Suncorp earnings rose sharply in the last financial year, underpinned by its core insurance operations as the business pushed through price rises in the face of increased claims and hazards expenses as well as other cost pressures.

Group net profit after tax for the 12-month period to June 30 increased to $1.14 billion from $681 million a year earlier, representing a 68.6% rise, while cash earnings surged 86.3% to $1.25 billion.

“This result reflects not only underwriting discipline but the significant contribution from investment markets and the release of the provision we had held for business interruption,” Chair Christine Christine McLoughlin said.

Suncorp’s 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 gross written premiums (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%.

“Unit growth, while moderating in the second half, remained within our tolerances as we continue to prioritise margin by pricing for higher natural hazard and reinsurance costs and broader claims inflation,” Group CEO Steve Johnston said this morning in an earnings webcast.

The New Zealand general insurance business made an after-tax profit of $NZ65 million ($60 million), down 56.7%, but GWP went up 14.3% to $NZ2.4 billion ($2.2 billion).

Suncorp says the business 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.

At the group level the results demonstrate “strong momentum” in its underlying business but Suncorp says it also shows the impact of elevated natural hazard activity on its operations.

The third consecutive La Nina weather pattern, experienced across Australia and New Zealand for the majority of the 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.

Mr Johnston, who was asked about the “political” impact from rising insurance premiums, says the hardening rate trend is partly the result of a “once in a generation reset of risks from global reinsurers”.

“We’ve seen it over the past two or three years… I think the dynamics are reasonably well understood by regulators and politicians,” he said.

On the industry’s part, he says insurers “have to respond to the customer need and we have to create affordable insurance products”.

“It might not be the same as the ones we’ve traditionally provided…they might be slightly different but as an industry we’ve got to regroup and do better at that,” Mr Johnston said.

“We have to continue as an industry to articulate the value of insurance, the resilience and mitigation issues…the role of government to support that with investment. We’re making progress but we’re not there yet.”

He also touched on the planned $4.9 billion sale of the bank to ANZ, which was blocked by the Australian Competition and Consumer Commission (ACCC).

“While we have only had a couple of days to review the ACCC determination, we’ve seen nothing that has changed our view on these matters or our level of confidence that the deal will ultimately be approved.”

Suncorp is supporting ANZ’s decision to take the case to the Australian Competition Tribunal with the process expected to take up to eight months.