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Suncorp Group Limited (ASX: SUN) is an Australian and New Zealand company that specialises in providing financial service to consumers (banking, insurance and superannuation). Suncorp has a market capitalisation of A$11.8 billion.
What has Suncorp announced today?
Suncorp announced today a large re-structuring of the company’s operational model along with a FY20 COVID-19 update. Changes to Suncorp’s operational model include four main aspects. Firstly, accountability for the performance of Insurance (Australia) is to be assumed by two executives. One executive is to be focused on underwriting, distribution, brands, marketing, product design and innovation; and the other executive is to be responsible for all aspects of claims management and operations. Secondly, Suncorp will be combining several Insurance (Australia) and Group functions to create a more streamlined and efficient operational structure. Thirdly, greater end-to-end operational accountability within Banking and Wealth and Suncorp New Zealand to drive improved performance. Finally, aligning Group Strategy and Technology to fast-track digital and automation capabilities and opportunities.
Suncorp’s Insurance Product and Portfolio will now have a Chief Executive Officer, which will oversee insurance distribution channels including contact centres, digital channels and intermediated partnerships as well as customer strategy, brand and marketing, product and pricing, and innovation. Current Chief Customer & Digital Officer, Lisa Harrison, has been appointed to the role.
A new Chief Operating Officer will also be added to their structure, this role will lead all aspects of claims management and operations and some Group functions including real estate management and procurement. Paul Smeaton has been appointed to this role.
Regarding Suncorp Banking and Wealth, Clive van Horen has been appointed to the vacant CEO Banking & Wealth role. This will allow Suncorp’s Banking and Wealth will have accountability for all Banking and Wealth operations, customer strategy, finance, marketing and digital distribution, with several functions moving from centralised teams.
This new structure is aimed at improving competitiveness of the bank through faster decision making, greater digital capability and the ability to address the direct expense base.
Suncorp also expected the FY21 natural hazard allowance to increase by $90 million to $130 million. Further details on this will be presented in the FY20 results.
Suncorp’s FY20 COVID-19 update shows that in Insurance (Australia) motor claims frequency is 25% lower compared with the corresponding period. Regarding Suncorp’s Banking and Wealth business, 15.6 thousand home loan deferrals and 3.3 thousand small business loan deferrals were reported. This represents around 11% of the value of the book.
What is the market reaction to Suncorp’s announcement?
The market reaction to Suncorp’s announcement today is negative. Suncorp’s share price is down around 3.2% and is currently trading at A$8.935. The reason why this market reaction is negative is attributed to the fact that the Australian market today is up around 0.8%. Suncorp has a forward P/E ratio in the high-teens and has an annual dividend yield of around 5.8%.
Disclaimer:
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
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ASR has no position in any of the stocks mentioned.
