Suncorp Group has reported improved earnings for H1 2024, mainly driven by a significant improvement in investment returns. Group net profit after tax was up 5.4 per cent to $582 million, while cash earnings rose 13.8 per cent to $660 million.
Strong equity market performance, higher running yields and favourable mark-to-market movements across the General Insurance business resulted in higher net investment income of $396 million, compared to $167 million in H1 2023.
Gross written premium (GWP) growth of 16.3 per cent in the General Insurance business reflected customer growth and targeted price increases required to respond to increasing reinsurance costs, elevated natural hazard experience and ongoing inflationary pressures.
Consumer Insurance units delivered profit after tax of $203 million, up from $32 million, reflecting continued momentum in revenue growth and improved investment income. Motor GWP grew 18.2 per cent across mass and niche brands.
Net incurred claims increased by 10.4 per cent to $2.443 billion, driven by portfolio growth and persistent inflation, particularly in the Motor portfolio.
Prior year reserves minus the impact of loss component movements were strengthened by $107 million across several portfolios. Suncorp said this was driven by a combination of external challenges, including ongoing inflationary pressures in supply chains, resulting in higher repair costs and extended repair times in the Motor portfolio. Suncorp said it responded to these challenges with measures including “appropriate” pricing and new repair capacity.
Total operating expenses increased seven per cent to $1.21 billion, largely reflecting growth-related expenditure and inflation. Insurance expense ratios declined, supported by the benefits from productivity and strategic initiatives, along with operating leverage.
Steve Johnston, CEO of Suncorp, said H1 2023 was challenging for both the company and its customers amid ongoing inflationary pressures and the impact of six severe weather events.
“Against this backdrop, the group has continued to work hard to support its customers while also delivering improved earnings driven by increased customer demand for our products and services and positive investment performance over the half,” said Johnston.
“Net investment returns were up significantly from $167 million in H1 2023 to $396 million, and this has been a key contributor to our reported earnings and profit for the half.
“Our Australian and New Zealand general insurance businesses achieved strong premium growth, with customer growth across both our home and motor portfolios. This remains a good indication of the value our customers continue to see in our products and brands, and the protection they provide.
“The growth in gross written premiums is also reflective of targeted price increases in response to higher reinsurance costs, ongoing supply chain inflationary pressures resulting in higher repair costs for cars and homes, and an elevated level of natural hazards. We remain acutely alert to the affordability challenges facing customers and continue to focus on driving greater efficiencies in our own business,” he said.