Suncorp net profit has risen 13% to $1.03 billion supported by its strongest financial year performance in Australian premium revenue in almost a decade.

Australian gross written premium (GWP) rose 5.5% to $8.79 billion in the year to June 30, with an acceleration of 7.1% in the second half described as particularly strong.

The division’s profit after tax rose 42% to $547 million as higher investment returns and increased prior year reserve releases also contributed, while the combined operating ratio improved to 94.8% from 96.6%.

CEO Steve Johnston says Suncorp is more effectively operating its multi-brand portfolio, supported by advertising, marketing and customer segmentation, allowing it to build on the underpinning benefits of a harder market.

“We are running the front-end of the business far better,” he told insuranceNEWS.com.au today. “I do think there will be an element of the continuation of the hardening market, but at some point that will start to moderate and will be replaced by the benefits we have realised by running our business stronger.”

Suncorp provided little specific guidance for the current financial year, but Mr Johnston says the company remains committed to the targets it highlighted as part of a three-year plan that will take Suncorp through to the 2023 financial year.

“We have a plan in place to get to those numbers,” he said.

In the past year, motor GWP was boosted by pricing and volume, while the home portfolio grew 7% to reflect repricing for higher natural hazards and reinsurance costs, but with a small decline in volumes due to the focus on margin remediation.

Commercial GWP increased 4.9%, supported by short-tail speciality and fleet portfolios and growth from NTI. That was partly offset by SME packages where there was lower retention and new business volumes and mid-single-digit rate increases.

The financial impact of COVID-19 was broadly neutral overall with lower motor claims frequency offset by provisioning for potential business interruption claims.

New Zealand profit after tax fell 17% to $NZ215 million ($204.8 million) as events such as the Auckland Tornado and floods in Napier, Northland and Canterbury pushed natural catastrophe costs higher, while the life business was also weaker.

General insurance delivered profit of $NZ177 million ($168.6 million), down 19.2%, while GWP rose 7% on a normalised basis.

Suncorp group natural hazard costs exceeded the $950 million allowance to reach $1.01 billion, up from $820 million in the previous year A La Nina weather pattern caused a significant number of smaller events, but only one resulted in a modest reinsurance recovery.

The allowance will increase to $980 million this year to reflect portfolio growth, inflation and a modest strengthening in assumptions offset by the impact of exited portfolios.

Suncorp announced an on-market share buyback of up to $250 million, to be completed over the next six months.

The company also said today that Duncan West, who is stepping down as Chairman of Hollard, will join its board as a non-executive director from September 23

Mr West has held chief executive roles at insurers including CGU and Vero and was EGM for Insurance at NAB Wealth and MLC. He previously worked with Royal Insurance in its UK and Indian operations.

Moody’s Investors Service Vice President Frank Mirenzi says the full-year result reflects the strength of Suncorp’s insurance operations, which despite high natural hazard costs, “generated consistently strong profitability underpinned by the group’s pricing power and claims management efficiency”.