Suncorp is aiming for price-driven gross written premium (GWP) growth of around 10% this financial year to counter the challenging cost environment. 

The insurer is also pressing ahead with measures to strengthen its core insurance operations as Group CEO Steve Johnston says the company “cannot afford to sit still” after its bank divestment plan was blocked by the Australian Competition and Consumer Commission (ACCC). 

The ACCC blocked the $4.9 billion deal this month and Suncorp has said it will support ANZ’s bid to appeal the decision before the Australian Competition Tribunal. 

“At the macro level the operating environment remains challenging,” Mr Johnston said at an earnings webcast last week. 

“While pressures in the supply chain are easing, elevated economy-wide inflation continues to inform central bank decision making, and this in turn, is driving volatility in investment markets. 

“GWP growth of around 10% will be primarily driven by pricing as we continue to respond to increased input costs and we prioritise margin over volume.” 

The priorities for this current financial year include strengthening its motor and home insurance portfolios, increasing efficiency and working towards its ultimate goal of having at least 70% of sales and 80% of claims lodgements delivered via digital channels. 

Suncorp last week reported group net profit after tax increased 68.6% to $1.14 billion from a year earlier and cash earnings surged 86.3% to $1.25 billion. 

Its Insurance Australia division achieved significantly higher earnings, with profit after-tax rising to $755 million from $174 million a year earlier. The Australian business delivered a 10.6% rise in GWP to $10.2 billion. 

The improved GWP reflected targeted price increases required to address material rises in reinsurance and natural hazard costs and economy-wide inflation. 

The home and motor portfolios saw like-for-like GWP growths of 11.7% and 13.8% and in commercial GWP grew 9.9%. 

At the same time the business says it was impacted by significant weather events, resulting in adverse natural hazards claims experience and additional reinsurance reinstatement premiums following the North Island floods and Cyclone Gabrielle. 

The third consecutive La Nina weather pattern, experienced across Australia and New Zealand for the majority of the last financial year, led to 15 separate weather events and around 130,000 natural hazard claims. 

“This resulted in the group exceeding its natural hazard allowance by $97 million,” Suncorp says. It had an allowance of $1.16 billion. 

For this financial year the group has set its natural hazard allowance at $1.36 billion and its reinsurance program was finalised, with premiums up on the prior year. Suncorp says changes to its reinsurance program will result in an approximately $340 million increase in capital required to be held by the Group.