Suncorp Group (ASX:SUN) reported a challenging first half, with management citing elevated natural hazard costs and investment market impacts as key drivers of weaker headline profitability versus the prior period. Speaking from the company’s Sydney office, CEO Steve Johnston said the insurance industry faced “a challenging half” as it responded to extreme weather, but emphasized Suncorp’s focus on supporting customers as central to long-term value creation.
Profitability pressured by natural hazards and investment impacts
Suncorp reported group net profit and cash earnings of AUD 270 million, which Johnston said were “well down” on the prior period. The result reflected a net natural hazard cost of AUD 1.32 billion for the half, which was above the company’s allowance. CFO Jeremy Robson later quantified the overshoot at AUD 153 million above the allowance, describing it as “the highest retention ever in a half” and “one of the most severe halves this century,” with hail being the dominant driver.
Management also pointed out the prior period result included income related to the sale of Suncorp Bank (referenced as AUD 252 million), affecting comparability.
Premium growth led by consumer; commercial more mixed
On operating performance, management highlighted continued momentum in the consumer portfolio. Johnston said consumer business growth remained “at the top end” of guidance, with an underlying insurance trading result (ITR) in the top half of the company’s 10%-12% target range at 11.7%. Robson said underlying insurance performance was up 6%.
Across the group, Johnston said premium growth was 2.7%, driven by both rate and unit growth. Key portfolio comments included:
- Home written premium up 7%, with unit growth of 0.4%; management said it continues to grow share in low and medium natural hazard risk segments.
- Motor portfolio up 5.8%, described as a satisfying outcome in a competitive market.
- Commercial contracted over the half, which management attributed to a softer market environment and heightened competition.
Robson said Suncorp expects acceleration in gross written premium growth in the second half due to pricing already implemented, and clarified full-year FY26 growth guidance as “around the bottom of the mid-single digit” range. In the Q&A, management confirmed that “mid-single digits” was 4%-6%, with “bottom” meaning 4%.
Weather events dominated claims; response capabilities highlighted
Suncorp reported it dealt with nine declared natural hazard events during the half, with hail accounting for approximately three-quarters of event-related claims—more than AUD 700 million of hail losses, according to Johnston.
Johnston stressed that the financial impact understates the broader customer and community consequences and highlighted operational response initiatives, including use of the company’s event management center in Brisbane, mobile disaster response teams visiting 27 affected communities, and a pop-up motor assessment site where more than 4,000 vehicles were assessed over two weeks to speed up repairs.
Robson said the company remains confident its natural hazard allowance is set at an appropriate level, noting that over an 11-year period the company would have cumulatively been below the allowance by over AUD 1 billion, even including this first-half outcome. For the second half, he said the allowance “remains the best guide” for expected experience, and management noted January experience was “within the allowance.”
Reinsurance, expenses, and capital management
Management said it continues to review reinsurance options as markets soften, with Robson stating the program’s objectives are optimizing capital efficiency relative to volatility and maximizing long-term shareholder value. He said the current program provides “robust protections” including drop-down cover in the second half, with retention for further events limited to AUD 260 million, and lower for subsequent large events.
On expenses, Robson said total expenses grew 4% while the total expense ratio reduced further. He attributed expense growth mainly to investment in growth-related initiatives including the digital insurer policy administration system, AI investments, and increased marketing amid elevated competitor activity, while run-the-business expenses rose modestly as productivity improved and technology costs increased. The company reiterated an operating expense ratio expectation of approximately 25, with a higher proportion of expenses allocated to growth.
Suncorp’s capital position remained strong. The board declared an interim fully franked dividend of AUD 0.17 per share, with Robson citing a 68% payout ratio—around the midpoint of the company’s 60%-80% target range. The company completed an AUD 168 million buyback over the half and said it expects to resume buybacks after the half-year results, reaffirming a target of AUD 400 million by FY2026. Management said the earlier pause was driven by timing and trading considerations around the half-year period rather than capital constraints.
Technology roadmap: Digital Insurer and AI programs
Johnston said Suncorp’s Digital Insurer platform modernization and AI initiatives remain on track. He noted the first release of the new policy administration system went live in April last year for new home and motor business and has begun delivering more automation. He said the next release, for the AAMI brand’s home and motor new business, is targeted around the middle of the year, with migration to follow.
On AI, Johnston said the company aims to be toward the front of the adoption curve and described “agentic AI” work shown in February, with initial deployments planned across claims. He said Suncorp sees “material opportunities” for AI to improve product design, customer processes, and reduce loss and expense ratios, while addressing affordability. Robson characterized AI as a “net opportunity,” particularly in claims management and manufacturing insurance products, while management also referenced ongoing work on risk settings and reskilling staff as AI is deployed.
About Suncorp Group (ASX:SUN)
Suncorp Group Limited provides insurance and banking products and services to retail, corporate, and commercial customers in Australia and New Zealand. The company operates through Consumer Insurance; Commercial and Personal Injury; and Suncorp New Zealand segments. The Consumer Insurance segment provides insurance products, including home and contents, motor, and boat insurance products. The Commercial and Personal Injury segment offers commercial motor, commercial property, marine, industrial special risks, public liability and professional indemnity, workers’ compensation, and compulsory third party products.
