Suncorp’s Auckland flood claims exceed 8000, half year profit rises 8pc

Flood claims will hit Suncorp's second-half result. Photo / Hayden Woodward

Suncorp - New Zealand’s second largest general insurer - saw its profits rise 8.3 per cent over the six months to December 31 to $91 million but it won’t be until the second half of its financial year that the effects of Auckland flood claims are felt.

The ASX-listed Australian company which owns Vero Insurance, Asteron Life, Vero Liability and co-owns AA Insurance with the Automobile Association, noted today as part of its half-year result that it had now received in excess of 8000 claims from the January flooding event.

“The impact of this weather event is still being assessed. As of close of business 7 February 2023, the Group has received in excess of 8000 claims and the gross event cost is yet to be determined.”

The company said the losses from the event would be capped at $50m, net of reinsurance cover.

“Post this event, the group maintains significant prepaid reinsurance cover and the approach to any reinstatement of cover utilised in this event will be determined once the full impact of the event is known.”

Suncorp NZ chief executive Jimmy Higgins said while the company delivered a strong first-half performance its second half was likely to be impacted by the recent devastating floods and landslips across Auckland and parts of the North Island.

“Friday January 27 was the wettest 24 hours on record in over 60 years. There are indications that this was a 1-in-250-year event with some areas of Auckland getting more than 280mm of rain in 24 hours.

“The significance of this event has reached the corridors of global reinsurers who have supported New Zealand insurance markets over the years and events such as these will cause risk models to be updated. However, our focus right now is helping our customers to assess, recover and move on from the events of the Auckland Anniversary weekend weather,” Higgins said.

The company had so far settled over 1000 claims, resulting in payouts worth a total of more than $5m.

Higgins said repairs for the extensive flood damage would also put pressure on the building industry and the broader supply chain.

“We will be working closely with impacted family and business customers to ensure they can get back on track as quickly as possible. While the best outcome is a fast claim settlement, there will be other factors outside our control that can impact this.”

The company’s first-half result showed its life insurance business performed more strongly than its general insurance arm. General insurance profit after tax fell 3.8 per cent to $75m while its life insurance profit after tax rose 166.7 per cent to $16m.

The general insurance profit was impacted by elevated claims and increased operating expenses to support its growth and strategic investment. Gross written premiums rose 12.2 per cent to $1.18 billion while net incurred claims rose 17.8 per cent to $583m, although Covid-19 had positively impacted the prior corresponding period with fewer motor insurance claims due to the Auckland 2021 August lockdown.

Its parent company Suncorp Group made a half-year net profit of A$560m ($616.2m), up 44.3 per cent while its cash earnings rose 62.9 per cent to A$588m. The company will pay a dividend of A33 cents per share.