Southsure Assurance profitability tied to revenue control: Fitch Ratings

Limited presence and exposure to possible regulatory intervention challenge its profile.

New Zealand-based Southsure Assurance continues to benefit from operational synergies with its parent, Southland Building Society (SBS), and sister company Finance Now Limited, according to Fitch Ratings. 

Group distribution channels accounted for over 90% of gross premiums in the financial year ending March 2024 (FY 2024), reinforcing the insurer’s reliance on its parent’s customer base.

However, its limited market presence and exposure to potential regulatory intervention remain constraints on its profile.  

Profitability has weakened in recent years due to declining premium volumes, product redesigns, and rising costs.

Single-premium consumer-loan insurance products, which made up 47% of premiums in FY 2024, continue to shrink. 

A $7.96m (NZ$14.1m) gain from the sale of its stake in Abbott NZ Holdings Limited boosted net profit to $8.63m (NZ$15.3m) in FY 2024, but return on equity, adjusted for the one-off gain, fell to 8% from 10% in FY 2023. 

Long-term profitability will depend on stabilising revenue and controlling expenses.