With natural catastrophe costs rising sharply to $1.319 billion in the first half of 2026, Suncorp executives said the group may reconsider the use of additional protections, including the potential purchase of new master reinsurance treaties, amid increasingly favorable conditions in the soft reinsurance market.
In addition to first half 2026 results released earlier today, Suncorp chief executive Steve Johnston said the insurer responded to nine declared natural catastrophe events in the first half, resulting in more than 71,000 claims.
“The damaging thunderstorms and widespread hail that hit Australia’s east coast, particularly south-east Queensland, in October and November were responsible for more than half of all claims, with November’s giant hail event probably one of our costliest events in recent years,” Johnston explained.
He added that while Suncorp’s reported profits and shareholder returns for the first half of 2026 were pressured by rising natural disaster costs and lower investment income, the underlying business remained resilient, continuing to deliver on its strategic priorities and building solid momentum.
Readers may recall that in the 2026 reinsurance renewals, Suncorp secured core catastrophe coverage covering losses of $500 million to $6.3 billion, while also arranging a structured multi-year settlement to reduce retainers for the first and second events to $350 million.
As a result, natural catastrophe costs of $1.319 billion in the first half of 2026 pushed the insurer $453 million over its budget.
With reinsurance pricing and terms loosening in recent years, Suncorp executives said on the company’s most recent earnings call that total coverage may once again be viable at the next renewal.
Without overall protection to limit budget losses, insurers remain at risk from the increasing frequency and severity of weather events in Australia.
Jeremy Robson, chief financial officer at Suncorp, said: “As previously stated, we continue to review our programs against the reinsurance framework, with the primary objectives of optimizing capital efficiency relative to the cost of equity and managing volatility, all with the overall aim of maximizing long-term shareholder value creation.
“Our FY26 plan best achieved these goals when it was developed last July, but market softening may provide opportunities to reassess additional coverage. At the same time, our plan provides strong protection, limiting the risk of recovery demand, as well as decline coverage for now-active 2H major events.
“Our maximum reserve for further activity will be limited to $260 million for the next major event and further restrictions for any subsequent major event. We will continue to review our options ahead of renewal this July and update the market accordingly.”
CEO Steve Johnston further spoke about whether more aggregate protection will be available this year, saying: “I think they’re getting closer to availability every year, and by definition that’s usually the case. We want to have an aggregate protection in our arsenal.”
“Since we’ve divested the banks, obviously, that’s amplified volatility across the group, so overall coverage will be something we’ve been aspiring to.
“Twelve months ago, when we were pricing it and seeing if it was a commercial product, if it was a sensible product in the market, we couldn’t make it work.
“Our expectation is that continued weakness in these markets and the profitability of reinsurers in the broader catastrophic coverage we offer will bring us closer to that availability. Now we have to go through that process.
“We strongly believe that as a major insurer we don’t have the opportunity in this country to be selective about the markets that we play in. So we have a great reinsurance group and great partners and we would like to see some support to provide volatility protection, which we think is the final piece of the story.”
