Suncorp, one of Australia’s largest financial services companies headquartered in Brisbane, has announced that its insurance operations in Australia (referred to as “Insurance Australia”) reported a profit after tax of ,174 million for the year ended 30 June 2022 (FY22). Down 68.2% compared to FY21.
Insurance Australia showed strong momentum for the year ended June 30, 2022 (FY22), but an intense natural hazards season and volatile financial markets impacted profit after tax.
Insurance Australia’s underlying Insurance Trading Ratio (ITR) improved, driven by strong revenue growth, improved expense ratios and an increase in investment returns.
A summary of Insurance Australia’s financial results for FY22 is as follows:
|
FY22 (million AUD) |
FY21 (million AUD) |
YoY change |
|
|
Gross written premium |
9,384 |
8,790 |
6.8% |
|
Net Premium Earned |
7,911 |
7,540 |
4.9% |
|
Accrued Net Receivables |
(5,328) |
(5,496) |
3.1% |
|
business expenses |
(1,719) |
(1,643) |
(4.6%) |
|
Result of insurance trading |
464 |
644 |
(28.0%) |
|
Insurance Australia profit after tax |
174 |
547 |
(68.2%) |
GWP growth reflected positive unit output and rate increases driven by the continued price reaction to higher input costs. The increased focus on improved risk selection and portfolio discipline led to some portfolio exits.
Net losses incurred fell by 3.1% to AUD 5,328m. Excluding rebate movements, net claims incurred increased by 3.3%, reflecting the impact of portfolio growth and higher natural hazard costs, partially offset by the impact of business interruption provisions in FY21.
The release of provisions in the prior year was 1.7% of the Group’s net earned premium, ahead of the Group’s long-term expectation of 1.5%.
Net investment loss was A$133m reflecting significant market volatility with rising government bond yields, widening credit spreads and lower equity markets.
Excluding emergency service charges and the transitional provision for excess profits and losses (TEPL), operating expenses increased 2.8%, reflecting the temporary increase in strategic investments and growth-related spending.
Suncorp New Zealand
Suncorp New Zealand profit after tax fell 23.3% to NZ$165m ($104m) for FY22, of which NZ$150m was for general insurance and NZ$15m for life insurance.
General insurance profit after tax was NZ$150m, down 15.3%. The reported ITR of 13.3% was supported by strong sales growth but was offset by adverse asset market impacts and increased natural hazards experience.
GWP rose 14.1%, driven by strong growth across product classes through a combination of unit growth and targeted pricing increases to offset inflationary pressures on claims. This growth reflects the strength of New Zealand brands, which have seen market share gains for seven consecutive quarters.
Net claims incurred increased by 17.2% to NZ$1,013m. Higher commercial damage costs driven by unit growth, inflationary pressures and several large property claims were partially offset by a COVID-19-related decline in auto claims in the first half of the year.
The net investment loss of NZ$30 million was significantly impacted by rising bond yields and volatility in equity markets.
Operating expenses increased by 7.2% to NZ$504 million, supporting growth across the business.
Life insurance profit after tax of NZ$15m fell by 60.5%. Recurring premiums grew by 3.8%, supported by the CPI and age-related premium growth. Increases in projected profit margins and positive experience were offset by significant adverse market adjustment effects from interest rate movements.
group performance
Suncorp’s operations consist of Insurance Australia, Suncorp New Zealand and banking. Group net profit after tax fell 34.1% to A$681 million. Profit after tax generated from banking operations was A$368m for FY22, down 12.2% year-on-year.
Suncorp says the prevailing La Nina weather pattern in Australia and New Zealand resulted in 35 separate weather events and around 130,000 natural hazard claims. This resulted in the group exceeding its natural hazards reserve by A$101m, with significant recoveries being made under the group’s reinsurance programme.
perspectives
In July 2022, following a comprehensive strategic review, Suncorp announced its decision to sell Suncorp Bank to ANZ Banking Group. The sale is expected to be completed in 12 months.
Steve Johnston, Suncorp Group CEO, said: “The strategic rationale for the sale is compelling. With the ability to focus solely on our insurance business, Suncorp will become a leading Trans-Tasmanian insurer and have a louder voice in advocating greater resilience and mitigation measures to better protect our customers and community.
“Our insurance strategy is bearing fruit and once the sales process is complete we will be able to do more and faster.”
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