SUNCORP GROUP LIMITED — Annual Report 2016

Aug 3, 2016

SUNCORP GROUP LIMITED ABN 66 145 290 124 DATA PACK RELEASE DATE 4 AUGUST 2016

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Financial results for the full year ended 30 June 2016 Create a better today

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Highlights

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1. Strategy reset to deliver value to customers

2. Operating model aligned to new strategy

3. Improvements in working claims to benefit UITR

4. Positive top line momentum

5. Building a more resilient business

2

Result Overview

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Diversified business model provides earnings stability

	FY16	FY15
	($m)	($m)
General Insurance	624	756
Bank	393	354
Suncorp Life	142	125
Business Lines NPAT	1,159	1,235
Other(1)	(70)	(44)
Cash earnings	1,089	1,191
Acquisition amortisation	(51)	(58)
Reported NPAT	1,038	1,133
Ordinarydividend(per share fullyfranked)	68 cents	76 cents

(1) Includes investment income and interest expense for capital held at the Group level, consolidation adjustments, Tyndall disposal, noncontrolling interests, transaction costs, and operating model restructuring costs.

3

FY16 Result Overview

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	FY16	FY15
	($m)	($m)
	1,047	1,146
Natural Hazards (after tax)	(511)	(748)
Investment Earnings (after tax)	298	436
Reserve Releases (after tax)	243	299
Restructure Provision (after tax)	(39)	-
Reported NPAT	1,038	1,133

4

1. Strategy reset to deliver value to customers

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Create a
better today
Purpose
‘One Suncorp’ Business model
Customer
Strategy
Capital Cost Culture
Resilience Priority
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5

The Suncorp Marketplace

Needs

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Self Mobility
Property Money
Enablers
Technology People
Analytics Brands
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Access

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Contact
Stores
Centres
Digital Brokers
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Solutions

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Banking
Insurance
& Wealth
Third New
Parties Alternatives
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6

Progress on Customer Strategy

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• 1/3 of Suncorp’s customers are Connected Customers

• Connected Customers have two or more need groups met

• The retention rate for Connected Customers is 96%

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Trov-Protect
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New
sources
of value
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AAMI Health
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• Trov-Protect launched in April 2016

• New health insurance offering planned for Group brands

• Shannon’s Club app launched

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Shannons Club

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SME Mature Age Young Lifestyle

• 9Spokes solution to support SME business

• New third party annuity offering for mature customers

• AAMI Smartplates helping L-platers become skilled drivers

7

2. Operating model aligned to New Strategy

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8

3. Improvements in Working Claims to benefit UITR

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80
60
40
20
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Home active claim volumes (‘000)

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Jul 15 Sep 15 Nov 15 Jan 16 Mar 16 May 16 Jul 16
Working Claims Natural Hazard Claims
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Average home claim size

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$4,600
$4,500
$4,400
$4,300
$4,200
$4,100
$4,000
Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16
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Motor active claims volumes (‘000)

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250
200
150
100
Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16
Working Claims Natural Hazard Claims
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SMART volumes (per month)

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15,000
14,000
13,000
12.2k
12,000 11.3k
11,000
10,000
9,000
8,000
Jul 15 Sep 15 Nov 15 Jan 16 Mar 16 May 16
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4. Positive Top Line Momentum of 2.9% Growth remains solid across all business lines ($m)

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Short Tail GWP

Long Tail GWP

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+2.0%
6,966
6,831
6,678 6,867
FY13 FY14 FY15 FY16
Bank Lending
+4.5%
54,280
51,918
48,198
49,956
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+1.2%
2,065
2,041
2,003
1,911
FY13 FY14 FY15 FY16
Life In-Force Annual Premium
+6.4%
1,032
970
840
911
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FY13

FY14

FY15

FY16

FY13

FY14

FY15

FY16

10

5. Building a more resilient business

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New Natural Hazard Aggregate Cover in place for FY17

• $300 million cover for natural hazards events greater than $5 million in size, once the total retained cost of these events reaches $460 million

• Additional protection results in FY17 natural hazard budget reduction to $620 million

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1,068
785 778
730
595
565
538
670
595
565
500 520
460
400
FY10 FY11 FY12 FY13 FY14 FY15 FY16
Allowance ($m) Actual ($m)
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11

General Insurance

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Positive underwriting result, impacted by volatility in investment markets

	FY16 ($m)	FY15 ($m)	Change (%)
GWP	9,031	8,872	1.8
Net earned premium	7,938	7,865	0.9
Net incurred claims	(5,661)	(5,587)	1.3
Operating expenses	(1,749)	(1,783)	(1.9)
Underwriting result	528	495	6.7
Investment income - insurance funds	254	399	(36.3)
Insurance trading result	782	894	(12.5)
Investment income - shareholder funds	101	163	(38.0)
Managed schemes, JVs and funding costs Income tax	(8) (251)	3 (304)	n/a (17.4)
NPAT	624	756	(17.5)

Key highlights

• GWP growth across all business units resulting in solid underlying growth

Underlying ITR of 10.6%

Operating expenses ratio of 22.0%

Impacted by lower investment returns and MTM adjustments

• Reserve releases of $347m or 4.4% of NEP

12

Gross Written Premium

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Solid growth across all major classes

Products	FY16 ($m)	Change (%)
Motor	2,858	2.9	Low single digit premium increases with stable retention
Home	2,585	1.8	Direct channel growth of 3.7% offset by a reduction in intermediated channels
Commercial	2,079	0.0	1.7% growth in Australia offset by a 4.9% decline in New Zealand
CTP	1,215	9.2	Growth across NSW, Qld and ACT portfolios
Workers Compensation and Other	294	(19.0)	Impacted by WA Workers Compensation
Total	9,031	1.8
Australia	7,803	1.8
New Zealand	1,228	1.9	3.2% in NZ$ terms

13

Australian Personal Insurance GWP growth A turnaround achieved, driven by retention and targeted premium increases

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4.0%
2.6%
1.0%
0.6%
(1.9%)
(2.3%)
(2.8%)
2H13 1H14 2H14 1H15 2H15 1H16 2H16
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14

Gross Written Premium

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Solid growth across all major classes

Products	FY16 ($m)	Change (%)
Motor	2,858	2.9	Low single digit premium increases with stable retention
Home	2,585	1.8	Direct channel growth of 3.7% offset by a reduction in intermediated channels
Commercial	2,079	0.0	1.7% growth in Australia offset by a 4.9% decline in New Zealand
CTP	1,215	9.2	Growth across NSW, Qld and ACT portfolios
Workers Compensation and Other	294	(19.0)	Impacted by WA Workers Compensation
Total	9,031	1.8
Australia	7,803	1.8
New Zealand	1,228	1.9	3.2% in NZ$ terms

15

Investment Assets

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Total investment income of $355 million

Insurance Funds $9.8 billion

• Investment income of $254 million (FY15: $399 million)

• $228 million MTM gain from a decrease in risk-free rates

• $46 million MTM loss from widening credit spreads

• $181 million MTM loss from decline in ILBs

Shareholder Funds $2.9 billion

• Investment income of $101 million (FY15: $163 million)

• Impacted by volatile equity markets and widening credit spreads, slightly offset by improving returns from a growing infrastructure and property portfolio

• 3.4% annualised return

• 2.7% annualised underlying return

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7%
18%
Corporate bonds
Inflation-linked bonds
70%
Semi-Government bonds
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Semi-Government bonds Cash and short-term deposits Commonwealth Government bonds

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8%
15%
10%
67%
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Interest-bearing securities Cash and short-term deposits Equities

Infrastructure

16

Suncorp Bank

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Another period of strong profitability

	FY16	FY15	Change
	($m)	($m)	(%)
Net interest income	1,129	1,103	2.4
Net non-interest income	88	107	(17.8)
Total income	1,217	1,210	0.6
Total operating expenses	(639)	(646)	(1.1)
Profit before impairment losses on loans and advances	578	564	2.5
Impairment losses on loans and advances	(16)	(58)	(72.4)
Bank profit before tax	562	506	11.1
Income tax	(169)	(152)	11.2
NPAT	393	354	11.0

Key highlights

• 4.5% total lending growth

• NIM increased to 1.86%

• • Cost to income ratio reduced to 52.5%

• Impairment losses reduced to 3 bps of gross loans and advances

• Core banking platform now in place

17

Suncorp Bank

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Evolution of the lending portfolio

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FY09 lending portfolio FY16 lending portfolio
$54.4 billion $54.3 billion
2% 1%
FY09 FY16
8%
Exposures
121 1
over $50m
10%
30%
Margin 1.68% 1.86%
52%
Impaired
$1,474m $150m
81% assets
6%
10% Impairment $710m $16m
losses
 
Housing Corporate & Property
 
Commercial (SME) Other
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• Agribusiness

18

Suncorp Life

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Improvement due to $21 million of positive claims and lapse experience

	FY16	FY15	Change
	($m)	($m)	(%)
Planned profit margin release	45	38	18.4
Claims experience	6	8	(25.0)
Lapse experience	15	7	114.3
Other experience	(10)	(8)	25.0
Underlying investment income	31	31	-
Superannuation	37	37	-
Total Life underlying profit after tax	124	113	9.7
Market adjustments	18	12	50.0
NPAT	142	125	13.6

Key highlights

• In-force premium growth and benefits of repricing

• Sustainable growth as in-force premiums increased to $1.0 billion, with focus on value over volume

• Two successive years of positive claims and lapse experience

19

Capital Position

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Strong Bank and General Insurance capital ratios compared to targets and peers

Bank capital ratios

General Insurance capital ratios

		Bank capital ratios General Insurance capital ratios	Bank capital ratios General Insurance capital ratios	neral Insurance capital ratios
CET1 Target (8.5% - 9.0% RWA)		1.21x 1.23x 1.22x 1.67x 1.80x 1.72x SUN Peer 1 Peer 2 9.21% 8.80% 8.24% 10.47% 10.24% 9.81% 9.69% 13.53% 12.45% 12.66% 14.02% 14.08% 13.68% 13.25% SUN Regional 1Regional 2 Major 1 Major 2 Major 3 Major 4 Advanced basis Standardised CET1 Target (0.95 - 1.15x PCA) CET1 AT1 Tier 2		1.21x 1.23x 1.22x 1.67x 1.80x 1.72x

Additional $148 million capital held at Suncorp Group level

Source: Latest published company reports

20

Medium Term Targets

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• Broadening of customer relationships

• Cost base flat in FY17 and FY18

• Improving underlying NPAT

• Sustainable ROE of at least 10% , which implies an underlying ITR of at least 12%

• Maintaining a dividend payout ratio of 60% to 80% of cash earnings

21

Outlook

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‘Create a better today’

• Australian economy still in transition

• Global economy impacted by volatility

• Suncorp is well positioned to drive growth and increase resilience

• A ‘One Suncorp’ approach

• Creating value for Connected Customers

22

Key Customer Initiatives for 2017

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Strengthening core business

• Customer Pathways

• Pain point elimination

• Efficiency

Stretching core business

• New customer access points

• New propositions

• New sources of revenue

Strategic response

• Individuals (not assets)

• Connected Home

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• Modular Financial Services

23

Highlights

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1. Strategy reset to deliver value to customers

2. Operating model aligned to new strategy

3. Improvements in working claims to benefit UITR

4. Positive top line momentum

5. Building a more resilient business

24

SUNCORP GROUP LIMITED ABN 66 145 290 124 DATA PACK RELEASE DATE 4 AUGUST 2016

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Financial results for the full year ended 30 June 2016 Create a better today

Data Pack

Suncorp Group

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Leading financial services brands in Australia and New Zealand

Top 20 ASX listed company

• $16 billion market capitalisation at 30 June 2016

$96 billion in group assets

13,500 employees in Australia and New Zealand

Approximately 9 million customers

End-to-end ownership of brands

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26

Suncorp’s shareholder promise Simplified, de-risked financial services group

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Yield

Growth

• Dividend payout ratio of 60% to 80%

• Strategy focused exclusively in Australia and New Zealand

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• Efficiency-led profit growth

• Multi-brand, multi-channel approach providing greater value to the Group’s 9 million customers

• De-risked and simplified business model

• ‘Above system’ growth in key markets

• Incremental market opportunities such as South Australia CTP

27

Suncorp’s strategy

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Create a
better today
Purpose
‘One Suncorp’ Business model
Customer
Strategy
Capital Cost Culture
Resilience Priority
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28

Create a better today

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For our Customers

Customers with solutions that enable them to enjoy the life they have today and feel secure that good choices are in place for the life they want tomorrow.

For our Shareholders A resilient business that will continue to deliver strong returns and growth over the long term.

For our People For our Communities For our Industry Our people are inspired We are an integral part of Our clear focus on providing to be innovative, make the communities in which innovative solutions that decisions and behave in we operate. We collaborate meet customer needs raises ways that contribute to to build resilience for today industry standards and creating a better today so they can thrive in a improves public perception. for all stakeholders. changing world.

For our Economy

A stable company that provides financial protection and liquidity so that individuals, businesses and governments can use their capital productively.

Our Strategy

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Customer
Cost Capital Culture
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Our Priorities

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Resilience
Momentum & stability Elevate the Customer Recalibrate costs
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Our Goals

Increase Connected Customers

Retention & Growth ROE > 10%

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Suncorp’s strategic assets

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Our focus

• Creating value for our customers

Customer

• Broadening the connection with the Group’s nine million customers by deepening their relationships with the Group’s brands

Capital

• Demonstrating a diversification benefit through Group Risk Based Capital modelling

• A+/A1 credit rating

• Deliver scale cost benefits on third party procured goods / services

Cost

• Maintain a stable operating expense base as a result of leveraging the Group’s scale, buying power and supplier relationships

Culture

• Operating as ‘One Suncorp’

30

Suncorp’s operating model

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A management structure to deliver a ‘One Suncorp’ approach

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Suncorp’s marketplace approach

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+
+ +
Needs
+
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• Engaging customers through omni-channel

• Curating solutions that customers care about

• • Enabling customers to navigate and make informed decisions

32

Connected Customers

Broadening and deepening customer relationships

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+ +
Property Mobility
Meeting
more &
needs
+ +
Self Money
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Increasing frequency of interactions

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Our strategy to grow Connected Customers

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Customer Marketplace

Experience

Brands

Deep insights Priority segments New propositions

Curate solutions Seamless experience Omni-channel Simplified journeys Customer navigation Personalised services

Reposition master brand Distinct and complementary Networked

34

Dividends

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68 cent total dividend, cash earnings payout ratio of 80%

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105
88
30
75 12
68
20
55
38
40
15 38
35 35
30
20
20 20
35 38
30
25
20
15 15
FY10 FY11 FY12 FY13 FY14 FY15 FY16
Interim Final Special
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Suncorp Group business line NPAT ($m) Diversification of earnings

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834
600
1,235
120 84 1,159
113
770 228
124
289
146 354
393
289
1,010
883
756
493 624
105 8 12 18
(60)
(263)
(496)
(632)
FY12 FY13 FY14 FY15 FY16
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■ General Insurance ■ Bank

■ Non-core Bank / Life write down of intangible assets

■ Life underlying NPAT ■ Life market adjustments

36

Shareholder metrics

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EPS (basic)
$0.89
$0.81
$0.57
$0.38
FY13 FY14 FY15 FY16
EPS (diluted)
$0.87
$0.80
$0.57
$0.38
FY13 FY14 FY15 FY16
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	FY13 FY14 FY15 FY16
Numerator ($m) Earnings (EPS basic) 491 730 1,133 1,038 Interest expense on CPS (net of tax) - - 45 43 Earnings (EPS diluted) 491 730 1,178 1,081 Denominator (m) Weighted average ordinary shares (EPS basic) 1,278 1,278 1,279 1,275 Effect of conversion of CPS - - 72 80 Weighted average ordinary shares (EPS diluted) 1,278 1,278 1,351 1,355	491 730 1,133 1,038 - - 45 43

37

Shareholder metrics

Cash EPS (basic)

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$1.02
$0.93
$0.85
$0.45
FY13 FY14 FY15 FY16
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Cash EPS (diluted)

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$1.01
$0.92
$0.84
$0.45
FY13 FY14 FY15 FY16
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FY13 FY14 FY15 FY16 Numerator ($m) Earnings (EPS basic) 576 1,304 1,191 1,089 Interest expense on CPS - 31 45 43 (net of tax) Earnings (EPS diluted) 576 1,335 1,236 1,132 Denominator (m) Weighted average ordinary shares 1,278 1,278 1,279 1,275 (EPS basic) Effect of conversion of CPS - 47 72 80 Weighted average ordinary shares 1,278 1,325 1,351 1,355 (EPS diluted)

38

Shareholder metrics

ROE

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FY13 FY14 FY15 FY16

ROE

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8.5%
7.8%
5.3%
3.5%
FY13 FY14 FY15 FY16
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Cash ROE

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9.4%
8.9%
8.2%
4.1%
FY13 FY14 FY15 FY16
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Earnings ($m) 491 730 1,133 1,038 Average shareholders’ equity ($m) 14,118 13,868 13,345 13,282

Cash ROE

Cash Earnings ($m)

576 1,304 1,191 1,089

Average shareholders’ equity ($m) 14,118 13,868 13,345 13,282

39

Suncorp’s shareholder overview

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SUN shareholders by type SUN shareholders by geography

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Australia 73%
(Institutions & Retail)
Domestic
Institutions 37% United States 12%
Retail United Kingdom 6%
Investors 36%
Hong Kong 3%
International Japan 1%
Institutions 27%
Europe (ex UK) 4%
Rest of World 1%
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Source: NASDAQ Corporate Solutions SUN share registry as at 23 June 2016

40

Positive top line momentum of 2.9%

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	4,006 4,408 FY12 FY13 FY14 FY15 FY16 Personal Insurance GWP by direct channels ($m) +2.8%	Insurance FY16 ($m) Change (%) Motor GWP 2,858 2.9
		Home GWP 2,585 1.8
		Commercial GWP 2,079 0.0
		CTP GWP 1,215 9.2
		Workers Compensation and other GWP 294 (19.0)
		Total GWP 9,031 1.8
		Australia GWP 7,803 1.8
		New Zealand GWP 1,228 1.9
		Banklending 54,298 4.5
		Lifein-force premium 1,032 6.4
		Group growth(weighted average) 2.9

41

Operating expenses ($m) Stable over time

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1,354 1,349 1,366 1,344 1,360
1,309
150 153 142 139 142
139
305 319 322 324 326
313
899 877 902 881 892 857
1H14 2H14 1H15 2H15 1H16 2H16
General Insurance Bank Life
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42

Capital position

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Capital position
GI(2) Bank(2) Life SGL, Corp Services & Consol FY16 Total	FY15 Total
CET1 2,827 2,896 467 148 6,338	6,629
CET1 Target 2,445 2,753 357 (3) 5,552	5,416
Excess to CET1 Target(pre div) 382 143 110 151 786	1,213
Group Dividend(3) (440) GroupExcess to CET1 Target(ex div) 346	(643) 570
CET1 Coverage Ratio(1) 1.21x 9.21% 1.80x
Total Capital 3,890 4,255 567 148 8,860 Total Target Capital 3,492 3,854 419 (22) 7,743	9,176 7,555
Excess to Target(pre div) 398 401 148 170 1,117	1,621
Group Dividend(3) (440) GroupExcess to Target(ex div) 677	(643) 978
Capital Coverage Ratio(1) 1.67x 13.53% 2.18x

(1) Capital ratios are expressed as coverage of the PCA for General Insurance and Life, and as a percentage of Risk Weighted Assets for the Bank.

(2) The Bank and General Insurance targets are shown as the midpoint of the target operating ranges.

(3) Group dividend net of expected shares issued under the Dividend Reinvestment Plan.

43

CET1 Capital Base - FY16 movements ($m)

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1,038 163
146
74
128
73 826
98 100
570
346
Excess CET1 FY16 NPAT GI excess GI PCA Bank growth Life policy Bank Project SGL Target Other FY16 Excess CET1
FY15 technical (Insurance liability Ignite change including Dividends FY16
provisions and Assets adjustment NZD (net of DRP)
Risk charge) (DAC)
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44

Group Risk Based Capital

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Capital volatility by key risk type

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----- Start of picture text -----

GI Bank
Suncorp Group
3% [3% ]
11%
27%
3% 21%
65%
73% 8%
24%
Life Corporate
62%
7%
14%
36%
57%
86%
■ Insurance Risk ■ Operational Risk
■ Market Risk ■ Counterparty Credit Risk
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45

Capital instruments

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Outstanding at 30 June 2016

	Semi-annual coupon rate / margin above 90 day BBSW	Optional Call / Exchange Date	Issue Date	30 JUNE 2016	30 JUNE 2016	30 JUNE 2016	30 JUNE 2016	Total Balance	Regulatory Capital
				GI	Bank	Life	SGL
				$M	$M	$M	$M	$M	$M
AAIL Subordinated Debt*	330 bps	Nov 2020	Nov 2015	225	-	-	-	225	225
AAIL Subordinated Debt	6.75%	Oct 2016	Oct 2006	101	-	-	-	101	108
AAIL Subordinated Debt	-	June 2017	Oct 2007	229	-	-	-	229	220
SGL Subordinated Debt	285 bps	Nov 2018	May 2013	-	670	100	-	770	770
SML FRCN	75 bps	Perpetual	Dec 1998	-	72	-	-	72	72
Total subordinated debt				555	742	100	-	1,397	1,395
SGL CPS2	465 bps	Dec 2017	Nov 2012	110	450	-	-	560	560
SGL CPS3	340 bps	June 2020	May 2014	400	-	-	-	400	400
Total Additional Tier 1 Capital				510	450	-	-	960	960
Total				1,065	1,192	100	-	2,357	2,355

Additional information is available in appendix 3 of the Analyst Pack.

During the 2015/16 financial year, AAI Limited issued $225 million of Tier 2 capital in the form of subordinated debt. Suncorp will continue to monitor similar opportunities across markets.

46

Suncorp projects key milestones

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On track and delivering

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Project 2H16 FY17
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Project	2H16	FY17
Motor claims	 RepairLink rationalisation  1 new SMART site  4 SMARTPlus sites	• 5 new SMART repair centres • 168,000 repairs via SMART network • Repair network rationalised
Super Simplification	 New platform in and operational  First new products released to market  Progress on both product upgrade paths and migration to new platform	• Simplification of 42 superannuation products to 9 • Migration of customers to new contemporary offers on new technology platform • Decommission current core superannuation system
Technology & Business Intelligence (BI)	 65% of total systems and applications migrated to cloud environments  10% of systems decommissioned  60% of legacy BI warehouses decommissioned  Core Group Data available in one place on Suncorp Data Services (SDS)	• Significant data migration into Cloud environment • Majority of system and legacy BI warehouse decommission complete • BI self service on the Cloud available to the wider workforce for analysis/reporting/modelling
Banking platform	 Continue roll-out to Store network  Deposit and Transactions accounts  Integration with broker management systems  Product migration  Collateral legacy system decommissioning	• Origination and servicing of Term Deposits, Transactions and Savings Accounts • Merchant management system • Data and product migration • Continue decommissioning of legacy systems
GI Legacy Simplification Program	 Workers’ compensation launched via new broker platform – Vero Edge  100% Workers’ compensation underwritten new business transacted on strategic platform	Focus on intermediated business deliveries including; • Vero – Motor, Profin, Property, Packages • Extension of Corporate Partners in NZ • 80% GWP on strategic platform • 70% Legacy platform decommissioning complete (9 of 13 systems) • 100% CI SME new business transacted on strategic platform
Real estate	 Reduce Sydney real estate footprint	• Preparing to optimise real estate footprint across Australia and New Zealand

47

SUNCORP GROUP LIMITED ABN 66 145 290 124 DATA PACK RELEASE DATE 4 AUGUST 2016

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Financial results for the full year ended 30 June 2016 Create a better today

General Insurance

General Insurance

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P&L

P&L General Insurance
	FY16 ($m)	FY15 ($m)	Change (%)
GWP	9,031	8,872	1.8
Net earned premium Net incurred claims	7,938 (5,661)	7,865 (5,587)	0.9 1.3
Operating expenses	(1,749)	(1,783)	(1.9)
Underwriting result	528	495	6.7
Investment income - insurance funds	254	399	(36.3)
Insurance trading result	782	894	(12.5)
Investment income - shareholder funds	101	163	(38.0)
Managed schemes, JVs and funding costs	(8)	3	n/a
Income tax	(251)	(304)	(17.4)
NPAT	624	756	(17.5)

Key highlights

• GWP growth across all business units resulting in solid underlying growth

• Underlying ITR of 10.6%

• Operating expenses ratio of 22.0%

• Impacted by lower investment returns and MTM adjustments

• Reserve releases of $347m or 4.4% of NEP

49

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General Insurance underlying and reported ITR Impacted by claims inflation and lower investment yields

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----- Start of picture text -----

18.6%
17.0%
14.0% 14.8% 14.6%
13.4% 13.6%
13.1%
14.7%
13.9%
11.0%
12%
12.8% 10.1%
11.1%
11.1%
10.3%
9.9%
9.4%
7.8%
3.8%
1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16
Reported ITR Underlying ITR
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50

General Insurance

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Key ratios

Loss ratio

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----- Start of picture text -----

71.0% 71.3%
67.8%
67.4%
FY13 FY14 FY15 FY16
Acquisition expenses ratio
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----- Start of picture text -----

14.3% 14.4%
13.8%
12.8%
FY13 FY14 FY15 FY16
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Total operating expenses ratio

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24.0%
23.0%
22.6%
22.0%
FY13 FY14 FY15 FY16
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Other underwriting expenses ratio

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----- Start of picture text -----

11.2%
9.2%
8.3%
7.6%
FY13 FY14 FY15 FY16
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51

General Insurance

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Total GWP of $9.0 billion - by product

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----- Start of picture text -----

Total GI portfolio Australia New Zealand
3% $7.8 billion $1.2 billion
3% 3%
13%
16%
24%
33%
32%
41%
20%
32%
23%
28%
■ Motor ■ CTP
29% ■ Home ■ Workers compensation & other
■ Commercial
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52

General Insurance

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Total GWP of $9.0 billion - by geography

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----- Start of picture text -----

3%
13%
25%
2%
QLD
3%
WA
$2.2b
6%
up 0.5%
$0.6b
SA
down 12.2%
$0.3b
NSW
up 1.2%
19% 29% $2.6b
up 1.8%
VIC $1.2b
$1.7b up 1.9%
■ Queensland ■ South Australia ACT & OTHER
up 6.5%
■ New South Wales ■ Tasmania
TAS
■ Victoria ■ New Zealand $0.3b $0.2b
■ Western Australia ■ ACT & Other up 16.1% up 7.3%
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53

General Insurance reserve releases Conservative assumptions and proactive long-tail claims management

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----- Start of picture text -----

$427m
5.4%
$347m
4.4%
$166m
Long-term assumption of 1.5% of NEP
2.4%
$105m $109m
1.4% 1.4%
FY12 FY13 FY14 FY15 FY16
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54

General Insurance reserve releases

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Continued releases

Building Blocks delivered one claims system

Simplification reduced legal costs

Management have reduced settlements and duration

Benign wage and superimposed inflation

Optimised claims processes

Reserve releases well above 1.5% of NEP

55

General Insurance

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FY16 natural hazards

Date	Event	Net costs($m)
Aug2015	South Coast NSW and SydneyStorms	29
Sep2015	NSW Central Coast Hail	21
Oct 2015	Fernvale Chinchilla Hail	41
Nov 2015	Sunnybank Hail	15
Nov 2015	DarlingDowns Storms	23
Dec 2015	Kurnell Tornado	57
Dec 2015	Great Ocean Road Bushfire	34
Jan 2016	Newcastle and Hunter HeavyRain	12
Jan 2016	South SydneyStorms	26
Jan 2016	East Australia Storms	74
Jun 2016	East Coast Low #1	109
Jun 2016	East Coast Low #2	9
	Other natural hazards attritional claims(Australia)	270
	Other natural hazards attritional claims(New Zealand)	10
Total		730
	Less: allowance for natural hazards	(670)
	Natural hazards costs above allowance	60 56

5,000

4,000

3,000

1,000

General Insurance

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50 year history of major weather events

6,000

2,000

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----- Start of picture text -----

Christchurch earthquakes,
AUS NZ Long run average Brisbane floods, Cyclone
Yasi, Melbourne
Hailstorm
Cyclone
Marcia and
Hunter Valley NSW Low
storm Storms
Brisbane flood,
Cyclone Tracy Newcastle Melbourne &
Perth Hailstorms,
earthquake
Christchurch
earthquakes
Sydney
Hailstorm
Brisbane Brisbane
Hailstorm Hailstorm
1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015
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Adjusted for inflation, population growth and market share

57

General Insurance FY17 reinsurance program Conservative balance sheet and P&L protection

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6.9b
6.1b
2.5b
500m
250m	Original cover	Reinstatement			Reinstatement		Reinstatement
200m		Dropdown aggregate			Dropdown aggregate
50m
	Retention				Natural hazard protection

58

General Insurance FY17 reinsurance program Drop-down aggregate program fully placed and $300 million of natural hazard protection

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----- Start of picture text -----

250m
50m xs
200m xs 50m
200m 100m xs 100m xs
150m xs 200m 150m xs 300m
150m
100m xs 100m xs
50m xs 200m 50m xs 300m
50m
Natural hazard protection
Retention
300m xs 460m
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59

General Insurance investment asset allocation

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Insurance funds $9.8 billion

Shareholders’ funds $2.9 billion

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8% 3% <1% 4% 1% 4% 8%
1% 14% 7% 17%
16%
15%
17% 2%
18%
6%
24% 10%
18%
81%
74%
70% 67%
56% 59%
FY14 FY15 FY16 FY14 FY15 FY16
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■ Corporate bonds

■ Inflation-linked bonds

■ Cash and short-term deposits

• Commonwealth Government bonds

■ Interest-bearing securities ■ Equities ■ Cash and short-term deposits ■ Infrastructure

■ Semi-Government bonds

60

General Insurance investment asset credit quality Fixed income holdings in Insurance and Shareholders’ funds

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----- Start of picture text -----

3.1% 5.3%
7.4%
18.2%
25.6%
28.8%
29.1%
29.8%
28.0%
49.6%
39.3%
35.8%
FY14 FY15 FY16
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----- Start of picture text -----

AAA AA A BBB
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61

General Insurance capital

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Total capital Prescribed Capital Amount Capital ratios vs Peers
(PCA) 1.80x
1.72x
3,890 1.67x
1.67x PCA
553
510 2,328
CET1 Target 298
(0.95 - 1.15x
PCA) 782
250
1.21x 1.23x 1.22x
2,827 556
917
(475) SUN Peer 1 Peer 2
■ Common Equity Tier 1 ■ Outstanding claims risk ■ Common Equity Tier 1
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• Common Equity Tier 1

• Premium liabilities risk

• Additional Tier 1

• Additional Tier 1

• Insurance concentration risk

• Tier 2

• Tier 2

• Asset risk

• Operational risk

• Aggregation benefit

62

Source: Latest published company reports.

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Personal Insurance

Personal Insurance

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P&L

	FY16	FY15	Change
	($m)	($m)	(%)
GWP	4,787	4,713	1.6
Net earned premium	4,242	4,275	(0.8)
Net incurred claims	(3,219)	(3,253)	(1.0)
Acquisition expenses	(487)	(479)	1.7
Other underwriting expenses	(278)	(327)	(15.0)
Total operating expenses	(765)	(806)	(5.1)
Underwriting result	258	216	19.4
Investment income – insurance funds	(1)	53	n/a
Insurance trading result	257	269	(4.5)

Key highlights

• 1.6% GWP growth in a competitive market

• Direct channels achieved premium increases with flat unit growth

• Additional resource deployed to rectify increase in working claims costs

• Total operating expenses ratio improved to 18.1%

64

Personal Insurance

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$4.8 billion total GWP

Portfolio by geography

Portfolio by product

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----- Start of picture text -----

2% 2% <1%
4%
6%
26%
46%
28%
54%
32%
■ Queensland ■ South Australia ■ Motor ■ Other
■ New South Wales ■ Tasmania ■ Home
■ Victoria ■ Other
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■ Western Australia

65

Personal Insurance

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Key ratios

Loss ratio

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76.1% 75.9%
68.2%
66.9%
FY13 FY14 FY15 FY16
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Acquisition expenses ratio

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----- Start of picture text -----

11.5%
11.4%
11.2%
11.0%
FY13 FY14 FY15 FY16
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Total operating expenses ratio

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----- Start of picture text -----

21.4%
19.8%
18.8%
18.1%
FY13 FY14 FY15 FY16
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Other underwriting expenses ratio

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----- Start of picture text -----

10.4%
8.4%
7.6%
6.6%
FY13 FY14 FY15 FY16
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66

Personal Insurance

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Market share

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----- Start of picture text -----

■ Motor ■ Home
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----- Start of picture text -----

VIC
37% 32%
41% 41%
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Source: Roy Morgan data as at May 2016

67

Personal Insurance

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Market share

Total portfolio $17.0 billion

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----- Start of picture text -----

Home Motor
$8.2 billion $8.9 billion
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----- Start of picture text -----

26% 27% 27% 26% 23% 29%
5%
4%
3%
4% 3% 27% 2% 7%
7% 31%
3% 6%
5%
6% 29% ■ Suncorp ■ Peer 4
■ Peer 1 ■ Peer 5
■ Peer 2 ■ Others
■ Peer 3
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Source: Roy Morgan data as at May 2016

68

Personal Insurance

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New business by distribution channel

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----- Start of picture text -----

6%
94%
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■ Direct ■ Intermediaries

69

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Commercial Insurance

Commercial Insurance

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P&L

	FY16	FY15	Change
	($m)	($m)	(%)
GWP	3,016	2,954	2.1
Net earned premium	2,651	2,620	1.2
Net incurred claims	(1,880)	(1,810)	3.9
Acquisition expenses	(419)	(415)	1.0
Other underwriting expenses	(227)	(238)	(4.6)
Total operating expenses	(646)	(653)	(1.1)
Underwriting result	125	157	(20.4)
Investment income – insurance funds	237	321	(26.2)
Insurance trading result	362	478	(24.3)

Key highlights

• 2.1% GWP growth due to disciplined growth in selected product lines

• CTP delivered strong growth, most notably in NSW and ACT

• Long-tail reserve releases of $416m

• Total operating expenses ratio improved to 24.4%

71

Commercial Insurance

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$3.0 billion total GWP

==> picture [700 x 316] intentionally omitted <==

----- Start of picture text -----

Portfolio by geography Non-statutory portfolio Statutory portfolio
$1.6 billion $1.4 billion
2% [2% ]
6%
16%
9%
30%
4%
32%
41% 40%
12%
40%
29%
37%
■ Queensland ■ South Australia ■ Commercial (SME & mid-market) ■ QLD CTP
■ New South Wales ■ Tasmania ■ Corporate (includes global customers) ■ NSW CTP
■ Victoria ■ ACT & Other ■ Specialty (includes professional services, ■ ACT CTP
■ Western Australia construction, motor dealers & marine) ■ Workers compensation
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----- Start of picture text -----

■ QLD CTP
■ NSW CTP
■ ACT CTP
■ Workers compensation
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72

Commercial Insurance

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Key ratios

Loss ratio

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----- Start of picture text -----

73.0%
70.9%
69.3% 69.1%
FY13 FY14 FY15 FY16
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Acquisition expenses ratio

Total operating expenses ratio

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----- Start of picture text -----

25.3%
24.8% 24.9%
24.4%
FY13 FY14 FY15 FY16
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Other underwriting expenses ratio

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----- Start of picture text -----

13.1%
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==> picture [328 x 88] intentionally omitted <==

----- Start of picture text -----

15.8% 15.8%
14.4%
12.2%
FY13 FY14 FY15 FY16
----- End of picture text -----

==> picture [328 x 80] intentionally omitted <==

----- Start of picture text -----

10.4%
9.1%
8.6%
FY13 FY14 FY15 FY16
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73

Commercial Insurance

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Market share

==> picture [640 x 287] intentionally omitted <==

----- Start of picture text -----

Total portfolio
Non-statutory Statutory
$18.2 billion
$12.9 billion $5.3 billion
4%
17% 9%
12%
24%
30% 28%
18%
18%
18%
7%
6% 18%
20%
23%
13%
14%
■ Suncorp ■ Peer 3
21%
■ Peer 1 ■ Peer 4
■ Peer 2 ■ Others
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Source: Latest Suncorp estimates

74

Commercial Insurance

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Market share - statutory products

==> picture [588 x 298] intentionally omitted <==

----- Start of picture text -----

CTP Workers compensation
$3.6 billion $1.7 billion
3%
5%
18% 18%
32%
20%
6%
21%
15%
23%
17%
22%
■ Suncorp ■ Peer 3
■ Peer 1 ■ Peer 4
■ Peer 2 ■ Others
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Source: Latest Suncorp estimates

75

Commercial Insurance

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Market share - CTP

==> picture [686 x 309] intentionally omitted <==

----- Start of picture text -----

QLD NSW ACT
$1.2 billion $2.3 billion $170 million
8% 4%
23%
22%
16%
40%
49%
60%
18%
27%
33%
■ Suncorp ■ Peer 3
■ Peer 1 ■ Peer 4
Source: State Scheme Regulators
*data as at March 2016 ■ Peer 2 ■ Peer 5
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----- Start of picture text -----

Source: State Scheme Regulators
data as at March 2016
data as at June 2016
----- End of picture text -----*

76

Commercial Insurance

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New business by distribution channel - non-statutory portfolio

==> picture [267 x 272] intentionally omitted <==

----- Start of picture text -----

4%
12%
84%
■ Direct ■ Resilium
■ Intermediaries
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Data not adjusted for unclosed business

77

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New Zealand Insurance

New Zealand Insurance

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P&L

	FY16	FY15	Change
	($m)	($m)	(%)
GWP	1,228	1,205	1.9
Net earned premium	1,045	970	7.7
Net incurred claims	(562)	(524)	7.3
Acquisition expenses	(240)	(233)	3.0
Other underwriting expenses	(98)	(91)	7.7
Total operating expenses	(338)	(324)	4.3
Underwriting result	145	122	18.9
Investment income – insurance funds	18	25	(28.0)
Insurance trading result	163	147	10.9

Key highlights

• 1.9% GWP increase as a result of strong growth across both direct and intermediated channels

• Higher NEP growth attributed to a shift in business mix requiring less reinsurance cover

• Total operating expenses ratio improved to 32.4%

79

New Zealand Insurance

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$1.2 billion total GWP

==> picture [614 x 306] intentionally omitted <==

----- Start of picture text -----

Portfolio by product Portfolio by channel
3%
19%
24%
49%
41%
32%
32%
■ Motor ■ Commercial ■ Direct ■ Strategic partners &
■ Home ■ Other ■ Brokers financial intermediaries
----- End of picture text -----

80

New Zealand Insurance

==> picture [98 x 30] intentionally omitted <==

Key ratios

Loss ratio

==> picture [126 x 30] intentionally omitted <==

----- Start of picture text -----

57.6%
55.8%
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==> picture [332 x 127] intentionally omitted <==

----- Start of picture text -----

54.0%
53.8%
FY13 FY14 FY15 FY16
Acquisition expenses ratio
----- End of picture text -----

==> picture [328 x 102] intentionally omitted <==

----- Start of picture text -----

26.0%
24.0%
23.5%
23.0%
FY13 FY14 FY15 FY16
----- End of picture text -----

Total operating expenses ratio

35.3% 33.4% 33.4% 32.4% FY13 FY14 FY15 FY16

Other underwriting expenses ratio

==> picture [328 x 76] intentionally omitted <==

----- Start of picture text -----

9.9%
9.3% 9.4% 9.4%
FY13 FY14 FY15 FY16
----- End of picture text -----

81

New Zealand Insurance

==> picture [98 x 30] intentionally omitted <==

Market share

Total portfolio NZ$5.2 billion

==> picture [224 x 286] intentionally omitted <==

----- Start of picture text -----

18%
20%
5%
5%
7%
45%
■ Peer 1
■ Vero (SUN) ■ Peer 2
■ AAI (SUN) ■ Peer 3
■ Others
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Source: Insurance Council New Zealand data as at March 2016

82

SUNCORP GROUP LIMITED ABN 66 145 290 124 DATA PACK RELEASE DATE 4 AUGUST 2016

==> picture [60 x 35] intentionally omitted <==

Financial results for the full year ended 30 June 2016 Create a better today

Suncorp Bank

Suncorp Bank

==> picture [98 x 30] intentionally omitted <==

P&L

	FY16	FY15	Change
	($m)	($m)	(%)
Net interest income	1,129	1,103	2.4
Net non-interest income	88	107	(17.8)
Total income	1,217	1,210	0.6
Total operating expenses	(639)	(646)	(1.1)
Profit before impairment losses on loans and advances	578	564	2.5
Impairment losses on loans and advances	(16)	(58)	(72.4)
Bank profit before tax	562	506	11.1
Income tax	(169)	(152)	11.2
NPAT	393	354	11.0

Key highlights

• 4.5% total lending growth

• NIM increased to 1.86%

• Cost to income ratio reduced to 52.5%

• Impairment losses reduced to 3 bps of gross loans and advances

• Ignite platform now in place

84

Suncorp Bank

==> picture [98 x 30] intentionally omitted <==

Total lending assets $54.3 billion

Lending assets by portfolio

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----- Start of picture text -----

1%
8%
10%
81%
----- End of picture text -----

■ Housing ■ Agribusiness ■ Commercial (SME) ■ Consumer

Lending assets by geography

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----- Start of picture text -----

7% [4% ]
10%
54%
25%
----- End of picture text -----

■ Queensland ■ ■ Victoria

■ Western Australia

■ New South Wales ■ Other

85

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Suncorp Bank

Key ratios Lending growth (annualised)

Net interest margin (interest-earning assets)

Cost to income ratio

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----- Start of picture text -----

4.55%
59.20%
3.93% 1.85% 1.86%
3.65% 57.40%
1.72%
1.64%
53.39%
52.51%
0.77%
FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16
Impairment losses to gross Return on Common Equity Deposit to loan ratio
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Return on Common Equity Tier 1

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----- Start of picture text -----

Impairment losses to gross
loans and advances
(annualised)
0.78%
0.25%
0.11%
0.03%
FY13 FY14 FY15 FY16
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----- Start of picture text -----

66.7%
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----- Start of picture text -----

12.2% 13.2%
8.2%
65.8% 65.8%
65.5%
(14.7%)
FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16
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86

Suncorp Bank

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Home lending assets $44.3 billion

Portfolio by borrower type Portfolio by geography

Portfolio by channel

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----- Start of picture text -----

3%
8%
30%
11%
35%
50%
65%
70% 28%
■ Owner occupied ■ Investor ■ Queensland ■ Victoria ■ Direct ■ Intermediaries
■ New South Wales ■ Western Australia
& ACT ■ Other
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87

Suncorp Bank

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Commercial (SME) assets $5.4 billion

Portfolio by industry Portfolio by geography

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----- Start of picture text -----

12% 11%
5%
35%
14%
7%
18%
75%
15%
8%
Property investment ■ Retail ■ Queensland
Hospitality & accommodation ■ Other ■ New South Wales
Construction & development
■ Other
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• Property investment

• Hospitality & accommodation ■ Other

• Construction & development

• Manufacturing & mining

Portfolio by exposure size

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----- Start of picture text -----

11%
20%
53%
16%
■ < $5 million ■ $10-$25 million
■ $5-$10 million ■ $25-$50 million
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• Services (including professional services)

88

Suncorp Bank Agribusiness assets $4.4 billion

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Portfolio by industry Portfolio by geography

Portfolio by exposure size

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----- Start of picture text -----

6%
10%
16%
3%
29%
3%
25%
49%
29%
8%
61%
10%
20%
31%
■ Beef ■ Sugar ■ Queensland ■ < $5 million ■ $10-$25 million
■ Grain & mixed farming ■ Fruit ■ New South Wales ■ $5-$10 million ■ $25-$50 million
■ Sheep & mixed livestock ■ Other ■ Other
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■ Beef ■ Sugar ■ Grain & mixed farming ■ Fruit ■ Sheep & mixed livestock ■ Other ■ Cotton

89

Suncorp Bank

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Credit quality – gross impaired and past due loans

Gross impaired loans by segment ($m) Past due home loans (% gross home loans)

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333
99
218
206
62
62
208
125
117
26 31 27
FY14 FY15 FY16
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■ Commercial (SME) lending

■ Retail lending ■ Agribusiness lending

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----- Start of picture text -----

0.98%
0.93%
0.78% 0.79%
0.74%
0.69%
0.05%
0.03%
1H14 2H14 1H15 2H15 1H16 2H16
Total home lending Home lending impaired
HL loss rate
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90

Suncorp Bank

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Home lending assets $44.3 billion

Home lending assets by LVR

Home lending new business by LVR

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17% 15% 12% 12% 9% 7% 17% 5% 10% 3% 10% 2% 13% 1%
12%
26%
22%
22%
24% 22% 12%
22% 23% 8%
83% 87% 88% 86%
61% 62% 64% 66% 69% 71% 66% 71%
1H14 2H14 1H15 2H15 1H16 2H16 1H14 2H14 1H15 2H15 1H16 2H16
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■ 0 - 80% ■ 80.01 % - 90% ■ 90.01% +

91

Suncorp Bank

Credit quality - impairments Impairment losses to gross loans

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Net impaired loans to gross loans

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----- Start of picture text -----

0.43%
0.32%
0.30% 0.29%
0.21% 0.28% [0.29% ] 0.26%
0.17%
0.17% 0.20%
0.14%
0.09%
0.03%
SUN Regional Regional Major 1 Major 2 Major 3 Major 4 SUN Regional Regional Major 1 Major 2 Major 3 Major 4
1 2 1 2
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Source: Latest peer financial reports

92

Suncorp Bank

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Asset growth and credit quality

Commercial (SME) portfolio

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----- Start of picture text -----

5,772
5,531
5,353 5,356
FY13 FY14 FY15 FY16
1.16% 1.16%
0.92% 0.88%
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Commercial portfolio ($m) Gross impaired assets/Total portfolio (%)

Agribusiness portfolio

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----- Start of picture text -----

4,624
4,400
4,360
4,311
FY13 FY14 FY15 FY16
4.50%
3.22%
2.83% 2.68%
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Agribusiness portfolio ($m) Gross impaired assets/Total portfolio (%)

93

Suncorp Bank

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Long-term funding profile ($m)

Covered bond Domestic senior unsecured

Offshore senior unsecured

1,400 1,200 1,000

800 600 400 200 0

94

Suncorp Bank Market share by product

Total deposits Retail deposits

2.0% 2.5% Mortgage lending Mortgage lending (Owner occupied) 2.9% 3.0%

Business deposits

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1.7%
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Mortgage lending (Investor) % 2.3

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Business lending

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----- Start of picture text -----

1.3%
Consumer lending
0.3%
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Source: APRA data as at June 2016

95

Suncorp Bank Retail banking market share

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----- Start of picture text -----

QLD
0.2% 15
WA 122
9
9.1% 9
0.5% 1
SA 512
1
135
0.2% 1
40 NSW &
133 0.9% ACT
2
Branch
331
Business centre
VIC
ATM 9
0.5%
1
1
0.3% TAS 473
Market share data source: Roy Morgan 41
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Market share data source: Roy Morgan all data as at June 2016

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96

Suncorp Bank capital

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Total capital Risk weighted assets

Capital ratios vs Peers

4,255 31,459 13.53% 14.02% 14.08% 13.68% 13.25% 12.45%[12.66% ] 13.53% 3,351 909 RWA 108 CET1 450 Target 9.21% (8.5% - 9.0% RWA RWA) 28,000 2,896 2H16 2H16 SUN Regional Regional Major 1 Major 2 Major 3 Major 4 1 2 Standardised Advanced basis

■ Common Equity Tier 1 ■ Additional Tier 1 ■ Tier 2

■ Credit risk

■ Market risk

■ Operational risk

■ Common Equity Tier 1

■ Additional Tier 1

■ Tier 2

97

SUNCORP GROUP LIMITED ABN 66 145 290 124 DATA PACK RELEASE DATE 4 AUGUST 2016

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Financial results for the full year ended 30 June 2016 Create a better today

Suncorp Life

Suncorp Life

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P&L

	FY16	FY15	Change
	($m)	($m)	(%)
Planned profit margin release	45	38	18.4
Claims experience	6	8	(25.0)
Lapse experience	15	7	114.3
Other experience	(10)	(8)	25.0
Underlying investment income	31	31	-
Superannuation	37	37	-
Total Life underlying profit after tax	124	113	9.7
Market adjustments	18	12	50.0
NPAT	142	125	13.6

Key highlights

• In-force premium growth and benefits of repricing

• Sustainable growth as inforce premiums increased to $1.0 billion, with focus on value over volume

• Two successive years of positive claims and lapse experience

99

Suncorp Life

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In-force portfolio - $1 billion

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Portfolio by product Portfolio by geography Portfolio by channel
10%
3% [7% ]
21%
28%
21%
47%
25%
7%
10% 63%
6%
20%
18% 14%
■ Term & TPD ■ Other ■ Queensland ■ Other ■ Direct via GI ■ New Zealand
■ Trauma ■ Group ■ New South Wales ■ New Zealand ■ Advised ■ Group & Other
■ Disability income ■ Victoria & Tasmania
■ Western Australia 100
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Suncorp Life

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New business - $97 million

Portfolio by product Portfolio by geography Portfolio by channel

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----- Start of picture text -----

8% 7%
24% 24%
20%
24%
4%
52%
57%
9%
21%
15%
17%
18%
■ Term & TPD ■ Disability income ■ Queensland ■ Other ■ Direct via GI ■ New Zealand
■ Trauma ■ Other ■ New South Wales ■ New Zealand ■ Advised ■ Group & Other
■ Victoria & Tasmania
■ Western Australia 101
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101

Suncorp Life

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Key metrics ($m)

Planned margins

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----- Start of picture text -----

99
69
45
38
FY13 FY14 FY15 FY16
Total operating expenses
303
291
281 281
FY13 FY14 FY15 FY16
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Claims and lapse experience

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21
15
-47 -50
FY13 FY14 FY15 FY16
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Value of One Year’s Sales

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43
25 25
11
FY13 FY14 FY15 FY16
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102

Suncorp Life

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Market share - Individual risk (Australia)

In-force portfolio $9.3 billion

Annual new business $1.1 billion

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----- Start of picture text -----

21%
15%
14% 14% 14% 14% 14%
13%
11% 11%
10%
9%
8% 8%
7%
7%
5% 5%
Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 SUN Peer 7 Others Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 SUN Others
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Source: NMG consulting data as at March 2016 in-force portfolio includes IFA, Bank and Direct business

103

Suncorp Life

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Market share by distribution channel

Direct Bank 36% $1.0 billion $2.4 billion 33% 32% 20% 18% 18% 8% 6% 5% 4% 3% 3% 2% 3% 2% 2% 2% 3% Peer 1 Peer 2 SUN Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Others Peer 1 Peer 2 Peer 3 Peer 4 SUN Peer 5 Peer 6 Peer 7 Others

Source: NMG consulting data as at March 2016

104

Suncorp Life

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Market share by distribution channel

IFA $5.9 billion

Group $6.6 billion

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----- Start of picture text -----

25% 25%
21%
15%
12% 13%
11%
10% 10% 9%
8% 8% 8% 8%
7%
5%
4%
1%
Peer 1 Peer 2 Peer 3 Peer 4 SUN Peer 5 Peer 6 Peer 7 Others Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 SUN Others
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Source: NMG consulting data as at March 2016

105

Suncorp Life capital

Total capital

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----- Start of picture text -----

567
2.18x PCA
100
467
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• Common Equity Tier 1

• ■ Tier 2

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Prescribed Capital Amount (PCA)

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----- Start of picture text -----

260
19
41
37
119
59
(15)
■ Insurance risk ■ Combined stress
■ Asset risk 2H16 scenario adjustment
■ Operational risk ■ Other regulatory
■ Aggregation benefit requirement
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106

SUNCORP GROUP LIMITED ABN 66 145 290 124 DATA PACK RELEASE DATE 4 AUGUST 2016

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Financial results for the full year ended 30 June 2016 Create a better today

Economy

Favourable economic fundamentals

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Australian economic growth

==> picture [310 x 187] intentionally omitted <==

----- Start of picture text -----

4.0
Annual % change Source: Consensus Economics
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2011 2012 2013 2014 2015 2016f 2017f
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Other supportive key metrics

	Australia	Queensland	Data as at:
Population Growth (pa)	1.4%	1.3%	Dec 15
Unemployment Rate	5.8%	6.5%	Jun 16
Inflation	1.3%	1.7%	Mar 16
Budget Position	$37bn deficit (2.2% of GDP)	$1bn surplus (0.3% of GSP)	2016/17 forecast
Credit Rating (S&P/Moody’s)	AAA (outlook -) / Aaa	AA+ / Aa1 (outlook -)	Jul 16

• Australia continues to deliver moderate economic growth, despite the decline in resources investment

• Consensus forecasts point to continued solid growth, slightly below the long run trend

• Fundamentals remain broadly supportive for both Australia and Queensland

• Australia retains its AAA credit rating, notwithstanding a negative outlook by S&P

• For QLD, population growth has lifted and the budget is now in surplus. These are counterbalanced by a recent lift in unemployment 108

Monetary policy is supporting activity

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Inflation & interest rates

Lending growth

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8
% Source: ABS, RBA, Bloomberg
7
6
5
4
3
Inflation target range
2
1
Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16
Std Var Mortgage Rate RBA Cash Rate
Headline Inflation Rate
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----- Start of picture text -----

11
Annual % change
9
7
5
3
1
-1
Source: RBA
-3
Feb 11 Feb 12 Feb 13 Feb 14 Feb 15 Feb 16
Total Credit Business Total Housing Investor Housing
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• The RBA’s most recent reduction in the cash rate was in August 2016 to 1.5%

• RBA commentary notes continued moderate economic growth, with recent data confirming that inflation remains quite low

• Total credit growth remains stable, with rebalancing evident amongst the components

• Policy measures and repricing have slowed residential investor lending while business lending has slowly accelerated

109

Residential building and the labour market

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Building approvals

Labour market

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240 Source: ABS, Bloomberg, Suncorp 12 80 6.4
Annual approvals per '000 Change per month ('000)
220 of population (RHS) 11
60
6.1
200 Annual Approvals 10 40
5.8
(‘000) (LHS)
180 9 20
5.5
160 8 0
5.2
140 7 -20
Source: Bloomberg
120 6 -40 4.9
Mar 86 Mar 91 Mar 96 Mar 01 Mar 06 Mar 11 Mar 16 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16
Employment (LHS) Unemployment Rate (%, RHS)
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• Dwelling approvals have begun to retreat from a long term peak

• After adjusting for population growth, approvals are less stretched and after an extended period of underbuilding, do not warrant a sharp pullback

• Labour market conditions have generally improved, notwithstanding a recent slowdown in job growth

• Forward looking indicators, including job vacancies and advertisements, continue to improve

110

Economic confidence and exports

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Confidence indicators

Shifting export trends

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----- Start of picture text -----

115 15
Business conditions (RHS) 6,000 $m 17,000
Index $m
Consumer sentiment (LHS)
110 10 5,750 Metal and Mining Exports Service Exports 16,000
(RHS)
5,500 (LHS) 15,000
105 5
5,250 14,000
100 0 5,000 13,000
4,750 12,000
95 -5
4,500 11,000
90 Sources: Westpac, -10
National Australia Bank, 4,250 10,000
Bloomberg Source: ABS
85 -15 4,000 9,000
Jul 11 Jul 12 Jul 13 Jul 14 Jul 15 Jul 16 May 11 May 12 May 13 May 14 May 15 May 16
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• Business confidence remains at high levels (with the survey conducted during the ‘Brexit’ vote period)

• Consumer confidence is lagging yet stands at around the long-term average level

• Australia’s exports continue to rebalance, assisted by a more competitive AUD

• Service exports such as tourism and education continue to grow strongly, off a low base

111

Household financial conditions

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Debt and debt servicing

House prices

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----- Start of picture text -----

200 14 900
% % Median House Price ($ '000)
190 12 800
180 10
700
170 8
600
160 6
500
150 4
400
140 2
300
130 0
Source: Bloomberg, ABS
Source: RBA
120 -2 200
Mar 01 Mar 06 Mar 11 Mar 16 Mar 06 Mar 08 Mar 10 Mar 12 Mar 14 Mar 16
▬
Interest payments to disposable income (RHS)
▬ Household savings rate (RHS) Sydney Melbourne Brisbane
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• Interest payments to disposable income (RHS)

• ▬ Household savings rate (RHS)

• Debt to disposable income (LHS)

• Notwithstanding the lift in household borrowing, interest payments have eased, savings have been maintained and unemployment has fallen

• Meanwhile, the RBA notes that “indicators of household resilience remain sound” (Financial Stability Review April 2016)

• Low interest rates continue to support the housing sector and, in turn, household wealth

• Brisbane is now showing a clear affordability advantage, particularly relative to Sydney

112

Queensland prospects

State economic growth

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----- Start of picture text -----

3.9%
2.3%
0.8%
2.1%
2.6%
Gross State Product FY17 forecast
Source: Deloitte Access
Economics, Mar-16 1.2%
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• Queensland is forecast to lead state growth in FY17, assisted by a diversified economic base

• The pullback in resources investment and community prices continues to be felt in state demand

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Queensland building approvals

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----- Start of picture text -----

60,000 18
Source: ABS, Bloomberg, Suncorp
55,000 16
Annual
50,000
approvals (LHS) 14
45,000
12
40,000
10
35,000
8
30,000
25,000 Annual approvals per '000 6
of population (RHS)
20,000 4
Mar 91 Mar 96 Mar 01 Mar 06 Mar 11 Mar 16
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• Queensland residential building remains buoyant, supported by low interest rates and relative affordability

• Strong population growth and underbuilding over the past decade do not, at this stage, signal oversupply on a state-wide basis

113

SUNCORP GROUP LIMITED ABN 66 145 290 124 DATA PACK RELEASE DATE 4 AUGUST 2016

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Financial results for the full year ended 30 June 2016 Create a better today

Glossary

Glossary

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Acquisition expense ratio	Acquisition expenses expressed as a percentage of net earned premium
APRA	Australian Prudential Regulation Authority
Cash earnings	Net profit after tax adjusted for the amortisation of acquisition intangible assets, the profit or loss on divestments and their tax effect
Cash earnings per share	Basic: cash earnings divided by the weighted average number of ordinary shares (net of treasury shares) outstanding during the period Diluted: cash earnings adjusted for consequential changes in income or expenses associated with the dilutive potential ordinary shares divided by the weighted average number of diluted shares (net of treasury shares) outstanding during the period
Cash return on average shareholders' equity	Cash earnings divided by average equity attributable to owners of the Company. Averages are based on monthly balances over the period. The ratio is annualised for half years
Combined operating ratio	The percentage of net earned premium that is used to meet the costs of all claims incurred plus pay the costs of acquiring (including commission), writing and servicing the General Insurance business
Common Equity Tier 1 (CET1)	Common Equity Tier 1 Capital comprises accounting equity plus adjustments for intangible assets and regulatory reserves
Common Equity Tier 1 Ratio	Common Equity Tier 1 divided by the Prescribed Capital Amount for Life and General Insurance, or total risk-weighted assets for the Bank
Connected Customer	Connected customers represent customers with two or more needs met across the following need categories: Home / Property; Self; Mobility and Money
Cost to income ratio	Operating expenses of the Banking business divided by total income from Banking activities
Credit risk-weighted assets	Total of the carrying value of each asset class multiplied by their assigned risk weighting, as defined by APRA
Deferred acquisition costs (DAC)	The portion of acquisition costs not yet expensed on the basis that it can be reliably measured and it is probable that it will give rise to premium revenue that will be brought to account in subsequent financial periods

115

Glossary

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Glossary
Deposit to loan ratio	Total retail deposits divided by total loans and advances, excluding other receivables
Diluted shares	Diluted shares is based on the weighted average number of ordinary shares outstanding during the period adjusted for potential ordinary shares that are dilutive in accordance with AASB 133 Earnings per Share
General Insurance – Commercial	Commercial products consist of commercial motor insurance, commercial property insurance, marine insurance, industrial special risk insurance, public liability and professional indemnity insurance, workers’ compensation insurance and compulsory third party insurance
General Insurance – Personal	Personal products consist of home and contents insurance, motor insurance, boat insurance, and travel insurance
Gross non-performing loans	Gross impaired assets plus past due loans
Insurance Trading Result	Underwriting result plus investment income on assets backing technical reserves
Insurance Trading Ratio (ITR)	The insurance trading result expressed as a percentage of net earned premium
Life insurance policyholders' interests	Amounts due to an entity or person who owns a life insurance policy. This need not be the insured. This is distinct from shareholders’ interests
Life risk in-force annual premiums	Total annualised statistical premium for all business in-force at the date (including new business written during the reporting period)
Life risk new business annual premiums	Total annualised statistical premium for policies issued during the reporting period
Life underlying profit after tax	Net profit after tax less market adjustments. Market adjustments represents the impact of movements in discount rates on the value of policy liabilities, investment income experience on invested shareholder assets and annuities mismatches
Loss ratio	Net claims incurred expressed as a percentage of net earned premium. Net claims incurred consist of claims paid during the period increased (or decreased) by the increase (decrease) in outstanding claims liabilities

116

Glossary

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Glossary
Net profit after tax	Net profit after tax attributable to owners of the Company derived in accordance with Australian Accounting Standards
Other underwriting expenses ratio	Other underwriting expenses expressed as a percentage of net earned premium
Past due loans	Loans outstanding for more than 90 days
Payout ratio – cash earnings	Ordinary shares (net of treasury shares) at the end of the period multiplied by the ordinary dividend per share for the period divided by cash earnings
Payout ratio – net profit after tax	Ordinary shares (net of treasury shares) at the end of the period multiplied by the ordinary dividend per share for the period divided by profit after tax
Profit after tax from business lines	The net profit after tax for the General Insurance, Bank and Life business lines
Return on average shareholders' equity	Net profit after tax divided by average equity attributable to owners of the Company. Averages are based on monthly balances over the period. The ratio is annualised for half years
Total operating expense ratio	Total operating expenses (acquisition and other underwriting expenses) expressed as a percentage of net earned premium
Total risk-weighted assets	Bank credit risk-weighted assets, off-balance sheet positions and market risk capital charge and operational risk charge, as defined by APRA
Treasury shares	Ordinary shares of Suncorp Group Limited that are acquired by subsidiaries
Value of one year’s sales (VOYS)	An estimate of the present value of all distributable profits expected from the new policies sold in a given year

117

Important disclaimer

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This report contains general information which is current as at 4 August 2016. It is information given in summary form and does not purport to be complete.

It is not a recommendation or advice in relation to the Group or any product or service offered by Suncorp or any of its subsidiaries. It is not intended to be relied upon as advice to investors or potential investors, and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate.

This report should be read in conjunction with all other information concerning Suncorp filed with the Australian Securities Exchange (ASX).

The information in this report is for general information only. To the extent that the information may constitute forward-looking statements, the information reflects Suncorp’s intent, belief or current expectations with respect to our business and operations, market conditions, results of operations and financial condition, capital adequacy, specific provisions and risk management practices at the date of this report. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties, many of which are beyond Suncorp’s control, which may cause actual results to differ materially from those expressed or implied.

Suncorp undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this report (subject to ASX disclosure requirements).

118

TO SEE MORE, GO ONLINE

suncorpgroup.com.au

REGISTERED OFFICE

Level 28, 266 George Street Brisbane, Qld Australia 4000 +61 7 3362 1222

INVESTOR RELATIONS CONTACTS

Mark Ley Ph: 02 8121 1221 Andrew Dempster Ph: 02 8121 9206 Amanda Caucino Ph: 02 8121 1314 Carly Jefferson Ph: 02 8121 1225 Sophie Bastin-Byrne Ph: 07 3135 4700

CONNECT

suncorpgroup.com.au @SuncorpGroup

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INVESTOR RELATIONS TABLET APP

Search 'Suncorp IR' or scan the code for Suncorp Group news, updates and share price movements.

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