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Here are 3 reasons why I think the Suncorp Group Ltd share price is in the buy zone

Whilst investors have a lot of choice when it comes to investing in insurance companies, I believe the current Suncorp Group Ltd (ASX: SUN) share price makes it a standout pick in the industry.

Here are three key reasons why:

Great value for money.

At present Suncorp’s shares are changing hands at under 16x estimated FY 2017 earnings according to CommSec. By comparison rivals Insurance Australia Group Ltd (ASX: IAG) and QBE Insurance Group Ltd (ASX: QBE) trade at 20x and 17x estimated FY 2017 earnings, respectively. In light of this I believe there is far more upside potential for Suncorp’s shares.

The One Suncorp strategy.

A key part of the One Suncorp strategy includes an integrated, customer-centric model which enables customers to choose from products provided across its wide ranging brands through its online marketplace. Management believes this will not only boost sales, but also customer satisfaction. The new model has already had a positive impact on its underlying insurance trading ratio. Suncorp’s ITR rose from 10.1% to 11% during the first-half of FY 2017. Pleasingly management believes it is now on a path to 12%.

Its market-beating dividend.

Suncorp’s shares currently provide a trailing fully franked 5.2% dividend. As well as being the biggest yield amongst its rivals, it also smashes the market average 4.2% dividend. The good news is that with its improved operating performance, I believe the company will be in a position to increase its payout over the next few years.

Overall, I believe this makes Suncorp a great investment option today and the best amongst its peers.

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Insurance Australia Group Limited. Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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