Claim surge hits Sovereign profits

Charles Anderson, chief executive of insurance company Sovereign. Photo / Chris Skelton

New Zealand's Sovereign Insurance reported a 13 per cent fall in annual profit after experiencing a significant increase in claims, particularly in its first half, Commonwealth Bank of Australia (CBA) said. Sovereign is part of the ASB Group, which is owned by CBA.

CBA said Sovereign reported a 13 per cent fall in net profit after tax to $103 million in the year to June 30 from a year ago. This was due to a major increase in health, trauma and disability claims, primarily in the first half.

The insurer also had a one-off $18 million gain in the second half due to a revaluation of deferred tax on policy liabilities as a result in the drop of the corporate tax rate in New Zealand to 28 per cent on July 1 next year.

The profit after tax in the six months to June 30 was $76 million, up from $27 million in the first half.

Inforce premiums, or paid up premiums, increased by 7 per cent.

CBA said Sovereign had 31 per cent of the New Zealand market as at March 31.

- NZPA