Earlier this year, Australia and New Zealand faced an onslaught of natural disasters that put strain on the two nation’s top insurer: Suncorp. Several estimates have been made as to how much the disasters cost the company, but Suncorp had not released any official statement regarding the issue. Yesterday, however, their silence was broken as the company hopes to improve its relationship with several reinsurance company in an effort to increase its profits for the 2011-12 fiscal year.
According to Suncorp, the two devastating earthquakes that rocked New Zealand – one in September of last year and another in February – cost more than $2.1 billion in damages. Most estimates from risk management firms were much lower. The earthquakes will cost reinsurers $2 billion.
Also an issue of concern is the acute economic impact of the floods in Queensland. Suncorp was explicitly chastised by the Australian government for their inability to cover the full cost of the disaster. Much of the financial burden fell to the government, a fact that has prolonged the recovery effort.
According to Suncorp CEO Patrick Snowball, the company will be focusing primarily on improving its underlying insurance trading results. However, rising reinsurance costs are making that a lofty goal. For the time being, the company will focus on reinsurance and retention in the hopes that it will help them recover from recent catastrophes. If not, Suncorp may yet find itself in more financial trouble.