Suncorp’s NZ insurers post $271 mln loss on Christchurch quakes
by Pattrick Smellie
Aug. 24 (BusinessDesk) – Australian insurer Suncorp Group’s New Zealand units posted a full-year loss after the cost of the Christchurch earthquakes squeezed premium income and boosted claims.
The Brisbane-based company’s kiwi insurers, Vero Insurance New Zealand Ltd. and Asteron Life Ltd., made a loss of $271 million in the 12 months ended June 30, compared to a profit of $88 million a year earlier.
The New Zealand insurers saw net earned premium drop 22% to $446 million, while net incurred claimed jumped 36% to $445 million, due to the four quakes in Christchurch that have caused in excess of $20 billion of damage.
“The impact of these earthquakes has resulted in increased net claims costs, additional reinsurance reinstatement premiums and an additional LAT (liability adequacy test) charge of $35 million,” the company said in its report. “The New Zealand market is expected to harden dramatically, particularly in the property classes.”
The wider group reported a 42% slide in net profit to A$453 million on natural disasters on both sides of the Tasman, with more than 100,000 flood, cyclone, earthquake and other natural hazard claims at a gross cost of about A$4 billion.
Suncorp’s board decided against its previous intention of returning excess capital to shareholders and the board announced a final dividend of 20 Australian cents a share, taking the annual payment to 35 cents.
“We originally anticipated a return of capital to shareholders at this result, but given the recent upheavals on global financial markets, the board has decided to retain the full amount of our surplus capital as a further protection against short-term uncertainty and volatility,” outgoing chairman John Story said in a statement.
“This position will be reviewed as markets stabilise, and in doing so, the board will be mindful of the high balance of franking credits that we currently hold on behalf of shareholders,” he said.
The shares gained 5.3% to A$7.57 in trading on the ASX and have dropped 19% this year.