Suncorp faces $1 billion in natural hazard claims
An exceptional series of weather events means Suncorp is heading towards $1 billion in natural disaster claims this financial year, Group CFO Steve Johnston says.
This compares with $538 million last year, he told the Macquarie Australian investment conference last week.
Suncorp expects one event a year in the $100-$250 million range, but there have been three in the past three months, he says.
The Brisbane hailstorm, Cyclone Marcia, NSW storms and Sydney’s Anzac Day hailstorm all called on its reinsurance, but “we still have the vast majority of the reinsurance program intact for any major events between now and June 30”.
The sequence of events will test some of Suncorp’s competitors, and Mr Johnston expects stabilisation in some of the more aggressive pricing activities seen recently.
He says the peak investment phase for projects to improve profitability and simplify the company is either complete or nearing completion, and Suncorp is primed to achieve profitable, lower-cost growth. The insurer is targeting profitable growth in commercial insurance and in New Zealand.
Growth in personal insurance and some statutory classes will be limited because Suncorp already has significant market share, but it can still use its scale and manage price and volume to expand.
It has invested the benefits of the simplification program on lower premiums in home and motor, and has noted a significant increase in renewals.
“New business volumes continue to be lower than we would expect,” Mr Johnston said. “However, the improved retention means we have experienced positive unit growth across personal insurance in the March quarter.”
The lower Australian dollar has raised car parts prices by 6-8% in the past six months, but Suncorp is cushioned by its partnership with US parts supplier LKQ.