Suncorp's claims grow faster than premiums

ASX-listed general and life insurer Suncorp Group [ASX: SUN], had a 21% first-half profit drop from its New Zealand general insurance business as claims grew at a faster pace than premiums.

The company's local brands include Vero, AA Insurance and Asteron Life

The insurer's New Zealand general insurance business reported a segment profit of $A60 million in the six months ended December 31 from $A76 million a year earlier.

In New Zealand dollar terms, Suncorp’s New Zealand insurance trading earnings fell 17% to $83 million, as a 15% increase in claims to $303 million offset a 2.7% increase in gross written premiums to $681 million.

The unit increased its loss ratio to 53.9% from 50.3% a year earlier due to "increased frequency in commercial large loss claims and a $A10 million increase primarily due to an increase in the risk margin associated with earthquake claims," the parent company says.

"While the current market remains competitive, above system growth is expected," Suncorp says.

"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% to $A533 million in the half, propped up by an improved performance from its banking segment.

The firm's New Zealand general business expanded gross written premiums in motor and home, while commercial premiums shrank in the half.

Suncorp's in-force life insurance premiums rose 8.8% to $223 million, which it says is through developing "value-adding and sustainable intermediary relationships" and its strategy to keep customers.

The company says 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 provide 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% to $A10.30, and have dropped 12% this year.

(BusinessDesk)