Suncorp Group's New Zealand insurance units posted a 57 per cent decline in first-half profit, mainly reflecting the Kaikoura earthquake and additional 'over-cap' claims from the 2010/11 Canterbury earthquakes.

Suncorp New Zealand's general insurance and life insurance businesses had a profit of $37 million, down from $87m a year earlier. The decline was mostly in Suncorp's NZ general insurance business, which operates Vero Insurance and AA Insurance in a joint venture, recording a 72 per cent drop in profit to $19m. Its life insurance businesses, Asteron Life and AA Life (a JV), had a 5.3 per cent drop in earnings to $18m.

The parent company today reported a 1.3 per cent gain in first-half profit to A$537m while also saying it was looking at strategic alternatives for its life insurance arm, which could include a sale or partnership. Suncorp's New Zealand life insurance business isn't covered in the review.

The parent company's results pack, released to the ASX today, shows operating expenses for New Zealand rose to A$203m from A$186m, offsetting lower expenses from Suncorp's insurance and banking & wealth businesses across the Tasman. The parent's results show net costs for natural hazard events included A$28m of internal reinsurance on the Kaikoura earthquake. That was the Australian group's third-largest of 11 natural disaster events in the first half after storms in South Australia and Victoria in November and December.


Net of internal reinsurance, the Kaikoura earthquake costs were $20m.

"Risk of further aftershocks from the Kaikoura earthquake remain over the coming months, however, the SNZ balance sheet remains well protected by the group reinsurance programme," the company said. "Reinstatement of catastrophe cover following the Kaikoura event will result in higher reinsurance expenses for the FY2017 year."

The parent's accounts show that net incurred claims from New Zealand rose 23 per cent to $372m. The actual claims expense in New Zealand soared 179 per cent to $1.33 billion but was offset by a 455 percent surge in reinsurance and other recoveries to $955m. Its insurance trading ratio dropped to 3.8 per cent from 14.8 per cent.

SNZ recorded the strongest gain in gross written premiums in home insurance, which rose 8.7 per cent to $226m in the first half. Commercial insurance rose 1 per cent to $298m while motor insurance rose 6.5 per cent to $164m.

The parent company today announced "an optimisation programme" for its Australian Life insurance division and is exploring "strategic alternatives" for that business. Suncorp NZ chief executive Paul Smeaton said the New Zealand life business was "out of scope" for the optimisation programme and operates as a strategically important standalone entity.
Suncorp's ASX-listed shares rose 0.2 per cent to A$13.05 and have gained 20 per cent in the past 12 months.