Suncorp has reported its financial results for the six months to 31 December 2021, declaring the figures demonstrate strong underlying business momentum despite higher claims costs and investment market volatility. Group net profit after tax was down 20.8 per cent to $388 million and cash earnings of $361 million decreased by 29.1 per cent.
Despite strong top-line growth and improved working claims performance, the Australian insurance business reported a 55.8 per cent decrease in profit after tax to $114 million. Suncorp said the result was mainly impacted by adverse natural hazards and lower investment returns. The company responded to 19 weather events and more than 50,000 natural hazard claims during the half, resulting in costs of $695 million – $205 million more than expected for the first half of the financial year.
Gross written premiums (GWP) grew 7.5 per cent across portfolios to $4.5 billion, driven by a continued focus on revitalising growth, including the launch of new product features and continued refinement of digital customer experiences.
Suncorp said GWP benefited from ongoing strategic investment that allowed insurance digital sales for mass brands to increase to 60.0 per cent in the first half of 2022, up from 51 per cent in the first half of 2021. The ongoing focus on the digital claims experience contributed to online motor lodgements increasing to 41 per cent in H1 2022, up from 21 per cent in H1 2021.
The Motor category grew by 7.8 per cent (excluding the exit of small, intermediated portfolios), reflecting AWP growth of 4.9 per cent and unit growth of 2.9 per cent. Suncorp said unit growth was broad-based across mass and niche brands, driven by improved retention that was partly offset by lower new business, reflecting the lockdowns on the eastern seaboard.
COVID-19 related impacts included reduced motor insurance claims frequency, partly offset by increased claims costs associated with higher second-hand car prices and supply chain impacts, delays in claims lodgement and closure, industry support, and higher operating expenses.
The sale of Suncorp’s 50 per cent stake in RACT Insurance, completed in November 2021, resulted in a pre-tax gain of $65 million.
“While we have been challenged by the La Nina climate pattern and the operational impacts of COVID-19, we continue to deliver against our strategic priorities and have good momentum as we move into the second half of FY22,” said Steve Johnston, Group CEO.
“GWP growth in Australia and New Zealand is a standout, and the Group’s underlying ITR increase to 8.0 per cent shows we are delivering. Across all three businesses we are growing, becoming more efficient, and improving how we serve our customers.”