Suncorp records fivefold boost in insurance half-year profit amid spike in premiums
Suncorp has recorded a more than fivefold boost to its half-year profits derived from its insurance customers to $203m, even as households get squeezed by fast-rising premiums for home, contents and motor policies.
The Brisbane-headquartered company joins rival QBE in reporting greatly expanding profit margins derived from general insurance, a sector that is a standout contributor to recent inflation amid double-digit annual premium increases.
On Monday, Suncorp reported a 5.4% lift in overall net profit to $582m, bankrolled by its insurance arm, which more than compensated for a fall in profits in its banking and personal injury divisions.
Profits derived from its consumer insurance division, which includes well-known brands Aami, GIO, Suncorp Insurance and Shannons, were up more than 530%, with underlying profit margins also rising sharply.
The insurer credited the result to strong premium growth, an increase in customer numbers and targeted price increases.
“We remain acutely alert to the affordability challenges facing customers and continue to focus on driving greater efficiencies in our own business,” Suncorp said.
Suncorp’s share price spiked higher early on Monday to levels not seen in more than five years.
Sign up for Guardian Australia’s free morning and afternoon email newsletters for your daily news roundup General insurers have been advising customers of double-digit premium price increases for most products, including home cover and car insurance, representing a new super cycle of hikes not seen in more than two decades.
The industry has defended the pricing, arguing that extreme weather and high costs of labour, building replacement, car parts and repairs mean above-inflation increases are necessary.
Suncorp said in its financial commentary on Monday its teams had been supporting customers subject to severe weather events.
“We are vocal advocates of policy reform and mitigation investment that help reduce the risk of extreme weather to people and communities, which are critical in reducing insurance premiums for consumers, particularly in high-risk locations,” Suncorp said.
Suncorp will soon become a pureplay insurer after gaining approval from the Australian competition tribunal to sell its banking business to ANZ despite opposition from the regulator.
Meanwhile, profits have been expanding across the general insurance sector, with QBE recently reporting a doubling of net profit for calendar 2023 to $1.4bn, after growing the size of its insurance book and profits derived from its policies.
The sector has not faced the same