Suncorp’s poor investment returns and non-cash charges for goodwill arising from the group’s $1.4 billion acquisition of the GIO business last year made the 2002 result of $311 million look disappointing beside the $395 million net profit it reported in 2001.

The GIO business was the highlight of 2001/02 for Suncorp. It brought in $56 million for the year, which translated to an insurance trading margin of 4.9%, meeting expectations for the first year of ownership.

Suncorp said it remains on track to achieve $240 million in GIO-related benefits by June 2003. And premium rises of 20%-plus mean it is looking forward to much better results in the second half of this year. Another positive aspect of the result was the improved experience of the CTP business in Queensland.

“The profit for the year to June 2002 was achieved despite the sharp reductions in investment income, and higher goodwill,” MD Steve Jones said. “We are very pleased with progress on the integration of GIO, and are confident that this acquisition will deliver excellent returns for shareholders.”

Underlying operating profits also improved during the year. Profit before tax, goodwill and investment income on general insurance shareholders’ funds increased from $429 million to $469 million, mainly thanks to the GIO merger.

Mr Jones said that “providing there are no extraordinary natural disasters in general insurance”, the company expects its trading margin will show a very strong improvement. “We aspire this year to be in the lower end of the 9-12% range that we expect to operate in over the longer term.”