After another half-year when Australian primary insurance giant Suncorp Group went over its natural hazards budget the company is hoping the softer reinsurance market conditions will allow it to reassess options for aggregate reinsurance or frequency protection at its next renewal.The insurer reported its results for the first-half of its 2026 fiscal year today, so the six months to Dec 31 2025, in which higher claims and costs from natural hazards, so catastrophes and severe weather, are a defining feature.Suncorp CEO Steve Johnston said, “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 and drive good momentum leading into the second half of the financial year.“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.

The destructive thunderstorms and widespread hailstorms that hit the east coast of Australia, particularly south-east Queensland through October and November, contributed to the majority of claims received over the half, with the giant hailstorm event in November likely to be among our costliest in recent history.“Despite this, the business continues to perform strongly, reflected in the solid growth of our Consumer business, and our underlying insurance trading ratio, which has remained towards the top half of our target operating range at 11.7%.“Importantly, we have thrown our full support behind our customers impacted by these severe weather events, while also working hard to finalise complex claims from major events earlier in the year including ex-Tropical Cyclone Alfred and flooding across parts of Queensland and New South Wales.

“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, demonstrating the benefits of our strategic investments in disaster management capability.” , the severe thunderstorms and hail event that month drove a full retention loss for Suncorp, enabling it to recover from its main catastrophe reinsurance tower after claims exceeded the $350 million attachment level.That was the only natural hazard event that reached the attachment for the main catastrophe reinsurance cover for Suncorp in its FY 2026 H1, but numerous other events took its weather and cat claims well over budget.

.It also features drop-downs, to reduce the retention for the insurer for any subsequent large catastrophe loss events and after the November hail event this dropped to $260 million.But, Suncorp does not have a true aggregate reinsurance protection, despite the drop-downs providing some frequency assurance for the company.

In total, Suncorp reported $1.319 billion of natural hazard costs, which took the insurer $453 million over its H1 budget even after the recoveries for the November large hail loss event.With no aggregate reinsurance protection or way to cap losses at the budget level, Suncorp remains exposed to the increasing frequency and severity of severe weather in Australia, with this evident in its results.The insurer .

But now, given softening reinsurance market pricing and conditions over the last couple of years, Suncorp’s executives are hopeful that reinstating aggregate reinsurance may be feasible again at its next renewal.Suncorp’s executives said today that the softening reinsurance market provides the insurer with an opportunity to reassess additional covers, including purchasing a new aggregate reinsurance treaty.CFO Jeremy Robson further stated on reinsurance that, “As previously flagged, we continue to review our program against our reinsurance framework with the key objectives of optimising capital efficiency relative to our cost of equity and managing volatility, all with the overarching goal of maximising long term shareholder value creation.

“Our FY26 program best met these objectives when placed in July last year, but a softening market may provide the opportunity to reassess additional cover.In the meantime, our programme provides robust protection, limiting exposure to the need for reinstatements, as well as drop down cover against large events in 2H now enlivened.“Our maximum retention for further events will be limited to $260m for a next large event, and further limited for any subsequent large events.

We will continue to review our options leading up to our renewal in July this year and will update the market accordingly.” During the firm’s earnings call this morning, Suncorp CEO Johnston was asked if aggregate protection would really be more available again this year.To which he said, “I think they’ve edged closer to availability every year, and by definition that’s usually the case.We would like an aggregate cover in our arsenal.

“Since we divested the bank, obviously, that’s amplified volatility across the group, and so, an aggregate cover would be something that we would have always aspired to.“Twelve months ago, when we went through the process of pricing it and seeing whether it was a commercially available product, a sensible product in the market, we couldn’t make it work.“Our anticipation is that the continued softening of those markets and the profitability of the reinsurers across the broader catastrophe covers that we’re offering, will put us proximate to that availability.

Now we’ve got to go through that process.“We firmly believe that as a primary insurer we don’t have the opportunity to pick and choose what markets we play in, in this country.And so we have a fantastic reinsurance panel with great partners, and we’d like to see some support to provide that volatility protection, which we think is the last part of this story.”.

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