Slide 1: Financial results for the full year ended 30 June 2015
Suncorp Group Limited For personal use only Suncorp Group Limited Financial results for the full year ended 30 June 2015 1 Suncorp Group Limited 4 August 2015
Slide 2: Suncorp FY15 results presentation
Suncorp FY15 results presentation For personal use only Introduction Conclusion 1 3 Patrick Snowball Patrick Snowball CFO report Q&A 2 Business NPAT | Group capital | Outlook 4 Steve Johnston Suncorp Leadership Team 2 Suncorp Group Limited 4 August 2015
Slide 3: Introduction
For personal use only Introduction Patrick Snowball Suncorp Group CEO 3 Suncorp Group Limited 4 August 2015
Slide 4: FY15 result overview ($m)
FY15 result overview ($m) For personal use only FY15 FY14 %∆ General Insurance NPAT 756 1,010 (25.1) Bank NPAT 354 228 55.3 Suncorp Life NPAT 125 92 35.9 Business lines NPAT 1,235 1,330 (7.1) Other (44) (26) 69.2 Cash earnings 1,191 1,304 (8.7) Life Insurance write-down - (496) n/a Other profit and
Slide 5: Suncorp Group business line NPAT ($m)
Suncorp Group business line NPAT ($m) Profit diversification For personal use only FY12 FY13 FY14 FY15 770 600 1,330 1,235 8 12 105 883 1010 756 493 146 120 113 84 289 289 228 354 (263) (632) General Insurance Bank Life underlying NPAT Non-core Bank (60) Life market adjustments 5 Suncorp Group Limit
Slide 6: Dividend
Dividend 38 cent final dividend and 12 cent special dividend For personal use only Special dividend Final dividend Interim dividend 30 12 20 40 38 15 30 20 20 20 35 38 20 25 15 15 FY10 FY11 FY12 FY13 FY14 FY15 6 Suncorp Group Limited 4 August 2015
Slide 7: Top line growth
Top line growth Growth in key target segments 1.9% For personal use only Short tail GWP* -0.5% Long tail GWP* 6,722 6,690 2,003 2,041 6,391 1,911 5,842 1,810 FY12 FY13 FY14 FY15 FY12 FY13 FY14 FY15 Bank lending 3.9% Life individual in-force policies 51,918 5.6% 49,956 900 47,463^ 852 785 43,356^ 722
Slide 8: Underlying and Reported ITR
Underlying and Reported ITR Building Blocks and Simplification continue to deliver For personal use only Underlying ITR Reported ITR 18.6% 17.0% 14.0% 14.8% 14.6% 13.1% 13.4% 13.6% 10.5% 11.2% 11.1% 14.7% 13.9% 12.8% 11.1% 10.9% 9.9% 7.8% 3.8% 1.9% 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 8
Slide 9: Group operating expenses
Group operating expenses Less than 1% annual increase For personal use only Life Bank General Insurance 2,663 2,703 2,710 291 303 281 619 624 646 1753 1776 1783 FY13 FY14 FY15 9 Suncorp Group Limited 4 August 2015
Slide 10: A strengthened customer franchise
Customer A strengthened customer franchise For personal use only Strong outcomes across the Group Industry leading customer satisfaction • Industry leading satisfaction in key Industry average Jun 14 Jun 15 88 business lines 87 85 84 • 4 of the top 5 most advocated national 84 83 82 82 insurance bra
Slide 11: Optimised Platform
Optimised Platform Unlocking the value of our 9 million customers For personal use only Connected customers Simplified systems BANK LIFE GENERAL INSURANCE CORPORATE Underpinned by DATA LAKE SUNCORP DATA SERVICES Business Intelligence Sitting within a secure and scalable cloud CLOUD ENVIRONMENT Suppo
Slide 12: CFO Report
For personal use only CFO Report Steve Johnston Suncorp Group CFO Suncorp Group Limited 4 August 2015
Slide 13: Suncorp's shareholder promise
Suncorp’s shareholder promise Simplified, de-risked financial services group For personal use only Yield Growth • Dividend payout ratio of 60% to • Efficiency-led profit growth 80% and return of surplus capital • ‘Above system’ growth in key • Organic strategy, focused markets exclusively in Austral
Slide 14: General Insurance
General Insurance For personal use only $m FY15 %Δ General Insurance profit after tax 756 (25.1) Underlying ITR of 14.7% exceeding Reserve releases of $427 million commitment to ‘meet or beat’ 12% Natural hazards $473 million Reported ITR of 11.4% above allowance GWP up 0.1% with positive unit GI CE
Slide 15: Gross Written Premium
Gross Written Premium Passing on efficiency benefits For personal use only Product FY15($m) %∆ Factors Motor 2,770 (2.1) Customer unit growth offset by reduction in average written premiums Home 2,449 0.4 Targeted reductions driving high retention rates and moderated unit losses Commercial 2,326 (0.
Slide 16: Investment assets
Investment assets Low yield environment reducing underlying yield For personal use only Insurance funds ($9+bn) Shareholder funds ($3+bn) • Investment income $399 million • Investment income $163 million • MTM gains of $176 million from decreases • Total returns on cash and interest bearing in risk-
Slide 17: General Insurance event costs for FY15
General Insurance Event costs for FY15 For personal use only Date Event Gross costs $m Net Costs $m Sep 2014 East Melbourne Storm 17 17 Oct 2014 Sydney Storm 22 22 Nov 2014 Brisbane Hailstorms 361 250 Dec 2014 East Coast Storms 34 34 Jan 2015 South Brisbane Hail 13 13 Feb 2015 Cyclone Marcia 149 149
Slide 18: New Zealand Earthquake
New Zealand Earthquake Good progress being made For personal use only Historical total claims development Risk of further increases diminishing $6bn 39k • In total, $4.5 billion or 85% of total claims paid. $5bn • Commercial claims: 92% contracted or settled 35k with only five outstanding claims exc
Slide 19: General Insurance reserve releases
General Insurance reserve releases FY15 net reserve release of $427 million or 5.4% of NEP For personal use only Management Absence of Building Blocks Simplification have reduced wage and delivered one reduced legal superimposed settlements and claims system costs inflation duration Optimised claims
Slide 20: Underlying ITR and Operating Expense Ratio
Underlying ITR and Operating Expense Ratio Building Blocks and Simplification continuing to deliver For personal use only Underlying ITR Operating Expense Ratio 26.5% 14.7% 25.8% 14.3% 13.5% 12.1% 10.8% 23.7% 24.0% 9.0% 23.0% 22.6% FY10 FY11 FY12 FY13 FY14 FY15 20 Suncorp Group Limited 4 August 2015
Slide 21: Suncorp Bank
Suncorp Bank For personal use only $m FY15 %Δ Bank profit after tax 354 55.3 NIM improved to 1.85% Cost to income ratio down to 53.4% Bank CET1 increased to 9.15% Deposit to loan ratio 65.3% Home lending up 7.1% Non performing loans down 20.1% Business lending down 7.3% Gross impaired assets down 34
Slide 22: Suncorp Bank lending portfolio
Suncorp Bank lending portfolio Conservative approach to growth For personal use only 69% of business lending exposures Lending assets $51.9 billion <$10m $50m-$100m 1% $25-$50m, Com/SME 9% 10% (down 9.3%) Housing $10-$25m, 80% 21% < $5m, Agri (up 7.1%) 52% 9% (down 4.8%) $5-$10m, 17% Consumer 1% (do
Slide 23: Funding and Liquidity
Funding and Liquidity Conservative balance sheet For personal use only Long term funding profile ($m) Deposit to loan ratio 1,200 83% 1,000 69% 71% 65% 67% 800 61% 55% 600 400 200 0 Aug 15 Jan 16 May 16 Mar 17 Nov 17 Aug 19 SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4 Covered Senior Uns
Slide 24: Credit quality
Credit quality Impaired and non-performing loans both down significantly For personal use only Gross impaired loans by segment Total non-performing loans by segment Retail Agribusiness Commercial (SME) Retail Agribusiness Commercial (SME) 258 154 206 125 99 95 193 226 67 199 160 62 182 208 162 125 4
Slide 25: Suncorp Bank lending portfolio
Suncorp Bank lending portfolio Now significantly de-risked with 80% mortgage portfolio For personal use only 2009 Lending portfolio 2015 Lending portfolio Portfolio Summary ($54.4 bn) ($51.9 bn) Metrics 2009 2015 Exposures 121 1 Com/ over $50m SME 10% Agri 6% Agri 9% Margin 1.68% 1.85% Housing Com/
Slide 26: Suncorp Bank: contributing sustainable earnings
Suncorp Bank Contributing sustainable earnings to the Group For personal use only Key targets Bank of the year • NIM 1.75% to 1.85% • Money Magazine’s “Bank of the year” • Retail deposit to loan ratio 60% to 70% • Euromoney’s “Best Bank in Australia” • Drive the cost to income ratio • Industry leadi
Slide 27: Suncorp Life
Suncorp Life For personal use only $m FY15 %Δ Underlying profit after tax 113 34.5 Market adjustment after tax 12 50.0 Life profit after tax 125 35.9 Claims experience $8 million favourable Individual in-force premiums up 5.6% Lapse experience $7 million favourable Super new business up 23.4% driven
Slide 28: Life rebased assumptions
16% Life rebased assumptions 15% Illustrative lapse example For personal use only Actual experience FY14 assumption Revised assumption 0.5% 14% 13% 12% 11% 10% 2008 2010 2012 2014 2015 2018 2020 28 Suncorp Group Limited 4 August 2015
Slide 29: FY15 CET1 movements ($m)
FY15 CET1 movements ($m) Reduction due to increased Bank CET1 target For personal use only 109 45 114 73 73 1,133 156 1,132 831 570 Excess CET1 NPAT Impact of Project Bank Target GI Target SGL & Life Growth & Other Dividend Excess CET1 30-Jun-14 FY15 Natural Hazards Ignite Change Change Target Chang
Slide 30: Suncorp Capital Ratios
Suncorp Capital Ratios Strong General Insurance and Bank capital ratios For personal use only Bank CET1 ratios General Insurance CET1 ratios* 9.15% 8.80% 8.87% 1.40x 8.70% 8.80% 8.70% 1.28x 7.92% 1.04x SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4 SUN Insurer 1 Insurer 2 *Ratios listed r
Slide 31: Dividend
Dividend 38 cent final dividend and 12 cent special dividend For personal use only Special dividend Final dividend Interim dividend 30 12 20 40 38 15 30 20 20 20 35 38 20 25 15 15 FY10 FY11 FY12 FY13 FY14 FY15 31 Suncorp Group Limited 4 August 2015
Slide 32: Suncorp Group Key targets
Suncorp Group Key targets For personal use only 1 ‘Above-system’ target markets growth in key 4 Sustainable at least 10% Group ROE of 2 Optimisation benefits of $170 million in 2018 financial year 5 60% to 80% dividend payout ratio 3 ‘Meet or beat’ an underlying ITR of 12% through the cycle 6 Contin
Slide 33: Conclusion
For personal use only Conclusion Patrick Snowball Suncorp Group CEO Suncorp Group Limited 4 August 2015
Slide 34: Q&A
For personal use only Q&A Financial results for the full-year ended 30 June 2015 34 Suncorp Group Limited 4 August 2015
Slide 35: Supplementary Slides
For personal use only Supplementary Slides Financial results for the full-year ended 30 June 2015 35 Suncorp Group Limited 4 August 2015
Slide 36: Suncorp transformation
Suncorp transformation Optimised Platform in 2017 For personal use only 2009 2011 2015 2017+ Optimised Stabilise Integrate Simplify Platform ENABLED BY ENABLED BY ENABLED BY Building Blocks Simplification Optimisation Single view of: • LSP/ NextGen • Claims transformation • Claims • Partnering • Ong
Slide 37: FY16 Reinsurance program
FY16 Reinsurance program For personal use only 6.9b 6.1b 2.5b 500m Original cover Reinstatement Reinstatement Reinstatement 250m 200m Dropdown aggregate Dropdown aggregate 50m Retention 37 Suncorp Group Limited 4 August 2015
Slide 38: FY16 Reinsurance program
FY16 Reinsurance program Drop-down aggregate program fully placed For personal use only 250m 50m xs 200m xs 50m 100m xs 100m xs 150m xs 200m 150m xs 300m 200m 150m Retention 100m xs 100m xs 50m xs 200m 50m xs 300m 50m 38 Suncorp Group Limited 4 August 2015
Slide 39: Natural hazards since 1967
Natural hazards since 1967 Christchurch earthquakes, Brisbane floods, Suncorp long-term catastrophic loss experience Cyclone Yasi, Melbourne Events greater than $100m, gross of all reinsurance Hailstorm For personal use only 5,000 AUS NZ Long run average 4,500 Hunter Valley storm Cyclone 4,000 Marci
Slide 40: Optimisation: the next phase
Optimisation The next phase For personal use only 700 Optimisation Program: 600 • Claims transformation 500 • Ongoing SMART rollout Optimisation benefits $170m • Super Simplification 400 • Business Intelligence Simplification benefits $265m 300 • Technology & Procurement $m 200 100 Building Blocks b
Slide 41: Simplification benefits
Simplification benefits $225 million in FY15, $265 million in FY16 use only Original net impact Revised net impact Revised 300 Simplification Benefits 250 200 150 For personal $m 100 Original Simplification 50 benefits 0 Original one-off (50) project costs FY16 FY15 (100) FY14 Revised (150) Project
Slide 42: Suncorp capital at June 2015
Suncorp capital at 30 June 2015 $570m excess CET1 on a post-dividend basis For personal use only General NOHC and Suncorp $m Bank Life Insurance other entities Group total CET1 3,069 2,802 438 320 6,629 CET1 target 2,298 2,678 334 106 5,416 Excess (pre-div) 771 124 104 214 1,213 Dividend (643) Exces
Slide 43: Suncorp market shares
Suncorp market shares Growth opportunities For personal use only Incremental growth opportunities Home and Motor QLD CTP in markets where we are a Insurance leading player 29% 51% Growth opportunities from entering CI Aust CI NZ PI NZ# CTP NSW new markets and expanding in OUR HOW existing markets 16
Slide 44: Important disclaimer
Important disclaimer This report contains general information which is current as at 4 August 2015. It is information given in summary form and does For personal use only not purport to be complete. It is not a recommendation or advice in relation to the Group or any product or service offered by Su
Slide 45: 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