Suncorp says it remains on track to record an insurance margin of at least 12% for the 2011/12 financial year despite higher reinsurance costs.

In a statement to the ASX, the company has confirmed the renewal of its property catastrophe reinsurance program for the financial year to June 30, 2012. 

Group CEO Patrick Snowball says the new program “is broadly similar to last year’s in terms of the protection it provides but, as expected, this protection comes at a higher price following a year of earthquakes, cyclones and floods in our region”.

The company declined to provide details on the cost of its reinsurance or quantify the rate increases it has been subject to, but Mr Snowball says the group is satisfied with the outcome of the negotiations “given the unprecedented number of major natural hazard events since September 2010”.

The property catastrophe reinsurance program provides up to $5.8 billion of cover with retention under the program of $250 million. 

Additional cover has been purchased to reduce the retention for Suncorp’s New Zealand risks to $NZ50 million ($39 million).

Suncorp has also placed an aggregate catastrophe reinsurance cover that provides cover of up to $90 million per Australian event. This program has a retention of $250 million for events over $10 million and provides total coverage of up to $200 million.   

Suncorp is the first major Australian insurer to renew its catastrophe reinsurance program following the succession of natural disasters over the past nine months.

At a market briefing in June, Mr Snowball said that the outcome of the reinsurance negotiations would have a “significant impact” on profits for the 2012 financial year.