Suncorp has banked a 74% rise in net profit driven by surging life and banking returns but the group’s general insurance result fell flat.

While net profit after tax shot to $389 million for the first half of fiscal 2012 – Suncorp’s best result for the first half since the acquisition of Promina – its shares fell 2.14% on the Australian Securities Exchange on Wednesday to close at $8.25.

This was due largely to a smaller than expected dividend increase and bad news from the insurance wing.

Net profit from Suncorp’s insurance operations fell 44.5% to $162 million for the half on $389 million in insurance claims and $368 million in reinsurance expenses.

Group CEO Patrick Snowball says Suncorp is still “transforming and simplifying its business”.

“Although external challenges mean our first-half profit is still not what we and our shareholders know this business is capable of, I’m proud of what Suncorp has achieved over the last six months,” he said.

Gross written premium (GWP) across all Suncorp insurance operations rose 8.2% to $3.855 billion, with commercial business rising above the average at 9.3%. Commercial insurance revenue rose by 25% to $1.856 billion.

However, Suncorp’s allowances for natural disaster claims were blown out by $149 million, headlined by $234 million in claims from last year’s Melbourne hailstorm.

In response to the rising frequency of claims, since June last year Suncorp has aggressively pursued price increases across its commercial and domestic portfolio, although intense competition has stifled across-the-board rate rises.

Suncorp Commercial Insurance CEO Anthony Day says the business has showed improvement in the face of a competitive sector and broader economic environment.

“If you look at the past 12 months, we took some early action to account for increasing weather and reinsurance costs,” Mr Day told insuranceNEWS.com.au.

“We have seen our retention rates hold up, and that suggests the market is moving.”

Mr Day says Suncorp has passed on premium increases across corporate property lines “in the low teens”, while SME lines have accepted smaller premium hikes.

“We are starting to see our quotes in that space increase.”

Movement in most other commercial lines remains flat, Mr Day says.  

Suncorp is also negotiating with state governments to increase CTP rates by “low single digits”. Suncorp is the largest CTP insurer in Queensland, with more than 50% of the market, and the second-largest in NSW.

Mr Day says reinsurance capacity remains “abundant’, but reinsurers are more selective.

“They have been affected by a number of events and they have adjusted their prices accordingly,” he said.