Suncorp Group Limited · ASX:SUN
Suncorp — H1 2010 Earnings Presentation
27 slides from Suncorp's earnings presentation, Feb 24, 2010
Slide 1: Half year results 2010
For personal use only Half year results 2010 24 February 2010
Slide 2: Agenda
For personal use only Agenda • Introduction & overview – Patrick Snowball • Detailed results – Clayton Herbert • General Insurance • Banking • Life • Capital • Building blocks – Patrick Snowball • Questions 2
Slide 3: Group performance
Group performance A$m 1H10 1H10 %Δ For personal use only General Insurance profit after tax 347 89 Core Bank profit before tax 224 n/a Non-core Bank profit before tax (211) n/a Consolidated Bank profit after tax 4 (93) Life profit after tax 105 (23) Other (Promina acquisition items and L.J. Hooker d
Slide 4: General Insurance overview
General Insurance overview A$m 1H10 %Δ For personal use only General Insurance profit after tax 347 89 600 14.0% • GWP up 7.5% excluding Covermore travel insurance 500 12.0% • Claims expense down 20.5% 10.0% 400 • Positive variance to natural hazard 8.0% allowance of $56 million 300 6.0% • Revised A
Slide 5: Bank overview
Bank overview A$m 1H10 For personal use only Core Bank profit before tax 224 Non-core Bank profit before tax (211) 120 1.9% Core Bank 1.8% 100 • Solid margins, improved deposit flows 1.7% and low levels of impairment 80 1.6% 1.5% • Deposit to core lending ratio of 69% 60 1.4% Non-core Bank 40 1.3% 1
Slide 6: Life overview
Life overview A$m 1H10 %Δ For personal use only Life profit after tax 105 (23) 120 160 • Underlying profit after tax down 14.9% 140 100 • Lapse experience negatively impacted 120 the life risk profit which was down 21.7% 80 100 80 • Planned profit margin release up 5.3% 60 60 • EFA channel sales up
Slide 7: Capital and dividends
Capital and dividends A$m 1H10 For personal use only Interim dividend per share 15 cents 25 160.0% • ‘Other’ includes $50 million profit on disposal of L.J. Hooker 140.0% 20 120.0% • Group capital position strengthened to absorb multiple risks 15 100.0% 80.0% • Capital will improve as the non-core 1
Slide 8: Agenda
For personal use only Agenda • Introduction & overview – Patrick Snowball • Detailed results – Clayton Herbert • General Insurance • Banking • Life • Capital • Building blocks – Patrick Snowball • Questions 8
Slide 9: General Insurance overview
General Insurance overview A$m 1H10 Δ% For personal use only Gross written premium 3,490 4.4 Net earned premium 3,144 5.2 Net incurred claims (2,191) (20.5) Operating expenses (812) (3.2) Investment income – insurance funds 260 (66.0) Insurance Trading Result (ITR) 401 153.8 Investment income – shar
Slide 10: Gross written premium
For personal use only Gross written premium 1H10 Product %Δ Factors (A$m) Motor 1,205 6.8 Solid premium and net written unit growth Significant premium increases and Home 867 13.9 resilient customer retention Hardening markets with solid increases Commercial 896 1.4 in short-tail classes Higher aver
Slide 11: General Insurance margin
For personal use only General Insurance margin 12.8% Reserve Pre-AWE (1.8%) Releases $137m Current Accident $58m 10.8% Period Strain (2.6%) 2.4% Risk Margin Pre AWE Strain $15m Up to Superimposed inflation $70m per half Reported ITR Natural hazard Investment Increase in Basic adjustment income - AWE
Slide 12: Core bank
Core bank A$m 1H10 For personal use only Net interest income 371 Non-interest income 78 Total income 449 Operating expenses (223) Impairment losses 2 PROFIT BEFORE TAX 224 Net interest margin 1.76% Cost to income ratio 49.7% 12
Slide 13: Core bank: deposits and lending assets
Core bank: deposits and lending assets Retail deposits (A$b) and deposit to loan ratio (%) Total deposits growth, December 2009 For personal use only 57.1% 61.3% 60.1% 64.1% 66.0% 69.0% 24.2 25.2 1.95% 23.4 23.6 1 month 21.8 22.9 2.7 0.17% 2.8 2.2 2.2 2.1 3.2 3.88% 3 months 1.03% 20.6 20.8 21.4 22.0
Slide 14: Core bank: credit quality
Core bank: credit quality Total retail arrears (past 90 days due) Core gross non-performing loans trends, $m For personal use only 0.63% 0.39% 0.39% 312 249 174 172 0.26% 145 153 142 108 Mar-09 Jun-09 Sep-09 Dec-09 Impaired assets > 90 days Bad and doubtful debt expense Summary A$m 1H10 • Credit qua
Slide 15: Non-core Bank
Non-core Bank A$m 1H10 For personal use only Net interest income 95 Non-interest income 20 Total income 115 Operating expenses (54) Impairment losses (272) PROFIT/(LOSS) BEFORE TAX (211) Net interest margin 0.78% Cost to income ratio 47% 15
Slide 16: Non-core bank: assets
Non-core bank: assets Summary For personal use only • Run-off of $1.9 billion during the half, ahead of forecast by $0.3 billion • Total facility limits have been reduced by over $2.6 billion • Seeing positive signs in the market regarding opportunities for divestment Non-core assets, A$b Forecast r
Slide 17: Non-core bank: credit quality
Non-core bank: credit quality Impaired asset movements, A$m For personal use only 2,077 2 x Corporate 133 1,917 (160) 5 x Property developers (50) 800 1,329 (135) Jun-09 BBI Single name Resolved account Other Dec-09 Post balance date Adjusted balance exposures sale Impairment losses on loans and adv
Slide 18: Life overview
Life overview A$m 1H10 %Δ For personal use only Life Risk Profit 36 (22) Superannuation & Investments 19 (24) Distribution (5) - Asset Management 7 17 Underlying Investment Income 29 - Total Life Underlying Profit After Tax 86 (15) Market Adjustments 19 (46) PROFIT AFTER TAX 105 (23) In-force premiu
Slide 19: Embedded Value (A$m)
Embedded Value (A$m) Embedded Value over time Value of One Year’s Sales (VOYS) over time For personal use only 2,350 100 2,250 80 2,150 60 2,050 40 1,950 20 1,850 0 Dec-08 Jun-09 Dec-09 Dec-08 Jun-09 Dec-09 Change in Embedded Value: 30 June 2009 → 31 December 2009 2,301 3 23 (44) 2,145 86 88 EV at 3
Slide 20: Group Capital
Group Capital Core Capital levels For personal use only • Investments in subsidiaries deducted from Bank capital • Hybrid capital excluded • General Insurance MCR of 1.81 times • Bank Tier 1 core capital ratio of 6.25% General Bank Life Insurance $2,501m $1,477m $2,685m Group $6,696m 20
Slide 21: Bank capital
Bank capital Movement in risk weighted assets ($bn) Bank Capital Adequacy For personal use only 0.5 (0.2) (1.6) 41.6 13.70 12.77 (0.5) 10.67 0.2 40.0 Jun-09 Core Core growth Non-core Non-core off- Market Risk Dec-09 Securitisation loan reduction balance sheet Dec-08 Jun-09 Dec-09 Tier 1 Capital Adju
Slide 22: Agenda
For personal use only Agenda • Introduction & overview – Patrick Snowball • Detailed results – Clayton Herbert • General Insurance • Banking • Life • Capital • Building blocks – Patrick Snowball • Questions 22
Slide 23: Strategic direction
For personal use only Strategic direction PHASE ONE PHASE TWO Getting to know the business Laying the foundations of our strategy 1 Sept 2009 to 28 Oct 2009 29 Oct 2009 to 24 Feb 2010 Phase One Phase Two • External advice from industry experts • Review the legal and organisational • Meet with Suncor
Slide 24: Building Blocks
Building Blocks Sept Mar Sept June June 2009 2010 2010 2011 2012 For personal use only Dec June Dec Dec 2009 2010 2010 2011 Employees Integrated employee systems implemented G Our people space R Customers Suncorp/GIO O Group Customer Data Other brands U Financials Consolidation of financial P Financ
Slide 25: The year ahead
For personal use only The year ahead…… Key dates for 2010: 7 May Banking strategy update David Foster, Bank CEO 21 May General Insurance Investor Day Mark Milliner, PI CEO & Anthony Day, CI CEO 23 June Life strategy update Geoff Summerhayes, Life CEO 25 August FY10 Result and Group strategy Patrick
Slide 26: Questions
For personal use only Questions Half Year Results 2010
Slide 27: Disclaimer
Disclaimer This presentation contains general information which is current as at 24 February 2010. For personal use only It is information given in summary form and does not purport to be complete. It is not a recommendation or advice in relation to Suncorp-Metway Limited or any product or service o