Message from the Chairman | Half year results to 31 December 2021

Dear Shareholder,

I am writing to update you on the first six months of Suncorp’s 2022 financial year.

Since I addressed you at our AGM in September last year, the COVID-19 pandemic has continued to present challenges, particularly with the recent emergence of the highly transmissible Omicron variant. It has become clear that vaccination remains the most effective control to mitigate the health and wellbeing risks associated with COVID-19 and Suncorp continues to strongly encourage full participation in the vaccination program.

A La Niña climate driver has also impacted many communities across Australia and New Zealand in the form of an elevated number of weather events including heavy rain, floods, storms and tropical cyclones. 

Suncorp’s purpose – building futures and protecting what matters – continues to guide our response through these challenging times. The safety and wellbeing of our people, customers, and the communities in which we live and work remains paramount, while we also prioritise the unwavering support of our customers in their times of need. 

Pleasingly, this approach continues to underpin the resilience of our business, enabling us to create positive momentum and value for our stakeholders.

Suncorp has continued to focus on improving our core banking and insurance businesses. This has resulted in strong underlying momentum and growth across all three businesses, and good progress against the Group’s three-year plan.

Although the Group’s net profit after tax of $388 million and cash earnings of $361 million are down compared to the prior corresponding period, as your Board we feel this is a compelling result considering the impact of increased natural hazard costs from weather events and lower investment returns during the half year.

The Group experienced 19 separate weather events in the six months to December 2021, resulting in more than 50,000 natural hazard claims at an estimated cost of $695 million, which is $205 million above our usual natural hazard allowance for the half year.

The strong underlying business momentum demonstrated through the HY22 result combined with the protection provided by the Group’s comprehensive reinsurance program has contributed to the Board’s confidence in the Group’s earnings outlook. In light of this and the Group’s robust capital position, your Board has determined a fully franked interim ordinary dividend of 23 cents per share, which is at the top end of our 60 to 80 per cent target payout ratio and payable to you, our shareholders, on 1 April 2022.

Suncorp’s focus on anticipating and adapting to the changing landscape has intensified. This includes solving for customer preferences driven by the digital revolution, preparing for evolving workforce and societal trends, and rising to the challenge of addressing both the risks and opportunities posed by our changing climate.

We remain committed to advocating for investment and action to build greater community resilience against natural hazards as the impacts of climate change become increasingly evident. Suncorp’s refreshed Climate Change Action Plan outlines our approach to supporting our people, customers and communities in their transition to a net-zero emissions economy, reducing our own environmental footprint and strengthening resilience to the impacts of extreme weather. A steadfast commitment to meaningful action from both the public and private sectors is required to drive real outcomes both now and for the future.

Suncorp has also released its second Modern Slavery Statement which outlines our commitment to advancing human rights and identifying and addressing the risks of modern slavery in our operations and supply chain.

We continue to leverage the benefits offered by technology in delivering for our customers. The pace of technological change and opportunity has never been greater. But with that, we also navigate new risks such as cybercrime, an area of heightened focus for your Board and all businesses in financial services.

For our workforce, Suncorp is committed to a hybrid working model, which continues to support an inclusive culture, flexibility for our people and the ability for our teams to remain connected, collaborative and productive. These ways of working have enabled us to continue to deliver for all of our stakeholders despite the challenges of COVID-19.

All of this forms a core part of our commitment to growing the business responsibly and sustainably.