Australia’s Suncorp has reported that its net profit after tax and cash earnings for H2 2021 were down significantly, compared to those in the prior corresponding period.
Despite the significant falls of 20.8% and 29.1%, the organisation said that this remained ‘a compelling result’.
Christine McLoughlin, chair of Suncorp, said in a written note that the Board felt this way, ‘[…] considering the impact of increased natural hazard costs from weather events and lower investment returns during the half year.’.
She added: “The Group experienced 19 separate weather events in the six months to December 2021, resulting in more than 50,000 natural hazard claims at an estimated cost of $695 million, which is $205 million above our usual natural hazard allowance for the half year.”
The group admitted that it had been forced to increase its natural hazard allowance for 2022.
Writing in its report, it said it had raised this to $980m, but added: “However, reflecting the Group’s natural hazard experience during the half, the full year outlook for natural hazard costs is approximately $1.075 billion.”
Elsewhere, the group said it had seen its natural hazard costs reach $695m by the end of 2021, which was $205m more than its allowance of $490m.
The group also revealed that in addition to its main catastrophe program that it had purchased dropdown aggregate protection. This was in three forms: Dropdown 1, Dropdown 2, and Dropdown 3, providing increasing levels of cover.
Suncorp said that it had purchased these dropdowns in order to, “[…] provide an additional $450 million of protection against large natural hazard events’.
Despite the travails of 2021, McLoughlin said that the outlook from the Board was positive.
She said: “The strong underlying business momentum demonstrated through the HY22 result combined with the protection provided by the Group’s comprehensive reinsurance program has contributed to the Board’s confidence in the Group’s earnings outlook.”
