Suncorp New Zealand reported a post-tax profit of $115 million for the year to June 30 —  a 30% fall from the previous year.

The company said significant weather events, a more than 50% increase in natural disaster claims costs, reinsurance increases and claims inflation led to a general insurance profit of $65m, down 56% on the previous financial year.

The general insurance result includes intermediated Vero Insurance and Vero Liability and direct business AA Insurance, a joint venture with the AA.

Suncorp said the reduced general insurance profit was partially offset by the strength of its life insurance business. 

Despite the profit slump, the group said it remained resilient and was confident in continued top-line growth. 

Suncorp New Zealand CEO Jimmy Higgins said the group’s diverse portfolio of brands protected it during uncertain times. 

“Suncorp maintains a strong reinsurance program and good capitalisation, which has helped the business support customers, particularly through the events of the past six months,” he added.

“This result has been heavily impacted by the recent large-scale weather events, in addition to some smaller but impactful rain events throughout the year. So far, we’ve paid out to customers more than 66% of the 32,000 claims from the North Island floods and Cyclone Gabrielle events this year, and all our efforts remain on supporting our customers back into their homes and businesses.”

The significant weather events in New Zealand have prompted Suncorp NZ to purchase additional reinsurance coverage. 

Higgins said the risk landscape has shifted in the country following last summer’s events.

“Prior to 2023, New Zealand was seen by global reinsurers as having earthquake risk, with flood and cyclone risk here not fully understood,” Higgins added. “Following these events, reinsurers no longer see New Zealand as low risk. The natural hazard models need to be recalibrated to account for the additional risks of flood and cyclone and, until those risks are properly understood, and the models recalibrated, our global reinsurers will price for that risk and uncertainty.”

Suncorp Group made changes to its reinsurance programme in July. The company said the changes put it in a strong position to achieve “the optimal balance between the cost of the program and acceptable levels of earnings and capital volatility whilst keeping in mind the cost pressures impacting customers”.

Higgins said the group’s growing reinsurance costs would flow through to premiums.

He added there remained “considerable uncertainty” for people in flood-affected areas, with the insurer seeking greater clarity on land categorisations from local councils. 

He added that insurers were working closely with local and central government to better understand the options for customers, including potential buyout solutions.

The Suncorp NZ boss said it was taking longer than expected to provide customers with choices and to settle claims.

“We remain committed to supporting existing customers, getting repair work completed and claims paid to impacted customers as quickly as we can. 

“Lessons learned over the past year reinforce our collective responsibility, with local and central government and service providers, towards improving the resilience of New Zealand communities.

“We need to develop a coordinated and united response to where and how we build; how we protect our communities, what the national community resilience plan is and what is the long-term investment strategy the government has on infrastructure.

“This result demonstrates the resilience of our business, that we have good strong products backed by 100 years of good service and our customers are seeing that.”

Suncorp NZ said cost of living pressures on customers remained a concern as it revised its risk models and reinsurance coverage.

“We will remain focused on supporting our existing customers impacted by the recent weather events, and also ensure broader insurance protection is available to meet the needs of New Zealanders.

“We are constantly looking ahead at New Zealand’s future insurance needs, shaping our insurance offerings to ensure they’re fit for current conditions but also fit for the significant changes taking place in the insurance market. These changes are due to the impact of recent events which have redefined how we view natural disasters and the potential impact of a changing climate,” Higgins added.

Sept 2023