Slide 1: Financial Results
Financial Results For the half year ended 31 December 2022 8 February 2023 SUNCORP GROUP LIMITED | ABN 66 145 290 124
Slide 2: 1H23 Overview
1H23 Financial Results 2 1H23 Overview Steve Johnston Group Chief Executive Officer
Slide 3: Purpose driven, delivering sustainable outcomes
1H23 Financial Results 3 Purpose driven, delivering sustainable outcomes Our Purpose Building futures and protecting what matters + People Capable, engaged, diverse, innovative = Customers & Community Delivering valued outcomes = Financial Outcomes A sustainable business
Slide 4: Group result
1H23 Financial Results 4 Group result Suncorp New Zealand Profit after tax from functions $83m (up 2%; up 8% in NZD) Strong top-line growth and continued 755 margin expansion Suncorp Bank $256m (up 28%) Odigentist lam volore Insurance Australia $276m (up 142%) velessi debis aliate molorro odia volla
Slide 5: Result highlights
1H23 Financial Results | 5 Result highlights Strong top-line growth and underlying momentum across the Group Insurance Australia Insurance Australia Suncorp General Insurance Gross written Gross written New Zealand Suncorp Bank Suncorp Bank Underlying premium premium Gross written insurance trading
Slide 6: Operational spotlight – natural hazards
1H23 Financial Results | 6 Operational spotlight – natural hazards NATURAL HAZARD COSTS VS ALLOWANCE FOUR-POINT PLAN TO ADDRESS NATURAL HAZARD RESILIENCE ($m) 1 Improve public infrastructure 695 679 519 561 580 475 475 490 490 410 410 449 386 Provide subsidies to improve the resilience 301 2 of priv
Slide 7: Operational spotlight – inflation
1H23 Financial Results 7 Operational spotlight – inflation CLAIMS IMPACT PRICING RESPONSE – NORMALISED AVERAGE WRITTEN PREMIUM Higher second Higher frequency hand car prices 9.9% 10.7% 9.1% 8.9% 7.1% 7.5% 5.4% 4.9% 4.9% 3.1% 2.1% 2.9% 1.6% 2.6% 1H20 2H20 1H21 2H21 1H22 2H22 1H23 Hardening global Sup
Slide 8: Pathway to Bank completion and transition
1H23 Financial Results | 8 Pathway to Bank completion and transition ~H2 2023 Calendar Year NOTES Public ACCC Statement ANZ submission Public feedback ACCC ― Bank sale process progressing consultation of Preliminary lodged and publication release determination subject to approvals period Views ― We
Slide 9: 1H23 Financial Results
1H23 Financial Results 9 1H23 Financial Results Jeremy Robson Group Chief Financial Officer
Slide 10: Group result overview
1H23 Financial Results 10 Group result overview Continued margin expansion and strong top-line growth 1H23 1H22 Change KEY MESSAGES ($m) ($m) (%) Insurance Australia 276 114 142.1 ― Strong top-line growth and underlying momentum ― Inflationary pressures and natural hazard costs driving Suncorp Bank
Slide 11: Insurance Australia – gross written premium
1H23 Financial Results 11 Insurance Australia – gross written premium GROSS WRITTEN PREMIUM BY PORTFOLIO HOME AND MOTOR PORTFOLIO GROWTH (excluding ESL; $m) (versus pcp; normalised for portfolio exits) (6) 9 (32) 10.7% 60 9.9% 9.1% 8.9% 144 7.5% 7.1% 5.4% 4.9% 4.9% 191 4,840 2.9% 4,474 4.5% 3.1% 2.9
Slide 12: Insurance Australia – net loss ratio
1H23 Financial Results 12 Insurance Australia – net loss ratio NET LOSS RATIO BY PORTFOLIO NOTES ― Deterioration in Consumer largely due to an Working claims excl. COVID 3.3% increase in average claims size in the motor portfolio 1.2% (1.1%) 0.1% 0.4% ― Increased loss ratio in Motor driven by both (
Slide 13: Insurance Australia – investment market impacts
1H23 Financial Results 13 Insurance Australia – investment market impacts UNDERLYING YIELD ON INSURANCE FUNDS ILB CARRY ABOVE RISK FREE / CPI VS BREAKEVEN INFLATION (annualised) 8% $60m 6% 4.98% $40m 4% $20m 2% Inflation-linked 0% $0m bonds -2% -$20m The yield on -4% 3.04% inflation-linked -$40m bon
Slide 14: New Zealand
1H23 Financial Results 14 New Zealand NEW ZEALAND PAT GROSS WRITTEN PREMIUM NET INCURRED CLAIMS NOTES (NZ$m) (NZ$m) (NZ$m) ― Strong GWP growth with pricing Net loss reflecting inflationary pressures 58% 61% ratio +8% 12.2% ― Increased market share 91 1,180 583 ― General Insurance profit moderated 84
Slide 15: Group underlying ITR
1H23 Financial Results 15 Group underlying ITR FUNDAMENTAL UITR DRIVER ANALYSIS NOTES ― Underlying ITR was impacted in the half by an increase in the natural hazard Outlook dynamics allowance and reinsurance costs, as well as working claims, especially in Motor 1H23 vs 2H22 2H23 vs1H23 Medium term ―
Slide 16: Natural hazards
1H23 Financial Results 16 Natural hazards EVENTS OVER $10 MILLION BY MONTH 1H23 NATURAL HAZARDS VS ALLOWANCE ($m) ($m) 679 580 99 479 273 39 89 200 19 59 20 19 Jul Aug Sep Oct Nov Dec Experience Allowance Australia New Zealand Over $10m Attritional NOTES EROSION OF AGGREGATE EXCESS OF LOSS (AXL) DED
Slide 17: Suncorp Bank
1H23 Financial Results 17 Suncorp Bank 1H23 v 1H23 v NET INTEREST MARGIN 1H23 2H22 1H22 2H22 1H22 ($m) ($m) ($m) (%) (%) (0.04%) (0.02%) Net interest income 725 624 621 16.2 16.7 Other operating income 8 (11) 14 n/a (42.9) 0.43% Operating expenses (366) (370) (366) 1.1 - (0.24%) 2.03% Operating prof
Slide 18: Suncorp Bank – credit quality
1H23 Financial Results 18 Suncorp Bank – credit quality HOME LENDING: LOAN-TO-VALUE >80 ORIGINATIONS: DEBT-TO-INCOME >6 90+ DAYS PAST DUE (% of total GLA) 0.08% 0.10% 0.08% 16% 16% 24% 23% 14% 13% 0.54% 12% 17% 16% 17% 0.43% 9% 12% 0.36% 1H22 2H22 1H23 1H22 2H22 1H23 1H22 2H22 1H23 Portfolio Origina
Slide 19: Group operating expenses
1H23 Financial Results 19 Group operating expenses GROUP OPERATING EXPENSES 1H22 TO 1H23 NOTES (excluding ESL and TEPL; $m) ― Reduced project spend in line with expectations, largely in regulatory 26 and maintenance (14) (39) ― The expense base was impacted by economy-wide inflationary pressures (16
Slide 20: Group capital
1H23 Financial Results | 20 Group capital COMMON EQUITY TIER 1 CAPITAL HELD AT GROUP NOTES ($m) ― Net capital generation of $110m in 1H23: Net capital generation $110m • Around $100m reversal of previous Deferred Tax Asset (DTA) • Around $70m benefit from pricing changes reversing previous impacts o
Slide 21: Strategic Outlook
1H23 Financial Results 21 Strategic Outlook Steve Johnston Group Chief Executive Officer
Slide 22: FY23 Plan
1H23 Financial Results 22 FY23 Plan Purpose Building futures and protecting what matters Customer led Technology enabled Our people Advocacy Strategic Digital first and Automated processes Exceptional people Building towards a fair pillars personalised and modernised empowered to make a and sustaina
Slide 23: FY23 strategic targets
1H23 Financial Results 23 FY23 strategic targets OPERATING ENVIRONMENT Cash return on equity above the through-the-cycle ― A geopolitical shock in Europe drove a further Return on equity supply shock to the global economy cost of equity ― Inflation rose to its highest level in decades ― Central bank
Slide 24: FY23 Plan progress – Suncorp Insurance
1H23 Financial Results 24 FY23 Plan progress – Suncorp Insurance GROSS WRITTEN PREMIUM GROSS WRITTEN PREMIUM PROGRESS AGAINST STRATEGIC INITIATIVES Insurance Australia 1 ($m) Suncorp New Zealand (NZ$m) ― AAMI the most considered national insurance +13.7% brand in Australia +27.8% ― Increased market
Slide 25: FY23 Plan progress – Suncorp Bank
1H23 Financial Results 25 FY23 Plan progress – Suncorp Bank HOME LENDING HOME LENDING PROGRESS AGAINST STRATEGIC INITIATIVES Total portfolio ($m) Turnaround times1 (working days) / applications (#) ― Home lending growth of $2.6b over the half 6,000 25 ― Reduced median turnaround time and +15.6% impr
Slide 26: Outlook
1H23 Financial Results | 26 Outlook ― GWP growth in FY23 expected to be in the mid to high single digits ― Pricing increases to reflect increasing reinsurance and natural hazards costs and inflationary environment ― Unwind of mark-to-market investment losses to grow yield and support UITR, offset by
Slide 27: Our long-term strategy will deliver value
1H23 Financial Results 27 Our long-term strategy will deliver value for our customers, people, shareholders and the broader community Purpose | Risk Appetite | Financial Settings | Reinsurance Strategy | ESG Motor Home Commercial Statutory Classes New Zealand Portfolios Strengthen our leading Develo
Slide 28: Questions
1H23 Financial Results 28 Questions
Slide 29: Important disclaimer
1H23 Financial Results 29 Important disclaimer This presentation contains general information which is current as at 8 February 2023. It is information given in summary 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 o