In­surer up­beat de­spite tipped eas­ing

Otago Daily Times - - GENERAL & MARKETPLACE -

AUCK­LAND: Sun­corp New Zealand will man­age its costs more closely in the com­ing year as the in­surer thinks deeply about its pric­ing, al­though chief ex­ec­u­tive Paul Smeaton is still up­beat about the ex­pected moder­a­tion in eco­nomic growth.

The lo­cal unit of Bris­bane­based Sun­corp Group lifted an­nual profit 70% to $148 mil­lion in the June 2018 year, bol­stered in part by rais­ing pre­mium prices in re­sponse to higher rein­sur­ance costs and at­tract­ing new cus­tomers.

The in­surer, whose brands in­clude Vero In­sur­ance and As­teron Life, ex­pects gross writ­ten pre­mium growth in the low sin­gle dig­its for the com­ing year af­ter an 8.2% gain to $1.54 bil­lion over the past year.

‘‘What we’re very fo­cused on is man­age­ment of claims and costs,’’ Mr Smeaton said.

‘‘We have to think very care­fully about af­ford­abil­ity of pric­ing.’’

He ex­pected top­line rev­enue growth to slow as New Zealand’s net in­bound mi­gra­tion con­tin­ued to ta­per off. The coun­try’s ex­pand­ing pop­u­la­tion has un­der­pinned eco­nomic growth in re­cent years and been a boon for gen­eral in­sur­ers as a ris­ing num­ber of mo­torists seek cover for their ve­hi­cles.

Mr Smeaton said even if the econ­omy slowed, ‘‘our out­look is ac­tu­ally still quite pos­i­tive for New Zealand’’.

That echoed oth­ers, ASB Bank chief ex­ec­u­tive Vittoria Shortt say­ing last week ‘‘New Zealand’s sound eco­nomic fun­da­men­tals have con­trib­uted to a pos­i­tive op­er­at­ing en­vi­ron­ment’’ with low un­em­ploy­ment, strong terms of trade and a re­silient hous­ing mar­ket.

Chief ex­ec­u­tives in a KPMG sur­vey last week tended to reg­is­ter a ‘‘slight soft­en­ing’’ in con­fi­dence, but are far more up­beat than wider busi­ness con­fi­dence sur­veys, which are the most pes­simistic they’ve been since the global fi­nan­cial cri­sis a decade ago.

Those sur­veys are be­ing taken se­ri­ously by pol­i­cy­mak­ers, Trea­sury not­ing the pes­simism and other data raised risks of slower eco­nomic growth than pre­dicted in the May Bud­get.

Sun­corp NZ’s fo­cus on pric­ing comes af­ter pre­mi­ums were raised last year as in­sur­ers passed on higher rein­sur­ance costs they bore as a re­sult of the Kaik­oura earth­quake in 2016.

Gov­ern­ment data shows dwelling in­sur­ance prices climbed 18% in the June quar­ter from the same pe­riod a year ear­lier, con­tents in­sur­ance was up 5.9% and ve­hi­cle in­sur­ance rose 5.7%. — Busi­nessDesk

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