Rising Weather Claims Challenge Suncorp’s Profit and Growth Outlook

A Challenging Half-Year for Suncorp

Suncorp Group Limited has reported a significant drop in net profit after tax (NPAT) to $263 million for the half-year ended 31 December 2025, compared to $1.1 billion in the same period last year. The steep decline primarily reflects an extraordinary $1.3 billion in natural hazard claims, which exceeded the company’s allowance by $453 million. This surge was driven by nine declared weather events, including severe thunderstorms and one of the costliest hailstorms in recent Australian history, particularly impacting south-east Queensland.

Despite these headwinds, Suncorp’s underlying insurance trading ratio (UITR) held steady at 11.7%, comfortably within the top half of its target range. This resilience was supported by solid growth in the Consumer Insurance portfolio, which saw gross written premium (GWP) increase by 6.3%, driven by unit growth in both Motor and Home insurance segments.

Operational Highlights and Strategic Progress

The insurer’s disciplined approach to capital management remains evident, with a strong Common Equity Tier 1 (CET1) capital position $700 million above the midpoint of its target range. The Board declared a fully franked interim dividend of 17 cents per share, representing 68% of cash earnings, and completed $168 million of an on-market share buy-back program, aiming for a total of $400 million by the end of FY26.

Suncorp continues to invest in digital transformation and artificial intelligence, aiming to modernise platforms and enhance operational efficiency. The company highlighted its improved disaster response capabilities, including rapid claims processing and community engagement initiatives, underscoring its commitment to supporting customers through severe weather events.

Segment Performance and Market Dynamics

The Consumer Insurance segment experienced a trading loss due to elevated natural hazard costs but benefited from pricing adjustments and portfolio quality improvements. Commercial and Personal Injury Insurance faced margin pressure from increased competition and claims inflation, though prior year reserve releases provided some offset. Suncorp New Zealand’s results were impacted by a soft commercial market and lower premiums, though underlying margins improved due to benign claims experience.

Investment income declined, affected by negative mark-to-market movements amid rising risk-free rates, though underlying yields remained robust at 4.9%. Operating expenses rose modestly, driven by growth investments and inflationary pressures, but expense ratios improved slightly due to revenue growth and cost discipline.

Looking Ahead

For the full year, Suncorp expects GWP growth to be at the lower end of mid-single digits, reflecting the current commercial insurance cycle in Australia and New Zealand. The underlying insurance trading ratio is forecast to remain in the top half of the 10% to 12% range, supported by continued premium rate earn-through in Consumer and Commercial portfolios. The company remains focused on delivering sustainable returns above its cost of equity while maintaining capital discipline and shareholder returns.