Suncorp Group Ltd : Half Year Results Summary Dec 2011
02/21/2012 | 05:36pm
ASX announcement
22 February 2012
SUNCORP REPORTS INCREASED HALF YEAR NPAT OF $389 MILLION
• Group NPAT of $389 million, up from $223 million in
the prior comparative period (pcp).
• Group balance sheet and capital levels further
strengthened with greater transparency provided by the
non-operating holding company structure.
• Building blocks programs improving margins and
offsetting increased reinsurance costs.
• General insurance NPAT of $162 million ($292 million
pcp), impacted by Melbourne hailstorm, increased reinsurance
costs, reduced reserve releases and falling interest
rates.
• Increase in the underlying ITR ratio to 11.1% (FY11:
10.8%).
• Core Bank after tax profit of $156 million ($110
million pcp) offset by an after tax loss of
$54 million ($107 million pcp) on the non-core portfolio.
• Suncorp Life after tax profit of $133 million ($61
million pcp).
• Increased interim ordinary dividend of 20 cents per
share, fully franked.
Suncorp Group Limited has reported net profit after tax
(NPAT) of $389 million for the half year to 31
December 2011, up from $223 million in the prior
corresponding period.
The improved net profit result was achieved despite numerous
external challenges including a weak domestic economy,
volatile investment markets, ongoing natural hazard events
and increased reinsurance costs.
Chairman Ziggy Switkowski said the Group had delivered
increased profits and underlying margins, top-line growth
across its businesses, improved cost control and a stronger
balance sheet.
"The Group's strong financial performance in challenging
markets has enabled us to pay an increased half year dividend
of 20 cents per share, fully franked."
Dr Switkowski said Suncorp's response to ongoing weather
events and natural disasters highlighted the importance of
its contribution to the broader community.
"Suncorp's leadership in product innovation and efficient
claims management has enabled local and regional communities
to rebuild and return to productive capacity in a shorter
timeframe than would otherwise be the case. Importantly,
private assets have been replaced and livelihoods restored
without recourse to public funds," he said.
Group chief executive Patrick Snowball said Suncorp's half
year results demonstrated the strength and resilience of the
Group and underlined the progress it was making in
transforming and simplifying its business.
"Although external challenges mean that our first half profit
is still not what we, and our shareholders, know this
business is capable of, I'm proud of what Suncorp has
achieved over the last six months and am confident the
transformation of our Group is on track," Mr Snowball
said.
Mr Snowball said Suncorp's balance sheet, as well as its
Building Blocks program, had provided protection against the
worst impacts of adverse weather events and difficult
economic conditions.
"The Group's surplus capital position means it is well placed
should there be any further deterioration in the global
economy," he said.
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Suncorp Group Ltd-
ABN 66 145 290 124 - GPO Box 1453, Brisbane QLD 4001
www.suncorpgroup.com.au
"Our Building Blocks programs, which included the move to
single insurance pricing and claims systems, helped the
insurance business respond to the worst calendar year for
natural hazards claims on record."
Mr Snowball said further Group-wide transformation and
simplification initiatives had been identified and were in
the process of being implemented. An update on these programs
will be provided at the Group's strategy day in May.
General Insurance
General Insurance recorded an after tax profit of $162
million for the half year to 31 December 2011, with the
result impacted by natural hazard claims that were $149
million above allowances as well as falling interest rates
and increased reinsurance costs. This resulted in a statutory
ITR ratio of 3.8%.
Despite this, the business increased underlying margins
through improved risk selection and pricing and a focus on
cost control. The underlying ITR ratio for the half to 31
December 2011 increased to
11.1%.
Australian short-tail classes grew with Home up 15.9% and
Motor up 1.7%. Premium rates in these classes increased
following ongoing adverse natural hazard experience and
significantly higher reinsurance costs.
Commercial insurance gross written premium increased 9.3%.
Higher reinsurance costs saw price increases for most
commercial lines although the small to medium enterprise
market remained challenging due to competition and the
economic environment.
Suncorp Bank
Suncorp Bank improved its after tax profit to $102 million
for the half year.
The Core Bank's after tax profit was $156 million, with its
direct footprint and broker flows increasing as customers
seek an alternative to the major banks. Lending growth
rebounded following the Queensland floods and cyclones in
early 2011 and above system volumes are expected to continue
into 2012.
Core Bank net interest margin declined slightly to 1.91%
during the half year due to intense competition for retail
deposits. The deposit to loan ratio remains at the top end of
the 60% to 70% target range with the Group's 'A+/A1' credit
rating providing a diversity of alternative funding
sources.
The non-core portfolio reported a reduced after-tax loss of
$54 million, reflecting lower impairment losses and the $34.5
million pre-tax profit on sale of the Polaris data centre,
the Bank's joint venture asset.
The run-off of the non-core portfolio continued to progress
ahead of expectations with total lending reducing to $5.7
billion. Global economic uncertainty is expected to have some
impact on the run-off of the remainder of the non-core
portfolio.
Suncorp Life
Suncorp Life's after tax profit for the half was $133 million
while underlying profit after tax was $69 million.
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Suncorp Group Ltd-
ABN 66 145 290 124 - GPO Box 1453, Brisbane QLD 4001
www.suncorpgroup.com.au
The business made good progress against its strategy to grow
its intermediated and direct distribution channels.
Individual Life Risk new business was $51 million, up 11% on
the prior corresponding period. Direct sales increased by 36%
as Suncorp Life successfully leveraged the Group's assets to
drive volumes.
The embedded value of Suncorp Life increased slightly to
$2,465 million.
Dividend/capital
Suncorp will pay an interim dividend of 20 cents per share
fully franked. Basic cash earnings per share, the basis of
the Group's dividend payouts, were 34.13 cents.
The Group's capital position remained healthy, with more than
$1.18 billion identified as surplus to the Group's internal
targets despite Suncorp paying down a further $221 million in
subordinated debt and repurchasing $72 million of reset
preference shares during the half.
Dr Switkowski said the Board and management placed a priority
on balance sheet management and ensuring the Group is well
placed to deal with ongoing regulatory and economic
uncertainty.
"Our priority is to specify capital targets that
appropriately reflect the evolving regulatory environment and
the needs of our businesses," he said.
"While capital levels remain well above the Group's targets,
we have decided to maintain these surpluses given ongoing
global economic uncertainty. We will review this position at
the conclusion of the full year."
* Further information
regarding Suncorp's results, including an explanation of
statutory and non- statutory financial information, is set
out in the Group's financial results announcement for the
half- year ending 31 December 2011 is available on
www.suncorpgroup.com.au or www.asx.com.au.
Ends
For more information contact:
Analysts / investors: Mark Ley, 0411 139 134
Media: Jamin Smith, 0409 170 035
Teleconference details
Analyst briefing
Webcast address: www.suncorpgroup.com.au
Australia dial-in: 1800 801 825
International dial-in: +61 2 8524 5042
Conference ID: 6359100
Media teleconference:
Australia dial-in: 1800 801 825
International dial-in: +61 2 8524 5042
Conference ID: 3868720
3
Suncorp Group Ltd-
ABN 66 145 290 124 - GPO Box 1453, Brisbane QLD 4001
www.suncorpgroup.com.au
