Slide 1: Half year results ended 31 December 2015
Suncorp Group Limited Release date: 11 February 2016 ‘ . ; oy om half year ended eee ieee ic - 31 December 2015 our customers
Slide 2: Welcome and introduction
For personal use only Good morning everyone and thank you for joining us today for my first results presentation as CEO. 2
Slide 3: First 100 days and half-year overview
For personal use only The end of my first 100 days signalled the completion of the transition phase, and I’m really pleased it has confirmed strong foundations and growth opportunities. Our Banking and Life businesses delivered improved underlying performance for the first half of the year demonstra
Slide 4: Group profit and divisional results
For personal use only The General Insurance business experienced material impacts from natural hazard claims and investment income. Natural hazard costs of $362 million were $28 million above the allowance and total investment income of just $133 million represented an annualised return of only 2.2%
Slide 5: Movement in underlying insurance trading ratio
For personal use only Today we are providing further detail on the pre-tax movements in the underlying ITR between the December 2014 half of 14.8%, and this result of 10.1%. Last year we announced a $75 million increase in the Natural hazard allowance for the full year reflecting our experience. Thi
Slide 6: Working claims cost drivers
For personal use only The claims result has been affected by both environmental and operational factors. Last year the industry experienced $4 billion of natural hazard claims. Together with a high level of construction activity along the eastern seaboard, the supply of skilled workers was reduced.
Slide 7: Home claims and rectification program
For personal use only The most material impact is in the Home portfolio. This graph highlights that the material increase in average repair cost is the key driver. In response to the worsening trends, a comprehensive program of rectification activities commenced immediately. A builder performance ma
Slide 8: Motor claims, parts costs and SMART repair
For personal use only The biggest contributor to Motor cost increases is parts which make up about half of a repair cost, and the average price of parts is up 9% in the past 18 months. The fall in the A$, and the increase in parts prices are highly correlated. To counter the cost increase we have re
Slide 9: CFO introduction
For personal use only Thanks Michael and good morning everyone. In addition to our usual disclosures, you will have noticed that today we have prepared a supplementary pack which provides a lot of additional data about the result and the performance of each of the businesses. With that in mind I wil
Slide 10: General Insurance result drivers
For personal use only Starting with General Insurance.. and Michael has already discussed the key drivers of the fall in the underlying ITR and our rectification program. In addition to the working claims issues, reported profitability has also been impacted by lower investment returns and mark to m
Slide 11: General Insurance premium growth
For personal use only Turning briefly to premium and we are pleased with the top line performance in GI with overall premium growth of 1.4%. It’s important to point out that over the past twelve months we have exited a number of corporate partner relationships. In most cases, these were deliberate b
Slide 12: Bank result
For personal use only Moving now to the Bank, which delivered a profit of $194 million, up 10%, clearly demonstrating the earnings diversification it provides to the Group. The market is very competitive yet the Bank has delivered solid lending growth without compromising credit standards. Impairmen
Slide 13: Suncorp Life result
For personal use only To Suncorp Life, where profit after tax was $53 million. Underlying profit was $58 million, up 11.5%. A reduction in long dated risk free rates has resulted in a negative market adjustment and therefore a lower reported profit when compared to the prior period. In what has been
Slide 14: Capital position and interim dividend
For personal use only On this slide I’ve shown our capital position relative to our peers in both Banking and General Insurance. It shows that Suncorp remains well positioned in terms of total capital and Common Equity Tier 1 or shareholder’s equity. I continue to believe that the inherent diversifi
Slide 15: Second half focus on ITR improvement
For personal use only Finally, in line with Michael’s earlier comment that the focus of the business has been - and will continue to be - on rectifying the claims issues identified in the first half. While much of this effort has been in the claims area, we are challenging expenditure items and area
Slide 16: Claims rectification and strategy refinements
For personal use only Thanks Steve. To reinforce what Steve covered: - We are comfortable that we have identified the causes and - We are well on top of the claim rectification process - There is more work to do and - We will continue the focus until its resolved. Today I will give you a taste of th
Slide 17: Resilience, ROE target and payout ratio
For personal use only My priority is to maintain the stability of the organisation and to keep the momentum to deliver our commitments made to investors, customers and employees. To achieve this, we will increase our resilience against an environment of higher volatility. Increasing our resilience w
Slide 18: Strategy foundations: simplification and optimisation
For personal use only The foundations of our strategy remain unchanged. The journey of simplification and optimisation has been successful, and will remain very relevant. You would have seen in previous presentations that Simplification and Optimisation are enabling us to have connected customers, s
Slide 19: Customer franchise and connected customers
For personal use only Suncorp has a unique franchise, positioned to deliver stronger customer outcomes. In the face of aggressive market competition, Personal Insurance retention has improved and our bank was named ‘Bank of the Year’ by Money magazine. Our Commercial Insurance business is ranked as
Slide 20: Customer platform approach
For personal use only The approach to deliver value for our customers means a shift from the current industry approach. • Instead of selling unrelated products or unconnected products to customers, we will take a ‘Customer Platform’ approach. • Instead of only growing by acquiring new customers, we
Slide 21: Customer outcomes platforms and omni-channel
For personal use only Our model is based on platforms that provide ‘outcomes’ for our customers. To deliver this we will need to re-align our operating model and changes will be announced shortly. We already have some of the platforms to provide a broad range of solutions and we have commenced an om
Slide 22: Customer outcomes platform vs bancassurance
For personal use only The ‘customer outcomes’ platform is different to the traditional bancassurance and allfinanz models that have dominated the strategies of international financial groups with mixed success. Our customers will be able to buy any component and any Suncorp brand from our new platfo
Slide 23: Recalibrating costs
For personal use only In addition to elevating the customer, the second component of creating a more resilient business is to recalibrate our costs. The delivery of this objective will also allow reinvestment for growth. Immediate actions include an adjustment to discretionary spending. We will also
Slide 24: Summary and highlights
For personal use only The Group’s priority is to maintain stability of the organisation and to keep momentum to deliver our commitments. We will increase our resilience in an environment of higher volatility. We will do this by elevating the customer and recalibrating our costs. The highlights today
Slide 25: Questions
Questions a, 4 One Company Many Brands 25