Slide 1: HY20 Results Presentation
SUNCORP O HY20 Results Presentation Financial Results for the half year ended 31 December 2019 RELEASE DATE 11 February 2020 SUNCORP GROUP LIMITED ABN 66 145 290 124 Photo: insurance Communty Relatonshyps Manager, queer Q =i
Slide 2: Good morning everyone
HY20 RESULTS PRESENTATION Good morning everyone On behalf of all present I would like to begin by acknowledging the Gadigal people of the Eora Nation, the traditional custodians of this land, and pay my respects to all Elders past, present and emerging. Today I am joined on stage by our CFO, Jeremy
Slide 3: Agenda and reflection on the Australian summer
HY20 RESULTS PRESENTATION The agenda for today follows our usual format, and of course we are keen to take your questions after the presentation. However, before we move to the numbers I think it’s important we take a few moments to reflect on the broader implications of an extraordinary summer in A
Slide 4: Widening the conversation on bushfires and resilience
HY20 RESULTS PRESENTATION It’s understandable in the context of a results presentation that we will narrow our focus to a discussion around claims costs, reinsurance, and profit. However, such a narrow discussion seems out of place against a backdrop of loss of life and property, the widespread dest
Slide 5: Financial services products and customer outcomes
HY20 RESULTS PRESENTATION It’s easy to describe financial services products as commodities, and they may well be perceived that way at the point of purchase. But it can be far from that at claims time or when a customer seeks a credit extension to maintain their livestock. I’m confident that the cal
Slide 6: Group high-level P&L
HY20 RESULTS PRESENTATION So, to the numbers, and on this slide I’ve shown the high-level P&L for the Group. We have reported net profit after tax of $642m, cash earnings of $365m, and an interim ordinary dividend of 26 cents per share, fully franked. On the left side of the slide I’ve called out th
Slide 7: Key highlights
HY20 RESULTS PRESENTATION There are, however, some key highlights I’d like to call out up front: − First, after years of market share losses, our Australian home and motor portfolios have returned to growth; − Digital – which is our future – is starting to deliver; − New Zealand posted another impre
Slide 8: Key priorities
HY20 RESULTS PRESENTATION This slide is a reminder of the key priorities I outlined at the full year result in August. Our focus then, and now, is on delivering improved performance in each of our three businesses; better leveraging our investments in digital and data, embracing regulatory change, a
Slide 9: Insurance areas of focus
HY20 RESULTS PRESENTATION Starting with Insurance and the areas of focus are outlined on the left of the slide. Reinvigorating our multi-brand strategy is crucial to our long-term success. Suncorp has at its disposal a suite of brands that are well segmented by market, geography and customer need. E
Slide 10: Bank priorities
HY20 RESULTS PRESENTATION Moving to the Bank, and the challenges facing the sector are well known and have been widely discussed. Our focus remains on four key priorities that play to our strengths and further help differentiate us from our competitors. Leveraging our strong brand, distribution reac
Slide 11: Progress against priorities
HY20 RESULTS PRESENTATION Progress against priorities Embracing − Extensive and complex regulatory program, implementation following regulatory certainty regulatory − Focused on improving customer outcomes in response to the Financial Services Royal Commission, change1 APRA self-assessment and Sedgw
Slide 12: Handover to CFO
HY20 RESULTS PRESENTATION Thanks Steve and good morning everyone. 12
Slide 13: CFO overview of business results
HY20 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 a little more detail, covering the Insurance businesses, including an update on Natural Hazards and the Group UITR, followed by the Ban
Slide 14: Australian Insurance result
HY20 RESULTS PRESENTATION So, starting with the Australian Insurance business which delivered a profit of $123 million, broadly in line with the prior period. The key features of the result include: − Positive unit and premium growth in Consumer; − Natural hazard costs were $104m higher than our all
Slide 15: GWP growth waterfall
HY20 RESULTS PRESENTATION I have shown here the usual waterfall breaking down our GWP growth for the year. Pleasingly, we saw solid growth in the Home and Motor portfolios, supported by both rate and units– with new business growth being a key driver, along with stable retention rates. In Home, we c
Slide 16: Claims
HY20 RESULTS PRESENTATION Turning to claims. The increase in consumer reflects continued pressure from water damage and large fire losses in the Home book. However, we have seen a stabilisation in water claims costs relative to last half following actions to improve our claims processes. Motor claim
Slide 17: Prior year reserve releases
HY20 RESULTS PRESENTATION As flagged, prior year reserve releases for the half were subdued. Prior year releases in the personal injury book were 2.3% of NEP, compared to 3.2% in the prior period. We saw lower CTP releases across most of the schemes in line with reforms aimed at lowering premiums an
Slide 18: Investment portfolio
HY20 RESULTS PRESENTATION Moving on to the investment portfolio. The underlying yield on Insurance Funds was 1.5%, down significantly on pcp, but in line with our expected range above risk-free rates. The shareholders’ funds returned a positive $37 million, supported by narrowing credit spreads and
Slide 19: New Zealand result
HY20 RESULTS PRESENTATION Next to New Zealand, which delivered profit of NZ$108 million, reflecting a more normalised claims experience. As flagged at the FY19 results, GWP growth, while still strong, is lower than the increases seen over the last two years. 1H20 includes remediation provisions of N
Slide 20: Natural hazards and reinsurance
HY20 RESULTS PRESENTATION Turning to Natural Hazards and we have already provided an update on the impact of natural hazard events in January. In addition, the East Coast of Australia is currently being impacted by a significant weather event. While it is still relatively early to quantify the gross
Slide 21: Group underlying insurance trading ratio
HY20 RESULTS PRESENTATION Now to the Group underlying ITR, which, as expected, is lower than 2H19. The higher natural hazard allowance and the additional ASL cost impacted UITR by almost a 150 basis points. Lower yields have driven a further 80 basis point reduction primarily driven by the lower pre
Slide 22: Banking & Wealth
HY20 RESULTS PRESENTATION Turning now to Banking & Wealth, which delivered a profit of $171 million. Home lending contracted 1.4% over the half, principally reflecting low system growth and elevated processing times, particularly in the broker channel. As Steve said, improving our performance in the
Slide 23: Group expenses
HY20 RESULTS PRESENTATION Now to Group expenses where I have shown the cost base over the last two halves after adjusting for the sale of the Australian Life business. As flagged in the FY19 results, expenses increased $46 million in the second half of last year driven by: an increase in regulatory
Slide 24: Capital and dividend
HY20 RESULTS PRESENTATION Finally, moving on to capital where we continue to maintain a very strong capital position. The Board has declared a fully franked interim dividend of 26 cents per share, equivalent to a payout ratio of about 90%. While this is above our target range, it reflects our confid
Slide 25: Handover to CEO
HY20 RESULTS PRESENTATION Thanks Jeremy. 25
Slide 26: Outlook
HY20 RESULTS PRESENTATION Turning to the outlook and from an operational perspective our priority is to leverage our scale to address the large volume of natural hazard claims. While dealing with the events we will not lose sight of working claims and will continue to focus on the four priorities I
Slide 27: Conclusion and questions
HY20 RESULTS PRESENTATION So, in conclusion, I’m very comfortable with the progress we have made over the past six months. We recognise that we have pushed into some strong headwinds and that we have more work to do. But I believe we have demonstrated that by aligning the whole of Suncorp around our
Slide 28: HY20 RESULTS PRESENTATION
HY20 RESULTS PRESENTATION 28