Slide 1: Financial results for the half year ended 31 December 2013
For personal use only Suncorp Group Limited Financial results for the half year ended 31 December 2013 1 Suncorp Group Limited 19 February 2014
Slide 2: Agenda
Suncorp results presentation Agenda For personal use only Results & operational highlights Patrick Snowball CFO report Steve Johnston Outlook Patrick Snowball Q&A Suncorp Leadership Team 2 Suncorp Group Limited 19 February 2014
Slide 3: Introduction
For personal use only Introduction Patrick Snowball Chief Executive Officer, Suncorp Group Limited 3 Suncorp Group Limited 19 February 2014
Slide 4: Suncorp's strategic priorities
Suncorp’s strategic priorities Relentless execution For personal use only Strategy Delivering Commitments • Building Blocks • Underlying ITR >12% • 10%+ ROE • Simplification • Flat expense base • Underlying ITR >12% • Non-core Bank • De-risked balance • Growth 7% to 9% resolution sheet • $225 millio
Slide 5: Suncorp Group NPAT
Suncorp Group NPAT ($m) Building Blocks delivering and Non-core resolved For personal use only 780 724 548 491 453 FY10 FY11 FY12 FY13 HY14 5 Suncorp Group Limited 19 February 2014
Slide 6: Dividend
Dividend Interim dividend up 40% For personal use only Special dividend 20 Final dividend Interim dividend 15 30 20 20 20 40% 35 20 25 15 15 FY10 FY11 FY12 FY13 HY14 6 Suncorp Group Limited 19 February 2014
Slide 7: Top line growth
Top line growth Growth across all three business lines ($m) For personal use only Short tail GWP* Long tail GWP* 6.5% 3,364 938 6.7% 2,890 815 HY12 HY13 HY14 HY12 HY13 HY14 Retail and Business Bank lending Suncorp Life individual in-force business 6.8% 10.1% 48,886 821 40,774 693 HY12 HY13 HY14 HY12
Slide 8: Underlying and Reported ITR
Underlying and Reported ITR Building Blocks and Simplification delivering For personal use only Underlying ITR 18.6% Reported ITR 13.6% 14.0% 13.1% 13.4% 12.8% 13.9% 10.0% 10.5% 12.0% 11.1% 11.2% 11.1% 8.0% 10.9% 7.8% 6.4% 1.9% 3.8% 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 8 Suncorp Group Limite
Slide 9: HY14 result overview
HY14 result overview ($m) For personal use only HY14 HY13 %∆ General Insurance 470 564 (17) Bank 105 4 large Suncorp Life 22 51 (57) Business line NPAT 597 619 (4) Other profit and acquisition amortisation (49) (45) 9 NPAT 548 574 (5) 9 Suncorp Group Limited 19 February 2014
Slide 10: Financial results
For personal use only Financial results Steve Johnston Chief Financial Officer, Suncorp Group Limited
Slide 11: 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 • Target 7% to 9% per annum 80% and return of surplus capital growth across the business lines • Organic strategy, focused • Multi-brand, multi-channel excl
Slide 12: Suncorp priorities
Suncorp priorities For personal use only HY14 focus • Deliver the benefits of Simplification • Manage General Insurance franchise and prioritise margins • Transition the Bank post Non-core • De-risk and reduce capital consumption of Suncorp Life • Balance sheet discipline 12 Suncorp Group Limited 19
Slide 13: General Insurance
General Insurance NPAT of $470 million For personal use only $m HY14 Consensus %Δ Gross written premium 4,380 4,486 (2) Gross written premium (ex FSL) 4,302 Net earned premium 3,865 3,843 1 Net incurred claims (2,608) (2,578) 1 Operating expenses (899) (915) (2) Investment income - insurance funds 1
Slide 14: Gross Written Premium
Gross Written Premium Up 6.6% excluding Fire Service Levies For personal use only HY14 Product %∆ Factors ($m) Motor 1,412 4.8 Unit and premium growth in a competitive market Home 1,230 8.9 Premium increases with some unit reduction in QLD Commercial 1,008 6.2 Growth with continued underwriting disc
Slide 15: Claims experience
Claims experience Short tail and long tail For personal use only Date Event Net costs $m Reserve Sep 2013 NZ Canterbury storms 15 releases: Oct 2013 Victorian wind 10 Oct 2013 NSW bushfires 63 • Net $56 million Oct 2013 NSW Central Coast hail 23 • Broadly in-line Nov 2013 NSW/QLD storms 66 with long
Slide 16: Investment assets
Investment assets Low yields with credit spread gains For personal use only Insurance funds Shareholder funds • $9.1 billion • $3.3 billion • Investment income $179 million • Investment income $141 million • Underlying yield 3.6% • Underlying yield 4.1% on fixed income • MTM gains of $49 million fro
Slide 17: General Insurance Overview
General Insurance Overview For personal use only • General Insurance NPAT $470 million • GWP up 6.6% • Underlying ITR of 14.0%, Reported ITR of 13.9% • Delivered on the ‘meet or beat’ 12% Underlying ITR target • Natural hazard claims $49 million above allowance • Reserve releases of $56 million 17 S
Slide 18: Suncorp Bank
Suncorp Bank Absorbing Non-core impacts For personal use only $m HY14 Consensus %Δ Net interest income 492 486 1 Non-interest income 20 41 (51) Operating expenses (305) (300) 2 Profit before impairment losses 207 227 (9) Loss on sale of loans and advances (13) - n/a Impairment losses on loans and ad
Slide 19: Lending assets of $49.2 billion
Lending assets of $49.2 billion Improved geographical diversification For personal use only Product split Geographic split Corporate Agribusiness SA & other 3% & Property <1% 9% (up 11%) WA 6% Commercial VIC 9% (SME) 11% (up 7%) Consumer QLD 1% Housing 58% 78% NSW 24% 19 Suncorp Group Limited 19 Feb
Slide 20: Suncorp market share
Suncorp market share Opportunities to refocus on QLD market For personal use only National market share Retail market share in QLD 81% 64% 3% 9% Suncorp Majors Suncorp Majors Source: APRA system data for total deposits and retail housing, DBM BFSM, SME Business Survey, MFI Satisfaction, Dec 2013 Sou
Slide 21: Funding and Liquidity
Funding and Liquidity Conservative balance sheet For personal use only Deposit to loan ratio Balance sheet components Assets Liab + Equity 84% 21% 24% 66% 68% 63% 59% 57% 56% Short-term wholesale 25% Long-term wholesale Equity & other 6% Retail deposits 100% Liquid assets Lending 66% SUN Regional 1
Slide 22: Credit quality
Credit quality Reduced impaired assets and non-performing loans For personal use only Gross impaired assets Non-performing loans (8%) or $79 million (18%) or $90 million 2,184 1,860 940 861 506 416 Dec-12 Jun-13 Dec-13 Dec-12 Jun-13 Dec-13 Impaired assets by segment Impairment losses to gross loans
Slide 23: Suncorp Bank: De-risked with growth levers
Suncorp Bank De-risked with growth levers For personal use only Product split Building key differentiators Jun-08: $55.2 billion Dec-13: $49.2 billion Agribusiness Corporate & property Basel II advanced accreditation Commercial/ SME Corporate & Property Housing Banking platform Housing Maintain A+/A
Slide 24: Suncorp Life overview
Suncorp Life overview Improved capital efficiency For personal use only $m HY14 Consensus %Δ Underlying profit after tax 41 59 (31) Market adjustment after tax (19) (16) 19 Life profit after tax 22 43 (49) • Shift in capital efficiency resulting in $535 million capital return to Group • Life Risk in
Slide 25: Suncorp Life
Suncorp Life Growth in Life Risk and Superannuation For personal use only Life Risk in-force annual Life Risk new business by Superannuation new business premium ($m) channel ($m) ($m) 886 IFA Direct NZ 185 9 11 13 149 845 131 16 17 17 800 35 33 32 1H13 2H13 1H14 1H13 2H13 1H14 1H13 2H13 1H14 25 Sun
Slide 26: Suncorp Life capital
Suncorp Life capital Contributing to the Group’s surplus For personal use only Capital movements ($m) 2,106 158 1,641 70 207 100 70 30-Jun-13 LAGIC Reinsurance Sub debt Capital efficiency BAU 31-Dec-13 26 Suncorp Group Limited 19 February 2014
Slide 27: HY14 capital movements
HY14 capital movements ($m) Group excess to CET1 over $1.1 billion For personal use only 29 207 450 548 1,585 1,135 801 Excess CET1 30-Jun- HY14 NPAT Life reinsurance Other Excess CET1 31- Interim dividend Excess CET1 31- 13 (post-div) Dec-13 (pre-div) Dec-13 (post-div) 27 Suncorp Group Limited 19 F
Slide 28: Conclusion
For personal use only Conclusion Patrick Snowball Chief Executive Officer, Suncorp Group Limited
Slide 29: Outlook
Outlook Focus for the remainder of 2014 For personal use only • ‘Meet or beat’ 12% underlying ITR General Insurance • Balance margin and growth • Capitalise on any market disruption from market consolidation • Growth 1 to 1.3 times system Bank • NIM heading back to target range of 1.75% to 1.85% • C
Slide 30: Suncorp Group Key commitments
Suncorp Group Key commitments For personal use only 1 Group growth of 7% to 9% per annum over the next two years 2 Simplification benefits of $225 million in the 2015 financial year 3 ‘Meet or beat’ an underlying ITR of 12% through the cycle 4 60% to 80% dividend payout ratio 5 Continue to return su
Slide 31: Q&A session
For personal use only Q&A session
Slide 32: Supplementary slides
For personal use only Supplementary slides 32 Suncorp Group Limited 19 February 2014
Slide 33: The Suncorp journey
The Suncorp journey ‘4Cs’ drive the Group’s competitive advantage For personal use only FY13 - FY16 Optimise & FY12 - FY16 differentiate Simplification program FY10 - FY12 Building Blocks FY10 • One pricing engine Simplification benefits $265m • One claims system Stabilise business & • One general l
Slide 34: General Insurance: A diversified portfolio
General Insurance A diversified portfolio For personal use only Geographic split Product split QLD 3% Motor 6% 12% 13% 26% NSW 33% Home 6% VIC Commerical WA 23% CTP 21% NZ 28% Workers comp Other 29% 34 Suncorp Group Limited 19 February 2014
Slide 35: FY14 Reinsurance program
FY14 Reinsurance program 5.8bn For personal use only 2.5bn 500m Original cover Third cover Original cover Third cover 250m reinstatement reinstatement 200m 150m 50m NZ dropdown NZ dropdown Dropdown aggregate program NZD 50m NZD 25m NZ dropdown NZ dropdown Retention 35 Suncorp Group Limited 19 Februa
Slide 36: FY14 Reinsurance program: Drop-down aggregate
FY14 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 36 Suncorp Group Limited 19 February 2014
Slide 37: Natural hazards since 1967
Natural hazards since 1967 Suncorp long-term catastrophic loss experience For personal use only Events greater than $100m, gross of all reinsurance Christchurch 5,000 NZ AUS Long Run Average earthquakes, Brisbane floods, Cyclone Yasi, 4,500 Brisbane flood, Melbourne hailstorm Cyclone Tracy 4,000 Mel
Slide 38: Suncorp Bank business lending
Suncorp Bank business lending Diverse portfolios For personal use only Commercial/SME portfolio Agribusiness portfolio Vegetables Transport & Health & Other 3% Other Storage Education 4% 4% 2% Fruit Dairy 4% 3% 3% Services (Inc. professional Poultry Beef services) 4% 34% 9% Property Sugar Manufact.
Slide 39: Life Capital
Life Capital Contributing to the Group’s surplus For personal use only 19 207 19 643 22 100 535 207 300 113 Excess Capital 30- H1FY14 NPAT Capital instrument Reinsurance Other Life capital returns Excess Capital 31- June-2013 transactions benefit to Group (1) 12-13 (1) Life capital return breakdown:
Slide 40: Suncorp Group Capital
Suncorp Group Capital $1,135 million excess to CET1 targets post dividend For personal use only General NOHC and Suncorp A$m Bank Life Insurance other entities Group total CET1 3,532 2,535 517 402 6,986 CET1 target 2,348 2,458 404 191 5,401 Excess (pre-div) 1,184 77 113 211 1,585 Dividend (450) Exce
Slide 41: Important disclaimer
Important disclaimer This report contains general information which is current as at 19 February 2014. It is information given in summary For personal use only form 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
Slide 42: Contact Details
Contact Details For personal use only Mark Ley mark.ley@suncorp.com.au +61 2 8121 1221 Andrew Dempster andrew.dempster@suncorp.com.au +61 7 3135 2425 Susan Duncalfe susan.duncalfe@suncorp.com.au +61 7 3135 3729 Sam Miller samantha.miller@suncorp.com.au +61 7 3135 2415 Nick Perchey nick.perchey@sunco