Some negative effects of the global financial crisis (GFC) are still being felt by the life risk arm of Suncorp even though the business is operating in a growing risk market environment, according to its chief executive Patrick Snowball.
Having carried out a review of all business arms since his appointment in September this year, Snowball has identified policy lapse rates as an area that is feeling the effects of the economic downturn.
“The economic environment has put pressure on consumers and industry lapse rates, so it is likely to be negative this year compared to the prior corresponding period last year,” Snowball said.
He also pointed out that pressure was being felt on the duration of disability claims in the current economic climate.
In regard to the funds management side of the business, Snowball said Suncorp had yet to see any significant change to inflows as a result of the recent market recovery.
“We’re still seeing retail investors being cautious with flat year-on-year investment sales,” he said.
However, there was also a positive element stemming from the GFC, Snowball said.
“It is somewhat mitigated by lower levels of redemptions compared to last year,” he said.
Still, the GFC has already had an effect on Suncorp’s forecast profit result from its funds management business.
“Planned profit is reduced due to the flow-on effect of the global financial crisis on the participating book which was de-risked last year reducing exposure to growth assets,” he said.
“Funds management profit will be impacted in 2009/10 due to two factors – change in asset mix across all portfolios and the flow-on effect of the global financial crisis on the participating book,” Snowball said.
