Suncorp ran its annual general meeting yesterday as an entirely virtual event, dominated by comments from the board on the effects of the pandemic on its various business operations.
The meeting began with 272 shareholders listening in and watching online, as the board hinted at the coming struggle to balance profits against business sustainability and customer goodwill.
In his recap of the FY 2020 results, CEO Steve Johnston noted the group delivered a net profit after tax of A$913 million, which included the $285 million after tax profit from the sale of the Capital S.M.A.R.T and ACM Parts businesses and a $89 million non-cash impairment charge relating to the core banking platform.
Insurance (Australia), Suncorp's largest division, delivered profit after tax of $384 million – a result impacted by lower reserve releases, higher reinsurance costs and the impact of low yields.
"We also strengthened our reserves for COVID-19-related business interruption claims, even though we remain confident in both the intent and specific exclusion wordings contained in those policies," Johnson said.
"Our banking and wealth business delivered profit after tax of $242 million as we established provisions for the likely impairments as a result of COVID-19.
"In New Zealand, our business delivered another strong result with a profit after tax of $259 million."
In her opening remarks, chairman Christine McLoughlin called for governments, businesses and the community to work together to enable the Australian and New Zealand economies to recover as quickly as possible in the months ahead.
"The reopening of borders is key to helping restart our economy," she said.
"We understand that this must be done carefully and sensibly, with the health and safety of the community in mind; but it will be critical step to take us forward."
The majority of the opening statements from the CEO and chairman, and the question and answer segments that followed, were directed at Suncorp's insurance businesses.
Johnston said resilience and mitigation are crucial, and the company has "repeatedly called for a co-ordinated response from all levels of government to reduce risk and create more sustainable communities."
Notably Johnson pointed to the danger of underinsurance or worse non-insurance by homeowners, which then leaves taxpayers to foot the bill. He called for more coordination between all levels of government and the industry to improve the situation.
"Today, just three cents in every dollar of disaster funding is spent in preparation and adaptation with 97 cents spent mopping up and picking up the pieces," he said.
"It’s a ratio that doesn’t make sense."
"We recognise our role in improving our products and ensuring they deliver value for our customers. But as the climate changes and risk increases so too does cost."
During the question and answer session a shareholder questioned the board on rising car insurance at a time when the falls are being driven far less frequently, are safer and, being an extra year older will have a lower replacement value.
McLoughlin parried this, pointing out that this situation is under review but a balance must be made between all stakeholders including shareholders.
Johnston also suggested that insurance companies have a