Suncorp Group’s half-year profit has jumped 89% to $1.1 billion, driven by bank sale proceeds and a surge in consumer insurance earnings.

The result was boosted by a one-off $252 million bank divestment gain, the period was relatively benign for natural perils, investment markets remained supportive and reserve strengthening was not the influence of a year earlier, it says.

“While the headline result has benefited from those four factors, the underlying business, which is the important point, continues to perform strongly,” CEO Steve Johnston said today.

“Margins and gross written premium expectations have landed in line with our guidance, and our customer engagement via digital channels continues to increase.” 

The company expects mid to high single digit GWP growth for the full-year and an underlying insurance trading ratio towards the top of a 10%-12% range. But Mr Johnston cautioned that in any year, shifts in the wider environment can affect the second six months.  

“The position ... can change markedly in the second half with one or two hazard events, and the utterances of a global leader anywhere in the world can adjust risk appetite in investment markets.”

GWP increased 8.9% to $7.5 billion in the half, group cash earnings rose to $860 million from $660 million, and the underlying general insurance trading ratio was 11.8%, in line with guidance.

General insurance profit after tax rose 71.6% to $875 million, with Australian consumer insurance earnings rising to $423 million from $203 million a year earlier.

Commercial and personal injury profit rose 7.2% to $208 million, and the New Zealand result jumped to $208 million from $74 million.

The company has expanded its claims team and supply chains, and redoubled efforts to address claims that have remained unresolved from prior-year events, Mr Johnston said.

“Increases in customers’ premiums are now moderating, with home construction and car repair costs showing signs of stabilisation, margins approaching or within our target ranges and reinsurance markets remaining constructive,” he said.

Suncorp is seeking to improve efficiency as it focuses on margins and sees some premium moderation. Mr Johnston says the most effective way to reduce prices longer term is through risk reduction and mitigation. 

“It’s a topic worthy of debate at the forthcoming Australian federal election,” he said. “We believe the aim should be a dollar-for-dollar pre- and post-disaster spending ratio. For every dollar spent mopping up after disasters, a dollar is invested in mitigation. That will equate to a multi-year, multibillion-dollar investment in the future resilience of our nation.”

The total cost of natural hazards for the half was $503 million, $277 million below Suncorp’s allowance, with six weather events above $10 million in Australia and no significant events in New Zealand.

Suncorp says $4.1 billion of net proceeds from the bank sale will be returned to shareholders through a $3.8 billion capital return and $300 million fully franked special dividend.

The company also completed the sale of Asteron Life on January 31, positioning it as a “simplified pureplay” general insurer.