Suncorp Group (ASX:SUN) Managing Director and CEO, Michael Cameron, discusses the company’s H1 FY17 results and corporate strategy


Suncorp Group (ASX:SUN) is a diversified financial services company. We have about 13,500 employees. We’re a Top 20 ASX Company, but you probably know our brands better – brands like AAMI, GIO, Shannons, APIA and Bingle. We have a life insurance business, a general insurance business and a bank.

The highlights from the first half results were firstly our profit of $537 million, for the six months. We also saw a 10 per cent uplift in dividend at 33 cents, and that’s about a 72 per cent payout ratio. But all parts of the business performed well. We saw 4.3 per cent our top line growth and flat expenses. So we’re very pleased with where we got to.

We saw a strong performance right across the business. In the insurance business, we saw good growth of 6.2 per cent, flat expenses, but most importantly we saw a lower level of claims. So our natural hazards that impact our result each year were lower than expected, which contributed to quite an uplift in the performance of the group.

The banking wealth business saw fairly stable growth. We saw enormous competition in the market for mortgages coming up to Christmas – what I would describe as unsustainable pricing levels. As a result of that, we stepped out of the market a bit and we saw fairly flat growth in the second half of the year. But overall, December to December, about a 2.5 per cent increase.

The life insurance business continues to be in line with the rest of the market. The underlying profit was flat at about $25 million for both halves. Last year we put in place a refreshed strategy. We also put in place a new operating model and a substantially new leadership team. So a lot of change and that was all about moving towards a marketplace strategy.

Now this is very different to what most of the large insurers and the regional banks currently do. There’s a lot of competition. If you look at a monoline business, all you’ve really got to do to compete is to reduce the price. Now that’s not sustainable. So for us, we’ve created a platform, or a marketplace that will deliver more value to our nine million customers. So very exciting times and we’ll see the success of that rollout over the next few years.

Our outlook for the next 6 to 12 months is for a continuation of margin growth, which is going to be a good driver of the performance of the group. We also expect that our underlying ITR, the key measure for the insurance business, will continue to improve.

But overall, our priorities are continuing with the stability and the momentum of the business. Secondly, to continue to elevate the customer through our marketplace strategy. And lastly, to look at recalibration of our costs to (firstly) give the shareholders a benefit, but (secondly) to also provide funds for reinvestment for future growth.


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