Suncorp’s strategic review of its Australian life insurance business continues to grind on, says chief financial officer Steve Johnston – with options remaining on the table including additional reinsurance, a joint venture or even “full divestment”.
Suncorp CFO Steve Johnston appeared alongside chief executive Michael Cameron yesterday to announce the group's full-year net profit of $1.08 billion.
The company also announced it will be spending $100 million over the next 12 months to create a "single digital experience" for the entire Suncorp network as well as a "brand refresh".
The life insurance division of Suncorp, Asteron Life, recorded a net profit of $34 million for the 2017 full-year, down 50 per cent from 2016's $68 million.
Mr Johnston attributed the fall to deferred acquisition costs, noting that as long-dated yields rise (as they did in 2016-17) a "negative market adjustment is incurred".
Suncorp is "committed to improving the profitability of the Australian life business", Mr Johnston said, namely through a "comprehensive optimisation program, which we’re confident will lead to an improvement in claims outcomes, reduced costs and a more sustainable business".
"We’re also seeing the need across the industry to review pricing of income protection given the recent industry claims experience," he said.
"The optimisation program sits alongside a strategic review, which is considering a number of options, including additional reinsurance, partnerships, through to a full divestment of the business.
"The review is ongoing, and we’ll keep the market fully informed as we progress."
S&P placed Asteron Life on 'negative watch' in February 2017, noting the business is now only 'strategically important' to Suncorp (a downgrade from its previous 'core' status).
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