Suncorp Group Limited · ASX:SUN
Suncorp — Investor Presentation (February 2015)
30 slides from Suncorp's investor presentation, Feb 11, 2015
Slide 1: Suncorp Group Limited: An Introduction
Suncorp Group Limited For personal use only Suncorp Group Limited An Introduction February 2015 1 Suncorp Group Limited February 2015
Slide 2: Suncorp Group: Leading financial services brands in Australia and New Zealand
Suncorp Group Leading financial services brands in Australia and New Zealand For personal use only Top 15 ASX listed company $19 billion market capitalisation at 10 Feb 2015 $94 billion in group assets 14,500 employees in Australia and New Zealand 9 million customers End to end ownership of brands 2
Slide 3: Suncorp's shareholder promise
Suncorp’s shareholder promise Simplified, de-risked financial services group For personal use only Yield Growth • Dividend payout ratio of 60% to • Efficiency-led profit growth 80% and return of surplus capital • FY15 top-line growth of ‘low • Organic strategy, focused single digits’ exclusively in
Slide 4: HY15 result overview
HY15 result overview ($m) For personal use only HY15 HY14 %∆ General Insurance NPAT 419 470 (11) Bank NPAT 176 105 68 Suncorp Life NPAT 86 22 291 Business lines NPAT 681 597 14 Other (21) (10) 110 Cash earnings 660 587 12 Other profit and acquisition amortisation (29) (39) (26) NPAT 631 548 15 4 Sun
Slide 5: Dividend
Dividend 38 cent interim dividend, up 8.6% For personal use only Special dividend Final dividend Interim dividend 30 20 40 15 30 20 20 20 8.6% 35 38 20 25 15 15 FY10 FY11 FY12 FY13 FY14 HY15 5 Suncorp Group Limited February 2015
Slide 6: Suncorp's Strategic Assets
Suncorp’s Strategic Assets Our focus For personal use only • Deliver scale cost benefits on third party procured goods / services Cost • Share scale on infrastructure (real estate, enterprise technology) and non-unique business services • Enhancing the value of 9 million customers connections by dee
Slide 7: Customer: Strong and growing customer advocacy
Customer Strong and growing customer advocacy For personal use only SUN brands HY14 SUN brands HY15 Industry average Very strong metrics across the Group 17 17 • 3 of the top 4 most advocated national 16 insurance brands 14 • Improving customer retention 11 • Brisbane Hailstorm claims satisfaction 9
Slide 8: Key commitments
Suncorp Group Key commitments For personal use only 1 Group growth of ‘low single digits’ in the 2015 financial year 4 Continue to return surplus capital 2 ‘Meet or beat’ an underlying ITR of 12% through the cycle 5 Simplification benefits of $225 million in the 2015 financial year 3 60% to 80% divi
Slide 9: Top line growth
Top line growth Reduced target of ‘low single digits’ ($m) For personal use only Short tail GWP* Long tail GWP* -0.6% 0.6% 3,364 3,344 938 944 2,890 815 HY12 HY13 HY14 HY15 HY12 HY13 HY14 HY15 Bank lending Suncorp Life individual in-force business 2.3% 50,300 8.6% 49,184 892 821 45,763 693 40,774 HY
Slide 10: Suncorp Group NPAT: Diversification of earnings
Suncorp Group NPAT ($m) Diversification of earnings For personal use only Business line NPAT 373 619 (19) 597 237 681 27 34 General Insurance 41 331 564 Bank 540 419 319 470 61 59 52 Life underlying 77 41 43 133 144 145 105 123 176 NPAT (209) (140) (19) Non-core Bank/ (10) (492) (496) Life write-off
Slide 11: General Insurance: The engine room
General Insurance The engine room Results GWP by product and geography For personal use only • NPAT $419 million OTHER 1% CTP • GWP down 0.3% (ex FSL) 12% • Underlying ITR of 14.8% MOTOR • Reported ITR of 12.8% 32% • Natural hazard claims $470 million including $250 million OTHER Brisbane Hailstorm
Slide 12: Gross Written Premium
Gross Written Premium Passing on efficiency benefits For personal use only Product HY15 ($m) %∆ Factors Motor 1,385 (1.9) Lower average written premiums and 1.1% reduction in units Targeted premium reductions driving high retention rates and Home 1,227 0.3 moderated unit losses Commercial 1,108 (1.2
Slide 13: Underlying and Reported ITR
Underlying and Reported ITR Building Blocks and Simplification delivering For personal use only Underlying ITR 18.6% Reported ITR 17.0% 14.7% 14.8% 13.6% 14.0% 13.1% 13.4% 12% 11.2% 11.1% 12.8% 13.9% 10.9% 11.1% 10.5% 7.8% 3.8% 1.9% 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 13 Suncorp Group Limit
Slide 14: Long-tail claims
Long-tail claims Ongoing systems improvement delivering 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 processes Reserve releases well ab
Slide 15: Personal Insurance brands
Personal Insurance brands Differentiated offerings, preserving core elements of each brand For personal use only Lead national brand: Suncorp Insurance: • Eliminating stress • Providing insurance to • Competitive price positions Queenslanders Market share • Strong community in each State(1) connecti
Slide 16: Commercial Insurance: products overview
Commercial Insurance: products overview GWP $1.4 billion For personal use only Commercial - Including 23% • Packages CTP • Mid Market 39% Statutory Commercial Portfolio Portfolio Corporate - Including 16% • Property • Liability • Fleet Workers Specialty - Including Compensation 15% • Construction &
Slide 17: New Zealand General Insurance
New Zealand General Insurance Second largest with 24% market share For personal use only Intermediated Direct • 19% share of total market GWP • 5% share of total market GWP • 1st or 2nd largest in most classes • Strong growth in domestic motor • Leader in broker channels insurance – 21% market share
Slide 18: FY15 Reinsurance program
FY15 Reinsurance program 6.1b For personal use only 5.8b 2.5b 500m 250m Original cover Reinstatement Reinstatement Reinstatement 200m Attributable to the Dropdown aggregate Dropdown aggregate 50m Brisbane Hailstorm Retention 18 Suncorp Group Limited February 2015
Slide 19: Natural hazards since 1967
Natural hazards since 1967 Christchurch earthquakes, Brisbane floods, Suncorp long-term catastrophic loss experience Cyclone Yasi, Events greater than $100m, gross of all reinsurance Melbourne Hailstorm For personal use only 5,000 NZ AUS Long run average 4,500 4,000 Hunter Valley storm 3,500 Brisban
Slide 20: Suncorp Bank: Sustainable growth over the medium term
Suncorp Bank Sustainable growth over the medium term Results Suncorp Bank lending portfolio For personal use only • NPAT of $176 million • Home lending up 3.9% focus on credit quality Com/SME 11% • Gross Non-performing loans down 23.8% (down 5.2%) • NIM of 1.86% slightly above target range • Deposit
Slide 21: Suncorp Bank: Australia's leading regional bank
Suncorp Bank Australia’s leading regional bank For personal use only • Total customer base of 1,109,000 growth of 12% Queensland • Complete customer growth of 50% 126 branches 12 business centres Western Australia • Network of 200+ branches & 12 branches 1 business centre South business centres Aust
Slide 22: Housing loans: Improved LVR mix
Housing loans Improved LVR mix For personal use only Conservative approach to mortgage lending Mortgage disbursements by LVR • Steady improvement in home <80% 80% - 90% 90% + lending portfolio quality 4% 13% 7% 25% 21% 11% • LVR mix has shifted notably toward 15% 13% 10% sub-80% lending 8% • 84% of
Slide 23: Credit quality: Reduced non performing loans
Credit quality Reduced non performing loans For personal use only Gross impaired loans by segment Past due home loans (% gross home loans) Retail Agribusiness Commercial (SME) Total Past due Impaired Past due non-hardship 1.03% 0.98% 0.92% 0.93% 206 0.79% 0.81% 99 0.74% 0.65% 67 0.51% 0.62% 182 208
Slide 24: Suncorp Bank: Contributing sustainable earnings to the Group
Suncorp Bank Contributing sustainable earnings to the Group For personal use only Australia’s leading Key targets regional bank • NIM 1.75% to 1.85% • Basel II Advanced Accreditation • Retail deposit to loan ratio 60% to 70% • New banking platform – Project Ignite • Drive the cost to income ratio •
Slide 25: Suncorp Life: Strengthened assumptions and improved capital efficiency
Suncorp Life Strengthened assumptions and improved capital efficiency Results For personal use only Growth in Life risk and superannuation ($m) • Life profit after tax $86 million Life Risk in-force annual premium • Life risk inforce premiums up 8.6% • Strong direct new business sales 957 911 • Supe
Slide 26: Capital: Risk-based capital modelling progressing
Capital Risk-based capital modelling progressing For personal use only Group Surplus Diversification • Simplification and Potential* de-risking have NOHC supported capital returns Life • Balance sheet very strong Group Group Bank Total • Risk-based capital Total on track • Enhance decision making GI
Slide 27: Suncorp Capital Ratios
Suncorp Capital Ratios Strong General Insurance and Bank capital ratios For personal use only Bank CET1 Ratios General Insurance CET1 ratios* 8.97% 8.82% 8.80% 8.60% 8.63% 1.44x 8.50% 7.83% 1.19x 1.14x SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4 SUN Insurer 1 Insurer 2 *Ratios listed r
Slide 28: Simplification benefits
Simplification benefits $225 million in FY15, $265 million in FY16 use only 300 Original net impact Revised Revised net impact Simplification 250 Benefits 200 150 For personal $m 100 Original Simplification 50 benefits 0 Original one-off (50) project costs FY16 FY15 (100) Revised FY14 (150) Project
Slide 29: Important disclaimer
Important disclaimer This report contains general information which is current as at 11 February 2015. It is information given in summary For personal use only 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 offered by
Slide 30: 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
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