Sun­corp lifts NZ profit 81%

Fewer claims with no ma­jor earth­quakes

The New Zealand Herald - - NEWS - 6 |The Busi­ness Fri­day, Fe­bru­ary 16, 2018

Sun­corp Group’s New Zealand in­sur­ance divi­sion lifted first-half profit 81 per cent as the Aus­tralian owner of Vero In­sur­ance faced fewer claims in a pe­riod when there were no ma­jor earth­quakes.

Af­ter-tax profit rose to $67 mil­lion in the six months ended De­cem­ber 31 from $37m a year ear­lier, Bris­banebased Sun­corp said in a state­ment to the ASX.

The bulk of that came from the gen­eral in­sur­ance divi­sion, which con­sists of Vero and the AA In­sur­ance joint ven­ture, which more than dou­bled profit to $ 50m, as net in­curred claims shrank 6.5 per cent to $348m from the year-ear­lier pe­riod which in­cluded the Kaik­oura earth­quake. Gross writ­ten pre­mium rose 7.6 per cent to $768m, with auto and home in­sur­ance pre­mi­ums grow­ing at a dou­ble-digit pace.

“The New Zealand gen­eral in­sur­ance busi­ness has main­tained strong growth and un­der­ly­ing per­for­mance,” Sun­corp said. “Nat­u­ral hazard ex­pe­ri­ence is sig­nif­i­cantly lower than the prior year’s earth­quakeaf­fected re­sult.” The re­sult echoes that of larger ri­val In­sur­ance Aus­tralia Group, New Zealand’s big­gest gen­eral in­surer, which more than tripled first-half earn­ings on the ab­sence of earth­quake claims. Sun­corp’s group net profit fell 16 per cent to A$452m ($486m) as the Vic­to­rian hail storm drove up nat­u­ral hazard claims in Aus­tralia. The board de­clared an in­terim div­i­dend of 33 Aus­tralian cents per share, payable on April 5.

The in­surer said it’s work­ing on a se­ries of ini­tia­tives to lift earn­ings at the New Zealand unit, and will keep fo­cus­ing on mo­tor claims cost in­fla­tion with new pric­ing and im­prov­ing claims man­age­ment pro­cesses.

Gross writ­ten pre­mium “growth across the port­fo­lio will con­tinue to be sup­ported by strong new busi­ness per­for­mance and the pric­ing re­sponse to both claims cost trends and the rein­sur­ance im­pacts of re­cent nat­u­ral hazard events,” it said. “Price in­creases im­ple­mented dur­ing the half year will con­tinue to flow into the re­newal book.” —

The Kaik­oura quake dented ear­lier prof­its.

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