Suncorp increases programme, benefits from price tension

Australia’s largest general insurer and largest personal injury insurer Suncorp will increase the top of its reinsurance programme to A$6.9 billion following an extensive review of the portfolio, the company’s buyer told Monte Carlo Today.

Anthony Day, CEO, commercial insurance, Suncorp, which ceded around A$1 billion ($698 million) of business in the 2013/2014 period, said that the company has made a number of tweaks to its programme compared with the year before.

“Annually Suncorp reviews its modelling in response to changes to exposure, risk appetite and assumptions,” Day said.

“This leads to changes in the limit of the main catastrophe programme and potentially the retention. This year the detailed review led to an increase in the top of the programme, to A$6.9 billion.”

Day said there will be no big move away from traditional reinsurance this year, despite the growing number of options available, although the company does work with a small amount of alternative capacity.

“Each year Suncorp reviews its counterparties, taking into account the strength, relationships and available capacity. At this stage, we utilise a small number of alternative capacity providers,” he said.

He noted that the trend of insurers merging has been beneficial to Suncorp because it increases competition and, therefore, results in better pricing.

“The reinsurance market is a global market, so it’s difficult to consider in isolation. However, the insurance industry has undergone significant consolidation, reducing available programmes for the local reinsurers.

“As in most areas of the world, these reinsurers continue to look for growth. This creates price tension which benefits companies like Suncorp,” Day explained.

Switching to discuss the dynamic between reinsurance companies merging, he said it is a case of waiting to see who will be next in the market at the moment.

“We will also be watching how insurers and reinsurers can achieve growth in the current difficult environment,” he said.

Suncorp prefers to focus on organic growth, he said, although it would consider the right deal. “Suncorp continues to look for growth mainly through organic opportunities, but smaller inorganic opportunities may also be considered,” Day said.