Suncorp revises Life approach
Queensland-based insurer, Suncorp has reported a solid full-year performance, with net profit up 48.68 per cent to $730 million, but its life business continues to pose challenges and prompted a revised approach including to the way it handles independent financial advisers (IFAs).
The results were released to the Australian Securities Exchange (ASX) today, with the directors rewarding shareholders with a final ordinary dividend of 40 cents per share and a special dividend of 30 cents per share.
Suncorp Life reported a net profit of $92 million with the company stating that the decrease in was attributable to a $30 million reduction in planned profit margin release to $69 million reflecting the increase in reinsurance coverage and the impact of strengthening claims and lapse assumptions. However it was the company's future approach to its life business which will be of most interest to financial planners and risk advisers with Suncorp saying it had moved aweay from the traditional industry practice of setting assumptions using ‘historical averages' to a more forward-looking basis.
"This revised approach explicitly reflects the time Suncorp Life believes it will take to work through the industry structural challenges, which include product design, premium structures and IFA remuneration," the ASX announcement said. "It recognises the potential for dislocation as the industry transitions and then recovers in the medium term."
The ASX announcement noted improved sustainability in the advice channel "through an increased proportion of IFA new business written electronically and on hybrid commission".
It also noted that individual new business volumes had fallen by five per cent, with Australian IFA channel sales down 10 per cent on the previous year "driven by constrained market growth and a prioritisation of value over volume".
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