Suncorp rains down dividends despite La Nina challenge

CEO Steve Johnston said bumping up premium prices mitigated the effects of claims rising 9.3 per cent to $3.2 billion, with La Nina's torrential rain prompting 53,000 natural hazard claims in the second half of 2022.

Despite the headwinds presented by natural disasters and inflation, Mr Johnston affirmed Suncorp's targets for financial year 2023, claiming the outlook for insurers remained rosy.

"The value ascribed to insurance products has never been greater," he said on Wednesday.

Consequently, the group announced a plump dividend payout of 33c, compared with 23c in the last corresponding period.

The market welcomed the news, with Suncorp's share price shooting up 4.3 per cent in the first hour of trading.

Driving the surge in revenue was an increase in car and home insurance premiums, with gross written premiums growing 9.0 per cent in Australia and 12.2 per cent in its New Zealand. 

Additionally, efficiency benefits as well as a relative decrease in investment costs caused operating expenses to fall 3.1 per cent, despite rising inflation.

Meanwhile, the group's banking arm performed strongly as it continued to prepare for its takeover by ANZ. 

Profit after tax grew 28 per cent on the back of a 10.4 per cent increase in home lending, while the bank's cost-to-income ratio decreased to 49.9 per cent from 57.6 per cent.

Mr Johnston said the deal remained on track, even as the Consumers Federation of Australia urged the competition regulator to block the $4.9 billion sale.

Moody's vice-president Frank Mirenzi said Suncorp's strong earnings results were likely to continue, although hazards loomed for the bank.

"Over the second half of the year, we expect increasing prices to benefit the insurance business," he said.

"However, the credit cycle may turn, raising risks and credit costs for the bank."