Australian insurer Suncorp has announced a FY21 result with cash earnings of AUD $1,064 million, up 42.1% from the prior year period.
Group net profit after tax increased by 13.1% to $1,033 million.
The improvement in cash earnings was driven by increased Profit After Tax in Insurance Australia of 42.4% and Suncorp Bank of 69%.
Natural hazard costs for the year exceeded Suncorp’s allowance by $60 million.
While disappointing, Suncorp notes how this is in the context of the La Nina weather pattern, with a significant number of smaller events. Only one event resulted in a modest reinsurance recovery this year.
Profit in New Zealand fell by 18.4%, largely as a result of increased natural hazard costs.
Furthermore, the board has declared a final ordinary dividend of 40 cents per share and an 8 cent special dividend, both fully franked.
Total FY21 ordinary dividend was 66 cents per share. In addition, up to $250 million of capital will be returned to shareholders through an on-market buyback.
For Australia Insurance, Gross Written Premium (GWP) is up 5.5%. As part of the business’ focus on boosting growth its customer value propositions have been refined, new product features have been introduced and an additional investment has been made in marketing.
In the bank, home lending grew by 0.8% in the second half of the year, reflecting improvements in broker lodgements and settlements, and improved approval turnaround times.
Net Interest Margin increased 13 bps in FY21 to 2.07%, attributable to growth in retail deposits and lower benchmark interest rates.
Meanwhile, New Zealand GWP grew 9.2%, driven by performance in the AA Insurance channel and growth in the intermediated commercial portfolios.
This top-line growth was partly offset by higher natural hazard costs, lower investment returns and a normalisation in working claims.
The La Niña weather pattern resulted in a higher number of events during FY21, with Group natural hazard costs of $1,010 million. This was $60 million above the Group’s FY21 allowance of $950 million.
Group operating expenses were $2.80 billion, up from $2.75 billion, due to the temporary increase in spending on strategic initiatives, technology upgrades and increased spending on marketing.
