Suncorp has an eye on Government’s sector reforms

WELLINGTON: Suncorp Group has a close eye on a ‘‘significant’’ New Zealand regulatory reform programme overseen by a more active administration, despite 70% annual earnings growth driven largely by higher premium and unit growth.

The Brisbanebased company is a major player in New Zealand in general and life insurance, with a suite of local brands including Vero Insurance, the AA Insurance joint venture, Asteron Life and AA Life joint venture.

Commerce Minister Kris Faafoi has taken a keen interest in the sector, calling for a review of law covering the sector this year, and continuing other work already in train such as a new regime for financial advisers, a key distribution network for life insurers.

‘‘The New Zealand Government is engaged in a significant financial services regulatory reform programme that includes changes to insurance levy collection, financial advice licensing, insurer conduct, insurer licensing, and privacy regulation,’’ the company said in a statement to the ASX.

‘‘New Zealand financial services regulators are currently engaged in a culture and conduct review of registered banks and licensed life insurers with reference to the initial findings of the Royal Commission in Australia.’’

Suncorp has been working on initiatives to improve New Zealand unit earnings. The local division boosted earnings to $148 million in the 12 months ended June 30 from $87 million a year earlier, with general insurance profit up 59% to $109 million. Life insurance earnings slipped 2.5% to $39 million.

The gains in the Vero and AA Insurance joint venture were underpinned by an 8.2% gain in gross written premium (GWP) to $1.54 billion. Hikes in motor and commercial premiums were supported by unit growth across all channels, it said. Meantime, the absence of a major natural event triggering claims made it easier for Suncorp to control costs.

Operating expenses rose 4.4% to $404 million as higher GWP drove increased commission payments.

Suncorp expects New Zealand GWP growth to slow to low single digits this financial year.

The life insurance unit’s performance reflected volatility in mortality claims and an increase in lapsed policies, offset by gains in the investment portfolio and market adjustments.

The ASXlisted shares last traded at A$14.99 and have gained 8.2% so far this year. —BusinessDesk