Message from the Chairman FY24

Dear Shareholders,

Suncorp Group has reached a critical juncture in its history. Following a two-year process to complete the sale of Suncorp Bank, the Group has emerged as a dedicated Trans-Tasman insurance business, well positioned to invest in our business and deliver greater value for our customers and communities as well as our shareholders.

The increasingly challenging environment in which we operate was a key driver of your Board’s decision to sell Suncorp Bank to ANZ Banking Group and become a pureplay insurance company at a time when the value of insurance and the need for continued investment in a vibrant private insurance sector has never been greater.

We remain a proudly Queensland headquartered company with a portfolio of leading insurance brands including AAMI, Suncorp Insurance, GIO, Shannons and Vero. As part of the sale process, we have made meaningful commitments to the State of Queensland to deliver more jobs and investment that will support the continued growth of the state.

In addition to a range of complex external approvals, we have undertaken a significant internal program of work required to separate the Bank given the integration of systems, platforms, processes, data and premises. We are immensely proud that the transaction was delivered with minimal impact to our customers.

The Board continues to expect net proceeds from the sale to be around $4.1 billion. Consistent with the approach taken in previous divestments, it is our intention to return the majority of these net proceeds to shareholders, primarily by way of a capital return and a smaller fully franked special dividend component. We anticipate this will occur around the first quarter of the 2025 calendar year, with timing dependent on receipt of a ruling from the Australian Tax Office and approval from the Australian Prudential Regulation Authority.

Shareholder approval of resolutions giving effect to amendments to the Suncorp Constitution and the return of capital and consolidation of ordinary shares will also be sought at our 2024 Annual General Meeting.

Against this backdrop, we have continued to operate in an increasingly complex business and regulatory landscape. Geopolitical tensions continue to escalate and the challenges of the energy transition, climate change and extreme weather events remain.

While the reinsurance market has returned to more stable and predictable outcomes after a significant market reset in 2023, the state of reinsurance markets remains intrinsically linked to material natural hazard event activity, both locally and internationally. 

Consumers have continued to be challenged by higher costs of living through high inflation and higher interest rates, driving heightened sensitivity to price and value for goods and services. 

Insurers have not been immune, with the rising cost of materials and supply chain constraints leading to insurance premiums rising rapidly. The cost to insure risk has also increased due to the higher frequency of natural hazards. 

Your Board remains acutely aware of the pressure households and businesses are under in this environment and is committed to ensuring the ongoing affordability and availability of insurance, which is critical to the health of our economies. While there is no simple solution, reducing or mitigating the underlying risk remains the key to addressing these issues. This is why we continue to advocate with all governments for the need for greater investment in resilience measures to protect people and communities, and reduce the devastating impacts of natural disasters across Australia and New Zealand.

We also acknowledge that driving improved outcomes for our customers is a responsibility for both Suncorp and the broader insurance industry. We continue to pay close attention to the Australian Federal Government’s Inquiry into insurers’ responses to 2022 major flood claims, as well as the focus by regulators on the handling of claims and complaints. 

Your Board remains alert to the rapid technology advancements and cyber threats that continue to grow in sophistication. We understand the sensitivity of information we hold as an insurer and the responsibility we have to our customers to protect their data. Equally, the adoption of generative artificial intelligence is accelerating and proving to be transformational across many industries, including insurance. These technological shifts and the ongoing digitisation of our society are reshaping the way we work and the work we do, and we are making investment decisions with these shifts in mind. This is reflected in Suncorp Group’s FY27 strategic plan, which the Board was pleased to approve this year.

As the final piece in the simplification of Suncorp Group, in April we announced the sale of our New Zealand Life Insurance business, Asteron Life Limited, to Resolution Life. The sale, which is expected to complete around the end of January 2025, is subject to approval from the Reserve Bank of New Zealand. Approval from the Overseas Investment Office has been obtained and no objections were raised by the New Zealand Commerce Commission.

Pleasingly, FY24 was another year of good growth and returns. Group net profit after tax (NPAT) was up 11.8% to $1,197 million, while cash earnings increased 16.6% to $1,372 million. The result reflected improved underlying margins in the General Insurance business and positive investment returns, with a 46.6% increase in net investment returns to $661 million.

The Board has determined to pay a fully franked final ordinary dividend of 44 cents per share. This brings total fully franked ordinary dividends for FY24 to 78 cents per share. The Group’s full year dividend payout ratio of 72.1% of cash earnings is around the middle of the target payout ratio range of 60% to 80%. Our final FY24 ordinary dividend payment will be made on 25 September 2024.

Appropriate capital buffers have been retained and our disciplined approach to the management of capital will continue with your Board remaining committed to returning capital in excess of the needs of the business to shareholders. 

On behalf of the Board, I would like to thank Group CEO Steve Johnston, his leadership team, and Suncorp’s employees, who have shown their deep commitment and genuine passion in supporting our customers and communities across Australia and New Zealand. This extends to getting customers back on the road, into their homes, and helping support a return to work and quality of life.  

I thank you, our valued shareholders, for your continued support of the Suncorp Group, and our strategic direction. While it is a new era for Suncorp as a pureplay insurer, our purpose to build futures and protect what matters for our people, customers and communities remains unchanged. Your Board is confident that Suncorp remains well positioned to deliver the benefits of being a strong, profitable, reliable and trusted insurer for Australia and New Zealand.