Suncorp Group’s FY2023 half-year financial results show improved earnings, with the company declaring continued strong top-line growth across the organisation, improved underlying margins, and positive investment returns. The result also benefitted from the release of $150 million of the provision for potential business interruption claims, following the resolution of the second industry test case.
Suncorp net profit after tax was $560 million, up by 44.3 per cent, while cash earnings increased 62.9 per cent to $588 million.
The company reported gross written premium (GWP) growth of nine per cent, excluding Emergency Services Levies (ESL) and portfolio exits, in its Australian general insurance business, along with 12.2 per cent in New Zealand. The underlying Insurance Trading Ratio (ITR) increased from eight per cent (excluding COVID-19 impacts) in H1 FY2022 to 10 per cent in H1 FY2023. The improved ratio was supported by strong top-line growth, improving expense ratios, and an increase in investment yields, but impacted by increased natural hazards, reinsurance costs, and claims inflation.
Volatility continued in investment markets in the half, although the impact of higher running yields more than offset any mark-to-market losses across the company’s $15 billion investment portfolio. The net gain from yields and investment markets was $287 million compared to $61 million in H1 FY2022.
Group operating expenses fell by 3.1 per cent to $1.349 billion, largely reflecting efficiency benefits from a strategic programme of work, as well as a decrease in project investment relative to the prior period, which more than offset the impact of the inflationary environment.
Suncorp says the sale of its banking arm to ANZ remains on track and is expected to be completed in the second half of calendar year 2023, subject to approvals.
Steve Johnston, CEO of Suncorp, said the company delivered a strong set of results for the half despite ongoing economy-wide inflationary pressures and the impacts of eight natural hazard events, largely due to the La Nina climate pattern.
“Our Australian and New Zealand businesses have achieved strong growth in premiums, while unit growth across our consumer portfolio demonstrates the value of our products and brands, particularly in an inflationary environment. Our best-in-class claims programme has allowed us to be more disciplined in leveraging scale to deliver lower aggregate inflation outcomes. The bank continued to grow its home and business lending portfolios and customer deposits,” said Johnston.
“Pleasingly, we remain on track to achieve our FY2023 targets, which is testament to the strength and resilience of our business amid significant headwinds and demonstrates our ability to create long-term shareholder value while meeting the evolving needs of our customers and other stakeholders.”