Suncorp pays less but trims limit on A$6.3 billion FY26 reinsurance program

By Ryan Hewlett

July 1 - (The Insurer) - Suncorp has renewed its main catastrophe reinsurance program for FY26, overhauling its cover at a lower cost while maintaining a maximum event retention of A$350 million ($235 million) for a first and second large event.

• Suncorp's FY26 reinsurance program covers losses between A$500 million and A$6.3 billion

• Program includes profit-sharing mechanism, caps reinsurer losses at A$600 million over three years

• CEO Johnston cites increased reinsurance market capacity as beneficial for renewal

ASX-listed Suncorp confirmed in a stock exchange filing on Tuesday that it had secured a maximum event retention of A$350 million for a first and second large event, in line with the first event retention in FY25.

Suncorp’s main catastrophe program covers the home, motor and commercial property portfolios across Australia and New Zealand.

The carrier said it took the opportunity to undertake a comprehensive strategic review of its reinsurance program following the sale of Suncorp Bank last year. This review explored a range of markets and both traditional and alternative reinsurance structures, including whole of account quota shares and aggregate cover programs.

The FY26 cover provides protection for losses between A$500 million and A$6.3 billion, down from A$6.75 billion in 2025, and includes one full prepaid reinstatement.

Suncorp noted that the previous group cover that reduced exposure to A$350 million for a first and second event has been replaced with a “structured, multi-year solution”, which includes a profit-sharing mechanism and which caps reinsurer losses at A$600 million over a three-year term.

The carrier also made “minor changes” to the structure of the program in a bid to optimise coverage under current market conditions. This includes the addition of a second reinstatement of the A$500 million to A$1 billion main catastrophe program. In addition, the group dropdown limiting a second event to A$250 million has not been renewed.

Suncorp said these changes will result in lower reinsurance premiums and will be largely offset in terms of earnings volatility risk.

The cost of the cover is lower than in FY25 with further expected upside from the profit-sharing arrangement.

As in previous years, group dropdown covers have also been purchased that reduce the third and fourth event retention to A$250 million, and the Australian dropdown program continues to reduce retention for a third and fourth event in Australia to A$150 million.

In New Zealand, buydown cover (including a prepaid reinstatement) has been placed to provide cover between NZ$200 million and the group’s maximum event retention of A$350 million, in line with FY25.

Suncorp CEO Steve Johnston said the renewal benefited from greater capacity in the reinsurance market.

“Over the past couple of years, reinsurers materially reset their appetite for deploying capital to cover smaller or mid-sized events in both Australia and New Zealand. This, and increased reinsurance pricing, has seen the cost of insurance, particularly home insurance, increase rapidly.

“While the pricing of household policies will continue to reflect underlying risks and broader economic inflation, it’s pleasing that this major input cost appears to have stabilised.”