WELLINGTON: Suncorp Group, the ASX-listed general and life insurer whose local brands include Vero, AA Insurance and Asteron Life, posted a 21 percent drop in first-half profit from its New Zealand general insurance business as claims grew at a faster pace than premiums.
The insurer’s New Zealand general insurance business reported a segment profit of A$60 million in the six months ended Dec. 31 from A$76 million a year earlier, the Brisbane-based company said in a statement. In New Zealand dollar terms, the units insurance trading earnings fell 17 percent to $83 million, as a 15 percent increase in claims to $303 million offset a 2.7 percent increase in gross written premium to $681 million.
Suncorp’s New Zealand general unit increased its loss ratio to 53.9 percent from 50.3 percent a year earlier due to “increased frequency in commercial large loss claims and a A$10 million increase primarily due to an increase in the risk margin associated with earthquake claims,” the parent company said.
“While the current market remains competitive, above system growth is expected,” Suncorp said. “Simplification work is advancing well, with new platforms enabling additional opportunities in direct and corporate partnership business.”
Suncorp’s New Zealand general business fell at a slower pace than the company’s wider general segment. The group’s profit fell 16 percent to A$533 million in the half, propped up by an improved performance from its banking segment.
The firm’s New Zealand general business expanded gross written premium in motor and home, while commercial premiums shrank in the half. Suncorp’s in-force life insurance premiums rose 8.8 percent to $223 million, which it said was through developing “value-adding and sustainable intermediary relationships” and its strategy to keep customers.
The company said the New Zealand market continues to see elements of unsustainable practices as insurers fight over financial advisers to build their distribution networks. “Suncorp Life through the Asteron brand continues to promote sustainable market practices and providing innovative solutions for IFAs (independent financial advisers) to help them create value for customers.”
The insurer expects New Zealand’s regulatory environment to go through a period of uncertainty and change, and it expects it will adopt elements being introduced in Australia. Suncorp’s ASX-listed shares fell 3.7 percent to A$10.30, and have dropped 12 percent this year.
