BUSINESSDESK: Vero Insurance New Zealand, the general insurer owned by Australia's Suncorp Group, expects to complete more than half its claims from the Canterbury earthquakes in the coming year, after returning to profit in the latest financial year.
Suncorp's New Zealand general insurance unit made a profit $25 million in the 12 months ended June 30, turning from a loss of $271 million a year earlier, when its books bore the brunt of the Canterbury quakes that devastated the country's second-biggest city.
The return to profit came from a 19% increase in gross written premiums to $1.07 billion after lifting premiums in response to higher reinsurance costs.
Vero is working through a backlog of claims from the Canterbury quakes and signalled it expects to have completed in excess of 50% of the 19,000 claims lodged within the next year.
"Vero and other major insurers continue to make good progress with the management of claims from five major earthquakes around Christchurch in 2010 and 2011," Suncorp says.
"Vero will also focus on reshaping its business strategy and publicly promoting changes needed in disaster and earthquake insurance management in New Zealand."
The spate of earthquakes in and around the city caused some $20 billion in damage and the Reserve Bank expects the insurance bill to rise as high as $30 billion to cover related costs such as employment protection.
The Australian group didn't break out details of earnings for its New Zealand life insurance business that trades under the AA Life and Asteron brands.
Suncorp's group profit rose to $A724 million in the period from $A453 million a year earlier. Group general insurance earnings rose 26% to $A493 million on a 9.3% bump in gross written premium to $A7.96 billion.
The life insurance business jumped 69% to $A251 million. The banking unit's earnings dropped 69% to $A26 million after it took impairment charges of $A408 million on bad debts in its non-core business.
The board declared a final dividend of 20 Australian cents a share and a special dividend of 15 cents per share, taking the total annual payout to 55 cents.
Suncorp's shares rose 0.3% to $A8.85 in trading on the ASX today, and have gained 5.4% this year.
The stock is rated an average "outperform" based on 15 analyst recommendations compiled by Reuters, with a median target price of $A9.