Suncorp lifts NZ earnings

  • 04/08/2015
Suncorp lifts NZ earnings

By Paul McBeth

Suncorp Group, the ASX-listed general and life insurer whose local brands include Vero, AA Insurance and Asteron Life, has lifted annual earnings from its New Zealand businesses as the company benefited from fewer claims in the year.

The insurer's New Zealand business delivered a net profit of AU$175 million (NZ$193.9M) in the 12 months ended June 30, compared to AU$110M a year earlier, the Brisbane-based company said in a statement.

Of that, general business lifted trading profit to $159M from $97M a year earlier, on a 2.9 percent increase in gross written premiums.

Underpinning the improved profitability was a reduction in severe weather claims and a reduced impact from earthquake reserve strengthening, Vero New Zealand chief executive Gary Dransfield told BusinessDesk.

"The top-line growth in kiwi dollars, at 2.9 percent, was reasonably flat compared to recent years, and it's much more a lower claims story," he said.

"I'm hoping for a continuation of the relatively benign weather compared to the preceding three years or so, because that's good for our shareholders and good for our customers."

The New Zealand general insurance segment's performance was in line with the wider Suncorp group, which reported a 55 percent increase in annual profit to AU$1.13 billion on 2.1 percent gain in revenue to AU$16.72b.

New Zealand gross written premiums rose 9.9 percent in local dollar terms across Suncorp's motor business on record car sales and increased premiums, while home insurance revenues grew 7.9 percent.

Suncorp's commercial insurance premiums fell 2.8 percent as an increasingly competitive environment led to heightened discounting for renewals and new business.

Mr Dransfield said he didn't expect to see more consolidation among underwriters after Insurance Australia Group bought the New Zealand Lumley business.

"Now you're probably seeing competitors seeing an opportunity to start up and try to build positions in niches," he said.

"It's hard to see more consolidation in the underwriters, but in the brokers certainly."

Mr Dransfield said the insurer was about 90 percent through its post-earthquake commercial claims in Christchurch, though residential claims were lagging behind, in the high-70 percent area, where more complex insurance arrangements, such as multi-unit dwellings, have slowed the process.