Suncorp reveals reinsurance recoveries of $135m, lifts natural hazard allowance for FY25

Australian insurer Suncorp recorded AUD 135 million of reinsurance recoveries for the financial year ended June 30th, 2024, as the total cost of natural hazard events in the period came in below the Group’s allowance.

Announcing its financial year results today, Suncorp Chief Executive Officer (CEO) Steve Johnston revealed that over the past five years, the firm has managed around 700,000 natural hazard claims at a cost of more than $9 billion.

This increase in both frequency and severity of weather events has impacted the cost of reinsurance and the amount Suncorp sets aside in its natural hazard allowance.

“Together these input costs have increased by more than $1 billion and much of this has unfortunately flowed through to customers,” said the CEO.

For FY 2024, Suncorp’s natural hazard bill reached AUD 1.235 billion, which is AUD 125 million below the Group’s allowance for the period. All in all, the firm managed 12 separate weather events in Australia and one event in New Zealand, as well as events covered by the Cyclone Reinsurance Pool.

Suncorp’s insurance service result for FY24 increased to AUD 997 million from AUD 793, and for this year included a benefit of AUD 135 million from reinsurance recoveries.

Last year, the Brisbane headquartered insurer adjusted its reinsurance program structure, reducing the top of the tower by AUD 400 million and increasing the retention by AUD 100 million, and opting against the renewal of its aggregate excess of loss (XoL) cover.

The core catastrophe reinsurance program covers the company’s home, motor, and commercial property portfolios across Australia and New Zealand. The program provides protection for losses between $350 million and $6.4 billion (including one full prepaid reinstatement), and the $350 million retention is for a first large event and the retention for a second large event is $250 million.

As the firm made recoveries under its 2023-2024 reinsurance program and in light of the increased frequency and severity of events, Suncorp has raised its natural hazard allowance for FY25 to AUD 1.56 billion, and renewed its comprehensive reinsurance program successfully at a cost broadly in line with the prior year.

For FY25, Suncorp maintained its maximum event retention of AUD 350 million for a first large event and lifted the top of its tower to AUD 6.75 billion.

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