Suncorp: Full limits remain available on all private reinsurance covers

Despite a costly end to the 2023 calendar year from severe weather and catastrophes, Australian insurer Suncorp has said that the full limits remain available from all of its private reinsurance coverage.

As we reported recently, Suncorp had announced that its claims from events towards the end of the last calendary year had reached over 28,000 across Queensland, New South Wales and Victoria, with more than 20,000 claims from residential property insurance.

This was from the severe storms that affected eastern Australia through the Christmas and New Year period, as well as from the remnants of tropical cyclone Jasper.

This morning, Suncorp has reported that its losses from natural hazard events in the first-half of its fiscal year 2024, so the second-half of calendar year 2023, have now reached $568 million.

The so called East Coast Holiday Storms, so the severe weather from around the Christmas and New Year period, are the largest contributor to Suncorp’s catastrophe losses for its first-half of the financial year.

These events have now driven a net estimate costs of $212 million on their own for the insurer, while total natural hazard costs from events larger than $10 million have now reached $380 million, with another $188 million from other natural hazard events in the period.

Suncorp highlighted today that its natural hazard budget for fiscal year 2024 is $1.36 billion, so less than half has been used through the first-half of its fiscal year.

The company highlighted its reinsurance arrangements, saying it has a comprehensive program in place for major events, with a $350 million first event retention under its main catastrophe reinsurance tower.

Suncorp also has a dropdown aggregate protection to cover medium-sized events and a 30% quota share arrangement relating to its Queensland homeowners insurance portfolio.

We covered Suncorp’s last reinsurance renewal here.

“The full limits remain available on all of the Group’s reinsurance covers going into the second half of the financial year,” the insurer said this morning.

Also explaining that, “The Group will recover approximately $14 million as part of the reinsurance arrangements with the Federal Government’s Cyclone Reinsurance Pool, in relation to Cyclone Jasper.”

Also of note, Suncorp has strengthened its reserves for some natural hazard events, including $32 million mostly related to loss development from the Newcastle Hail event from May 2023, along with a range of other events.

There has also been a further $32 million of reserve strengthening in Suncorp’s homeowners book, largely due to water damage claims and fire claims from the second-half of fiscal year 2023.

The company said that its pricing has been updated to reflect the loss experience of these events.

Finally, Suncorp also updated the market about its experience with tropical cyclone Kirrily in recent days, which made landfall north of Townsville as a category 2 cyclone on Thursday evening, which it says has so far resulted in around 500 claims.

However, the company highlighted that the remnants of the cyclone could again drive further costs, as was seen with Jasper.

CEO Steve Johnston said, “Communities in the path of ex-TC Kirrily were largely spared the worst of the wind and rain as the system downgraded and quickly headed further inland.

“While this means we have seen less damage than expected in the more densely populated coastal communities in North Queensland, we are seeing significant rainfall and storms in southern parts of the state, and we will be closely monitoring the movements of the system over coming days.”