Suncorp’s life insurance division is set to take a fall in net profit after tax of more than 75 per cent, mostly due to the negative market adjustments driven by the increasing discount rates.
Suncorp Life is likely to have a net profit after tax of $60 million, down from last year’s $251 million.
“Increasing discount rates have driven negative market adjustments of approximately $60 million,” the group stated in its announcement to the Australian Securities Exchange, after estimating its underlying profit would be $120 million (down from $146 million last year).
“The life insurance industry continues to be impacted by negative experience against lapse and claims assumptions,” the group said. “For Suncorp Life, current lapse experience is broadly consistent with the assumption changes that were outlined in the group’s half-year result in February.
Suncorp Group released its financial update for the year ending 30 June 2013, in which it confirmed the completion of its loan book sale to Goldman Sachs for $940 million.
However, the group’s overall profit is also set to decline, mostly due to the losses associated with its non-core business.
The group’s net profit after tax is expected to be in the range of $480-500 million, down from last year’s $724 million.
“This includes a full year after-tax loss of approximately $630 million on the non-core bank,” the group said.
