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Suncorp shares zoom 5.3% higher on impressive full-year results

Profits from Suncorp’s Australian insurance business have rebounded strongly for the 2019 full-year, after a string of natural hazards cut into the company’s bottom-line during the first half.

The Suncorp Group Ltd (ASX: SUN) share price has surged higher today, after the insurance giant reported impressive 2019 full-year results.

Suncorp’s shares traded as much as 5.3% higher during the afternoon session – climbing to $A13.41 per share as of 15:07 AEST.

Here’s everything you need to know about the Suncorp’s FY19 results:

Full-year profits rebound

On the top-line, Suncorp Group Ltd reported FY19 revenues of A$15.56 billion.

Maybe more importantly though, the insurance giant reported full-year cash profits of A$1.12 billion, in line with average analyst estimates, according to Bloomberg Data.

This is a particularly good result for the insurance giant, given a rocky first half which saw Suncorp’s Australian insurance arm report profits some 44% lower following a string of natural hazards.

Indeed, as we previously reported, following a disappointing first-half result, Suncorp ramped up its ‘main catastrophe program, dropdown aggregate protection and natural hazard aggregate protection.’

As Suncorp's full-year results clearly show, such initiatives have evidently paid off.

Moreover, the firm’s New Zealand business continued to build on the strong momentum it reported in the first half. For the full-year, Suncorp’s New Zealand operations saw stellar growth, with profits after tax climbing 76.4% to hit NZ$261 million.

Investors happy, analysts mostly pleased

The general ASX 200 rally during today’s trading session likely contributed to Suncorp's rise, as investors bid the insurance giant's share price as much as 5.3% higher.

Analysts seem mostly happy: according to the Wall Street Journal, of the 12 analysts covering the stock, six rate it as a buy, while only two rate it as a sell.

Digital initiatives gain ground

Suncorp Group Ltd continues to place a heavy emphasis on refining and improving its digital capabilities, counting it third amongst the company’s key priorities.

The digitisation initiative of the company’s banking arm has already proved to be a standout success, with it being noted that:

‘The investment in digital has been particularly success in the Bank with at-call deposit growth of 10.9%.’

Though Suncorp has been primarily focused on expanding its digital footprint in regard to its banking operations, in FY20 the company will begin to place an even greater emphasis on digitising its insurance business.

In its current iteration, for example, this has already shown great promise; with Suncorp’s Acting CEO, Steve Johnston pointing out that:

‘Data science and digital have supported zero touch claims – a capability used to great effect in the Sydney hailstorm.’

Suncorp’s outlook going forward

Though Suncorp’s outlook generally remains positive, according to analyst ratings at least, the insurance giant has pointed out that:

‘In the prevailing low interest rate environment and with the increased weather allowance and elevated regulatory spend the achievement of a 10% ROE is unlikely.’

In saying that, the company remains committed to returning excess capital to its shareholders, with Suncorp noting that it intends to maintain a dividend pay-out ratio of between 60% to 80%.

Finally, in its FY19 results release, Suncorp Group Ltd declared a final dividend of A$0.44 per share – 10% higher than the insurance giant’s final dividend, on a year-over-year basis.

Suncorp's share price has now gained 7.67% YTD.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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