Suncorp CEO John Mulcahy says claims that the insurance industry cycle has reached a dangerous low point are unfounded.

The company yesterday announced a 16% rise in profit to a record $1.064 billion. Mr Mulcahy says premiums are due for a correction but disagrees they are dangerously low.

“We are in a very competitive environment,” he told the company’s AGM in Brisbane. “Commercial rates could flatten out to some extent, but that depends on other events.”

Mr Mulcahy says Suncorp has no plans to increase commercial premiums in the next 12 months, but he doesn’t rule out a price rise should market conditions call for it.

Premiums have fallen year on year since 2004, leading IAG CEO Mike Hawker to flag his inclination to reverse the trend by raising commercial premiums in the current financial year.

Analysts have predicted that, barring a catastrophe, premiums across commercial lines will fall until 2009. Suncorp revealed yesterday that some classes have fallen 9%.

Mr Mulcahy says Suncorp will not lower premiums to maintain market share but will price appropriate to risk.

The integration of Promina into Suncorp has also raised questions about how competing brands will be managed in different markets. Suncorp’s flagship GIO brand, for example, is now in direct competition with Promina’s AAMI in the NSW compulsory third party market.

Mr Mulcahy pooh-poohs the scrapping of any brands and says Suncorp will adopt a “side by side” rather than a “head to head” strategy. He also dismisses talk of big job losses as back office and IT systems are integrated.

Suncorp is 100% committed to extracting the full benefit of its Promina play, he says, and there are no plans to examine other merger and acquisition opportunities in the near future. (See CORPORATE for results)