Suncorp Group Limited reported a robust half-year result for 1H25, with net profit after tax nearly doubling to $1.1 billion, driven by the sale of Suncorp Bank and strong insurance operations. The company announced a substantial capital return and special dividend, underscoring its disciplined capital management.
- Net profit after tax of $1.1 billion, up 89% from prior year
- Cash earnings rose 30% to $860 million excluding bank sale gain
- Return of $4.1 billion to shareholders via capital return and special dividend
- General Insurance gross written premium grew 8.9%, underlying trading ratio steady at 11.8%
- Sale of New Zealand life insurance business completed, simplifying group focus
Strong Half-Year Performance Bolstered by Bank Sale
Suncorp Group Limited (ASX: SUN) has delivered a standout financial performance for the half year ended 31 December 2024, reporting a net profit after tax (NPAT) of $1.1 billion, a significant increase from $582 million in the prior corresponding period. This result was materially supported by a one-off gain of $252 million from the sale of Suncorp Bank to ANZ, completed in July 2024.
Excluding this gain, cash earnings rose 30% to $860 million, reflecting solid operational momentum across Suncorp's core insurance businesses. The group's underlying general insurance trading ratio (UITR) held steady at 11.8%, in line with guidance, while gross written premium (GWP) grew 8.9%, driven by both unit growth and pricing adjustments to address claims inflation and natural hazard allowances.
Capital Management and Shareholder Returns
In a clear demonstration of disciplined capital management, Suncorp announced a substantial return of capital to shareholders following the bank sale. The company will return $3.8 billion via a capital return of $3.00 per share, accompanied by a share consolidation to neutralize the impact on share price. Additionally, a fully franked special dividend of 22 cents per share will be paid alongside the interim ordinary dividend of 41 cents per share in March 2025.
CEO Steve Johnston highlighted the significance of delivering the forecasted net proceeds from the bank sale nearly 1,000 days after the transaction was announced. He emphasized that the group is now a simpler, more resilient pure-play general insurer, having also completed the sale of its New Zealand life insurance business to Resolution Life NOHC in January 2025.
Operational Highlights and Market Conditions
Suncorp's Consumer Insurance segment posted a profit after tax of $423 million, benefiting from benign natural hazard experience and the earn-through of pricing increases. Motor and Home insurance portfolios both saw premium growth above 10%, with claims inflation moderating and digital customer engagement increasing significantly.
The Commercial and Personal Injury Insurance business also improved profitability, with a 7.2% increase in profit after tax to $208 million. Growth was supported by strong premium increases across all portfolios, particularly in the Platforms and Tailored Lines segments, despite some margin pressure in the Personal Injury portfolios due to higher loss ratios in Queensland and New South Wales CTP schemes.
Suncorp New Zealand reported a profit after tax of NZ$248 million, up substantially from the prior period, driven by premium earn-through, lower reinsurance costs, and a moderation in claims inflation. The sale of the New Zealand life insurance business further simplifies the group's focus.
Capital Strength and Outlook
The group's capital position remains robust, with excess Common Equity Tier 1 (CET1) capital of $781 million above the mid-point of target ranges, excluding dividends and proforma for the capital return. This strong capital base provides capacity for further capital management initiatives, including the likely establishment of an on-market buy-back facility.
Looking ahead, Suncorp expects gross written premium growth in the mid to high single digits for FY25, with the underlying insurance trading ratio to remain towards the top of the 10% to 12% range. Operating expenses are forecast to improve, and the natural hazard allowance remains the best guide to expected claims experience for the full year.
Johnston reiterated the group's commitment to supporting customers through investments in claims management, digital capabilities, and disaster response infrastructure, while navigating the challenges of inflation and climate-related risks. The company also continues to engage constructively with regulators on CTP scheme reforms to ensure sustainability and affordability.
Bottom Line?
Suncorp’s transformation into a focused general insurer, combined with disciplined capital returns, positions it well—but watch for evolving claims inflation and regulatory shifts.
Questions in the middle?
- How will Suncorp’s on-market buy-back strategy unfold following the capital return?
- What impact will ongoing claims inflation and CTP scheme reforms have on future margins?
- How will the simplification from divesting life insurance affect long-term growth and risk profile?