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Suncorp reveals massive hikes in car, home premiums as half-year profit jumps

  • February 14, 2023

The company is paying a dividend of 33¢, higher than the previous corresponding period’s 23¢ payout.

Suncorp shares were trading up 47¢ to $12.94 in the afternoon. While cash earnings missed market estimates, some analysts remained upbeat.

“We see this as a solid result with underlying trends largely in line with expectations, albeit a little worse in [New Zealand] and better in the bank,” Citigroup analyst Nigel Pittaway said.

Hunter Green analyst Mark Tomlins said a “reduction in operating expenses was a credit to Suncorp [but] investment income … was weaker than expected”.

Higher premiums

Earnings at Suncorp’s Australian insurance arm, whose brands include AAMI and Apia, more than doubled to $276 million.

That was assisted by a turnaround in investment returns and releasing $150 million in provisions previously set aside for potential COVID-19-related business interruption claims. Insurers recently won a final round of legal test cases about whether they had to pay out such pandemic-related claims.

Overall gross written premium, measuring price and customer number changes, rose 9 per cent to $4.8 billion in Australia.

Motor insurance premiums spiked, with average premiums up 8.9 per cent. In the previous June results, that figure was 4.9 per cent.

A survey by the Financial Review of accounts going back to 2010, when Suncorp began splitting out average premium rises, indicates the previous highest average rises were in the 5 per cent region.

“Motor, I couldn’t point to one period where we’ve seen [average premium growth] ahead of 10 per cent,” Mr Johnston said.

He pointed to inflation rapidly rising, similar to comments last week from rival IAG.

“Cars in the last 12 to 18 months have been driving out of the showroom and appreciating [in value],” he said.

That meant when smashed cars were replaced, the cost was “materially more expensive”

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