Suncorp first-half net profit has risen 44.3% to $560 million supported by rising premiums, the release of the majority of a provision set aside for business interruption claims and improved investment returns.

The company reaffirmed its fiscal-year targets despite inflationary headwinds and weather event impacts. Natural peril costs topped the December half allowance, but the company left the full-year allowance unchanged, with Auckland flood losses capped at $NZ50 million ($45.6 million) net of reinsurance.

Insurance Australia after tax earnings rose 142.1% to $276 million, while the New Zealand general and life result increased 2.5% to $83 million, as strong premium gains were put through to combat rising costs.

“I do acknowledge these increased costs have required us to continually adjust the premiums that we charge our customers, particularly those in high-risk areas,” CEO Steve Johnston told a briefing.

“While this is adding to the current cost of living pressures the value ascribed to insurance products has never been greater, particularly amongst those whose lives have been put back together after the rain clears, or the water recedes.”

Australian gross written premium (GWP), excluding the emergency services levy and portfolio exits, grew 9% to $4.84 billion, largely driven by the consumer business.

The home portfolio grew 12.1%, with average written premium (AWP) growth accelerating to 10.7%, reflecting pricing in response to higher natural hazard and reinsurance costs and inflation. Unit growth was 1.4%. The company is looking toward its mid-year reinsurance renewals as it considers further price moves.

Motor GWP increased 11.7%, with AWP rising 8.9% and unit growth up 2.8%, while commercial GWP grew 6.9% as short-tail underwriting growth was partly offset by a decrease in packages.

In local currency terms, New Zealand’s earnings rose 8.3% to $NZ91 million including the general insurance and life businesses.

General insurance profit decreased 3.8% to $NZ75 million as the result was affected by elevated claims experience and increased operating expenses. GWP was up 12.2% to $NZ1.18 billion.

Suncorp New Zealand CEO Jimmy Higgins says the second half is likely to be impacted by the recent floods and land slips across Auckland and parts of the North Island, and repairs for the extensive damage will put pressure on the building industry and the broader supply chain.

“The significance of this event has reached the corridors of global reinsurers who have supported New Zealand insurance markets over the years and events such as these will cause risk models to be updated,” Mr Higgins said.

“Over the next few months, our continued focus will be on  delivering to the customers and communities who are going to need our support more than ever before.”

The insurer, which had received more than 8000 claims as of yesterday, says the gross cost of the event is yet to be determined.

Natural hazard costs for Suncorp across Australia and New Zealand totalled $679 million in the half, exceeding the $580 million allowance, with eight separate weather events resulting in around 53,000 claims. The company has maintained its full-year $1.16 billion allowance, which was increased from $980 million last year.

Suncorp says the El Nino Southern Oscillation (ENSO), which shifts between La Nina and El Nino conditions, is expected to return to neutral this half after three successive La Ninas, which are typically associated with increased rainfall and floods.

Suncorp reaffirmed its target for a 10-12% underlying insurance trading ratio for the financial year.

The company also says the sale of its banking business to ANZ remains on track for completion in the calendar year second half, subject to government and regulatory approvals. The Australian Competition and Consumer Commission is currently reviewing the transaction.