Suncorp Group Limited Release date: 11 February 2016 Financial - - PowerPoint PPT Presentation

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Suncorp Group Limited Release date: 11 February 2016 Financial - - PowerPoint PPT Presentation

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Suncorp Group Limited Release date: 11 February 2016 Financial results Creating value for for the half year ended our customers 31 December 2015 Suncorp Debt Investor Update Agenda 2 Suncorp Group 6 Group Financial Results &

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SLIDE 1

Suncorp Group Limited

Release date: 11 February 2016

Financial results for the half year ended 31 December 2015 “Creating value for

  • ur customers”
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SLIDE 2

2

11 February 2016

Suncorp Group Limited

Suncorp Debt Investor Update

2

Suncorp Group

6

Group Financial Results & Capital

16

Suncorp Bank

26

Funding & Liquidity

30

Appendix - Capital

Agenda

33

Appendix – Economy

40

Appendix – General Insurance

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SLIDE 3

3

11 February 2016

Suncorp Group Limited

Leading financial services brands in Australia and New Zealand

Suncorp Group

Top 20 ASX listed company $14 billion market capitalisation at 11 February 2016 $94 billion in group assets 13,400 employees in Australia and New Zealand 9 million customers End to end ownership of brands

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4

11 February 2016

Suncorp Group Limited

Group Capital Structure

Ordinary dividend – 60-80% of cash earnings 100% of distributable earnings Maintain capital targets Surplus assets Suncorp Group GI Life Bank

General Insurance Bank

(Suncorp Metway Ltd)

Life Shareholders

Surplus returned to shareholders

  • Suncorp Metway Ltd is the entity that issues senior debt instruments on behalf of the Bank
  • AAI Limited and SIF Limited are the entities that typically issue sub-debt instruments on behalf of General Insurance
  • Suncorp Group Limited is typically the entity that issues Basel III compliant CPS and T2 sub-debt
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SLIDE 5

Priorities

11 February 2016

Suncorp Group Limited

  • 1. Maintain stability

and momentum

  • 2. Elevate the customer
  • 3. Recalibrate costs

Key Targets

  • Broadening of customer relationships
  • Improving underlying NPAT
  • Sustainable ROE of at least 10%, which

implies an underlying ITR of at least 12%

  • Maintaining a dividend payout ratio of

60% to 80% of cash earnings

  • Returning excess capital

5

Strategic refinements

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SLIDE 6

Group Financial Results and Capital

“Creating value for our customers”

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7

11 February 2016

Suncorp Group Limited

Natural hazards and investment income impact on the GI NPAT

HY16 results overview ($m)

HY16 HY15 % change General Insurance 297 419 (29) Bank 194 176 10 Suncorp Life 53 86 (39) Business lines NPAT 544 681 (20) Other 12 (21)

  • Cash earnings

556 660 (16) Acquisition amortisation (26) (29)

  • Reported NPAT

530 631 (16) External impacts: Pre-tax Post-tax Pre-tax Post-tax Investment returns 133 93 348 244 Natural hazards (362) (253) (470) (329) Reserve releases 137 96 214 150 Suncorp Life market adjustments

  • (5)
  • 34
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8

11 February 2016

Suncorp Group Limited

Diversification of earnings

Suncorp Group business line NPAT ($m)

64

  • 10
  • 19

34

  • 5

162 564 470 419 297 156 144 105 176 194 69 61 41 52 58

  • 54
  • 140

1H12 1H13 1H14 1H15 1H16

■ Life underlying NPAT ■ Life market adjustments ■ General Insurance ■ Bank ■ Non-core Bank

397 597 681 544 619

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9

11 February 2016

Suncorp Group Limited

Stable over time

Cost - operating expenses ($m)

899 877 902 881 892 305 319 322 324 326 150 153 142 139 142 1,354 1,349 1,366 1,344 1,360

1H14 2H14 1H15 2H15 1H16 General Insurance Bank Life

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SLIDE 10

HY16 HY15 %change

GWP 4,417 4,357 1.4 Net earned premium 3,992 3,947 1.1 Net incurred claims (2,822) (2,805) 0.6 Operating expenses (892) (902) (1.1) Underwriting result 278 240 15.8 Investment income – insurance funds 99 266 (62.8) Insurance trading result 377 506 (25.5) Investment income –shareholder funds 34 82 (58.5) Managed schemes, JVs and funding costs 1 6 (83.3) Income tax (115) (175) (34.3) NPAT 297 419 (29.1)

10

11 February 2016

Suncorp Group Limited

Claims inflation and lower investment returns reducing profitability

General Insurance

Key highlights

  • GWP up 1.4%
  • Return to top-line growth

across all portfolios

  • Claims inflation

challenges reducing underlying margin

  • Underlying ITR 10.1%
  • Lower investment returns

and MTM adjustments

  • Reserve releases of

$137 million or 3.4% of NEP

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11

11 February 2016

Suncorp Group Limited

Improving credit quality driving improved profit

Suncorp Bank

HY16 HY15 %change

Net interest income 566 553 2.4 Net non-interest income 49 64 (23.4) Total income 615 617 (0.3) Total operating expenses (326) (322) 1.2 Profit before impairment losses 289 295 (2.0) Impairment losses on loans and advances (11) (43) (74.4) Bank profit before tax 278 252 10.3 Income tax (84) (76) 10.5 Suncorp Bank NPAT 194 176 10.2

Key highlights

  • 5.1% lending growth
  • Ongoing improvement in

credit quality with non- performing loans down 15.1%

  • NIM of 1.85% at the top

end of the target range

  • Cost to income reducing to

53%

  • Good progress with key

projects, Ignite and Advanced accreditation

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12

11 February 2016

Suncorp Group Limited

Underlying profit increase of 11.5%

Suncorp Life Insurance

HY16 HY15 %change

Planned profit margin release 22 17 29.4 Claims experience 3 6 (50.0) Lapse experience 5 1 400.0 Other experience (6) (5) 20.0 Underlying investment income 16 15 6.7 Superannuation 18 18

  • Suncorp Life underlying profit after tax

58 52 11.5 Market adjustments (5) 34 n/a

Suncorp Life NPAT

53 86 (38.4)

Key highlights

  • In-force premium

growth of 5.2%

  • Direct growth via GI

brands up 20%

  • Embedded Value of

$1,936 million up 4.9%

  • Value of One Year

Sales up 28% to $23 million

  • Third successive half of

positive claims and lapse experience

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SLIDE 13

1.25x 1.14x 1.25x 1.73x 1.70x 1.67x

SUN Peer 1 Peer 2

CET1 AT1 Tier 2

* Ratios listed relate to Prescribed Capital Amount (PCA). Source: Latest published company reports.

General Insurance capital ratios* Bank capital ratios*

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11 February 2016

Suncorp Group Limited

Strong General Insurance and Bank capital ratios against peers

Suncorp Capital Ratios

Additional $243 million capital held at Suncorp Group level

Advanced basis Standardised 9.45% 8.91% 8.17% 10.24% 10.24% 9.59% 9.50% 13.97% 12.72% 12.57% 14.15% 14.08% 13.29% 13.26% SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4 CET1 AT1 Tier 2

* Peer bank ratios exclude impacts of post balance date capital raisings and transactions. Source: Latest published company reports.

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14

11 February 2016

Suncorp Group Limited

Impacted by lower GI margins

CET1 Capital Base – HY16 movements ($m)

570 506 530 47 22 153 53 71 386

Excess CET1 FY15 HY16 NPAT GI excess technical provisions Bank Project Ignite Bank ERCL release Life impact from lower yields Growth and

  • ther

movements Dividend Excess CET1 HY16

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15

11 February 2016

Suncorp Group Limited

Outstanding at 31 December 2015

Capital instruments

* Additional information is available in appendix 3 of the Analyst Pack

Semi-annual coupon rate / margin above 90 day BBSW Optional Call / Exchange Date Issue Date 31 DECEMBER 2015 Total Balance Regulatory Capital GI Bank Life SGL $M $M $M $M $M $M AAIL Subordinated Debt 330 bps Nov 2020 Nov 2015 225

  • 225

225 AAIL Subordinated Debt 6.75% Oct 2016 Oct 2006 101

  • 101

108 AAIL Subordinated Debt

  • June 2017

Oct 2007 265

  • 265

220 SGL Subordinated Debt 285 bps Nov 2018 May 2013

  • 670

100

  • 770

770 SML FRCN 75 bps Perpetual Dec 1998

  • 72
  • 72

72 Total subordinated debt 591 742 100

  • 1,433

1,395 SGL CPS2 465 bps Dec 2017 Nov 2012 110 450

  • 560

560 SGL CPS3 340 bps June 2020 May 2014 400

  • 400

400 Total Additional Tier 1 Capital 510 450

  • 960

960 Total 1,101 1,192 100

  • 2,393

2,355

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Suncorp Bank

“Creating value for our customers”

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17

11 February 2016

Suncorp Group Limited

Key ratios

Suncorp Bank

4.06% 3.17% 1.37% 6.49% 3.58% 1H14 2H14 1H15 2H15 1H16

Lending growth (annualised)

1.66% 1.78% 1.86% 1.83% 1.85% 1H14 2H14 1H15 2H15 1H16

Net interest margin (interest-earning assets)

59.57% 55.48% 52.19% 54.64% 53.01% 1H14 2H14 1H15 2H15 1H16

Cost to income ratio

0.18% 0.32% 0.17% 0.06% 0.04% 1H14 2H14 1H15 2H15 1H16

Impairment losses to gross loans and advances (annualised)

7.59% 8.78% 12.13% 12.21% 13.11% 1H14 2H14 1H15 2H15 1H16

Return on Common Equity Tier 1

65.70% 65.80% 66.10% 65.30% 65.60% 1H14 2H14 1H15 2H15 1H16

Deposit to loan ratio

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0.3%

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11 February 2016

Suncorp Group Limited

Total lending assets $52.9 billion Retail banking market share

Suncorp Bank

10.0%

0.8% 0.8% 1.8% 0.3%

Source: Roy Morgan

11 1 151

ATM Branch Business centre

19 122 9 524 40 3 414 9 1 545 1 1 245 1 48 0.5% 81% 10% 8% 1%

Portfolio

54% 25% 10% 7% 4%

Geography

■ Commercial (SME) ■ Housing ■ Agribusiness ■ Consumer ■ NSW ■ QLD ■ VIC ■ SA & Other ■ WA

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11 February 2016

Suncorp Group Limited

Home lending assets $43 billion

Suncorp Bank

■ New South Wales and ACT ■ Queensland ■ Victoria, South Australia and Other ■ Western Australia ■ Investor ■ Owner occupied ■ Intermediary ■ Direct

51% 28% 13% 8%

Geography

70% 30%

Borrower type

37% 63%

Channel

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11 February 2016

Suncorp Group Limited

Commercial (SME) assets $5.2 billion

Suncorp Bank

■ New South Wales ■ Queensland ■ Other

54% 14% 20% 10% 2%

Exposure size

■ Hospitality and accommodation ■ Property investment ■ Construction and development ■ Retail ■ Services ■ Manufacturing and mining ■ Other ■ < $5 million ■ $5-$10 million ■ $10-$25 million ■ $25-$50 million ■ $50-$100 million

35% 16% 8% 17% 8% 5% 11%

Industry

74% 13% 13%

Geography

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21

11 February 2016

Suncorp Group Limited

Agri assets $4.3 billion

Suncorp Bank

■ Beef ■ Grain and mixed farming ■ Sheep and mixed livestock ■ Sugar ■ Cotton ■ Fruit ■ Other

49% 21% 24% 6%

Exposure size

■ < $5 million ■ $5-$10 million ■ $10-$25 million ■ $25-$50 million ■ Queensland ■ New South Wales ■ Other

30% 30% 10% 8% 3% 3% 16%

Industry

62% 29% 9%

Geography

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11 February 2016

Suncorp Group Limited

Credit quality – gross impaired and past due loans

Suncorp Bank

Gross impaired loans by segment ($m)

34 28 26 33 31 25 139 182 208 162 125 109 51 206 99 67 62 42 2H13 1H14 2H14 1H15 2H15 1H16 Commercial/SME lending Agribusiness lending Retail lending

Past due home loans (% gross home loans)

0.79% 0.98% 0.93% 0.74% 0.78% 0.69% 0.05%

  • 0.01%

2H13 1H14 2H14 1H15 2H15 1H16

Total home lending Home lending impaired HL Loss Rate

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23

11 February 2016

Suncorp Group Limited

Credit quality - impairments

Suncorp Bank

Impairment losses to gross loans Net impaired loans to gross loans

Source: Latest peer financial reports

0.22% 0.27% 0.38% 0.28% 0.16% 0.24% 0.29% SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4 0.04% 0.18% 0.14% 0.17% 0.13% 0.13% 0.24% SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4

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11 February 2016

Suncorp Group Limited

Asset growth and credit quality ($m)

Suncorp Bank

Commercial (SME) portfolio Agribusiness portfolio

4,039 4,311 4,484 4,624 4,534 4,400 4,258

2.46% 3.22% 4.06% 4.50% 3.58% 2.83% 2.56%

1H13 2H13 1H14 2H14 1H15 2H15 1H16

Agribusiness portfolio ($m) Gross impaired assets/Total portfolio (%)

5,297 5,531 5,666 5,772 5,593 5,353 5,203

1.56% 0.88% 1.00% 0.88% 1.20% 1.16% 0.81%

1H13 2H13 1H14 2H14 1H15* 2H15* 1H16*

Commercial portfolio ($m) Impaired assets/Total portfolio (%)

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SLIDE 25

61% 62% 64% 66% 69% 22% 23% 24% 23% 22% 17% 15% 12% 12% 9% 1H14 2H14 1H15 2H15 1H16

Home Lending Assets by LVR

25

11 February 2016

Suncorp Group Limited

Home lending assets $43 billion

Suncorp Bank

■ 0 - 80% ■ 80.01 % - 90% ■ 90.01% + 66% 71% 84% 87% 88% 8% 13% 12% 9% 9% 26% 17% 5% 3% 2% 1H14 2H14 1H15 2H15 1H16

Home Lending New Business by LVR

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Funding & Liquidity

“Creating value for our customers”

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11 February 2016

Suncorp Group Limited

Liquidity

Suncorp Bank

LT funding profile ($m)

200 400 600 800 1,000 1,200 1,400 Mar 15 Apr 16 May 16 Aug 16 Sep 16 Dec 16 Jan 17 Feb 17 Mar 17 Apr 17 Oct 17 Nov 17 Dec 17 Apr 19 Aug 19 Nov 19 Apr 20 Oct 20

Covered Senior Unsecured (Domestic) Senior Unsecured (Offshore)

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11 February 2016

Suncorp Group Limited

Liquid Assets

Components of Liquid Assets ($bn)

1.2 1.6 1.9 3.6 2.8 3.5 9.7 7.7 6.2 5.3 5.0 3.3 4.2 4.2 4.2 4.0 4.3 4.4 1 2 3 4 5 6 Cash, Govt, Semi-govt Bank, NCD, Bills, RMBS, Supra, Covered Bonds Internal RMBS Dec 15 15.1 13.5 12.3 12.9 12.1 11.2 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15

Components of LCR ($bn)

LCR defined as Liquidity Coverage Ratio CLF defined as Committed Liquidity Facility HQLA defined as High Quality Liquid Assets

30 Jun 15 31 Dec 15

100% LCR 100% LCR 118% LCR 139% LCR

2.8 6.3 3.5 5.9 4.8 1.3 4.8 2.3

1 2 3 4 5

HQLA assets CLF Required LCR qualifying liquid assets Buffer

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11 February 2016

Suncorp Group Limited

Investor Reporting

For further information on Treasury Funding please go to http://www.suncorpbank.com.au/financial- services/treasury/wholesale-funding

Contacts

Scot McMullen Simon Lewis Adam Parry Katie Taylor-Groth Joanne Rains Treasurer Head of Funding Institutional Relationship Manager Institutional Relationship Manager Corporate Relationship Manager scott.mcmullen@suncorp.com.au simon.lewis@suncorp.com.au adam.parry@suncorp.com.au katie.taylor-groth@suncorp.com.au joanne.rains@suncorp.com.au 07 3362 4042 07 3362 4037 07 3362 4031 07 3362 4049 07 3362 4053

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APPENDIX Capital

30

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31

11 February 2016

Suncorp Group Limited

Increased sophistication due to Risk Based Capital modelling

Capital

  • Simplification and

de-risking have supported capital returns

  • Balance sheet

strong

  • Risk Based Capital

embedded

  • Enhancing decision

making

*Chart not to scale

Group

Total

Group

Total

GI Bank Life Diversification Potential* NOHC Group Surplus

Regulatory minimum Operating target

Surplus to operating target

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11 February 2016

Suncorp Group Limited

Capital volatility by key risk type

Group Risk Based Capital

Market risk Counterparty credit risk Insurance risk Operational risk

Suncorp Group GI Bank Life Corporate

73% 3% 21% 3% 65% 27% 8% 36% 57% 7% 14% 86%

62% 11% 24% 3%

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APPENDIX Economy

33

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Favourable economic fundamentals

34

11 February 2016

Suncorp Group Limited

  • Australia continues to see moderate economic

growth despite the impact from the resources sector.

  • Consensus forecasts expect growth to continue

through 2016 and 2017.

  • Fundamentals remain positive for both Australia and

Queensland.

  • Australia has also retained its AAA credit rating.
  • Population growth continues to support economic

activity while unemployment has declined.

Australia Queensland

Data as at:

Population Growth (pa) 1.4% 1.2%

Jun-15

Unemployment Rate 5.8% 5.8%

Dec-15

Inflation 1.7% 1.7%

Dec-15

Budget Position $33bn deficit (2.0% of GDP) $1bn deficit (0.4% of GSP)

2015/16 forecast

Credit Rating (S&P/Moody’s) AAA / Aaa AA+ / Aa1

Feb-16

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2011a 2012a 2013a 2014a 2015e 2016f 2017f Source: Consensus Economics Annual % Change

Australian economic growth Other key metrics supportive

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SLIDE 35

Monetary policy is supporting activity

35

11 February 2016

Suncorp Group Limited

  • The RBA’s most recent reduction in the cash rate

was in May 2015. No further changes are anticipated in the near term with recent RBA commentary noting the strength of the Australian economy.

  • Credit growth remains stable. The increase in

business loans has been offset with slower growth in residential investor lending following the macro-prudential measures taken by APRA in 2015.

1 2 3 4 5 6 7 8 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Std Var Mortgage Rate RBA Cash Rate Headline Inflation Rate Source: ABS, RBA, Bloomberg % Inflation Target Range

  • 4
  • 2

2 4 6 8 10 12 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Total Credit Business Total Housing Investor Housing Source: RBA Annual % Change

Inflation & interest rates Lending growth

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Favourable trends in building and labour

36

11 February 2016

Suncorp Group Limited

  • Dwelling approvals are at long term highs. However

adjusting for population growth, high levels of residential building activity is likely to continue.

  • The non-residential building market continues to

harden albeit gradually.

  • Labour market conditions continue to improve, with

employment growth at the strongest levels since 2006.

  • The unemployment rate has decreased to 5.8% from

6.0%.

6 7 8 9 10 11 12 120,000 140,000 160,000 180,000 200,000 220,000 240,000 Dec-85 Dec-90 Dec-95 Dec-00 Dec-05 Dec-10 Dec-15 Annual approvals per '000

  • f population (RHS)

Source: ABS, Bloomberg, Suncorp Annual approvals (LHS) Average

Building approvals Labour market

4.9 5.2 5.5 5.8 6.1 6.4

  • 50
  • 25

25 50 75 100 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Employment Unemployment Rate (%) Change Per Month ('000) Source: Bloomberg

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SLIDE 37

Other indicators are mixed

37

11 February 2016

Suncorp Group Limited

  • Business and consumer confidence indicators

improved through 2015 and remain above average despite continued been volatility.

  • Australia’s exports continue to rebalance due to a

more competitive AUD.

  • Service exports such as tourism and education

performed well in 2015.

  • 10
  • 5

5 10 15 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Sources: NAB, Bloomberg Index Business Conditions Business Confidence

Confidence indicators Shifting export trends

3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Service Exports (RHS) Mining Exports (LHS) $m $m Source: ABS

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Household financial conditions

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11 February 2016

Suncorp Group Limited

  • Notwithstanding the lift in household borrowing,

interest payments have fallen, savings have been maintained and unemployment has fallen.

  • Meanwhile, the RBA notes that “indicators suggest that

household financial stress remains fairly benign”

(Financial Stability Review October 2015).

  • Increases in house prices have boosted household

wealth.

  • House prices in Brisbane are now showing a clear

affordability advantage.

120 130 140 150 160 170 180 190 200

  • 2

2 4 6 8 10 12 14 Sep-00 Sep-05 Sep-10 Sep-15 Source: RBA % Debt to disposable income (LHS) Interest payments to disposable income (RHS) % Household savings rate (RHS)

Debt and debt servicing House prices

200 300 400 500 600 700 800 900 1,000 Jun-05 Jun-07 Jun-09 Jun-11 Jun-13 Jun-15 Sydney Melbourne Brisbane Source: Bloomberg, ABS Median House Price ($ '000)

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Queensland prospects

39

11 February 2016

Suncorp Group Limited

  • Queensland is forecast to lead state growth in 2016,

assisted by a diversified economic base.

  • The pullback in resources has however had an

impact on measures of real economic growth.

  • Queensland saw a buoyant residential building

market over 2015.

  • However, population growth of >2% per annum
  • ver the past decade means that building levels

adjusted for population are only back at average levels.

3.0% 3.0% 0.1% 2.5% 3.7% 1.4%

State economic growth QLD building approvals

6 7 8 9 10 11 12 120,000 140,000 160,000 180,000 200,000 220,000 240,000 Dec-85 Dec-00 Dec-15 Annual approvals per '000

  • f population (RHS)

Source: ABS, Bloomberg, Suncorp Annual approvals (LHS) Average

Gross State Product 2016 forecast Source: Deloitte Access Economics, Sep-15

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APPENDIX General Insurance

40

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41

11 February 2016

Suncorp Group Limited

Top-line positive in a very competitive market

Gross Written Premium

Product HY16 ($m) %change Factors Motor 1,413 1.7 Increase in average written premium rates partly offset by a small loss of units Home 1,287 1.3 Increase in average written premium rates partly offset by a small loss of units Commercial 1,115 (1.3) Growth in most commercial lines offset by a 33% reduction in the Workers Compensation segment CTP 567 6.8 Growth across NSW, Qld and ACT portfolios Other 35 (5.4) Total 4,417 1.4 Australia 3,796 1.2 New Zealand 621 2.6 2.7% in NZ$ terms

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11 February 2016

Suncorp Group Limited

Key ratios

General Insurance

9.8% 8.7% 8.6% 8.1% 8.0% 1H14 2H14 1H15 2H15 1H16

Other underwriting expenses ratio

13.5% 14.0% 14.3% 14.4% 14.4% 1H14 2H14 1H15 2H15 1H16

Acquisition expenses ratio

67.5% 68.2% 71.1% 71.0% 70.7% 1H14 2H14 1H15 2H15 1H16

Loss ratio

23.3% 22.7% 22.9% 22.5% 22.4% 1H14 2H14 1H15 2H15 1H16

Total operating expense ratio

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11 February 2016

Suncorp Group Limited

By product

Gross Written Premium

■ Home ■ Motor ■ Commercial ■ Other ■ CTP

23% 30% 43% 4%

New Zealand

$1.2b

34% 29% 22% 15% <1%

Australia

$7.6b $8.8b

32% 28% 27% 12% 1%

Total

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11 February 2016

Suncorp Group Limited

Total GWP of $8.8 billion

Gross Written Premium

■ New South Wales ■ Queensland ■ Victoria ■ South Australia ■ Western Australia ■ Tasmania ■ New Zealand ■ Other ■ Home ■ Motor ■ Commercial ■ CTP ■ Other

25% 28% 19% 6% 3% 2% 14% 3%

Geography

34% 29% 22% 15% <1%

Product

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45

11 February 2016

Suncorp Group Limited

Impacted by claims inflation and lower investment yields

Underlying and Reported ITR

8.0% 10.0% 10.5% 11.2% 11.1% 13.1% 13.4% 13.6% 14.0% 14.7% 14.8% 14.6% 10.1% 12.8% 6.4% 10.9% 1.9% 3.8% 11.1% 18.6% 7.8% 13.9% 17.0% 12.8% 9.9% 9.4% 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 12% 12% Underlying ITR Reported ITR

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46

11 February 2016

Suncorp Group Limited

Conservative assumptions and world leading long-tail claims management

Reserve releases

1.1% 1.7% 1.4% 1.4% 5.4% 5.4% 3.4% 1H13 2H13 1H14 2H14 1H15 2H15 1H16

1.5%

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47

11 February 2016

Suncorp Group Limited

Six months to 31 December 2015

General Insurance – Natural hazards

Date Event Net costs ($m)

Aug 2015 South Coast NSW and Sydney Storms 29 Sep 2015 NSW Central Coast Hail 21 Oct 2015 Fernvale Chinchilla Hail 44 Nov 2015 Sunnybank Hail 16 Nov 2015 Pinery Bushfire 15 Nov 2015 Darling Downs Storms 25 Dec 2015 Kurnell Tornado 63 Dec 2015 Great Ocean Road Bushfire 31 Other natural hazards attritional claims (Australia) 114 Other natural hazards attritional claims (New Zealand) 4

Total 362

Less: allowance for natural hazards (334) Natural hazards costs above allowance 28

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  • 1,000

2,000 3,000 4,000 5,000 6,000

1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

NZ AUS Long run average

48

11 February 2016

Suncorp Group Limited

45 years of natural hazards*

General Insurance – Natural hazards

Retention

Christchurch earthquakes, Brisbane floods, Cyclone Yasi, Melbourne Hailstorm Newcastle earthquake Melbourne & Perth Hailstorms, Christchurch earthquakes Sydney Hailstorm Hunter Valley storm Cyclone Marcia and NSW Low Storms Brisbane Hailstorm

* Adjusted for inflation, population growth and market share

Brisbane Hailstorm Brisbane flood, Cyclone Tracy

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49

11 February 2016

Suncorp Group Limited

Conservative balance sheet protection against catastrophes

General Insurance – FY16 reinsurance program

6.9b 6.1b 2.5b 500m

Original cover Reinstatement Reinstatement Reinstatement

250m 200m

Dropdown aggregate Dropdown aggregate

50m

Retention

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50

11 February 2016

Suncorp Group Limited

Drop-down aggregate program fully placed

General Insurance – FY16 reinsurance program

250m

50m xs 200m xs 50m 100m xs 150m xs 200m 100m xs 150m xs 300m

200m 150m

100m xs 50m xs 200m 100m xs 50m xs 300m

50m

Retention

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Important disclaimer

51

11 February 2016

Suncorp Group Limited

This report contains general information which is current as at 11 February 2016. It is information given in summary form and does not purport to be complete. It is not a recommendation or advice in relation to the Group or any product or service offered by Suncorp or any of its

  • subsidiaries. It is not intended to be relied upon as advice to investors or potential investors, and does not take into account

the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate. This report should be read in conjunction with all other information concerning Suncorp filed with the Australian Securities Exchange (ASX). The information in this report is for general information only. To the extent that the information may constitute forward-looking statements, the information reflects Suncorp’s intent, belief or current expectations with respect to our business and operations, market conditions, results of operations and financial condition, capital adequacy, specific provisions and risk management practices at the date of this report. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties, many of which are beyond Suncorp’s control, which may cause actual results to differ materially from those expressed or implied. Suncorp undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date

  • f this report (subject to ASX disclosure requirements)