Suncorp warns of rising prices
INSURANCE giant Suncorp predicts premiums will continue to rise across the industry, saying it will compensate for more natural disasters and increasing costs.
Yesterday’s comments come as Brisbane- based Suncorp, Queensland’s biggest company, posts profits of $ 1.075 billion for the full year.
The result from Suncorp, whose brands include AAMI and Apia, included higher earnings at its insurance arm and a muted profit from its smaller banking division.
Shareholders received a higher dividend payout this year of 73c per share, up from 68c a year before.
However, that is still below levels of 75c made in 2013.
The result is the second delivered by chief executive officer Michael Cameron, and featured a year of disasters including Cyclone Debbie smashing northern Queensland and a heavy hailstorm in Sydney in February.
Luckily for Suncorp, its own reinsurance protection shielded it from heavy expenses related to Debbie. But the hailstorm savaged the company for $ 110 million.
Suncorp’s accounts flagged that car and home insurance premiums lifted by “low to middle single digit price increases” in the year.
“In the consumer portfolio, the favourable pricing environment is expected to continue as industry- wide pricing is adjusted to address claims cost inflation and the increasing incidence of natural hazards,” the accounts said.
The industry had been hit with a tough environment for premium increases in recent years, after an initial jump in pricing following devastating floods in Queensland in 2011.
Citigroup analysts recently said regulatory statistics suggested that industry- wide price increases were being driven by increasing costs of claims.
After years of bleeding customers, Mr Cameron said among positives for Suncorp was growth in this area.
“We’ve actually ( now) grown customers by 147,000 organically, with a further 252,000 acquired through the entry into the South Australian CTP scheme,” he said.
The Australian insurance arm’s overall profits rose from $ 558 million to $ 723 million.
This was helped by higher than ex- pected releases of reserves – money tucked away for expected insurance claims.
The banking and wealth- management arm’s profit was down from $ 418 million to $ 400 million.
Some signs of a turnaround were apparent – home loan growth revived in the second half after having fallen backwards in the first.
Still, overall loan growth was muted at 1.9 per cent compared to the overall industry.
Suncorp’s chief financial officer Steve Johnston argued the bank was “very well positioned” given regulatory and reputational problems for Big Four lenders and ratings pressure on other regional banks.
Suncorp shares dipped sharply when the share market opened and at 11.45am were down 6.4 per cent.