Australian primary insurer Suncorp has reported a nearly 69% increase in net profit to $1,148 million for fiscal year 2023, despite natural hazard costs exceeding budget in the period by $97 million.
Total natural hazard costs for the year came out at $1.257 billion, Suncorp said, but for the next fiscal year the insurer has set this higher at $1.360 billion.
“A third consecutive La Niña weather pattern, experienced across Australia and New Zealand for the majority of the financial year, led to 15 separate weather events and around 130,000 natural hazard claims,” says Suncorp.
The accumulated losses from catastrophe and weather events during the year eroded $648 million of the Aggregate Excess of Loss (AXL) reinsurance treaty deductible, which sat at $850 million, therefore no recoveries were made under that arrangement in FY23.
The reinsurance plan implemented by the Group during FY23 offered extra coverage for losses in New Zealand. Consequently, the significant incidents that occurred in the second half of the year, namely the North Island Floods and Cyclone Gabrielle, were limited to a maximum of NZ$50 million and NZ$25 million in losses respectively, after accounting for reinsurance protection.
In FY24, the Group has set aside a sum of $1,360 million for potential natural disasters, and its extensive reinsurance strategy was effectively established, featuring higher premiums compared to the previous year.
These adjustments to the reinsurance plan will lead to an approximate rise of $340 million in the Group’s necessary capital reserves.
As recently reported, Suncorp did not renew its aggregate reinsurance for the coming year, citing the hardening of the reinsurance market.
