Natural disasters impact Suncorp New Zealand's full year result, but underlying performance remains strong

9 August 2021

Suncorp New Zealand today announced a net profit after tax (NPAT) of NZ$215 million for the 12 months to 30 June 2021, down 17% on the prior corresponding period (pcp).

Parent company Suncorp Group Limited announced an NPAT of A$1,064 million, up 42.1%.

CEO Jimmy Higgins says the New Zealand result was significantly impacted by natural hazard claims costs associated with the recent Auckland Tornado as well as the floods in Napier, Northland and Canterbury, which combined pushed natural hazard costs $45 million higher than the prior year. 

However, he says the underlying performance of the business was strong, with Suncorp New Zealand demonstrating excellent progress against its key strategic priorities in FY21, including delivering Best in Class Claims, investing in digital and data capability and growing its brands and strategic partnerships. 

“We’re seeing unit growth in both our direct channel and the broker-intermediated lines, and solid new business growth and retention in our life insurance business,” says Higgins.

“Our operating costs have remained stable, although there were some increases in areas that support the growth of the business. We continue to focus on improving outcomes for our customers, particularly through investment in people, technology and processes to deliver our strategic priorities.”

Suncorp New Zealand CEO Jimmy Higgins

General insurance

The New Zealand general insurance business, which includes Vero Insurance and AA Insurance (a joint venture between Vero and the New Zealand Automobile Association) delivered an NPAT of $177 million, down 19.2% on the prior period. 

Gross written premium (GWP) grew 7.0% on a normalised basis, driven by new business growth and strong retention in the motor, home and commercial portfolios. Claims costs increased in line with portfolio growth, as well as increased weather-related costs. 

During FY20 and FY21 financial support was provided to customers that experienced financial hardship during the various Covid-19 related lockdowns. This included premium relief and extended premium holidays across both general and life insurance customers.

Higgins says that the business will continue to monitor the economic conditions that could influence input costs to its products and services, particularly around reinsurance costs and disruptions to the global supply chains, as well as the growing impact of climate change and the related natural hazard frequency.

Life insurance

The New Zealand life insurance business delivered profit after tax of $38 million, down $2 million on the prior corresponding period.

The strong underlying performance was driven by improved claims experience but offset by unfavourable market adjustments as a result a rising interest rate environment. The in-force premium growth of 4.0% was driven by new business growth and strong retention rates. 

New business was $2 million higher than the pcp, mainly due to increased business through independent financial advisors.

Higgins says that Asteron Life’s focus on supporting advisers and customers through Covid-19, and its suite of innovative and highly flexible products, were being recognised by advisers as a strong choice for delivering good customer outcomes.

Financial resilience and sustainability

Higgins says the impact that climate change is having on the insurance industry is evident and that Suncorp is focussed on the sustainability of both its own business and its insurance portfolios.

“As well as our commitments to reducing our own carbon footprint as a business, we have been engaging on upcoming TCFD-related reporting requirements, and assessing the environment, social and governance risks and opportunities within some of our insurance portfolios.”

In April Suncorp New Zealand announced it had signed up to the Climate Leaders Coalition’s 2019 Statement, an ambitious pledge to reduce emissions and support employees, suppliers, customers and the public to combat climate change. Suncorp New Zealand is trialling a programme with a pilot group of suppliers to help them measure and reduce their carbon footprint, and is also working with three community groups in the Whakatane region to develop and test natural hazard resilience support programmes.

As part of its social resilience programme, Suncorp New Zealand has increased its sponsorship of the TupuToa programme to Principal Partner, and will welcome ten Māori and Pasifika interns in 2021-22. It has also been awarded the DVFREE Tick, reflecting its commitment to a workplace free from domestic violence. 

“Insurance companies play a significant role in the social, financial and natural hazard resilience of our community,” says Higgins. “Suncorp continues to look for ways to support New Zealanders to protect what matters to them.”

Suncorp Group announcement available here

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Media enquiries: Lisa Meiklejohn +64 27 404 4355

The information in this article has been compiled from various sources and is intended to be factual information only. It is not personal advice and any description of an insurance product or service is not a complete description of all the terms and conditions applicable to the particular insurance product or service. You should consult a qualified adviser for advice on whether the information in this article is suitable for your personal situation and needs. While we take reasonable steps to ensure that the information contained in this article is accurate and up-to-date, it is subject to change without notice. Suncorp New Zealand and its related companies does/do not accept any responsibility or liability in connection with your use of or reliance on this article.