Slide 1: 1H21 Results Presentation
SUNCORP O 1H21 Results Presentation Financial results for the half year ended 31 December 2020 Release date 9 February 2021 SUN' MITED ABN SUNCORP
Slide 2: Welcome and introductions
1H21 RESULTS PRESENTATION Good morning and welcome. Let me begin by acknowledging the traditional owners of the lands on which we meet and pay our respects to all Elders, past, present and emerging. I am joined on the call today by members of our Executive Leadership team. There are a few new faces
Slide 3: Executive Leadership team introductions
1H21 RESULTS PRESENTATION In Sydney today we have: Our CFO Jeremy Robson; Lisa Harrison, who is the CEO Insurance Products and Portfolio; Paul Smeaton, the COO of Insurance; Clive van Horen, the CEO of Suncorp Bank, Clive joined us in August 2020; 3
Slide 4: Executive team introductions continued
1H21 RESULTS PRESENTATION Adam Bennett, our CIO, Adam joined us in July 2020; Fiona Thompson, who is our CRO. Fiona is also currently leading our People and Culture Team as we finalise the appointment of this role. And finally, Belinda Speirs, our Group General Counsel And joining us from Auckland i
Slide 5: Group result and key metrics
1H21 RESULTS PRESENTATION Turning to the result and the key metrics captured on this slide show a pleasing increase in earnings for all three businesses and cash profit for the Group up by 40%. When I first presented to you as CEO, I said our focus was on aligning everyone at Suncorp around improved
Slide 6: Result highlights
1H21 RESULTS PRESENTATION But first, I would like to call out a number of result highlights that underscore the strong progress we have made since we refocused our attention on the core business. Our Australian Insurance business has delivered headline premium growth of 4.0%, increasing to 4.4% when
Slide 7: Reshaping and simplifying the business
1H21 RESULTS PRESENTATION What is less obvious in the financials, but no less important, is the work we have done to reshape and simplify our business. We have put in place a new operating model and structure, one that is better aligned to the areas of greatest opportunity. We have improved accounta
Slide 8: Business results review
1H21 RESULTS PRESENTATION Thanks Steve and good morning everyone. Steve has already given an overview of the Group results, so I’ll now run through each business in more detail. 8
Slide 9: Insurance Australia GWP waterfall
1H21 RESULTS PRESENTATION Starting with Insurance (Australia) and the GWP waterfall. Pleasingly, consumer GWP grew over 5% with positive unit count. In Home, we continue to price for the higher natural hazard costs, with average written premium up 7.6%. Normalising for the ongoing remediation of the
Slide 10: Insurance Australia claims
1H21 RESULTS PRESENTATION So, turning to claims. The impact of COVID-19 was broadly neutral with lower motor claims frequency offset by additional reserves for potential business interruption claims, which I’ll cover on the next slide. Motor claims costs were higher, reflecting underlying inflation
Slide 11: Business interruption provision
1H21 RESULTS PRESENTATION Next, I wanted to provide a bit more colour on our business interruption provision, which has increased modestly from $195 million to $214 million following final valuations. The increase reflects an allowance for the possibility of further legal costs and the provision cov
Slide 12: Investment performance
1H21 RESULTS PRESENTATION Moving on to investment performance. The underlying yield on insurance funds was 74 basis points, reflecting the lower yield environment and tighter credit spreads, with strong manager performance offsetting the reduced Inflation linked bond (ILB) carry above risk free. The
Slide 13: New Zealand result
1H21 RESULTS PRESENTATION New Zealand delivered another great result despite a material increase in natural hazard costs. The AA Insurance direct business continues to perform strongly which led to GWP growth of over 5%. Net incurred claims were up 6%, from increased natural hazards costs and busine
Slide 14: Natural hazards and reinsurance
1H21 RESULTS PRESENTATION Turning to natural hazards and reinsurance. And as you can see from the table, we had a series of smaller Eastern States weather events in the half, along with the QLD/NSW hail event in late October and two flood events in New Zealand. This resulted in total natural hazard
Slide 15: Group underlying insurance trading ratio
1H21 RESULTS PRESENTATION Now to the Group underlying insurance trading ratio (ITR) where I have shown the key movements from 1H20, looking through some of the usual seasonality between the first and second halves. The movement in underlying ITR was largely in line with our expectations and was driv
Slide 16: Banking & Wealth
1H21 RESULTS PRESENTATION Now to Banking & Wealth, which delivered a profit after tax of $190 million, up 11% on the prior period. The increase was driven by a very strong net interest margin underpinned by continued momentum in at-call deposit growth, particularly in transaction accounts. Whilst ho
Slide 17: Group expenses
1H21 RESULTS PRESENTATION Now to Group expenses which have been broadly flat over the last three halves. We have absorbed salary increases, invested in digital and technology capabilities including the deployment of an enterprise wide telephony platform and spent more on marketing and advertising as
Slide 18: Capital and dividend
1H21 RESULTS PRESENTATION Finally, moving on to capital, where we have maintained a very strong position with Group excess common equity tier one (CET1) capital of just over $1 billion, underpinned by strong organic capital generation. The Board has declared a fully franked interim dividend of 26 ce
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Slide 20: Three-year business plan
1H21 RESULTS PRESENTATION Thanks Jeremy I’ve talked previously about our five point framework for managing through COVID-19: we needed to protect and support our people; be there for our customers, be open and honest in our communications and ensure our business remained strong. The final priority w
Slide 21: Key initiatives of the business plan
1H21 RESULTS PRESENTATION Underwriting and pricing is at the heart of any successful insurance company and fundamental to improving loss ratios. Here, we will further enhance our underwriting capability through targeted investments in pricing analytics and capability. Optimising distribution through
Slide 22: Opex impact of the three-year plan
1H21 RESULTS PRESENTATION To the next slide and here we have outlined the impact on opex from the 3 year business plan. We expect a modest increase in our forecast opex this year and in FY22 to deliver material improvements to our business. We've captured this on the left of the slide. However, you
Slide 23: Aspiration for Suncorp in 2023
1H21 RESULTS PRESENTATION To the next slide, here we have outlined our aspiration for Suncorp in 2023. For Suncorp to create value for its shareholders we must deliver returns on equity above our cost of equity. That will be our first target and from there we will seek to generate a positive spread
Slide 24: Natural hazard resilience and mitigation
1H21 RESULTS PRESENTATION Before concluding I’d like to again briefly mention our ongoing advocacy around natural hazard resilience and mitigation. The unfolding situation in Western Australia reminds us that it’s now 12 months since bushfires wreaked havoc on our nation and its people. A lot has ha
Slide 25: Conclusion
1H21 RESULTS PRESENTATION So, in conclusion, We enter the second half of FY21 in good shape, with momentum building across all of our businesses. Our balance sheet is very strong and continues to improve, providing us with significant flexibility Our purpose “To build futures and protect what matter
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