Sharechat Logo

Suncorp's New Zealand 1H profit jumps on premium price hikes

Thursday 14th February 2019

Text too small?

Suncorp Group's New Zealand insurance arm boosted first-half profit by 79 percent as the latest round of premium hikes coincided with a dip in how much it paid out in claims. 

The Brisbane-based financial services firm is a major Kiwi player in general and life insurance, with a suite of New Zealand brands including Vero Insurance, the AA Insurance joint venture, Asteron Life and AA Life joint venture. 

Within the New Zealand operations, the general insurance arm more than doubled profit to $103 million, as gross written premiums rose 8.2 percent to $831 million. Suncorp NZ benefitted from the round of price rises insurers have been imposing, and its Vero and AA brands also grabbed more market share. The gains were shared fairly evenly across the motor, home and commercial businesses. 

The latest result echoes Suncorp's 70 percent annual earnings increase in the June 2018 year, which the insurer put down to higher premiums and unit growth. 

Government figures show consumer prices for dwelling insurance rose 6.8 percent and vehicle insurance was up 4.1 percent in the six months through December last year. Contents premiums rose a more modest 1.2 percent, whereas life premiums were up 0.3 percent. 

Dwelling insurance premium prices have soared about 193 percent since the Canterbury earthquakes devastated the country's second-biggest city in 2010 and 2011 and blindsided global reinsurers who hadn't anticipated the impact of New Zealand's policies providing full replacement coverage rather than the international norm of sum insured. 

Meanwhile, New Zealand's expanding population and record new car sales had lifted not only the number of vehicle policies, but also the volume of claims made.

Suncorp said it's facing fewer motor vehicle claims, after making several underwriting changes and is noticing a dwindling number of large home claims. The insurer's net incurred claims shrank 2.3 percent to $340 million in the six-month period. 

Suncorp's New Zealand acquisition costs rose 14 percent at $161 million, which it said was due to increased commission payments that accompanied its gross written premium gains. About 45 percent of Suncorp's New Zealand general insurance is sold through brokers. 

The New Zealand life insurance arm posted an unchanged profit of $17 million. Suncorp's combined New Zealand operations posted a profit of $120 million, up from $79.1 million a year earlier. 

The Australian group was less upbeat, with a 45 percent slide in net profit to A$250 million as the firm wrote down impaired assets and faced greater regulatory costs. Group revenue was up 3.8 percent at A$8.14 billion. 

The board declared an interim dividend of 26 Australian cents per share to be paid on April 19, down from 33 cents a year earlier. 

Suncorp said it expects to face higher regulatory costs in New Zealand, with a raft of reforms flagged for insurers and the wider financial services sector. 

ASX-listed Suncorp last traded at A$13.49, and is up 3.6 percent over the past year. 

(BusinessDesk)



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report