Suncorp shares jump on strong profit, hefty payout
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More news: Shares in Suncorp Group have jumped more than 4% to $21.21 in early trading on the ASX after the insurer posted a 30% increase in cash earnings, announced a capital return and special dividend. It also flagged a likely share buyback from the proceeds of its $4.9 billion sale of Suncorp Bank to ANZ.
UBS analysts termed the numbers a "strong result" with cash profit 10% ahead of consensus and catastrophe costs lower.
UBS has a 'neutral' rating on the stock with a price target of $20.70
What they said: "With $4.1 billion capital management also confirmed and underlying insurance trading ratios tracking slightly ahead, expect stock to remain well supported near-term," UBS said in a note.
Suncorp outlines capital return, special dividend after HY profit lift
The news: Suncorp Group has announced a capital return and special dividend out of the proceeds of the sale of its banking business to ANZ, which boosted its first-half profit.
The numbers: Net profit for the six months to December nearly doubled to 1.1 billion, but this included a one-off gain of $252 million on the sale of Suncorp Bank to ANZ. Excluding this, cash earnings were still up 30% to $860 million. It will pay an interim dividend of 41 cents a share.
The company announced the first tranche of its capital return from the $4.9 billion sale in the form of a $3 a share capital return and a 22 cents a share special dividend.
The context: The insurer said its half-year result was boosted by favourable natural hazard experience, positive investment returns and the non-recurrence of reserve strengthening, which impacted the year ago period.
Gross written premiums in the general insurance business increased 8.9%, while net investment income contributed $374 million to the result.
Chief executive Steve Johnston said Suncorp is now a simpler, more resilient, and focused business and flagged a potential share buyback.
What they said: “Our commitment to return capital in excess of the needs of the business and our robust capital position means we have the capacity for further capital management initiatives, most likely the establishment of an on-market buy-back facility,” Johnston said.
The source: ASX announcement
