Australian insurer Suncorp has reported Group net profit after tax of AUD 913 million for FY20, which includes a gain of AUD 285 million from the sale of its Capital SMART and ACM Parts businesses.
In comparison, Suncorp reported Group net profit after tax of just AUD 175 million for FY19, driven by an AUD 899 million net loss on the sale of its Australian Life Insurance businesses.
Cash earnings fell by almost 33% in FY20 when compared with the previous year to AUD 749 million, which the insurer attributes to a 33.9% dip in profit within its Australian Insurance operation, and a 33.5% dip in Banking & Wealth divisions.
In total, the Insurance (Australia) segment recorded after tax profit of AUD 384 million in FY20 against AUD 581 million a year earlier, while Banking & Wealth operations saw after tax profit fall from AUD 364 million in FY19 to AUD 242 million in FY20.
Suncorp has also revealed that its group general insurance underlying insurance trading ratio fell from 12.3% to 1.1%, driven by a higher natural hazard allowance and reinsurance costs, higher expenses and reduced investment income.
Overall, the Group’s natural hazard costs were in-line with the FY20 allowance of AUD 820 million, despite the occurrence of significant nat cat events during the year.
The company notes that while the COVID-19 has had a range of impacts on its financial performance during the period, the impact on the general insurance businesses is estimated to be broadly mutual. Although this excludes the impacts of investment markets, while the Bank has been hit by increased COVID-19 impairment losses.
Group Chief Executive Officer (CEO), Steve Johnston, commented: “It has been a challenging 12 months for Suncorp and for the customers and communities we support: first a season of extreme weather conditions, and then the global COVID-19 pandemic which will result in longlasting economic disruption and fundamentally change the way we live.
“Suncorp entered the COVID-19 crisis in a solid position and responded quickly to keep our people safe and our customers in need protected through access to financial relief measures. At the same time, we have maintained the financial and operational strength of our business.
“The strength of our balance sheet has enabled the Board to determine a fully franked final ordinary dividend of 10 cents per share. It is pleasing we are able to deliver on our commitment to shareholders by paying a modest final dividend.”
Adding: “While our financial performance, particularly in the second half, has not been immune from the negative impacts of COVID-19, there were a number of highlights which demonstrate the Group has solid foundations.
“Digital channels helped drive favourable growth in our Australian motor and home insurance portfolios, and natural hazard costs remained in-line with allowance as a result of our strengthened reinsurance program…
“The health and economic headwinds of COVID-19 will continue to be felt for some time but the lessons of the past year position us to withstand future challenges and to continue executing against our key priorities. These priorities include improving the performance of our core businesses, improving operational efficiency, leveraging our investments in data and digital and embracing regulatory change.”
In July, Suncorp announced that it had finalised the renewal of its main catastrophe reinsurance program for FY21 with a similar structure to previous years.
