Suncorp has announced that group net profit after tax and net profit after tax for its general insurance business for the six months to 31 December 2015 have dropped by $101 million and $122 million respectively.
The general insurance business saw its profits after tax fall from $419 million at half-year 2015 to $297 million as working claims performance due to natural disasters
affected the business as noted in an update to investors at the end of last year.
Gross Written Premium (GWP) in both the personal and commercial space rose, 0.6% and 2.2% respectively, as CEO
Michael Cameron said the business will look to improve its working claims performance.
“My number one priority has been resolving these issues,” Cameron said of the issues brought up in December.
“We have moved quickly with an intervention strategy designed to restore performance. Our target is to deliver lower working claims costs, which together with other initiatives, will drive a higher underlying ITR for the full year.”
Cameron noted that a series of challenges await the company as it moves forward but the leadership of the business is ready to meet them.
“My key objective is to maintain the stability of the organisation and to keep the momentum to deliver our commitments made to investors, customers and employees,” Cameron said.
“We recognise the global uncertainty created by financial markets, climate change and other factors such as cyber security.
“Refinements are being made to our strategy to invigorate growth and drive more resilience to volatility. Increasing our resilience will be achieved by two streams of activity, elevating the role of the customer and recalibrating our costs,” Cameron continued.
The Group also announced an interim dividend of 30 cents per share, fully-franked representing a payout of 69% of cash earnings.
Suncorp Group chairman, Dr Ziggy Switkowski, said that whilst the general insurance business has struggled the results prove the worth of a diversified business.
“The half year net profit after tax of $530 million demonstrates the benefits of a financial services conglomerate with the Banking and Life operations delivering improved underlying profits at a time when General Insurance earnings have been impacted by external headwinds and operational issues,” Dr Switkowski said.
With approximately 9 million customers, Suncorp will take a ‘Customer Platform’ approach to its strategy as the company looks to deepen its understanding of customers while ‘rationalising’ its business.
“Immediate actions include an adjustment to discretionary spending,” Cameron continued.
“Our brands will be rationalised and we will ensure that we realise the project benefits from past and current investments including the $170 million optimisation benefits expected in 2018.
“These benefits will both flow to shareholders and also provide re-investment opportunities. These initiatives will be carefully planned and executed to avoid unintended consequences to the smooth operation of the business.
“This is an exciting time for Suncorp, creating value for our customers, not from our customers,” Cameron concluded.
