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Suncorp profit hit by catastrophes

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Suncorp’s after tax profit from ongoing functions was $396 million for the six months to December 31, down 6.2% on the previous corresponding period.

Group net profit after tax increased 156.8% to $642 million, but this includes profits from the sale of Capital Smart and ACM Parts.

The Insurance (Australia) sector delivered profit after tax of $123 million, down 3.9%, impacted by natural catastrophe costs. New Zealand’s profit after tax of $108 million, down 10%, was also hit by catastrophes.

Suncorp says the “unprecedented” storm and bushfire season resulted in natural hazard costs above allowance for the period, but its “enhanced reinsurance program” provides strong earnings protection for the second half.

Delivering a results presentation last week, CEO Steve Johnston criticised government inaction on disaster resilience.

But he says this season’s tragic bushfires provide an opportunity to put things right.

Mr Johnston pointed out once again that 97% of disaster funding is spent on repairs, and just 3% on prevention.

“The fundamental obligation of any government has to be the protection of its citizens at home and in ensuring our communities are both resilient and safe,” he said.

“Against a scorecard of lives lost, properties destroyed and saved, and communities torn apart, it continues to be abundantly clear that more needs to be done.”

Last year the insurance industry praised the Federal Government for setting aside an extra $50 million a year for flood levees, seawalls and other mitigation works – but made clear that it isn’t enough.

The industry has been lobbying for at least $200 million a year to be spent on mitigation projects, matched by states and territories – as recommended by the Productivity Commission.

Mr Johnston says Suncorp has been pushing “for some time” for a national response, and says the bushfires should “galvanise” the Government.

“Let’s not allow the passage of time to distract us from acting on an issue that has for too long been placed in the too-hard basket,” he said.

“We believe it’s now time for a well-funded, multi-year resilience-building program.”

Mr Johnston later told action is also required on one of the primary causes of climate change – carbon emissions.

Australia must “pull its weight”, he says, regardless of its relatively small contribution to global totals.

“That is no excuse,” he said. “Business needs to stand up. Government needs to stand up.”