SYDNEY, Feb 9 (Reuters) - Suncorp Group Ltd, 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 percent 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 reported a net profit after tax of A$537 million ($410.16 million) for the six months ended Dec. 31, up from A$530 million a year earlier, after top-line growth of 4.3 percent. It forecast margins would grow in the second half and raised its fully-franked interim dividend by 10 percent to A$0.33 a share.
The Brisbane-based company said earnings from its life insurance division, which has around a 5 percent share of the Australian market, fell 52 percent to A$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.
Australia and New Zealand Banking Group is considering the sale of its life insurance and wealth division, with a book value of A$4.5 billion, while National Australia Bank last year sold 80 percent of its life insurance unit to Japan’s Nippon Life for A$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 A$319 million for the first half, A$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. ($1 = 1.3092 Australian dollars) (Reporting by Jamie Freed; Editing by Dan Grebler)