Slide 1: Financial results for the year ended 30 June 2014
For personal use only Suncorp Group Limited Financial results for the Suncorp year ended Group 30 June 2014Limited Suncorp Group Limited 13 August 2014
Slide 2: Agenda
Suncorp FY14 results presentation Agenda For personal use only Results and Outlook 1 operational highlights 3 Patrick Snowball Patrick Snowball CFO report Q&A 2 Business lines | Group capital 4 Steve Johnston Suncorp Leadership Team 2 Suncorp Group Limited 13 August 2014
Slide 3: Introduction
For personal use only Introduction Patrick Snowball Suncorp Group CEO Suncorp Group Limited 13 August 2014
Slide 4: FY14 result overview
FY14 result overview ($m) For personal use only FY14 FY13 %∆ General Insurance NPAT 1,010 883 14.4 Bank NPAT 228 (343) n/a Suncorp Life NPAT 92 60 53.3 Business lines NPAT 1,330 600 121.7 Other (26) (24) 8.3 Cash earnings 1,304 576 126.4 Life intangible asset write-down (496) n/a n/a Other profit an
Slide 5: Dividends
Dividends 7.5% yield based on $14.00 share price For personal use only Special dividend $1.05 Final dividend 40% Interim dividend 30 $0.75 20 40 15 30 20 20 20 35 20 25 15 15 FY10 FY11 FY12 FY13 FY14 5 Suncorp Group Limited 13 August 2014
Slide 6: Continued underwriting discipline
Continued underwriting discipline Average GI ROE of 7.8% For personal use only 12.1% GI ROE 11.1% GWP Growth* 8.8% 8.5% 6.0% 6.8% 5.1% 6.4% 5.1% 5.1% 3.7% 2.7% FY09 FY10 FY11 FY12 FY13 FY14 *excluding FSL 6 Suncorp Group Limited 13 August 2014
Slide 7: A 'home insurance' cycle
Suncorp 5yr Australian CAGR ($m) A ‘home insurance’ cycle For personal use only 3,000 June 2009 +3.5% June 2014 2,500 +8.8% +2.2% 2,000 1,500 2,597 1,000 2,187 2,106 1,614 1,799 1,382 500 - Motor Home Commercial 7 Suncorp Group Limited 13 August 2014
Slide 8: CFO Report
For personal use only CFO Report Steve Johnston Suncorp Group CFO Suncorp Group Limited 13 August 2014
Slide 9: Suncorp's shareholder focus
Suncorp’s shareholder focus Simplified, de-risked financial services group For personal use only Yield Growth Dividend payout ratio of 60% to FY15 growth target of between 80% and return of surplus capital 4% to 6% Organic strategy, focused exclusively Multi-brand, multi-channel approach in Australi
Slide 10: General Insurance
General Insurance $m FY14 %Δ For personal use only General Insurance profit after tax 1,010 14.4 Reserve releases of $109 million GWP up 5.1% (ex FSL) Natural hazard claims $27 million below allowance Underlying ITR of 14.3% exceeding commitment to ‘meet or beat’ 12% GI CET1 1.66x PCA Reported ITR o
Slide 11: Gross Written Premium
Gross Written Premium Up 5.1% excluding Fire Service Levies For personal use only FY14 Product %∆ Factors ($m) Motor 2,829 2.6 Strong retention despite increase in competitive activity Home 2,439 6.3 Increase in average written premiums offset by unit loss Commercial 2,329 6.8 Maintaining underwriti
Slide 12: Investment assets
Investment assets Low yields with credit spread gains For personal use only Insurance funds ($9+bn) Shareholder funds ($3+bn) Investment income $485 million Investment income $246 million MTM gains of $117 million from decreases Interest income of $130 million from in risk-free rates $2.6 billion po
Slide 13: Claims
Claims Natural hazards $27 million below allowance; Reserve releases in line For personal use only Aus $53m favourable NZ $26m unfavourable Reserve releases 325 278 27 75 Total releases of $109 million 165 broadly in line with expectation of 225 1.5% of NEP, major components: 595 • Australian long-t
Slide 14: Operating expense and loss ratios
Operating expense and loss ratios Underwriting and expense discipline For personal use only 28.0% 27.5% 82.0% 79.3% 26.5% 80.0% 27.0% 77.1% 25.8% 78.0% 26.0% 76.0% 25.0% 73.5% 75.7% 24.0% 74.0% 24.0% 23.7% 72.0% 23.0% 70.0% 23.0% 68.0% 22.0% Total operating expense ratio* 67.4% 67.8% 66.0% 21.0% Los
Slide 15: Underlying ITR
Underlying ITR Building Blocks and Simplification delivering 14.7% For personal use only 14.0% 13.4% 13.6% 13.1% 12.0% 11.2% 11.1% 10.0% 10.5% 8.0% 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 15 Suncorp Group Limited 13 August 2014
Slide 16: Suncorp Bank
Suncorp Bank $m FY14 %Δ For personal use only Bank profit after tax 228 n/a Cost to income ratio HoH down Bank CET1 8.54% 4.1% to 55.5% NIM of 1.78% (2H14) Retail deposit core lending ratio 65.8% Non-performing loans down 18% Home lending up 5.0% Gross impaired assets down 34% Agribusiness portfolio
Slide 17: Suncorp Bank lending portfolio
Suncorp Bank lending portfolio 78% mortgage lending For personal use only LendingSummary assets $49.9 billion 69% Com/SME & Agri <$10m $50-$100m >$100m+ Consumer 2% 2% 1% $25-$50m 9% Com/SME Housing 12% 78% (up 4.4%) $10-$25m < $5m 18% 52% (up 5%) Agri 9% (up 7.3%) $5-$10m 17% 17 Suncorp Group Limit
Slide 18: Funding and Liquidity
Funding and Liquidity Conservative balance sheet For personal use only Deposit to loan ratio LT funding profile ($m) 1,400 Covered Bonds 84% Senior Unsecured (Domestic) 1,200 68% 72% Senior Unsecured (Offshore) 66% 67% 1,000 59% 56% 800 600 400 200 0 SUN Regional 1 Regional 2 Major 1 Major 2 Major 3
Slide 19: Credit quality
Credit quality Gross impaired and non-performing loans reduced For personal use only Gross impaired loans Gross non-performing loans Coverage Coverage Gross non-performing loans Retail Agribusiness 26% Total provision coverage Commercial (SME) Corporate and property 392 506 (34%) 416 416 Coverage 79
Slide 20: Suncorp Bank: Australia's leading regional bank
Suncorp Bank For personal use only Australia’s leading Key targets regional bank NIM 1.75% to 1.85% Retail deposit to lending ratio 60% to 70% Basel II advanced accreditation Disciplined cost management driving New banking platform – Project Ignite down cost to income ratio A+/A1 credit rating Susta
Slide 21: Suncorp Life
Suncorp Life Improved capital efficiency For personal use only $m FY14 %Δ Underlying profit after tax 84 (30.0) Market adjustment after tax 8 n/a Life profit after tax 92 53.3 Claims experience negative $24 million $535 million capital return to Group Lapse experience negative $26 million Risk in-fo
Slide 22: Suncorp Life growth in risk and superannuation
Suncorp Life Growth in Life risk and superannuation ($m) For personal use only Life risk in-force Life risk new business Superannuation annual premium by channel new business IFA Direct NZ 20 402 911 25 14 326 33 30 34 280 840 775 62 68 61 FY12 FY13 FY14 FY12 FY13 FY14 FY12 FY13 FY14 22 Suncorp Grou
Slide 23: Life rebased assumptions
16% Life rebased assumptions Illustrative lapse example 15% For personal use only Actual experience 14% FY14 assumption 1-1.5% Revised assumption 13% 0.5-1% 12% 11% 10% 2008 2010 2012 2014 2015 2018 2020 23 Suncorp Group Limited 13 August 2014
Slide 24: FY14 CET1 movements
FY14 CET1 movements ($m) Excess increased to $831 million For personal use only 207 59 71 450 1304 515 386 801 831 Excess CET1 FY14 Cash Life Reinsurance Change in Other* Interim dividend Final dividend Special dividend Excess CET1 (ex div) Earnings Targets (ex div) 30-Jun-13 30-Jun-14 * “Other” lar
Slide 25: Suncorp capital at June 2014
Suncorp capital at 30 June 2014 $831 million excess to CET1 targets post dividend For personal use only General NOHC and Suncorp $m Bank Life Insurance other entities Group total CET1 3,524 2,648 455 555 7,182 CET1 target 2,342 2,557 358 193 5,450 Excess (pre-div) 1,182 91 97 362 1,732 Dividend (901
Slide 26: Conclusion
For personal use only Conclusion Patrick Snowball Suncorp Group CEO Suncorp Group Limited 13 August 2014
Slide 27: Key commitments
Suncorp Group Key commitments For personal use only 1 Group growth of 4% to 6% in the 2015 financial year 4 60% to 80% dividend payout ratio 2 Simplification benefits of $225 million in the 2015 financial year 5 Continue to return surplus capital 3 ‘Meet or beat’ an underlying ITR of 12% through the
Slide 28: Suncorp's waves of growth
Suncorp’s waves of growth Life Bank For personal use only Top line growth Vero NZ Commercial Insurance Personal Insurance Building blocks Plan for growth Building Blocks in place Balance Sheet strength Business simplified Stabilise the business Cost Customer Capital Culture Suncorp Group Limited 13
Slide 29: Suncorp's Strategic Assets
Suncorp’s Strategic Assets Our focus For personal use only • Deliver scale cost benefits on third party procured goods / services Cost • Share scale on infrastructure (real estate, enterprise technology) and non-unique business services • Enhancing the value of 9 million customer connections by deep
Slide 30: Q&A
For personal use only Q&A Financial results for the year ended 30 June 2014 Suncorp Group Limited 13 August 2014
Slide 31: Supplementary slides
For personal use only Supplementary slides Financial results for the year ended 30 June 2014 Suncorp Group Limited 13 August 2014
Slide 32: FY15 Reinsurance program
FY15 Reinsurance program 6.1b For personal use only 5.8b 2.5b 500m Original cover Third cover Original cover reinstatement Third cover reinstatement 250m 200m Dropdown aggregate 50m NZ dropdown Dropdown aggregate NZD 54m NZ dropdown NZD 25m NZ dropdown NZ dropdown Retention Suncorp Group Limited 13
Slide 33: FY15 Reinsurance program
FY15 Reinsurance program Drop-down aggregate program For personal use only 250m 50m xs 200m xs 50m 100m xs 100m xs 150m xs 200m 150m xs 300m 200m 150m Erosion contributes to 100m xs 100m xs aggregate dropdown 50m xs 200m 50m xs 300m 50m Retention 33 Suncorp Group Limited 13 August 2014
Slide 34: Natural hazards since 1967
Natural hazards since 1967 Christchurch earthquakes, Brisbane floods, Suncorp long-term catastrophic loss experience Cyclone Yasi, Events greater than $100m, gross of all reinsurance Melbourne hailstorm For personal use only 5,000 4,500 NZ AUS Long run average 4,000 3,500 Brisbane flood, Hunter Vall
Slide 35: Simplification benefits
Simplification benefits $225 million in FY15, $265 million in FY16 use only 300 Original net impact Revised Revised net impact Simplification 250 Benefits 200 150 For personal $m 100 Original Simplification 50 benefits 0 Original one-off (50) project costs FY16 FY15 (100) Revised FY14 (150) Project
Slide 36: Underlying and Reported ITR
Underlying and Reported ITR Building Blocks and Simplification delivering For personal use only 18.6% Underlying ITR 17.0% Reported ITR 14.0% 14.7% 13.1% 13.4% 13.6% 12.8% 10.9% 11.2% 11.1% 13.9% 12.0% 10.0% 11.1% 8.0% 10.5% 7.8% 6.4% 3.8% 1.9% 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 36 Su
Slide 37: Credit quality
Credit quality Past due loans impacted by methodology change For personal use only Past Due Home Loans (% of gross home loans) 1.03% 0.98% 0.92% 0.93% 0.79% 0.69% 0.65% 0.59% 0.51% Start of hardship treatment change 0.06% Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Total home lend
Slide 38: Important disclaimer
Important disclaimer This report contains general information which is current as at 13 August 2014. It is information given in summary form For personal use only and does not purport to be complete. It is not a recommendation or advice in relation to the Group or any product or service offered by S
Slide 39: Investor Relations App
For personal use only Investor Relations App In 2014, Suncorp launched an Investor Relations application for tablets to enable easy access to a suite of investor materials. For all the latest news, updates and share price movements download the Suncorp Group investor relations app now. Search “Sunco