The Suncorp Group Ltd (ASX: SUN) share price is charging higher on Wednesday morning.
At the time of writing, the insurance giant's shares are up over 5% to a 52-week high of $21.50.
This follows the release of the company's half year results.
Suncorp share price hits 52-week high of results day
- General insurance gross written premium (GWP) up 8.9% to $7.5 billion
- Cash earnings up 30% to $860 million
- Net profit after tax (including bank sale proceeds) up 89% to $1.1 billion
- Interim dividend of 41 cents per share
- Special dividend of 22 cents per share
- Return of capital of $3.00 per share
What happened during the half?
For the six months ended 31 December, Suncorp reported an 8.9% increase in general insurance GWP to $7.5 billion thanks to grow across all segments. This was in line with its guidance. As was the company's underlying general insurance trading ratio (ITR), which came in at 11.8%.
The star performer for Suncorp was the key Consumer Insurance business, which reported a 10.2% increase in GWP to $4.04 billion. This reflects strong GWP growth in the motor portfolio and home portfolio.
And with benign natural hazard experience and the earn through of pricing in response to recent inflation, the Consumer Insurance business delivered a profit after tax of $423 million, which is up from $203 million.
This ultimately supported a 30% increase in group cash earnings to $860 million for the half.
And including the profit on the sale of its banking operations to ANZ Group Holdings Ltd (ASX: ANZ), Suncorp recorded an 89% lift in net profit to $1.1 billion.
Dividends and capital return
The good news for shareholders is that the company is planning to reward them generously with a combination of dividends and a capital return.
A fully franked interim dividend of 41 cents per share was declared this morning. This is a 20.6% increase on last year's interim dividend and represents a payout ratio of 60.6% of cash earnings.
In addition, there will be $4.1 billion of net proceeds from the sale of Suncorp Bank to be returned to shareholders. This is through a $3.8 billion capital return and $300 million fully franked special dividend, equating to $3.00 per share and 22 cents per share respectively.
Management commentary
Suncorp's CEO, Steve Johnston, appeared to be pleased with the half. He said:
These results reflect our discipline in executing strategic and operational priorities. We have delivered to our commitments, we are financially strong and resilient, and we have created future capacity to invest in initiatives to support our customers.
Johnston also spoke about the sizeable capital return that is heading to shareholders. He adds:
It is pleasing to be returning the net proceeds of the sale of the Bank to shareholders. It's significant that we have been able to deliver the same net proceeds that we forecast when the transaction was announced almost 1,000 days ago. We also completed the sale of Asteron Life on 31 January 2025, positioning Suncorp as a simplified pure-play general insurance company.
Outlook
Looking ahead, management advised GWP growth is expected to be in the mid to high single digits in FY 2025. This reflects pricing moderation in line with easing inflationary pressures in some portfolios, particularly in New Zealand.
Underlying ITR is expected to remain towards the top of the 10% to 12% range.
