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414161
414161
28 May 2013
Suncorp Group today outlined its market commitments including targeted topline growth of 7% p.a. to 9% p.a. over the next two years and 10% return on equity by the 2015 financial year. At the Groups annual Investor Day presentation, Suncorp Group CEO Patrick Snowball detailed the Groups simplification program and outlined an increase in the expected benefits to $225 million in the 2015 financial year and $265 million in the 2016 financial year (previously $200 million in FY16). We have made significant progress in the transformation of the Suncorp Group, achieving results ahead of plan. Today weve set targets to drive further benefits, he said. Mr Snowball was speaking at the market update held at the Suncorp Groups newest joint venture smash repair facility, Q-Plus at Riverwood in Sydney, a state-of-the-art repair centre and one of the largest in Australia. Suncorp is the largest user of smash repair services in the country. Our customers told us they wanted more consistent, quality repairs with faster turnaround times. This joint venture and investment in the smash repair industry delivers for customers as well as providing scale and cost savings for the Group, Mr Snowball said. Q-Plus caters for more complex repairs and expands on Suncorps SMART smash repair joint venture which now has 23 facilities. Q-Plus and SMART are indicative of the innovation and scale opportunities being realised within the Suncorp Group. At its core, Q-Plus is a simple idea, executed well and that is what were driving out of our Simplification Program and our One Company, Many Brands strategy.
Suncorp Group Limited - ABN 66 145 290 124 - GPO Box 1453, Brisbane QLD 4001 www.suncorpgroup.com.au 1
ASX announcement
Suncorps Simplification Program Mr Snowball said the modern Suncorp Group was a more streamlined and efficient company delivering on its targets by leveraging the strategic assets of capital, cost, customer and culture. The simplification projects outlined a year ago have made our policy systems more efficient, consolidated our legal structures and improved productivity, he said. Key progress includes: Embedding the Part 9 Life insurance licence consolidation Gaining federal court approval for the General Insurance licence consolidation Consolidating legacy insurance policy systems Harmonising and automating the procurement process across the Group Rolling out Operational Excellence to improve efficiency and productivity across the Group Embedding the Banks Customer Relationship Management system and making good progress on advanced accreditation under Basel III Finalising the strategic review of the New Zealand operations and rolling out the Groups building blocks and simplification initiatives
Mr Snowball said the Groups transformation journey was ongoing and would deliver further benefits. All of our lines of business are performing well and generating benefits from our model, he said. Im confident that the strength of our core businesses combined with the benefits of simplification and a more efficient capital structure will mean that we can increase the ROE to at least 10% by FY15. Our strategy is clear. We remain focussed on organic growth. Our businesses are growing strongly in low risk, target markets. We expect this will result in growth across the Group of 7% to 9% each year for the next two years. Theres plenty more gas in the tank.
For more information: Media: Michelle Barry 0402 892 789 Analysts: Mark Ley 0411 139 134
Suncorp Group Limited - ABN 66 145 290 124 - GPO Box 1453, Brisbane QLD 4001 www.suncorpgroup.com.au 2
Q&A
Conclusion
Simplification program
4,225
CAGR 8.7%
45,763
CAGR 7.3%
3,563
38,766
642
GI GWP
FY10
FY11
FY12
GI Underlying ITR
NPAT
Additional Simplification benefits Businesses deliver value from points of difference 4Cs drive competitive advantage Meet or beat 12% underlying ITR 10%+ ROE by FY15
7
Simplification achievements
Relentless execution
Simplified legal structure
Part 9 Life licence consolidation Single General Insurance licence court approval Moved Suncorp Insurance onto one policy and online system
Simplified platforms
Simplified organisation
$m
150 100 50 0 (50) (100) (150) Revised project costs Original one-off project costs Original Simplification benefits
FY16
Growth
7% to 9% per annum growth across the business lines Leverage the Groups 9 million customers Multi-brand, multi-channel approach Simplification benefits
Pricing
Flat expenses
Competition
New entrants and retailers with strong brands Challenger brands targeting profitable customers
Technology
Changing customer expectations Distribution channels evolving
Improved risk selection and pricing Suncorp leading disaster mitigation conversation
Focus Areas
Further Simplification New sources of value Customers
Manage expenses Manage expenses Maintain margin Maintain margin Retention and and growth Retention growth
16
Cost leadership
Margin
Results
Commercial Insurance GWP Growth
6.4%
7.6%
9.7%
13.4%
CTP 36%
SME 30%
Corporate 24%
20
10
Customer segments
Global, Corporate, MidMarket, Market, Small Business, Micro Global, Corporate, Mid Small Business, Micro
Our channels
Broker
Advisor
Direct
Brands
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supported by
will deliver
11
12
Key issues
Industry restructuring Cost and premium escalation Back to the future underwriting changes Government fiscal and monetary policy EQC reform
AA Insurance
Third largest direct brand Personal lines motor and home 18%+ market share of private passenger vehicle market Current market share 5%
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13
Focus
2013+ New Three Year Plan Clear strategic direction aligned with reshaped insurance market Effective Operating Model Ongoing Simplification Consistent value added via profitable growth
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Agribusiness
How we specifically service the needs of our Agribusiness customers
Commercial Insurance
How the multi-brand, mutil-channel approach targets the needs of the Australian Commercial Insurance market
Suncorp Bank
Our Big bank capability coupled with small bank connection shows why are customers are satisfied
15
Suncorp Bank
Core Bank growth opportunities
Current operating environment
Solid outlook for the Australian economy Credit growth below historical averages Low interest rates and fiscal policy should support business investment
16
Suncorp Bank
AB&F Australian Financial Institution of the year (non-major) Total customer base of 1,079,000, growth of 20% Complete customer growth of 35% Access to 1,121 more ATMs
Branch, Business Centre and ATM data as at April 2013. Growth from 2009. Customer figures at April 2013. Growth from Jan 2010
Cost
Leveraging the Groups scale and investment in backoffice efficiency
Capital
A+/A1 credit rating provides lower cost debt and hybrid funding
Customer
Improving CRM capability and launching DirectSuper
Culture
Better Way in Bank and more robust risk culture
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Suncorp Bank
Well ahead of the majors in customer satisfaction Customer Advocacy* Retail Customer Satisfaction (%)**
Suncorp Bank Major 1 Major 2 Major 3 Major 4 -15 -10 -5 0 5 10 15 90 85
Up 16 points in 2 years
Up 5% in 2 years
Suncorp Bank
Major 4
Money Magazine
Bank of the Year top of the second-tier and regional banks Gold Award for My Home Package
* Roy Morgan single source Net Promoter Score March 2013 (6mma) ** Roy Morgan single source Retail Satisfaction March 2013 (6mma)
CANSTAR
Five star ratings for business and personal products
Suncorp Bank
Enhance risk management capabilities with Basel II Advanced Accreditation Execute Banking Platform Program Achieve profitable growth Simplification program Enhance sales & service with Better Way program Resolve the Non-core Bank
36
18
19
Suncorp Life
Superannuation fund and trustee rationalisation Created a single Life company Released over $150 million capital
39
Suncorp Life
Structural challenges, significant opportunities
Double digit system growth Improving economic cycle Industry sustainability Impetus for structural change Fungibility of Group capital Scale benefits on infrastructure 9m Group customers Enabled and engaged people
OPPORTUNITIES
C C C
CHALLENGES
40
20
Sustainable advice
Industry Leadership Create Sustainable Futures High Performance Partnerships
Our how
Customer
Outcomes
@ the Forefront
Cost
Simplified & Scalable
Capital
Double Digit RoCET1
Culture
Engaged & Enabled
41
21
COST
Simplification benefits
CAPITAL
Improved risk systems
Culture
44
22
$m
150 100 50 0 (50) (100) (150) Revised project costs Original one-off project costs Original Simplification benefits
FY16
45
100%
74%
46
23
Capital Strategy
$770 million
General Insurance
CPS 2 $110 million (planned)*
Life
Sub Debt $100 million (planned)*
Bank
CPS 2 $450 million Sub Debt $670 million (planned)*
47
Capital Strategy
Further evolve our Risk Based Capital capability across the Group Deliver Advanced Accreditation for the Bank & General Insurance Articulate the clear diversification benefits Deliver value from Life Direct products
48
24
Capital Strategy
Risk Based Capital will allow us to:
Quantify risk and optimise return Enhance decision making Understand diversification benefits
Diversification Potential
Life
Bank
Group Total
Group Total
GI
Regulatory Minimum Operating target Surplus to operating target
Key commitments
1
2 3 4 5 6
25
21.1
15
10
5.4 1.4
5.5
4.8
0
51
Simplification
Reduced Risk
Increased ROE
Reduced Capital
52
26
Suncorp transformation
Life & Vero NZ
Core Businesses
Non-core Bank
2009
2010
2011
2012
2013
2014
2015
54
27
Important disclaimer
This report contains general information which is current as at 28 May 2013. 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 forwardlooking statements, the information reflects Suncorps 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 Suncorps 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 of this report (subject to ASX disclosure requirements).
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