Rising Natural Hazard Costs Pose New Challenges Despite Suncorp’s Strong FY25 Results

Strong Financial Performance Amid Natural Hazard Resilience

Suncorp Group Limited has reported a robust financial performance for the year ended 30 June 2025, with net profit after tax reaching $1.823 billion, a significant increase from $1.197 billion in the prior year. This growth was underpinned by favourable natural hazard experience, which was $205 million better than expected, alongside strong investment returns of $766 million and a one-off profit of $351 million from the sale of Suncorp Bank and New Zealand Life Insurance businesses.

The company’s cash earnings rose to $1.486 billion, reflecting solid operational performance across its insurance portfolios. The general insurance segment saw an improved underlying insurance trading ratio, supported by price increases and moderated reinsurance costs, while the personal injury portfolio faced some headwinds from higher loss ratios in key Australian states.

Capital Management and Shareholder Returns

Suncorp maintained a fully franked dividend of 90 cents per share for FY25, with a payout ratio of 71% of cash earnings, consistent with its dividend policy. Demonstrating confidence in its capital position, the company has announced a $400 million on-market share buy-back program commencing September 2025, signaling disciplined capital management and a commitment to returning excess capital to shareholders.

The company’s capital strength is further supported by organic capital generation and proceeds from divestments, with excess common equity tier 1 capital held comfortably in the top half of its target range. This positions Suncorp well to absorb future natural hazard risks and invest in growth initiatives.

Strategic Focus on Digital Transformation and Risk Resilience

Suncorp continues to invest heavily in digital transformation, leveraging artificial intelligence and cloud-based platforms to enhance customer experience and operational efficiency. The insurer reported over 2.8 million digital customer interactions handled automatically by conversational AI, alongside significant time savings for frontline teams through AI-powered knowledge tools.

On the risk front, Suncorp has bolstered its natural hazard allowance to $1.77 billion for FY26, reflecting portfolio growth and a strategic emphasis on resilience. The company operates a state-of-the-art Disaster Management Centre and mobile response hubs to support customers during severe weather events, underscoring its commitment to community and customer service.

Outlook for FY26

Looking ahead, Suncorp expects gross written premium growth in the mid-single digits, driven by moderating price increases as inflationary pressures ease. The underlying insurance trading ratio is forecast to remain in the top half of the 10% to 12% target range, supported by continued premium earn-through and improved reinsurance market conditions, albeit offset by a higher natural hazard allowance.

Operating expenses are expected to remain broadly stable, with an increasing share directed towards business growth initiatives. The company plans to maintain a disciplined capital management approach, targeting a dividend payout ratio around the midpoint of its 60% to 80% cash earnings range, complemented by the announced share buy-back.