Suncorp forecasts solid improvement for coming year
Financial services group Suncorp has had a strong start to the current financial year, and has reconfirmed the company's forecast of a solid improvement in underlying annual profit.
Addressing the Group's annual general meeting of shareholders in Brisbane, Chairman John Story said that conditions in general insurance and banking continued to be favourable and the domestic economy was strengthening.
"We are also seeing some improvements in equity markets, which are delivering stronger investment returns," said Mr Story.
"So overall, in the absence of any major insurance disasters, unexpected interest rate movements or volatile investment markets, we remain confident of reporting a solid increase in profits for the current year."
Chief executive John Mulcahy said growth in the total lending book had exceeded industry credit growth rates for the 12 months to August 2003. Mr Mulcahy also confirmed overall credit quality in both housing and lending remained strong, with no evidence of deterioration in bad debts.
He said that in general insurance, the structural changes that had been experienced in the industry during the past two years had led to a strong improvement in profitability, and these conditions were being sustained.
"We are therefore seeing steady growth in net earned premium as price recoveries flow through the system and we consolidate following the completion of the GIO integration."
He said claims experience in the first three months had been favourable, although recent severe hailstorms in Sydney and south east Queensland would impact on claims expense for the half year. Current estimate of claims costs for these storms is between $25 million and $30 million.
He reconfirmed that the company expected to report an increase in underlying group profit, before tax, goodwill and investment income on general insurance shareholders funds, of approximately 15% for the full year.
The outlook was supported by an extensive strategic review and restructure of the company along business lines, initiated earlier this year and now complete.
"This has inspired the company to a significant improvement in its operating performance," said Mr Story.
"Our financial services conglomerate approach announced to the market in June 2003 means we intend to retain our existing businesses - retail banking, business banking, general insurance and wealth management - and to operate them as separate business lines within an integrated financial services group," he said.
"We aim to do this as effectively and efficiently as possible, and in the case of each business line, operate at least as well as, but preferably better than, our competitors. Then, by taking advantage of opportunities to share costs and infrastructure, as well as build on sales opportunities across the group, we believe we can extract further benefits and deliver financial results that are better than our peers.
"The result will be value that is created within the company, and recognised by the market as a premium in our price," said Mr Story.
Shareholders were also advised the company had reported full compliance with the principles and recommendations of the ASX Corporate Governance Council announced earlier this year on corporate governance.
Details of the Board's methodology for determining executive remuneration were also outlined to shareholders, in particular, that a substantial portion of an executive's remuneration was dependent upon the company's performance both annually and over a three year period, benchmarked against the comparative performance of the top 50 ASX-listed industrial companies.
29 October 2003
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For more information contact:
Chris Cunnington (Public Affairs) on 07 3835 5437
or Joe Dowling (Investor Relations) on 07 3835 5769
