Suncorp Group, which owns high-profile New Zealand insurer Vero, said a rise in the claims cost from Christchurch's earthquake last February led to it charging a further A$38 million ($48 million) against its first-half results.
Vero New Zealand, headquartered in Auckland's Vero Tower, is one of the country's largest insurers. Its parent company said yesterday that at June 30 last year it had estimated the gross costs from the earthquake would be A$2 billion but more recent estimates had increased to A$2.3 billion.
Suncorp's reinsurance cover for the year ended June 30, 2011 provided full cover for New Zealand events between A$200 million and A$2.5 billion, the business said. "For NZ events over A$2.5 billion, Suncorp shares a small portion of the gross costs with reinsurers," the company said.
Even though the current estimate is still below A$2.5 billion, the company has allowed the A$38 million to ensure a 90 per cent level of confidence of sufficiency and to allow for changes in the Australian/New Zealand dollar exchange rate.
"Should claims arising from the February 2011 earthquake settle in accordance with Suncorp's current estimate, the risk margin will reduce by A$38 million with a corresponding increase in profit," the company said.
Suncorp Group has general insurance, banking, life insurance, superannuation and investment brands in Australia and New Zealand.
The group has about 16,000 employees and has assets of more than A$95 billion.
"Suncorp has five core businesses: personal insurance, commercial insurance, Vero New Zealand, Suncorp Bank and Suncorp Life," the business says.
* Vero: Owned by Suncorp, previously Royal & SunAlliance
* IAG: Owns State and NZI and AMI
* Tower: Originally Government Life Insurance
* Lumley: Owned by ASX-listed Wesfarmers
- Additional reporting: BusinessDesk