Annual Review 2015/16

In October 2015, the Board welcomed Michael Cameron as Suncorp’s new CEO & Managing Director.

This appointment was followed by a significant organisational transformation which included the launch of a new purpose to Create a better today for all of our stakeholders, and an operating model which emphasised that creating value for customers would underpin future profitability and growth.

To that end, Suncorp continues to be a well-capitalised, low-risk, financial services conglomerate, with a diversified earnings base that provides a strong foundation to create and sustain value for our customers, shareholders, employees and communities.

General Insurance, Life Insurance and Banking define our portfolio of financial services, our people understand their important role in helping customers during life’s challenges, critical decisions and dramas, and our proud legacy sees us as close to, and dependent upon, the communities we serve in Australia and New Zealand.

The past financial year demonstrates that our businesses continue to generate strong profitability in an environment of low economic growth and unpredictable weather, and investment markets. The Group delivered a solid result, with a full year net profit after tax of $1,038 million.

The underlying profit after tax for Suncorp’s banking business improved as a result of prudent growth and improved risk management. Suncorp Life also saw underlying profits increase and is well positioned for growth as the industry undertakes reform. The General Insurance business experienced lower investment returns and higher claims costs, but was able to partially offset the financial impact of these issues with reserve releases arising from low inflation. The higher claims costs are being addressed, resulting in our insurance margins improving over the second half of the year.

In New Zealand, both the general and life insurance businesses have increased market share as a result of ongoing product innovation.

Continuing to deliver robust returns in uncertain times

Suncorp strives to deliver attractive shareholder returns through disciplined cost and capital management, enhanced reinsurance arrangements, timely investments in technology and relevant relationships, and ongoing business efficiency improvements.

The Board has declared a final ordinary dividend of 38 cents per share, bringing the year’s total dividend to 68 cents per share fully franked. This is at the top end of the Group’s dividend payout ratio.

During a year of substantial volatility, where the ASX 200 Accumulation Index returned 0.6%, the Group’s total return performance was negative 0.9%. While this is short of our aspirations and what we have delivered in recent periods, it compares to our peer group* who delivered a total return of negative 6.5% for the year. Over the past five years our total returns are 104%, more than double the ASX 200 Accumulation Index return of 43% for the comparable period.

Notes* The ASX 200 financials excluding areits

A refined Suncorp strategy

Suncorp’s refinement of its business strategy in early 2016 and the implementation of a new customer-focused operating model will help drive future growth, increase resilience to volatility and ensure long-term sustainability.

The Group should deliver greater value for customers by meeting their needs more consistently and adapting to evolving customer preferences.

The Board and executive team are galvanised behind the 'One Suncorp' business model and we are steadfast in our commitment to delivering long-term value for all of our stakeholders. The Group has outstanding people, advanced systems and established corporate functions that create a powerful foundation for future growth.

New leadership

Nearing the end of his first year in the job, Michael has proven himself to be the right leader for the Group, refining Suncorp’s strategy to focus on growth and resilience.

With the Board’s endorsement, Michael has implemented the new operating model, putting customers at the centre of the organisation. Accordingly, a number of roles among the executive team have changed, delivering fresh perspectives and new energy for Michael’s ambitious plans for the Group.

In October 2015, we also welcomed Sally Herman to the Board. Sally brings extensive experience in corporate and retail banking, insurance and wealth management, and corporate social responsibility developed over the course of a long executive career.

Board Director Geoff Ricketts will retire at the 2016 AGM in September and he will not seek re-election. Geoff has made a significant contribution over a period of almost 10 years and I thank him for his service and consistently wise counsel.

I would like to express my gratitude to Suncorp’s people, whose dedication and passion for this business are both impressive and a great source of competitive advantage. I would also like to acknowledge my Board colleagues for their frank, fearless and invaluable contributions and conscientious stewardship of the Group.

Finally, thank you to our loyal customers and shareholders. Your interests have been at the centre of all our decisions as we have worked to evolve our strategy and implement the new operating model. We look forward to being able to deliver exceptional results.