Suncorp Group (SUN) SNAPSHOT
Profile: Suncorp Group (SUN) is a financial services group operating in Australia and NZ. SUN provides various general insurance, life insurance, banking and wealth products. General insurance products include home and contents, motor, compulsory third party and workers’ compensation. The banking and wealth division offers banking, financial planning, superannuation and fund administration services. SUN’s network of brands includes AAMI, GIO and Vero.
History: Metropolitan Building Society converted to bank status and listed on the ASX in 1988 as Metway Bank. In 1996, Suncorp, owned by the Queensland government and QIDC, merged with Metway Bank to create Suncorp Metway, with the government holding a 68% stake. In 1997, the government reduced its stake to 4%, before announcing a total sell-down of its holding in 2000. In 2007, Suncorp merged with Promina Group. SUN sold its Australian Life Insurance business in February 2019 for $746m, resulting in a non-cash loss of $910m. SUN sold Capital S.M.A.R.T and ACM Parts in October 2019, resulting in an after tax profit of $293m.
Earnings composition: $588m (49%) of FY19 cash net profit after tax (NPAT) came from the Insurance (Australia) segment. Banking and Wealth NPAT was $364m (30%), New Zealand NPAT was 245m (21%) and the Australian Life Insurance business, which has been sold, reported $23m. Other expenses were $105m.
Most recent result – 1H20: Cash profit decreased 11.6% on the prior corresponding period (pcp) to $365m (from $415m). This includes a reduction in profits from discontinued businesses of $27m. Including the gain on sale, group NPAT increased from $250m to $642m. Banking profit after tax declined 6.6% on the pcp to $171m. Profit after tax from the Australian Insurance business declined 3.9% to $123m, while NZ Insurance profit declined 8.1% to $102m. A 26-cent dividend was declared, in line with the pcp.
Company outlook: SUN is targeting “at least flat unit growth in Australian Consumer Insurance for FY20”. SUN expects FY20 reserve releases to be above 1.5% of net earned premiums (NEP). Net interest margin is expected to remain within 1.85-1.95%. SUN anticipates regulatory project costs to peak in FY20, with costs expected to remain elevated but decline over time.
Important dates: Ex-dividend date is 19 February 2020. Payment date is 31 March 2020. Full-year results are scheduled for 6 August 2020.
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