The group CEO of Suncorp in his speech at the firm’s annual general meeting (AGM) has said that the Australian financial giant’s reinsurance and higher nat budget is helping the company remain in good stead.
Steve Johnston gave his remarks in Brisbane earlier this week in the firm’s hybrid—online and in-person—event.
Johnston said at the AGM: “Looking ahead, our focus remains on building on the strong momentum across our three businesses to deliver on our strategic initiatives and meet our FY23 commitments. We remain confident in our ability to achieve our targets despite the challenges posed by inflation and the likelihood of a third La Niña weather pattern for part of this coming summer.
“Our strategic investments have so far allowed us to stand apart from the elevated levels of inflation experienced by some of our competitors. And our recently renewed reinsurance program, supported by a natural hazard allowance which has increased by 68% over the past five years, holds us in good stead for the weather season ahead.”
He added: “We are executing well and are now accelerating opportunities to leverage our scale to generate further efficiencies. Alongside a comprehensive pricing response, we aim to meet the challenge of inflation and protect margins and returns while continuing to deliver the valuable products our customers have come to expect.”
The remarks come only about six weeks after the firm reported a 34% decline in net profit to AUD 681m for fiscal year 2022, as natural hazard costs exceeded budget in the period by AUD 101 million, leading to significant reinsurance recoveries.
For the fiscal year ended June 30th, 2022, Suncorp reported total natural hazard costs of AUD 1.08bn against AUD 1.01bn in the previous year.
In its Australian insurance business alone, Suncorp noted in August that overall revenues from reinsurance and other recoveries hit AUD 2.26bn for the year, which is up 170% on the AUD 837m reported for FY21.
Christine McLoughlin, chairman and non-executive director of Suncorp, referenced the firm’s financial performance in her remarks given at the same event.
She said: “As you know, the Group’s net profit after tax of $681m, cash earnings of $673m, and a full-year ordinary dividend of 40 cents per share were significantly down from the previous year. These headline results, however, mask the progress we are making to improve the business, and this is reflected in record growth, higher margins, and improved customer metrics. The difference between reported profits and our underlying performance, and between the FY21 and FY22 results can largely be explained by two factors: natural hazards and investment markets.”
According to Johnston, the firm’s Australian and New Zealand insurance businesses delivered full-year premium growth of 9.2% and 14.1%. In addition, the Underlying Insurance Trading Ratio ended FY22 at 9.9%, just below its FY23 target of 10-12%.