Suncorp's many paths to profit

Suncorp chairman Ziggy Switkowski, speaking at the bancassurance group's annual general meeting in Brisbane's Sofitel yesterday, attributed the steady increase in the company's share price and a significant increase in dividends to the benefits of the Group's transformation through the 'One Company. Many Brands' business model.

Suncorp's financial performance for the year saw its net profit after tax increase to A$730 million. This headline result was helped by good investment returns, and "relatively subdued natural hazard experience" which benefited the general insurance business - which delivered over $1 billion in net profit after tax, along with Suncorp Bank's return to profitability.

However, the group was encumbered by issues in the life insurance industry which led to the write-down of $496 million in intangible assets.

Given the strong capital position of the Group, continued improvements in operational and financial performance and a positive outlook, the Board declared a final ordinary dividend of 40 cents per share and a special dividend of 30 cents per share - making this the third successive year a special dividend has been paid.

"This brings the total dividend payout for the 2014 financial year to $1.05 per share, fully franked, a 40 per cent increase on the prior year," Switkowski announced.

The Board also committed to an ordinary dividend payout target of 60 to 80 per cent of full year cash earnings.

CEO Patrick Snowball chimed in, noting that the crucial indicator to focus on was the margin. "This tells you how well we are pricing risk and managing claims. Four years ago, this margin was under nine per cent and we made a commitment to achieve at least 12 per cent."

Snowball said he saw opportunities for Suncorp Bank in the Financial System Inquiry. In line with other smaller banks, he took aim at what described as "the most frustrating aspect of the current regulatory regime, the significant capital advantage that the major banks have over Suncorp and the other regionals."