Suncorp Returns $4.1 Billion to Shareholders After $1.1 Billion Profit Surge

Strong Financial Performance Bolstered by Strategic Bank Sale

Suncorp Group Limited (ASX: SUN) has reported a standout first half for FY25, with net profit after tax (NPAT) soaring to $1.1 billion, nearly doubling from $582 million in the prior corresponding period. This impressive result was buoyed by a one-off gain of $252 million from the sale of Suncorp Bank, which completed in July 2024, alongside favourable natural hazard experience and positive investment returns.

Excluding the bank sale gain and other non-cash items, cash earnings rose 30% to $860 million, reflecting solid underlying operational performance. The general insurance business saw gross written premium (GWP) increase by 8.9%, driven by both unit growth and pricing adjustments in response to claims inflation and natural hazard allowances. The underlying insurance trading ratio (UITR) remained steady at 11.8%, in line with company guidance, indicating disciplined underwriting.

Capital Return and Dividend Reflect Robust Balance Sheet

In a clear signal of confidence in its capital position, Suncorp announced a substantial return of capital to shareholders following the bank sale proceeds. Shareholders will receive a $3.00 per share capital return on 5 March 2025, accompanied by a fully franked special dividend of 22 cents per share payable on 14 March, alongside the interim ordinary dividend of 41 cents per share. This combined $3.63 per share distribution underscores the company’s commitment to returning value amid a simplified business model focused on general insurance.

The capital return will be implemented with a share consolidation at a ratio of 0.8511 to maintain shareholder proportional interests. The board also flagged the potential for further capital management initiatives, including on-market buy-backs, supported by an excess Common Equity Tier 1 capital buffer of $781 million.

Operational Highlights and Customer Focus

CEO Steve Johnston highlighted the company’s disciplined execution of strategic priorities, emphasizing investments in customer service enhancements and claims management. Digital interactions now account for 61% of sales and service and over 41% of claims, improving customer experience and operational efficiency. The company has expanded its claims team and established new disaster response capabilities, including a state-of-the-art Disaster Management Centre in Brisbane and mobile response hubs targeting disaster-prone regions like Townsville.

Natural hazard costs were notably benign at $503 million, $277 million below the company’s allowance, benefiting from a relatively quiet weather period in Australia and New Zealand. This favourable experience, combined with stable reinsurance arrangements, contributed positively to earnings and underwriting margins.

Outlook and Strategic Positioning

Looking ahead, Suncorp expects mid to high single-digit GWP growth for FY25, with pricing moderating as inflationary pressures ease, particularly in New Zealand. The UITR is forecast to remain near the upper end of the 10-12% target range, supported by prudent reserve management. Operating expenses are expected to improve, reflecting efficiency gains and phased project spend.

The recent sale of the New Zealand Life business further simplifies Suncorp’s portfolio, positioning it as a pure-play general insurer focused on delivering sustainable returns above its cost of equity. The company continues to engage with government and industry stakeholders on natural hazard risk mitigation and insurance scheme reforms, recognising the growing impact of climate change on the sector.

Overall, Suncorp’s half-year results demonstrate a resilient and focused insurer capitalizing on strategic divestments and operational discipline to enhance shareholder returns while investing in customer outcomes.