Suncorp to write-down $500 million in life business
Suncorp Group will write-down $500 million in its life insurance business due to the highly uncertain nature of conditions currently affecting the Australian life sector.
The revised assumptions will see a write-down of goodwill and other intangible assets by approximately $350 million after tax; and loss recognition on some products and other reserving adjustments to policy liabilities of approximately $150 million after tax.
Group CEO Patrick Snowball said the changed assumptions recognised the industry headwinds and deteriorating situation.
“The structural and cyclical life insurance issues have now been recognised by most life insurance companies and reinsurers, however, we are frustrated that industry change is not occurring at a more rapid pace. This is continuing to impact Suncorp Life earnings and the potential for further deterioration needs to be reflected in our assumptions. We believe our revised approach to setting forward-looking assumptions acknowledges the structural challenges appropriately,” he said.
Meanwhile, lower natural hazard claims, which were approximately $75 million below allowance for the first four months of the 2014, and expected reductions in reinsurance costs will impact on average written premium growth in both the 2014 and 2015 financial years.
According to Suncorp Life, the insurer expects to report an underlying profit after tax of between $75 million and $85 million for the 2014 financial year, while renewing its main catastrophe programme to a limit of approximately $6 billion at a discount to the 2014 financial year programme.
