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Suncorp’s 81% profit balance sheet was down to strong growth and the absence of any major natural disasters such as earthquakes and floods that impacted the 2016 result, the insurer’s New Zealand chief executive Paul Smeaton says.
The firm announced yesterday that profits in the New Zealand insurance business had risen by 81% in HY18, compared with the prior corresponding period. Net profit after tax was recorded at $67 million, with GWP growth of 7.6% in NZ dollar terms.
The general insurance business, which includes Vero Insurance and AA Insurance (a joint venture with the New Zealand Automobile Association) delivered profit after tax of $50 million, with premium increases, strong unit growth, and strong claims management offsetting the impacts of increased reinsurance premiums and claims cost inflation, particularly in the motor insurance business.
The life insurance business, which includes Asteron Life and AA Life (a joint venture with the New Zealand Automobile Association) delivered profit after tax of $17 million, down $1 million on the prior corresponding period, due to short term volatility in experience with prior year favourable experience reversing over the half.
In-force premium grew 5%, driven by new business and policy retention, Suncorp NZ reported.
Smeaton said Suncorp NZ continues to focus on building a more resilient business to meet the needs of its customers and business partners.
“We expect the business to continue to grow, through new business and the pricing responses we have had to implement to manage increased claims costs and reinsurance pricing increases,” he said. “At the same time, we are focused on managing our operating expenses and strong claims management, through initiatives such as SMART vehicle repair centres.”
Smeaton said Suncorp New Zealand was well positioned to deliver a strong second half, and deliver on its strategy, including initiatives to further digitise the business.
Throughout the rest of the Suncorp Group, meanwhile, net profit after tax dipped 15.8%, due to natural disasters, standing at AU$452 million in its HY18 results, down from $537 million at HY17. However, top line growth was boosted by 2.5% across the group thanks to consumer insurance and banking.
“Our intense focus on working claims performance, and repricing, has led to solid underlying margin expansion for our home and motor insurance lines,” Michael Cameron, Suncorp managing director and CEO said.
Net incurred claims costs were up 14.7%, also due to higher natural disaster costs.
Looking ahead, the firm said that it expects a higher profit result over the coming six months with top line growth between 3% and 5%.
“Our work over the past 18 months on driving efficiencies in our claims processes, improvements in our customer experience, a hardening insurance market and our strategic investment programs, position the business well for the second half,” Cameron said.
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