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’s strategic review of its Australian life insurance business continues and “full divestment” is one of the options, the bank confirmed yesterday.
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).