Australian insurer Suncorp has successfully renewed its reinsurance program for 2022, securing an unchanged upper limit of $6.5 billion covering home, motor, and commercial property portfolios across Australia and New Zealand.
The structure of Suncorp’s FY22 reinsurance program remains unchanged from the company’s FY21 program, as the Group’s maximum event retention remains at $250 million.
Alongside the main catastrophe reinsurance program, Suncorp has reported that the structure of its drop-down aggregate protection and aggregate excess of loss treaties are also unchanged this year from the prior year.
For FY22, Suncorp’s natural hazard allowance is expected to be $980 million. The company says that the cost of the FY22 reinsurance program and natural hazard allowance are in-line with the assumptions embedded within its three-year plan.
Today, the insurer has also announced an agreement to sell its 50% joint venture interest in RACT Insurance Pty Ltd to its partner, the Royal Automobile Club of Tasmania Ltd.
According to Suncorp, the sale is consistent with the ongoing simplification of its portfolio.
The sale consideration of $83.75 million will be in the form of upfront cash proceeds and reflects a P/E multiple of 18.1x based on expected FY21 earnings. The pre-tax profit on sale is expected to be in the range of $65 to $70 million.
Steve Johnston, Suncorp Group Chief Executive Officer (CEO), commented: “Suncorp and RACT have enjoyed a successful relationship in Tasmania since 2007. We have mutually agreed that now is the right time for RACT to take full control of the insurance entity. This is consistent with our focus on simplifying the Group and driving improvement in our core insurance and banking businesses.
“Tasmania remains an important market for Suncorp Group. We are now focused on driving growth in the region through our wholly owned brands. This includes our leading national mass market brand AAMI, as well as our more specialised brands Shannons and APIA.”