Suncorp have revealed there half-year financial results and they make for mixed reading.
While the overall business had a net profit after tax of $631 million despite the $250 million impact of the Brisbane storms, up 15% on last year’s total, the insurance practice suffered a slight dip.
General insurance reported a profit after tax of $419 million for the half-year ended 31 December 2014 compared to $470 million in 2013.
Personal insurance GWP, inclusive of the Fire Services Levy, took a hit of 2.8% which the company put down to passing on “operational efficiencies and lower reinsurance rates,” as customer retention improved in the December quarter.
Commercial insurance GWP, again inclusive of FSL, grew slightly at 0.6% “with a strong focus on quality risk selection,” according to the company.
In a late addition to the results, Suncorp also revealed a “potential issue” relating to the 2011 catastrophe reinsurance program.
“This potential issue is contrary to the Suncorp Group’s understanding of its additional reinsurance purchases made in 2011,” the company said in a statement to the ASX.
“This issue is of a technical nature and relates to the placement of reinsurance cover after the combination of the September Christchurch earthquake, Brisbane floods and Cyclone Yasi.
“It is uncertain whether this will have any financial impact; however, the Suncorp Group’s maximum exposure will not exceed $118 million after tax,” the company said.
Anthony Day, CEO of commercial insurance at Suncorp, stressed that the results stand the company in good stead for the future.
“Our customer and intermediary relationships are strong; our market-leading claims performance continues to improve; and we have a superior underwriting regime - this is a solid base to grow the business in this market,” Day said.
Day also criticised the price reductions in the Australian insurance market and was backed by Group CEO Patrick Snowball who noted “irrational pricing from some of our peers,” in a conference with analysts.
“Suncorp Commercial Insurance doesn’t view this pricing as a sustainable long term strategy and will we will continue to focus on margin over growth,” Day continued.
Day praised the company handling of the Brisbane storms as it was revealed that the average wait time for claims lodgement was one minute and 26 seconds.
“CI will also continue to focus on a customer-first culture and strengthening its intermediary relationships to retain and grow business, while pursuing tactical new business opportunities,” Day said.
“Our stability, well progressed simplification journey, and solid intermediary relationships have given us a competitive advantage and we will capitalise on changing market dynamics.”
