Suncorp Group Ltd (ASX: SUN) shares slipped 2.7% today following the release of its half year report to the ASX.
Suncorp Group is a $17 billion insurance and banking company. It has its own brand of products but also operates under names like AAMI, GIO, Apia and Shannons.
This morning, Suncorp released its half-year report to the ASX.
Here’s the key news from its announcement:
- Revenue of $7.8 billion, down 9% compared to the prior corresponding period
- Profit of $452 million, down 16%
- A dividend of 33 cents per share, fully franked
Suncorp said its profit result was impacted by the recent Victorian hail storm, investment and regulatory costs.
Suncorp isn’t the only insurer to be hit by adverse weather events. In January, QBE Insurance Group Ltd (ASX: QBE) reported a slump in profit on account of the ‘unprecedented cost of catastrophes’.
Suncorp said its result was bolstered by a strong performance in Consumer General Insurance and Banking. Gross Written Premium (GWP) is equal to the value of premiums Suncorp customers are required to pay for coverage. Suncorp’s GWP rose 3.9% in the Australian Home and Motor Insurance business.
Meanwhile, bank lending rose 8.7% and Suncorp’s New Zealand General Insurance business achieved GWP growth of 7.6%.
Commenting on the result, Suncorp Chairman Ziggy Switkowski said maintaining the dividend was important and was declared because the board is confident in the company’s outlook.
“The interim dividend reflects the confidence we have in generating strong future returns from the strategic programs being undertaken this year,” Dr Switkowski said.
Looking ahead, Michael Cameron, CEO of Suncorp, said the group is well positioned for the second half of its 2018 financial year.
“Our work over the past 18 months on driving efficiencies in our claims processes, improvements in our customer experience, a hardening insurance market and our strategic investment programs, position the business well for the second half,” Mr Cameron noted.
Suncorp expects a stronger profit result in second half of its 2018 financial year compared to the first half.
Top line growth of 3% to 5% will be driven by targeted growth and strategic initiatives, with the company focused on achieving a return on equity (ROE) of 10%. The board intends to pay dividends equivalent to 60% to 80% of profit going forward.
“Today’s result provides evidence that our strategy, our team, and our organisation will deliver an improved second half and a significant uplift in performance in FY19 and ’20,” Mr Cameron concluded.
Earlier in the week, rival Insurance Australia Group Ltd (ASX: IAG) announced profit growth of 23% for its half-year reporting period.
According to Google Finance, shares of Suncorp were trading 2.7% lower at $12.96 on Thursday.
Join Rask’s Investor Club Newsletter Today
You can join Rask’s FREE investor’s club newsletter today for all of the latest news and education on investing. Join today – it doesn’t cost a thing. BUT, you’ll need a good sense of humour and a willingness to learn.
Keep Reading
- Surviving And Profiting From The Market Rout
- Great Things I Read This Week
- The Best Investors Are Dead or Female
Disclaimer: This article contains general information only. It is no substitute for licensed financial advice and should not be relied upon. By using our website you agree to our Disclaimer & Terms of Use and Privacy Policy.
