Brisbane-based insurance giant Suncorp Group Limited today has reported a challenging first half for FY26. The result revealed a story of two halves: a headline profit heavily dented by record-breaking hailstorms, and an underlying business that continues to fire on all cylinders. In the context of how hard the first half of FY 2026 was, CEO of Suncorp Group Limited, Steve Johnston, has mentioned, “Suncorp dealt with nine declared natural hazard events through the half, resulting in more than 71,000 claims at a net cost of around $1.3 billion.”
However, the Company delivered resilient underlying margins, maintained strong capital buffers and reaffirmed its commitment to shareholder returns through dividends and an ongoing buy-back program.
For the half year ended 31 December 2025, Suncorp posted net profit after tax (NPAT) of $263 million, down from $1.1 billion in the prior corresponding period. Cash earnings came in at $270 million, compared with $828 million in 1H25.
Yet management struck a confident tone about the underlying health of the business.
“While Suncorp’s 1H26 reported profits and shareholder returns have been challenged by an elevated level of natural hazard costs and lower investment returns over the half, our underlying business remains resilient as we continue to deliver on our strategic imperatives,” said CEO Steve Johnston.
Figure 1: Comparative analysis of profit and loss results of 1H25 and 1H26 of Suncorp Group [Suncorp]
Continuous Natural Hazards Gave Suncorp a Tough Time
The defining feature of the half was severe weather.
Suncorp responded to nine declared natural hazard events. For Suncorp, they generated more than 71,000 claims at a net cost of approximately $1.3 billion, $453 million above the half-year allowance.
Destructive thunderstorms and widespread hailstorms along Australia’s east coast, particularly in south-east Queensland, drove the bulk of claims. The November hailstorm ranked among the costliest in the Company’s recent history.
Read the severity of the November hailstorm below:
Johnston highlighted the broader significance of these events: “These events continue to underscore our purpose and the important role we play in our communities and economies. I am particularly proud of our enhanced ability to respond to such large-scale weather events and claims volumes with speed and efficiency.”
Major natural hazard metrics:
- 9 declared events
- 71,000 claims
- $1.319 billion total cost
- 57% of claims lodged online (up from 51%)
Figure 2: Suncorp response team in affected areas [Suncorp]
Figure 3: Photograph by Robert Johnson capturing a vehicle heading straight into the heart of the storm on Monday, 24 November, at Double Island Point. [Coastwatch]
Underlying Margins Remain in Target Range
Despite the earnings impact, Suncorp delivered an Underlying Insurance Trading Ratio (UITR) of 11.7%, positioning the result in the top half of its 10–12% target range for the seventh consecutive half.
Management credited:
- Continued earn-through of prior pricing increases
- Improved claims management
- Lower reinsurance costs in Consumer
- Strong reserve releases in CTP portfolios
The Company expects the underlying ITR to remain in the top half of its target range through FY26.
Consumer Insurance: Growth Amid Inflation Pressures
The Consumer division recorded:
- GWP growth of 6.3%
- Motor unit growth of 2.0%
- Home unit growth of 0.4%
Gross Written Premium (GWP) reached $4.229 billion, supported by disciplined pricing and enhanced risk selection.
However, the division posted an insurance trading loss of $137 million, largely due to elevated catastrophe costs.
Working claims reflected persistent inflationary pressures:
- Construction and labour inflation in Home
- Parts and repair cost pressures in Motor
Johnston acknowledged competitive conditions but emphasised strategic discipline: “We have maintained a focus on strengthening the mix and quality of our portfolios, with enhanced risk selection and pricing supporting growth in low risk, target segments.”
Notably, 78.4% of Home policies now sit in lower natural hazard risk categories, reflecting portfolio optimisation efforts.
Commercial & Personal Injury: Pricing Offsets Competitive Pressure
The Commercial & Personal Injury (C&PI) division delivered:
- GWP of $2.203 billion (up 2.5%)
- Insurance trading result of $204 million
- UITR of 9.4%
Significant pricing increases in Queensland and NSW CTP schemes supported Personal Injury growth, while Workers’ Compensation premiums declined.
Commercial portfolios faced pricing pressure due to global capital flows and cyclical competition, particularly in property and professional lines.
Nevertheless, prior-year reserve releases of $65 million strengthened the result.
Operating Expenses: Investing for Growth
Operating expenses increased 4% to $893 million, reflecting:
- Investment in the Digital Insurer program
- Artificial intelligence initiatives
- Marketing and brand strengthening
Encouragingly, the total expense ratio improved to 18.0%, down from 18.4%, reflecting revenue growth and disciplined cost control.
AI and Digital Transformation Accelerate
Suncorp continues to scale artificial intelligence across operations.
During the half:
- 15 AI chatbots handled 1.6 million interactions
- More than 100 AI/ML models remained in production
- 20+ GenAI use cases were delivered in FY25
- Crash detection launched in the AAMI app
Johnston reinforced the strategic importance: “We are making good progress on our strategic imperatives to modernise our platforms and transform our operations by leveraging artificial intelligence at scale.”
Digital adoption metrics improved:
- 73.3% of sales conducted online
- 63.1% of service transactions handled digitally
Capital Strength Supports Shareholder Returns
Suncorp ended the half with $700 million CET1 capital above the midpoint of its target range.
The Board declared a fully franked interim dividend of 17 cents per share, representing a 68% payout ratio of cash earnings. Payment is scheduled for 31 March 2026.
The Company also completed $168 million of its on-market buy-back program, cancelling approximately 8 million shares. Management targets around $400 million in buy-backs by the end of FY26.
Johnston stated: “Our disciplined approach to capital management has enabled us to complete $168 million of our on-market share buy-back program… We remain committed to returning excess capital to shareholders.”
FY26 Outlook
Management reaffirmed guidance:
- GWP growth: Bottom of mid-single digit range
- Underlying ITR: Top half of 10–12% range
- Expense ratio: ~50bps below FY25
- CTP reserve releases: ~0.3% of Group net insurance revenue
The Company also sees reinsurance optionality emerging as markets soften.
Figure 4: Outlook of the 1H26 results [Suncorp]
Share Price Performance
ASX: SUN
- Last Price: $15.18
- Change: -5.01%
- 1 Week: -5.42%
- 1 Month: -10.18%
- 2026 YTD: -13.99%
- 1 Year: -26.67%
- Market Cap: $16.44 billion
The share price reflects broader market caution toward insurers exposed to elevated catastrophe risk and earnings volatility.
Investors’ Outlook
Suncorp’s 1H26 result highlights the volatility inherent in general insurance, particularly in an era of escalating climate-related events. Natural hazards reduced reported earnings significantly, yet the underlying metrics tell a more stable story.
Important investor considerations include:
- Resilient underlying margins within the target range
- Strong capital surplus and active buy-back program
- Continued pricing power in Consumer and CTP
- Strategic AI investment to drive productivity
- Reinsurance flexibility as markets soften
If natural hazard costs normalise in the second half, Suncorp appears well-positioned to deliver improved earnings momentum. The Company’s capital strength, disciplined underwriting and digital transformation efforts provide a foundation for sustainable long-term returns.
For long-term investors, the current valuation and capital management strategy may present an opportunity, provided catastrophe volatility remains manageable, and pricing discipline holds firm.
