Slide 1: Suncorp Group Update May 2020
Suncorp Group Update May 2020 Good morning everyone. I’d like to acknowledge the Traditional Owners of the Land on which our business operates. We pay our respects to Elders past, present and emerging. Today I am joined on the call by our Group CFO Jeremy Robson, CEO Insurance Australia Gary Dransfi
Slide 2: Group entered COVID in a sound position
SUNCORP GROUP UPDATE MAY 2020 Before we move into the body of the presentation it is important to outline that the Group entered the uncertain period of COVID in a sound financial and operational position. This is highlighted on this slide, but I’d like to call out a few of the more notable initiati
Slide 3: Our response to COVID
SUNCORP GROUP UPDATE MAY 2020 Turning now to our response to COVID. To help us navigate this uncertain period, the Senior Leadership Team and I have applied the framework and priorities outlined on the slide. Our first priority has been to protect the health and wellbeing of our people. The digital
Slide 4: Economic scenarios
SUNCORP GROUP UPDATE MAY 2020 Before I move on to discussing the impact on our businesses and portfolios, I’d briefly like to outline our view on the economic scenarios that will guide our responses over the short, medium and longer term horizons. Like all the CEO’s you’ve heard from over the last m
Slide 5: Impacts on Australian Insurance business
SUNCORP GROUP UPDATE MAY 2020 First to the impacts on the Australian Insurance business. The significant market volatility seen over recent months resulted in significant mark-to-market (MTM) losses on the investments portfolio to 31 March, albeit protected to a degree by the hedges we put in place.
Slide 6: Insurance claims frequency and GWP impacts
SUNCORP GROUP UPDATE MAY 2020 The lower claims frequency benefits in commercial motor and to a lesser extent compulsory third party (CTP) will not be recognised until we complete our periodic valuations, so this is more likely to come through the profit and loss in 1H21. Finally, we also expect a mo
Slide 7: Impacts on New Zealand
SUNCORP GROUP UPDATE MAY 2020 Moving on to New Zealand The New Zealand government-imposed Level 4 restrictions in late March, which saw even tighter restrictions than those imposed in Australia. As such motor claims frequency has declined more dramatically than in Australia. However, since easing re
Slide 8: Impacts on the Bank
SUNCORP GROUP UPDATE MAY 2020 Turning now to the impacts on the Bank. As I said at the beginning of the presentation, the Bank’s lending portfolio is relatively low risk. Home lending accounts for around 80% of the book, with a skew to owner occupiers and principal and interest repayments. Around 20
Slide 9: Collective provision and Core Banking Platform impairment
SUNCORP GROUP UPDATE MAY 2020 Our process for modelling the collective provision is different to others. Instead of probability weighting two or three specific scenarios, we have adopted a distribution approach which considers a much wider range of possible outcomes around our base case for key econ
Slide 10: Insurance Australia investment portfolio MTM impact
SUNCORP GROUP UPDATE MAY 2020 Thanks Steve, and good morning everyone. As Steve mentioned, the significant market volatility in Q3 as a result of COVID has impacted the Insurance Australia investment portfolio. This came through in the form of a $205m MTM loss to the end of March. Going into the COV
Slide 11: Capital position
SUNCORP GROUP UPDATE MAY 2020 Moving on to capital now where we are maintaining a sound position. At the end of the March quarter the Group’s Excess common equity tier 1 (CET1) position was $682m pre any final dividend accrual. On a like-for-like basis, this is a circa $300m reduction from the Decem
Slide 12: Capital impact of CPS3 and Core Banking impairment
SUNCORP GROUP UPDATE MAY 2020 position by up to $194m by exercising our option to exchange the residual convertible preference shares (CPS3) that we partially refinanced in December last year. I also just wanted to cover off the capital impact of the Core Banking Platform impairment Steve mentioned
Slide 13: Review of pay and leave entitlements
SUNCORP GROUP UPDATE MAY 2020 Thanks Jeremy. You would have seen this morning that we have included an update on an ongoing review of pay and leave entitlements for our employees in Australia. We commenced the review in November last year to ensure we were meeting all obligations to all our employee
Slide 14: Accelerating digital, data and automation
SUNCORP GROUP UPDATE MAY 2020 COVID presents us with an opportunity to accelerate the pace at which we execute our digital, data and automation strategies. You will have previously heard me talk about the further opportunities available to Suncorp as we leverage the efficiency and productivity tools
Slide 15: Outlook
SUNCORP GROUP UPDATE MAY 2020 Moving now to the outlook. Quite clearly, there remains a significant amount of uncertainty for how the health aspect, and therefore the economic impact, of COVID plays out. From an operational perspective our priority is to safely return people to physical work locatio
Slide 16: Costs, capital and dividend outlook
SUNCORP GROUP UPDATE MAY 2020 On costs, there are a number of competing issues. We expect that COVID will result in a net increase in costs, the most material factor being the roll back of offshore processes. In addition, we will also now provide for the cost of the pay and leave entitlements review
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