer and individual risk growth across home, motor, and commercial lines.

Suncorp New Zealand CEO, Jimmy Higgins says following the natural hazard events of early 2023, customers are increasingly appreciating the value insurance provides and he is committed to expediting recovery efforts alongside advocating for better risk reduction in communities.

"Unfortunately, we still have customers who were badly impacted by the major weather events in early 2023 that are still unclear over the land categorisation of their properties. We have a small number of customers that don’t know yet whether they’ll be bought out or not. While we’re supporting those customers, until Auckland Council provides them with certainty, they are reluctant to settle their claims."

Higgins says the business is watching closely the global reinsurance markets following the 1 January 2024 renewals, to see if there is likely to be capacity constraints and price hardening similar to 2023. They will be looking at the December 2023 floods in North Queensland and a significant earthquake in Japan, pointing out that New Zealand is part of the Australian reinsurance purchase and therefore impacted by Australian and global weather events.

"We need to see how reinsurers respond to recent events outside of New Zealand, to see if their risk appetite and pricing for New Zealand natural hazards has changed, particularly off the back of the major NZ weather events in 2023. This guidance, coupled with local supply chain inflationary pressures should provide an early signal on the impact to premiums in 2024. I am hopeful we won’t see the level of premium increases our customers experienced in 2023."

Higgins says the business is conscious of the current pressures on customers, and thanks the insurance brokers and business partners for their work in claims management through the events and their advice and advocacy in assisting policy holders to ensure they have appropriate cover in place.

New Suncorp New Zealand Chief Executive Officer, Jimmy Higgins

He says the business is using multiple levers, analytics and insights to help customers better understand how their premiums are made up, what they can do to manage their premiums and what options are available to them if they are struggling.

"Operationally, we’ll continue to work towards our vision of ‘expertise delivered simply’, which includes improving our underwriting and pricing capability as well as improvements to our technology platforms. We are committed to working with central and local government to improve our collective understanding of natural hazard risks and how we can reduce or mitigate these risks through proper, longer-term investments into planning and development decisions."

General Insurance numbers:

General Insurance GWP of $1,411 million grew 19.6% in both intermediated and direct channels. Growth reflects pricing increases in response to increased reinsurance costs and claims inflation, and the strength of the brands with solid customer growth.

Net incurred claims costs of $620 million increased 6.9%, driven by inflationary pressures and customer growth. Natural hazard experience of $41 million decreased 30.5%, $14 million below the allowance benefitting from a comparatively benign first half of the year. Prior year reserves strengthened $26 million, largely due to a small number of large commercial claims, as well as the impact on claims capacity of the two weather events in early 2023.

Total expense of $309 million increased 10.4%, driven by growth related costs and commissions.

Investment income of $51 million was up $39 million on the pcp benefitting from strong underlying yields, mark-to-market gains and global equities returns.

Asteron Life numbers:

Suncorp New Zealand’s Life insurance profit of $14m, was a decrease of 12.5% on the pcp, with an increase in planned profits offset by discount rate impacts and a modest net unfavourable experience movement.

In-force premium of $330 million, grew 7.1%, supported by new business, CPI and age-related premium growth, and strong retention. New business of $13 million was up $1 million on the pcp, driven by strong adviser engagement and support, with growth in all channels. Retention rates continue to be better than system.

Media enquiries: Kimberley Cameron +64 27 208 1268