Suncorp, Australia's second-largest general insurer by market share, said on Thursday it was considering "strategic alternatives" for its life insurance division after reporting a 1.3 per cent rise in half-yearly net profit.
The options for the life insurance division could include a sale or partnership arrangement, but no process has been started, a Suncorp spokeswoman said.
![Suncorp Group CEO Michael Cameron.](/web/20170209025333im_/http://www.smh.com.au/content/dam/images/g/q/l/0/z/x/image.related.articleLeadwide.620x349.gu8syr.png/1486594266352.jpg)
Suncorp reported a net profit after tax of $537 million for the six months ended December 31, up from $530 million a year earlier, after top-line growth of 4.3 per cent. It forecast margins would grow in the second half and raised its fully-franked interim dividend by 10 per cent to $0.33 a share.
The Brisbane-based company said earnings from its life insurance division, which has around a 5 per cent share of the Australian market, fell 52 per cent to $11 million in the first half.
Australia's life insurers have faced rising claims rates and more policy cancellations since Australian media in March last year revealed the use of discredited methods to refuse legitimate claims for insurance payouts.
ANZ is considering the sale of its life insurance and wealth division, with a book value of $4.5 billion, while National Australia Bank last year sold 80 per cent of its life insurance unit to Japan's Nippon Life for $2.5 billion.
Australia is an attractive market for foreign insurers because the population and economy are growing more quickly than in most other developed markets and the regulatory regime is more stable than in emerging markets, analysts say.
Suncorp's results were hit by natural hazard claims costs in Australia and New Zealand of $319 million for the first half, $19 million above its natural hazard allowance.
That includes the impact of a deadly earthquake in New Zealand in November, as well as damage from storms in southern Australia in November and December.
Suncorp, whose brands include AAMI, GIO, Shannons, Vero and Apia, has surpassed its natural disaster budget at every half-year result since 2013.
Reuters