Suncorp Forecasts Substantial Improvement in Underlying Profits
Suncorp Metway Chairman John Lamble has reconfirmed his forecast of a substantial improvement in underlying operating profit for the company for the year to June.
Addressing shareholders at the group's annual general meeting in Brisbane, Mr Lamble said that making forecasts was particularly difficult, due to external events such as drought, the downturn in housing, falling stockmarkets and the prospects of a Gulf War and terrorism on our doorstep in Bali.
"Nevertheless, assuming no unusual claim events, or a further deterioration in investment returns, we should report a very strong improvement in underlying operating performance for the full year," he said.
The outlook was supported by continued progress in the integration of the GIO general insurance business, acquired by Suncorp in June 2001.
Acting chief executive Chris Skilton confirmed that the integration program was on track, and he announced that by the end of September, the company had achieved synergies and savings worth $154 million in a full year. The company expects to achieve total savings worth $240 million a year by June 2003.
Mr Skilton said the improvement in profits in the current year would be driven by reductions in General Insurance operating expenses and claims processing costs. He said he expected the group's insurance operations to achieve an insurance trading result of between 9% and 12% for the full year.
The group's banking business was expected to report moderate growth in the current year, despite a slowdown in housing lending and moderate increases in loan losses.
Deputy Chairman John Story, who is scheduled to take over as Chairman of the company in March, following the retirement of John Lamble, told the meeting that directors had resolved to discontinue the company's executive options scheme.
Instead, the company will introduce a long term performance incentive for executives through the distribution of deferred shares which will be fully expensed.
"This method of remuneration will provide to the senior executives a reward represented by the ownership of shares in the company. The cost of providing that reward will be incurred by the company, and will be recorded and disclosed in its statement of financial performance. This expense will be tax deductible. There will be no dilutionary effect for the shareholders. In other words, the financial benefit for the executives and the financial cost to the company will be fully transparent," he said.
Mr Lamble confirmed that the CEO selection committee had interviewed internal and external candidates and hoped to formulate a recommendation for the board shortly.
21 October 2002
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