Suncorp’s full-year net profit after tax increased 11.8% to $1.197 billion on stronger premium and investment returns, and with natural hazard costs below the annual allowance.

General insurance gross written premium increased 13.9% to $14.1 billion and net investment returns rose to $661 million from $451 million.

The result is the first since Suncorp completed the sale of its banking business to ANZ, and the company will provide a further briefing on November 6 as it moves ahead as a trans-Tasman business focused solely on insurance.

CEO Steve Johnston says the result shows momentum across the insurance businesses and lays a strong foundation for the group’s financial plan over the next three years.

“While the headline results represent strong increases on the prior year, it’s important to point out that the past three years have been very challenging for all insurance companies with inflation, natural hazards and a fundamental reset in global reinsurance markets,” he said.

“It’s pleasing that we navigated these challenges, and the complexity of the bank sale, and our earnings have rebounded to roughly where they were previously.”

Consumer insurance profit after tax more than doubled to $424 million and Suncorp New Zealand earnings increased to $213 million from $82 million a year earlier.

Commercial and personal injury earnings declined to $381 million from $443 million, with the previous year’s result boosted by a $124 million business interruption provision.

“In terms of inflation, we saw a cost per policy increase of about 8% in home and about 10% in motor,” Mr Johnston said. “Earned premium is at least 2% ahead of those rates in each portfolio, as the earn-through of the prolonged pricing response in each portfolio has now moved ahead of inflation.”

Mr Johnston says inflation is moderating across the portfolio, with some challenges remaining on the home side, including from household water escape claims – such as from flexi-hoses – and fire severity impacts.

Suncorp forecasts GWP growth this financial year in the “mid to high” single digits, and the group is targeting an underlying insurance trading ratio towards the top of a 10%-12% range. The ratio was 11.1% in the year to June 30.

The total cost of natural hazard events last year was $1.235 billion, $125 million below the allowance, which this year rises to $1.56 billion, reflecting unit growth and inflation.

Mr Johnston says the second half was relatively benign for catastrophes but there was some development from events late in the December period, particularly in Queensland after Christmas.

At its recent reinsurance renewal, Suncorp decided not to renew a Queensland quota share arrangement, while reinsurers have moved away from high-frequency, lower-impact events.

Mr Johnston says with the bank sale complete and reinsurance markets stabilising, Suncorp can consider other covers and alternative reinsurance structures.

“Any proposal would need to be in the long-term interests of our shareholders, therefore value-accretive and consistent with our strategic priorities,” he said.

He says the bank sale completes a portfolio simplification program that has progressed alongside technology modernisation, and an overhaul of data and pricing is being followed by a multi-year plan to replace the policy administration system.

“Put simply, a modern insurance company would not survive on technology that was built before 80% of the people who work on it were born,” he said.

The system replacement is a “root and branch rewiring” that will reduce complexity, improve speed to market and enable innovation and development of better customer propositions, he says.

“We’re already under way in AAI in New Zealand, before we move back to AAMI in Australia, and then progressively through the remaining portfolios,” he said.

“This and the ultimate reconfiguration of claims to the cloud will create a true digital insurer.”