Suncorp's NZ general insurance lifts earnings 12%, still focused on costs

Suncorp Group's New Zealand businesses were buoyed by the country's record net inflow of migrants, whose need for car and house cover helped lift the insurer's annual earnings.

The Australian firm's Vero and AA Insurance general insurance brands boosted motor gross written premium (GWP) 11% to $A290 million and home GWP 5.9% to $A392 million in the 12 months ended June 30. Suncorp New Zealand chief executive Paul Smeaton said the country's strong net migration underpinned increases in the insurer's personal lines of business and helped offset a 4.9% reduction in commercial GWP to $A502 million, where firms were aggressively discounting in a bid to attract customers.

"On the personal lines, we're seeing solid unit growth and I think that's being driven mainly by the net migration you're seeing come into New Zealand and specifically in Auckland," Mr Smeaton told BusinessDesk. "With that you've got people needing home and motor insurance, so you see the unit growth there and we're riding that wave."

New Zealand has posted 23 months of record annual net inbound migration as the local economy offers more employment opportunities than Australia where its resources boom has come off a 20-year peak. That's supported economic growth at an aggregate level, which has been more anemic on a per capita basis, while dulling inflation pressures by keeping wages lower.

Those personal lines of insurance were more profitable for Suncorp NZ than its commercial business, which has different reinsurance programmes and faces intense competition with discounting of 10-to-15%. The New Zealand general insurance business lifted annual profit 12% to $NZ178 million on a 3.2% increase in GWP to $NZ1.34 billion.

Mr Smeaton said he's confident Suncorp NZ can beat the insurance industry's growth of about 3.4% in the current financial year, aided by the strategy to better align its general and life insurance offerings to customers.

The three-year programme is based on what the Suncorp Group did in Australia and hinges on the idea that the firm covers a person's four financial needs by protecting their car, home, health, and income.

Mr Smeaton said Suncorp NZ doesn't yet know how much crossover there is between its brands, which include Asteron and AA life insurance, and is currently trying to find out. It will then look to encourage customers to fill their insurance gaps through a digital marketplace, another component of the three-year simplification programme.

"You can start to get a sense of the scale we can use by bringing together the Asteron and Vero businesses and the like," Mr Smeaton said. "If you look at our competitors, a lot of them aren't set up to do that."

(BusinessDesk)