Suncorp New Zealand announces strong half year result
11 February 2020
Suncorp New Zealand today announced a net profit after tax of NZ $108 million for the half year to 31 December 2019, down 10 per cent on the prior corresponding period (HY19).
Suncorp New Zealand CEO Paul Smeaton said Suncorp New Zealand’s first half performance reflects the strength and resilience of Suncorp’s business in the New Zealand market.
“We’re seeing the benefits of our customer-focused strategy flow through. Gross written premium (GWP) and customer growth via our direct and partner channels remains strong,” Mr Smeaton says.
Suncorp New Zealand CEO Paul Smeaton
General Insurance result
Suncorp's New Zealand's general insurance business, which includes Vero Insurance, Vero Liability and AA Insurance (a joint venture with the New Zealand Automobile Association) delivered profit after tax of $94 million, down 8.7 per cent on the prior corresponding period.
This was largely driven by an increase in natural hazard claims and customer remediation provisions impacting Gross Written Premium (GWP), partially offset by a disciplined portfolio management approach delivering strong top-line premium growth.
GWP grew by 5.4 per cent to $876 million, driven by premium increases and supported by unit growth in the direct business. Excluding customer remediation impacts, GWP growth on HY19 was 6.4 percent.
A provision of $8 million has been recognised to manage costs associated with the remediation of incorrectly applied package and member discounts. Work is already underway to contact affected customers, and Suncorp New Zealand has updated the Financial Markets Authority and the Reserve Bank of New Zealand about the matter.
Life Insurance result
The Life insurance business reported a net profit after tax of $14 million, down $3 million on the prior corresponding period, in response to adverse claims. Premium increases were also made during the half, reflecting consumer price index movements and age indexed premium growth.
Suncorp New Zealand purchased Housing New Zealand wellbeing bonds worth $6 million, taking its total wellbeing funds under management to $20 million.
“Our investment in wellbeing bonds is tangible evidence of our commitment to Suncorp New Zealand’s corporate responsibility framework. Affordable housing supports one of the framework’s key principles - helping build strong, resilient communities,” says Mr Smeaton.
Significant progress has also been made towards implementing Suncorp New Zealand’s Customer Vulnerability Roadmap, including the creation of new community partners to deliver financial support and advice for customers experiencing vulnerability.
“All Suncorp New Zealand employees are currently completing additional training to strengthen their support for customers during periods of hardship,” says Mr Smeaton.
Last November, Suncorp New Zealand was awarded Excellence in Workplace Diversity and Inclusion at the 2019 ANZIIF NZ Insurance Industry Awards. The award recognised Suncorp New Zealand’s strategic focus on building an inclusive and diverse workforce to enable greater innovation, better responsiveness to customer needs, improved business performance and employee engagement.
Areas of focus across the second half of FY20 include expanding digital and data capabilities, simplifying and automating processes and enhancing customer communication channels.
“Investing in digital remains a key priority for Suncorp as we look for new ways to deliver better outcomes for our customers, brokers and advisers together with more efficient business processes,” Mr Smeaton says.
“Strengthening our core business is a key priority as we continue to manage the normalisation of claims trends and underlying profit levels for our Life business. Efficiencies around operational excellence and process improvements are well underway, with implementation of simplification projects focused on reducing manual processing due to commence.”
The Government has announced proposals for regulating conduct of insurers, banks and non-bank deposit takers with the intention of introducing conduct related draft legislation by the end of 2020. Changes from the legislation are expected to come into force around 2022.
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