Suncorp Group CEO Patrick Snowball says a slower economy will lead to lower growth in coming months.

The group increased profit by 15% to $631 million in the half-year to December 31, compared with the previous corresponding period. Bsut has warned its full-year profit growth will be in the single digits because of increased competition and lower interest rates.

It had previously given guidance of 4-6% growth.

Mr Snowball says Suncorp has used lower reinsurance costs and savings from efficiency programs to maintain profit margins and attract and retain customers.

“We have a number of projects that will deliver benefits in the 2016 and 2017 financial years,” he said.

The group reported a 2.5% increase in revenue to $8.46 billion for the half, while gross written premium (GWP) fell marginally to $3.68 billion, with motor GWP down 1.9% to $1.39 billion and commercial GWP down 1.2% to $1.11 billion.

Claims expense in Suncorp’s powerhouse, general insurance, grew 14% to $3.74 billion.

General insurance made an after-tax profit of $419 million, down 11%, as income from commercial and personal lines dropped and the $250 million impact of last November’s Brisbane hailstorm was felt.

Life insurance bounced back with an $86 million profit compared with $22 million in the corresponding period of 2013, and the banking arm reported a 68% rise to $176 million. See other story.

The New Zealand division reported GWP of $605 million – up 6.5% in Australian dollars or 2.8% in New Zealand dollars – and a profit of $NZ100 million ($95 million).

Mr Snowball told analysts he can see the New Zealand division becoming a $NZ200 million ($190.15 million) business.

Suncorp Personal Insurance reported a 28% fall in after-tax profit to $176 million.

CEO Mark Milliner told analysts the benefits of a simplification program and vertical integration have been reinvested into pricing and marketing, leading to customer growth for the first time in three years.

“The [motor] parts business is up and running and we are getting significant benefits from that,” he said.

Mr Snowball told insuranceNEWS.com.au the fall in the Australian dollar has pushed the cost of vehicle parts up by 8%, but the effect is tempered by Suncorp operating its own repair network.

The commercial insurance market has been affected by an inflow of international capital, and Suncorp has experienced rate reductions of about 5%, he said.

Suncorp Commercial Insurance reported an 18% fall in profit to $167 million.

Commercial Insurance CEO Anthony Day says retentions have improved to 83% and the market remains strong and capable of producing solid returns.

The division will focus on risk selection rather than following competitors in cutting prices to maintain growth.

“Suncorp Commercial Insurance doesn’t view this pricing as a sustainable long-term strategy and we will continue to focus on margin over growth,” he said.

“Our customer and intermediary relationships are strong, our market-leading claims performance continues to improve and we have a superior underwriting regime. This is a solid base to grow the business in this market.”

New Zealand CEO Gary Dransfield says commercial rates are softening rapidly but the group is growing margin as its personal lines business adopts Suncorp’s technology.

Mr Snowball says Suncorp’s workers’ compensation and compulsory third party (CTP) portfolio continues to perform well and he sees significant growth opportunities.

CTP premium grew 5% to $531 million, and Suncorp has applied learning from the statutory portfolio to its life business.

Last week Suncorp flagged a technical issue with a reinsurer that surfaced just days before the profit announcement. It is unsure whether there will be a financial impact, but the maximum exposure will not exceed $118 million after tax.

Mr Snowball says the group will participate in the Federal Government’s comparison website for north Queensland home insurance.

He also has confirmed plans to leave the group by the end of this year. He says he joined in 2009 intending to stay three or four years and has had a “tremendous and challenging journey, which I have thoroughly enjoyed”.