Suncorp chief executive, Patrick Snowball has expressed frustration that change in the life insurance industry is not occurring at a more rapid pace as Suncorp Life announced a $350 million write-down.
Snowball’s comments were contained within a Suncorp Group update released to the Australian Securities Exchange (ASX) today in which the company also flagged that Suncorp Life’s underlying profit after tax was now expected to be between $75 million and $85 million for the current financial year.
The ASX announcement said the company had “determined to materially revise claims and lapse assumptions in its Life Insurance business as part of its financial results for the year ended 30 June, 2014.
It said the revised assumptions reflected the culmination of a detailed review of the business taking account of current industry trends and Suncorp’s more recent experience.
“In light of the revised assumptions, the Group has reassessed the carrying value of intangibles and goodwill associated with the Life business,” the announcement said. “The effect of this revision is expected to be ¨.write-down of goodwill and other intangible assets by approximately $350 million after tax and loss recognition on some products and other reserving adjustments to policy liabilities of approximately $150 million after tax.
Snowball said the changed assumptions recognised the industry headwinds and deteriorating situation.
“The structure and cyclical life insurance issues have now been recognised by most life insurance companies and reinsurers, however, we are frustrated that the industry change is not occurring at a more rapid pace,” he said. “This is continuing to impact Suncorp Life earnings and the potential for further deterioration needs to be reflected in our assumptions.”