Suncorp gets improved reinsurance renewal pricing, lifts top of tower to $6.4bn

Australian insurance giant Suncorp has extended the top of its main catastrophe tower slightly to $6.4 billion at the mid-year 2026 reinsurance renewals, while maintaining its retention and now having the benefit of the aggregate reinsurance arrangement it purchased earlier in the year to minimise exposure to frequency loss events.

A year ago, Suncorp shrank its reinsurance tower buying catastrophe limit up to $6.3 billion, with major events covered from a $350 million retention.

That was a reduction from the 2024 catastrophe reinsurance tower that provided protection up to $6.75 billion and recall that the insurer had stopped buying aggregate reinsurance in 2023 as it felt the costs of the hard market environment.

Now, for the 2027 fiscal year, Suncorp sits in a much better-protected position again, having now extended its reinsurance tower back slightly to include catastrophe limit coverage up to $6.4 billion at the July 1 2026 renewal, while the insurer had added a new five-year aggregate reinsurance arrangement in April this year.

Now, reinsurance market softening has helped Suncorp extend its reinsurance slightly again, with improved pricing across the tower for the coming year.

Acting CEO Jeremy Robson explained that the renewal outcome reflects discipline in Suncorp’s protection buying strategy, with the company “maintaining an appropriate balance between cost, earnings volatility and capital efficiency.”

Robson said, “The FY27 reinsurance program demonstrates our focus on optimising returns while ensuring appropriate
protection for our customers and shareholders.

“While the cost of reinsurance remains an important input to insurance pricing, it is pleasing to see improved market conditions reflected in the pricing of our comprehensive main catastrophe program, now complemented by the addition of aggregate protection to further enhance resilience and reduce volatility.”

Suncorps main catastrophe reinsurance tower covers its Home, Motor and Commercial property portfolios across Australia and New Zealand, now providing protection from losses between $500 million and $6.4 billion for the coming year, with one full prepaid reinstatement available.

Installed a year ago, the structured, multi-year reinsurance arrangement announced in July 2025 continues to be in-force to cover losses between $350 million and $500 million for a first and second large event.

In addition, group dropdown covers are in place again for losses between $350 million and $500 million for a third and fourth event. There is additional dropdown protection in the aggregate reinsurance cover purchased in April, which reduces the retention for a third and fourth event in Australia to $150 million as well. While a New Zealand focused buydown placed in the aggregate reinsurance means Suncorp is protected there from NZ$200 million up to the maximum event retention.

The five-year aggregate reinsurance purchased in April has an attachment at $1.85 billion, giving Suncorp $800 million of protection annually, up to $2.4 billion in total, over the 5-year term.

All of which puts Suncorp in a better reinsured position for the 2027 fiscal year, and the insurer confirmed its natural hazard allowance (NHA) for FY’27 of $1.8 billion (slightly up on the prior year’s $1.77 billion), excluding claims handling expenses (CHE) and profit commission.

While the aggregate reinsurance is expected to cap natural hazard costs at $1.85 billion for FY27 in around 90% of scenarios.

Suncorp’s FY 2027 catastrophe reinsurance tower:

Total reinsurance spend is expected to be up for the year, given the aggregate coverage now in place and the insurer’s exposure growth.

But Suncorp noted this is slightly offset by improved pricing achieved in the main catastrophe program.

Importantly, Suncorp highlighted the utility of the aggregate reinsurance addition, saying this is expected to lower the amount of excess capital it needs to hold above the midpoint of its target range.

Suncorp also gave a preview of its expected natural hazard costs for the 2026 fiscal year, saying these could be around $250 million above last year’s allowance of $1.77 billion.

The aggregate reinsurance for FY 2027 only came into force on June 30th this year, but some of that nat cat budget overrun could have been covered had there been aggregate cover in place for the previous year, it appears.

Suncorp said that it experienced 18 separate natural hazard loss events that cost more than $10 million in FY 2026, with hail and storm events in October 2025 costing $234 million and hail in November 2025 at $350 million being the largest two catastrophe loss events of the period.

Improved reinsurance market conditions for buyers has helped Suncorp put more robust protection in place for the coming year, while also installing more frequency protection.

Given the loss experience in Australia from severe storms, hail and convective type events, this should benefit Suncorp through its 2027 financial year.

Read all of our reinsurance renewal news coverage.