Suncorp Group Limited · ASX:SUN
Suncorp — Morgan Stanley Conference Singapore (November 2007)
27 slides from Suncorp's conference presentation, Nov 14, 2007
Slide 1: Introduction and overview of presentation
For personal use only Good morning. I’m delighted to be here in Singapore and to have the opportunity to speak to you about Suncorp. Today, I’d like to give you a quick overview of who we are and where we have come from… and, demonstrate the strength of the Group by briefly re-capping the highlights
Slide 2: Suncorp at a glance
For personal use only Suncorp is a top 20 Australian company, capitalised at around $18 billion with operations in every state and a significant presence in New Zealand. We employ more than 16,000 people, and service more than 8 million customers. 2
Slide 3: Major milestones in Suncorp history
For personal use only This slide provides you with a snapshot of the major milestones in the Suncorp history. In December 1996 the Group was formed through a 3 way merger involving Suncorp, a government owned insurance company; QIDC, a government owned industry development corporation; and the publi
Slide 4: Three key themes from the result
For personal use only SLIDE There were three key themes to come out of the result Firstly – that each of our businesses are fit and well and continue to compete strongly - head to head - with their competitors. Secondly: The result proves that the business has not been distracted by the completion o
Slide 5: Group net profit and profit before tax
For personal use only SLIDE To the high level numbers for the group To the left hand side of the slide you can see that Net Profit After Tax has risen to $1.06 billion for the year to June 07. The right hand chart shows Profit before tax, And Promina acquisition items, which for the purposes of this
Slide 6: Final and full year dividend
For personal use only SLIDE The strength of the result and the Board’s continuing confidence in the performance of the business allowed us to declare a final, fully franked, ordinary dividend of 55 cents, taking the full year ordinary dividend to 107 cents an increase of 10.3% over the prior year. 6
Slide 7: Bank divisional result
For personal use only SLIDE On to the divisional results and first to the Bank, which delivered another solid result, lifting profit before tax by 12.5% to $569 million for the year. Within this result there were some notable highlights: • the bank grew its housing, business and consumer portfolios
Slide 8: Bank net interest margin
For personal use only A key driver of the P&L performance in the Bank is net interest margin and I always like to spend a few moments discussing some of the factors at play here. You will see NIM reduced 12 basis points during the year to 1.97% The waterfall chart on the slide provides a summary of
Slide 9: Banking growth strategy and branch footprint
For personal use only In recent weeks we have refreshed our banking strategy to support our growth plans for both our direct and indirect customer channels. As a direct result of this review we have announced plans to further expand our retail bank outlets into identified growth corridors primarily
Slide 10: Credit market exposure and sub-prime
For personal use only And finally, in our discussion on the bank I would now, like to take the time to talk about how the group is positioned in the current credit market environment. Firstly, the banking arm has no direct holdings of U.S. sub-prime mortgage bonds or CDO’s with exposures to U.S. sub
Slide 11: Wholesale funding strategy
For personal use only I would also like to highlight the Group’s wholesale funding strategy and the significantly improved strength of the Bank’s balance sheet. Over the past 4 years we have focused on increasing funding diversification by undertaking extensive investor relations activities both dom
Slide 12: Funding diversification and investor base
For personal use only These initiatives have lead to a significant increase in the number of investors, with improved diversification in terms of both geography and investor type. A good example is that last month we attracted orders from 84 investors from across Europe and Asia for a 200 million St
Slide 13: Bank result summary
For personal use only SLIDE So to quickly sum up the bank result We’ve seen strong lending growth across the portfolio, With pleasing growth in total revenue and continued tight control of expenses As always we have disciplined approach to credit and our funding strategy is robust. And we have just
Slide 14: General Insurance result
For personal use only SLIDE Turning now to General Insurance The strong profitability of this business continues to be a feature with a profit before tax contribution of $835 million for the full year on a consolidated basis. Key P&L drivers for the business were: • GWP growth of 4.3% for the former
Slide 15: Gross written premium by class
For personal use only SLIDE Turning now to premium and what we have on this slide is the GWP profiles of both Suncorp and Promina for the full year. In Compulsory Third Party, which is a long tail class, GWP decreased in both businesses for the year reflecting the highly competitive market with risk
Slide 16: Consolidated GWP profile
For personal use only This slide gives you the GWP profile for the consolidated Group. Following on from the previous slide you can see Suncorp’s pro forma GWP profile for its general insurance product set. When you cut GWP by class of business you will note that long tail business now accounts for
Slide 17: Claims and loss ratio
For personal use only SLIDE Turning now to claims, Net incurred claims for the year for Suncorp were down 3.9% which when combined with a 1.1% lift in net earned premium, resulted in a 4.8% improvement in the loss ratio to 61.5%. And for the former Promina businesses, net incurred claims for the yea
Slide 18: General Insurance summary
For personal use only SLIDE So, in summary for GI, we have: • a strong, diverse and profitable business • benefiting from improved profitability, conservative provisioning and favourable claims experiences in long tail classes • a strong ITR result in short tail despite increasing competition and st
Slide 19: Wealth Management result
For personal use only SLIDE Turning now to Wealth Management, And profit after tax and minority interests for the consolidated entity was $123 million for the full year. 19
Slide 20: Wealth Management drivers
For personal use only SLIDE Both businesses continued to focus on the delivery of superior customer experiences and product innovation. The life risk operations of both companies experienced strong growth from increased experience profit and growth in annual premiums. Funds management which includes
Slide 21: Capital position and strategy
For personal use only SLIDE To Capital now. We have previously indicated that there is an opportunity for generating additional capital post merger through the corporate restructuring of the general insurance licenced entities and through a review of our capital targets with the rating agencies, whi
Slide 22: Integration plan and principles
For personal use only SLIDE And finally to the very important topic of integration We have put a very clear plan in place to ensure the combined organisation maximises the benefits flowing from the transaction. This approach is underpinned by a set of integration principles which include: • Fact bas
Slide 23: Integration achievements since merger
For personal use only SLIDE Since the merger transaction was completed on 20 March We have achieved a great deal. The group executive team was appointed in late March and shortly afterwards agreed the vision and purpose for the new Suncorp. This in turn drove the decision around the desired high lev
Slide 24: Synergy benefits and integration costs
For personal use only Quick win teams were put in place to identify synergy benefits that were not dependent on the business model At 30 June $55 million of annualised synergy benefits have been locked in, in two key areas: Firstly by combining the Reinsurance programs of the two organisations to re
Slide 25: Outlook for year to June 2008
For personal use only SLIDE Now, let me conclude with our outlook. We reported in August that we expect to grow profit before tax and bad debts in the Bank by approximately 10%. We made the point at the time, and subsequently, that this guidance obviously excludes any impact from the recent dislocat
Slide 26: Summary
For personal use only SLIDE So to summarise…. Suncorp is a diversified financial services company with each of the businesses performing strongly in their own right We have not been distracted by the transaction or the integration. Our capital position remains strong as is our balance sheet meaning
Slide 27: Forward-looking statements notice
* The information in this report is for general information only. To the extent that the information may constitute forward-looking statements, the information reflects Suncorp’s current views at the date of this report (14 November 2007) and is subject to known and unknown risks and uncertainties,
Suncorp Group — Morgan Stanley Conference Singapore (November 2007) on 6ix