Suncorp New Zealand has reported a fall of more than $100 million in annual net profit, attributing the decline to a softening commercial environment and an increasing number of extreme weather events.
The country’s second-largest general insurer, which operates Vero and has a majority stake in AA Insurance, reported net profit after tax of $316 million for the 12 months to June, 24.6%, or $103 million, less than it reported a year earlier.
In a statement, chief executive Jimmy Higgins said the financial results had been driven by "disciplined underwriting” and reflected an “increasing trend” of extreme and frequent weather events.
“Natural hazard claims were elevated this year, above Vero’s annual allowance, following a series of major storms that had a significant impact on New Zealand communities,” he said.
Natural hazard event costs were $109 million higher than Suncorp NZ had budgeted for the full year, with the majority of costs – $81 million – occurring in the second half of the financial year.
The NZ insurer did not provide the number of claims it paid out in its 2026 financial year, and Higgins was not available for an interview to discuss the results.
Premium cash still close to $3 billion
Gross Written Premium (GWP) for the New Zealand arm of the Australian general insurer fell by 4.8%, or $140 million, to $2.756 billion in the June year, compared to a year ago. GWP is the total amount of money customers are required to pay for insurance coverage on policies issued by an insurer.
Suncorp’s annual report attributed the drop in annual GWP to a “softer” commercial market cycle and the exit of an unnamed consumer book of business in the intermediated channel.
From the premium pool of $2.75 billion, AA Insurance contributed the majority through more than $1.3 billion in GWP, while $854 million came from Vero’s intermediated consumer premiums and $868 million from Vero’s intermediated commercial premiums.
Suncorp said its AA Direct channel reported a “solid performance”, with unit growth in its home and motor portfolios up 3.2%.
AA Insurance is a joint venture between the NZ Automobile Association (AA) and Vero Insurance NZ. Vero NZ holds a 68% stake in AA Insurance while the AA holds the remaining 32%. Suncorp NZ is the sole owner of Vero.
The company’s underlying insurance trading ratio (UITR) increased to 19.5% for the year ending June from 19.4%, although the insurer noted it decreased in the second half of the year to 17.6%.
“The lower margin in the second half reflects the commercial cycle and pricing response as inflation moderated in consumer lines,” Suncorp said in its annual report.
As defined by the company, the UITR is adjusted for reserve releases and natural hazards claims costs above or below long-run expectations, investment income mismatch and any abnormal expenses in the prior year.
Insurers use a UITR to measure core operating profitability. The ratio determines how much profit is made from the insurer’s core business for every dollar of premium it earns. A higher UITR is a sign an insurer is generating stronger profit margins compared to the premium revenue it collects.
Suncorp NZ’s UITR has trended upwards over the last few years, rising from 12% in 2024 to 19.4% in 2025, and now 19.5% in 2026.
El Niño ahead
Suncorp NZ’s Australian parent told the ASX in July that the insurer had secured A$350 million for its main catastrophe program across Australia and NZ for the 2027 financial year. This maintains the maximum event retention for a first and second large event.
The main catastrophe program covers the home, motor and commercial property portfolios in Australia and NZ, protecting losses between A$500 million and A$6.4 billion and one full prepaid reinstatement.
“The structured, multi-year reinsurance arrangement announced in July 2025 remains in place, providing protection for losses between AUD$350 million and AUD$500 million in relation to the first and second large event,” Suncorp said in July.
“The buydown cover in New Zealand also remains in place through the aggregate reinsurance cover, protecting NZ$200 million and the group’s maximum event retention.”
Buydown cover reinsurance is a specialised secondary reinsurance structure that primary insurance companies use to lower their net financial retention or attachment point for catastrophe losses.
Higgins said forecasters are expecting a strong El Niño – a warm phase – to develop over the coming summer and different parts of the country could face a mix of stronger winds, drier conditions and heavier rainfall.
“It’s a timely reminder that preparation can’t wait until the next event is on the doorstep. Building a more resilient New Zealand is vital to keeping insurance accessible and affordable for the long term,” Higgins said.
In a national adaptation plan progress assessment released on Tuesday, the Climate Change Commission said natural hazards, including climate change, were costing Central Government and insurers over $4 billion a year. Nationwide action to adapt is not keeping pace with growing climate risks and is leaving the country “inadequately prepared”, it said.
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