The insurance sector discussed in an MM report last November has largely followed our expected path, albeit in a slightly more positive fashion, i.e. cautiously bullish. The performance of the major companies in the local sector has generally been strong, with three of the names up ~10% or more year-to-date. However, interest rates are only one piece of the puzzle as premiums continue to rise well ahead of inflation, e.g. in February, Suncorp (SUN) slugged consumers with a 16% price increase on car insurance in an effort to increase margins, while this week has been all about private health premiums rising by over 3%, the largest annual increase since 2019 – it’s not surprising that an increasing number of Australians are experiencing financial stress.
