Suncorp New Zealand FY22 Results

8 August 2022

Suncorp New Zealand today announced a net profit after tax (NPAT) of NZ$165 million for the 12 months to 30 June 2022, down 23% on the prior corresponding period (pcp).

Parent company Suncorp Group Limited announced an NPAT of A$681 million, down 34%.

CEO Jimmy Higgins says the strength of the Suncorp New Zealand business is reflected in the solid top-line growth and underlying performance; delivered off the back of a disruptive year that has impacted customers and its people.

“This disruption came from the impacts of Covid-19, including the war on talent in a tight employment market, the restrictive environment our people have had to work in, and employees being off sick with Covid,” he says.

“Multiple weather events experienced during the year resulted in the highest volume of claims since 2018; and customers experienced longer waiting times for repairs to their homes and vehicles because of the delay in getting materials.”

“This year we’ve experienced a highly volatile investment market – the most volatile we’ve seen in a long, long time. Despite this, the underlying business has performed well, and we’ll continue to be a strong, well-capitalised company that can support customers in their time of need.”

Higgins says Suncorp New Zealand’s strategy is focused on making things easier for customers to understand and making things faster too.

“Our focus remains on improving outcomes for our customers and we are doing this by investing in our people, technology and processes. We’ve a deeply held purpose to support new Zealanders when they suffer loss. Our products and services are designed to protect what matters to customers and everything we do is directed to that purpose.”

Higgins says he’s proud of Suncorp New Zealand’s progress in the diversity space. 

“In February, we contributed to Mind the Gap’s public pay registry, and while we were the best of the financial services organisations that reported these statistics, at 13.3% we’re still not where we need to be. On women in senior leadership positions, I’m pleased to end FY22 having achieved 50/50 for the first time.”

“It’s been a big year of industry awards, winning five ANZIIF awards; Insurance Leaders of the Year, Life insurance company of the year, Excellence in workplace diversity and inclusion; and AA Insurance securing General insurer of the year and Insurance learning programme of the year,” says Higgins.

General insurance

The New Zealand general insurance business, which includes intermediated Vero Insurance, Vero Liability and direct channel AA Insurance (a joint venture between Vero and the New Zealand Automobile Association) delivered an NPAT of $150 million, down 15% on the prior period.

The intermediated channel experienced strong growth reflecting the value New Zealanders place on expert advice and the important role that insurance brokers play in the insurance market. Vero Liability also continued its history of delivering strong results off the back of its market leading position in speciality liability insurance.

Gross written premium (GWP) grew 14%, with intermediated and direct channels recording strong growth through a combination of customer growth and pricing increases that were necessary to offset the inflationary pressures that we continue to experience.

Looking ahead, Higgins says the industry is facing into headwinds with natural hazard weather events becoming more frequent and expensive, which has attracted significant increases to our reinsurance costs. Premiums will also be impacted by the pressure on materials and labour costs in repairing homes and cars, as well as the increases in Toka Tū Ake EQC levies following the increased EQC cap changes in October later this year.

“The strength of our reinsurance programme allows us to provide insurance protection to customers throughout New Zealand and we are continuing to provide support to those customers that experience vulnerabilities, particularly as they manage through the costs of living pressures that exist in New Zealand today.

“The tight employment market and the living cost pressures in New Zealand makes it difficult to attract and compete for talent in other countries.” says Higgins.

Life insurance

Asteron Life, the New Zealand life insurance business, demonstrated its strength by delivering an underlying profit after tax of $38 million driven by in-force premium growth of 4% and strong retention rates. Reported profit after tax of $15 million was down $23 million on the prior corresponding period due to the adverse impact of the rising interest rate environment.

New business was $18 million, in-line with the prior period, and a positive result given a disruptive year for advisers due to a combination of Covid-19 restrictions and business disruptions from ongoing regulatory and licensing changes.

“Our Asteron Life business continues to perform strongly maintaining margins in line with growth and producing positive net experience profits. Its claims acceptance rates remain high at 95%, reflecting the business’s drive to support customers and their families,” says Higgins.

Higgins says a key focus for Asteron Life is assisting customers to access insurance benefits despite the current capacity constraints of the New Zealand health system as a result of Covid-19, which has caused delays in surgeries and rehabilitation.

“The current environment presents challenges from economic factors and New Zealand’s health system constraints, together with emerging risks around potential impacts of Long Covid, and market disruption from the proposed New Zealand Income Insurance Scheme.

“On the scheme, it is critical for us to think about the role advisers play in financial advice and literacy; equally important is ensuring customers have access to quality case management and rehabilitation services that are essential for good customer outcomes especially for longer duration claims. Asteron is monitoring these risks and is well placed to meet these challenges,” he says.

Sustainability

Higgins says the continued increase in natural hazards shows the impact that climate change is having on the insurance industry and Suncorp remains focussed on the sustainability of its own business and its insurance portfolios.

“We released our Sustainability Plan FY22-23 earlier this year, and more recently our FY23-25 Strategy, which includes ‘Resilience’ as one of the four pillars ensuring more focus is on environmental, social and economic sustainability. We continue to mature our understanding of our climate risks and opportunities and prepare for the requirements to disclose this information from FY24.

“We have continued our ‘Drive’ affordable car insurance scheme to support financial resilience and continue to work with three Whakatane charities to enhance the social and natural hazard resilience of the community to flooding events. In the August lockdown, we donated $150,000 to five charities – Fair Food, The Cause Collective, Shine, The Salvation Army–Northland, and Sikh Aware – to help support New Zealand communities, and in January, donated $30,000 to the Red Cross to support the people of Tonga following the tsunami. Our Suncorp team continues to proudly support and raise funds for our long-time community partner Shine and donate to their chosen charities through Good2Give, which Suncorp dollar-matches,” says Higgins.

As part of its social resilience programme, Suncorp New Zealand has increased its sponsorship of the TupuToa programme to Principal Partner and welcomed ten Māori and Pasifika interns in 2021-22.