Suncorp group CEO Patrick Snowball has claimed that the insurer is “in a good position to capitalise on any market disruption” – such as
IAG’s ongoing acquisition of Wesfarmers’ underwriting business.
At an analyst briefing on the group’s half year results yesterday he said: “We are in a better position to capitalise on market disruption - more than our competitors.”
Although Snowball would not directly discuss the deal, at a subsequent media briefing later he said: “When there is strategic movement in the market the market gets disrupted.”
Asked if he meant events such as the IAG and Wesfarmers deal, he said that would be one.
Steve Johnston, group CFO said: “The general insurance business is firing on all cylinders and is now well capitalised on the investment we’ve made on integration and, more recently, simplification.”
General insurance profit after tax for the half year to 31 December 2013 took a slight dip from $564m in 2012 to $470m in 2013. General insurance gross written premium, excluding the impact of fire service levies, rose 6.6% to $4.3bn.
Including the levies, GWP for the home book of business increased by 8.9% to $1,230m, due to increases in average written premiums with some reduction in Queensland. Motor GWP grew 4.8% to $1,1412 has been achieved through increased average premiums and net written units. In commercial insurance, GWP increased by 6.2% to just over $1bn with growth across all major product lines as a result of an increased breadth of products, as well as improvements in pricing and retention. Workers comp & other GWP increased by 1.4% to $147m due to price increases, new business and improved retention; and CTP soared 8% to $505m.
Investment income on insurance funds decreased 29.8% to $179m attributable to narrowing credit spreads partially offset by the impact of sustained lower risk- free and credit spread yields. Investment income on shareholder funds decreased 10.6% to $152m was supported by narrowing credit spreads and good equities performance.
General insurance claims expense rose to $3.3bn, up from $3bn the prior year.
The insurance trading result was 13.9% and the underlying ITR increased to 14%, above Suncorp’s commitment to “meet or beat‟ an underlying ITR of 12%. The result was driven by strong premium earnings, continued focus on claims and expense management, offset by higher than expected natural hazard claims experience.Suncorp Group's natural hazard allowance was $49m more than it had anticipated for net natural hazard claims due to a number of major weather events.
Reserve releases of $56m were primarily attributable to a benign wage inflation environment and proactive management of long-tail claims; offset by strengthening in the estimation of the February 2011 Christchurch earthquake claims costs.
Commenting on the commercial insurance results,
Anthony Day, Suncorp Commercial Insurance CEO said: “CI has spent the last few years establishing its strong foundations and position and now we are in the ideal spot to capitalise on a market that is going through a number of disruptions.”
The business had “grown above system" in a competitive market because of its focus on fundamentals, including maintaining superior claims management and risk selection.
“This focus would allow the business to maintain long term growth of 3-4% above system,” he continued.
Day added that retention rates have remained strong as intermediaries and direct channels would continue to grow with customers with less complex insurance needs, while intermediated channels, especially the key area of brokers, remained the choice for customers with complex requirements.
