The Suncorp Group Ltd (ASX: SUN) share price is on Monday morning.
At the time of writing, the insurance giant's shares are down 2% to $16.87.
This follows the release of the company's full year results for FY 2024.
Suncorp share price slips on FY 2024 results
- General insurance gross written premium (GWP) up 13.9% to $14.1 billion
- Underlying insurance trading ratio (UITR) up 50 basis points to 11.1%
- Net investment returns up 46.6% to $661 million
- Group net profit after tax up 11.8% to $1,197 million
- FY 2024 final dividend of 44 cents per share
What happened during the year?
For the 12 months ended 30 June, Suncorp delivered a sizeable 11.8% increase in net profit after tax to $1,197 million.
The key drivers of this performance were its Consumer Insurance and Suncorp New Zealand segments, which reported annual profit increases of 112% and 159.8%, respectively. This offset a 14% decline in Commercial & Personal Injury profits and a 19.4% decline in Suncorp Bank profits. The latter business has now been sold to ANZ Group Holdings Ltd (ASX: ANZ).
Speaking of which, net proceeds from the sale of the business are largely unchanged at ~$4.1 billion. Management reaffirmed that the majority of the proceeds are expected to be returned to shareholders around the first quarter of calendar year 2025.
In the meantime, shareholders have a fully franked final dividend of 44 cents per share to look forward to. Combined with its interim dividend, this brings Suncorp's total dividends to 78 cents per share in FY 2024. This is a 30% increase year on year and represents a payout ratio of 72% of cash earnings, which is around the middle of the target payout ratio range of 60% to 80%.
How does this compare to expectations?
According to a note out of Goldman Sachs, its analysts were expecting Suncorp to report group net profit after tax of $1,246 million and a final dividend of 44.6 cents per share.
So, with Suncorp posting a profit of $1,197 million and a dividend of 44 cents per share, it has fallen a touch short of Goldman's estimates.
This may explain why the Suncorp share price is under pressure on Monday.
Management commentary
Suncorp's CEO, Steve Johnston, was pleased with the way the company has bounced back from a challenging three years. He said:
While the headline results represent strong increases on the prior year it's important to point out that the past three years have been very challenging for all insurance companies with inflation, natural hazards and a fundamental resent in global reinsurance markets. It's pleasing that we navigated these challenges, and the complexity of the bank sale, and our earnings have rebounded to roughly where they were previously.
While the bank sale process continued through the year, our insurance portfolios have remained focused on improving our underlying business and customer experiences. As a pureplay insurer, we now look forward to investing in our business and delivering greater value for our customers and communities as well as our shareholders.
Outlook
Suncorp is guiding to GWP growth in the mid to high single digits in FY 2025. This is expected to be primarily driven by increases in average written premiums.
An UITR towards the top of the 10% to 12% range is targeted for the year, this will be up from 11.1% in FY 2024.
Expense ratios are expected to be broadly flat. This includes the investment required to support strategic investments and continue to grow the business.
Finally, a dividend payout ratio at the mid-point of the 60% to 80% range of cash earnings is being targeted.
