SUNCORP GROUP LIMITED — Capital/Financing Update 2009

Feb 4, 2009

Capital raising details

5 February 2009

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Disclaimer

This Presentation has been prepared by Suncorp-Metway Limited (ABN 66 010 831 722) ( Suncorp ).

Summary information

This Presentation contains summary information about Suncorp and its subsidiaries ( Suncorp Group ) and their activities current as at 5 February 2009. The information in this Presentation does not purport to be complete. It should be read in conjunction with Suncorp Group’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange, which are available at www.asx.com.au.

Not financial product advice

This Presentation is for information purposes only and is not financial product or investment advice or a recommendation to acquire Suncorp shares and has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek legal and taxation advice appropriate to their jurisdiction. Suncorp is not licensed to provide financial product advice in respect of Suncorp shares. Cooling off rights do not apply to the acquisition of Suncorp shares.

Financial data

All dollar values are in Australian dollars ( A$ ) and financial data is presented within the financial year end of 30 June unless otherwise stated. The pro forma historical financial information included in this Presentation does not purport to be in compliance with Article 11 of Regulation S-X of the rules and regulations of the US Securities and Exchange Commission.

Future performance

Certain statements contained in this Presentation may constitute statements about future matters and forward-looking statements. These forward-looking statements speak only as of the date of this Presentation. The forwardlooking statements involve known and unknown risks, uncertainties and other factors which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance.

Suncorp Group’s actual results, performance or achievements may differ materially from any future results, performance or achievements expressed or implied by these forwardlooking statements. Neither Suncorp Group, nor any other person, gives any representation, warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Presentation will actually occur. In particular, such forward-looking statements are, by their nature, subject to significant uncertainties and contingencies, many of which are outside the control of Suncorp Group.

An investment in Suncorp shares is subject to investment and other known and unknown risks, some of which are beyond the control of Suncorp Group, including possible delays in repayment and loss of income and principal invested. Suncorp does not guarantee any particular rate of return or the performance of Suncorp Group nor does it guarantee the repayment of capital from Suncorp or any particular tax treatment. Persons should have regard to the risks outlined in this Presentation.

Past performance

Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.

Not an offer

This Presentation is not, and should not be considered, an offer or an invitation to acquire Suncorp shares or any other financial products. This Presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit of, any ‘US person’ (as defined in Regulation S under the US Securities Act of 1933, as amended ( Securities Act ) ( US Person )). Suncorp shares have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to any US Person without being so registered or pursuant to an exemption from registration.

Underwriter

The underwriter has not authorised, permitted or caused the issue, lodgement, submission, dispatch or provision of this Presentation and does not make or purport to make any statement in this Presentation and there is no statement in this Presentation which is based on any statement by the underwriter.

The underwriter and its affiliates, officers and employees, to the maximum extent permitted by law, expressly disclaim all liabilities in respect of, make no representations regarding, and take no responsibility for, any part of this document and make no representation or warranty as to the currency, accuracy, reliability or completeness of information.

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Capital raising details

Suncorp today announces an underwritten capital raising to deliver a minimum of $900 million

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1,400 1,302
1,200
402
1,000 100 900
410
100
800
600
390
400
200
0
Institutional Institutional Underwritten 1H09 Underwritten Maximum potential Maximum
Placement Entitlement Offer DRP (in excess of amount Retail Entitlement theoretical raising
(1 for 5) natural take-up, Offer (1 for 5)
cancellable)
Size (A$m)
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Improved capital position

Suncorp’s ACE will increase to ~6% as a result of the capital raising

6.86% 0.93% 0.23% 5.93% 0.93% 0.23% 0.88% 3.89% ACE ratio[1] at 31 Institutional Institutional Underwritten DRP Pro forma ACE ratio Retail Entitlement Pro forma ACE ratio December 2008 Placement ($390m)[2] Entitlement Offer ($100m) (minimum) Offer (maximum) (maximum—$502m) ($410m)[2]

• 1 Adjusted Common Equity as a percentage of risk weighted assets

• 2 Net of fees

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Offer structure

Placement to raise $390 million

• Fully underwritten[1]

Entitlement Offer to raise up to $912 million, underwritten to $410 million

• Up to $410 million Accelerated Institutional Entitlement Offer, fully underwritten[1]

• Conducted simultaneously with Placement

• Up to $502 million Retail Entitlement Offer, non-underwritten

• Offer closes 13 March 2009

$4.50 Offer Price

• 35% discount to last closing price (adjusted for 20 cent interim dividend)

• 39% discount to 5-day VWAP (adjusted for 20 cent interim dividend)

• New shares do not rank for 1H09 dividend, which is expected to be 20 cents

Underwritten Dividend Re-investment Plan (DRP)

• $100 million of 1H09 DRP underwritten[1] (in excess of natural take-up)

• Only exercised if Retail Entitlement Offer take-up is less than $100 million

• Underwritten size reduces with Retail Entitlement Offer take-up

1 The underwriting agreements include a number of termination events, including material disruptions in financial conditions or markets

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Summary timetable

Key Dates	Key Dates
Trading Halt	Thursday, 5 February 2009
Institutional Entitlement & Placement Bookbuild opens	Thursday, 5 February 2009
Institutional Shareholding Declaration forms due to Orient Capital	4.00pm (AEDT) Thursday, 5 February 2009
Institutional Entitlement & Placement Bookbuild closes	11.00am (AEDT) Friday, 6 February 2009
Ordinary Shares re-commence trading	Monday, 9 February 2009
Record Date	7.00pm (AEDT) Tuesday, 10 February 2009
Offer information dispatched to Eligible Retail Shareholders	Monday, 16 February 2009
Retail Entitlement Offer Period	16 February – 13 March 2009
Institutional settlement date	Wednesday, 18 February 2009
Institutional trading date (trade as separate ex-dividend class)	Thursday, 19 February 2009
Institutional shares trade with Ordinary Shares	Friday, 27 February 2009
Retail Entitlement Offer closes	Friday, 13 March 2009
Issue of New Shares under Retail Entitlement Offer	Monday, 23 March 2009
Retail trading date	Tuesday, 24 March 2009

Suncorp reserves the right, subject to the Corporations Act, ASX Listing Rules and other applicable laws to vary the dates of the Entitlement Offer, including extending the Entitlement Offer, closing the Entitlement Offer early or accepting late applications, either generally or in particular cases, without notice.

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Risks

This section discusses some of the key risks associated with an investment in Suncorp. Before investing in Suncorp, you should consider whether this investment is suitable for you. Potential investors should consider publicly available information on Suncorp (including these materials, the Market Update dated 5 February 2009, 2008 Annual Results, 2008 Annual Results Presentation and other announcements that have been made available at www.suncorp.com.au or www.asx.com.au), carefully consider their personal circumstances and consult their stockbroker, accountant or other professional adviser before making an investment decision.

SPECIFIC RISKS

1H09 results may differ from Market Update —Suncorp’s financial results for the six months to 31 December 2008 are due to be released on 24 February 2009 and may differ from those presented in the Market Update dated 5 February 2009. The guidance provided in the Market Update is subject to finalisation of Suncorp’s accounts, and completion of the review by external auditors. As such, actual results for the six months to 31 December 2008 may differ from the guidance contained in the Market Update.

Credit risk —Credit risk is the risk that a borrower or counterparty will not meet its obligations in accordance with agreed terms. Suncorp is exposed to credit risk as a consequence of its lending activities and it maintains provisions to provide for bad and doubtful debts. If these provisions are inadequate there may be an adverse impact on Suncorp’s financial performance and position.

Funding and liquidity risk —Banks and other financial institutions (including Suncorp) are currently subject to highly volatile credit market conditions. This volatility may result in (amongst other things):

• a reduction in the availability of markets from which to raise funds;

• an increase in the cost of funding and more onerous lending conditions; and

• an increase in potential counterparty default.

Suncorp accesses credit markets for a variety of funding sources as part of its operations. This access is supported by the recent initiatives of the Federal Government on deposits and wholesale funding. Continued volatility or further deterioration in credit markets may adversely impact the financial performance and position of Suncorp.

Catastrophes —Through its general insurance businesses, Suncorp is subject to claims arising from catastrophes caused by various events, including cyclones, earthquakes, tsunami, wind, hail, fires, floods, volcanic activity and bushfires, in addition to manmade disasters. These events are inherently unpredictable in terms of their incidence and severity. The extent of insured losses from catastrophes is determined by the total amount of insured exposure in the area affected by the event and the severity of the event. While Suncorp manages its exposure to catastrophes through the purchase of catastrophe reinsurance, Suncorp cannot be assured that such coverage will be adequate or will continue to be available at acceptable levels or at all.

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Risks (continued)

Estimation of claims provisions —Suncorp’s provisions for its insurance liabilities may prove to be inadequate to cover its ultimate liability under policies written by its insurance subsidiaries. Within its general insurance subsidiaries Suncorp maintains provisions to cover the estimated ultimate liability for claims, and within its life insurance subsidiary provisions for future policy benefits. Although Suncorp seeks to maintain outstanding claims provisions in its general insurance subsidiaries at a probability of adequacy of approximately 90%, actual future events and conditions may result in the current estimates of claims costs being inadequate. Moreover, additional costs of claims which cannot currently be foreseen, including costs arising from changes in the legal environment, may emerge in the future. Insufficient provisions for insurance liabilities could have a material adverse effect on Suncorp’s financial condition, results of operations and cash flows.

Investment income —Suncorp has a significant investment portfolio that supports liabilities arising from its general insurance and life insurance businesses, as well as generating a portion of Suncorp’s profits. Consequently, investment performance affects the Suncorp Group’s financial condition and results of operations.

Suncorp Group’s investment portfolio consists of assets which back:

• shareholder funds; and

• technical reserves, which represent assets to support outstanding claims and unearned premium liabilities.

The investment portfolio is managed in accordance with the Suncorp Group’s investment policy. The Group’s investment policy for shareholders funds and technical reserves is to invest in high quality fixed interest portfolios. There is risk, however, that adverse market volatility may affect investment.

Reinsurance —Suncorp enters into a number of reinsurance arrangements which allow Suncorp to limit its risk from particular lines of business or from specific events and to increase its capacity to write new policies. Under these arrangements, other insurers and reinsurers assume a portion of Suncorp’s exposure to reported and unreported losses in exchange for a premium. The availability, amount and cost of reinsurance depend on prevailing market conditions, in terms of price and available capacity, and may vary significantly. There are risks involved in reinsurance in relation to availability, price, conditions of reinsurance, determination of proper levels of outwards reinsurance, dispute of reinsurance claims, collection of reinsurance receivables and default risk of reinsurance counterparties. All of these risks may have a material adverse effect on Suncorp’s financial condition and results of operations.

Transaction risk —Suncorp may seek to grow in the future by merging with or acquiring other companies in the financial services industry. This may cause Suncorp to face operational and financial risks that could adversely affect Suncorp and its results of operations. Conversely, Suncorp may seek to sell or dispose of certain businesses in the future. This may result in a change in the operations of Suncorp and cause Suncorp to face operations and financial risks that could adversely affect Suncorp’s financial condition and results of operations.

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Risks (continued)

Regulatory risk —Suncorp’s business is subject to substantial regulatory and legal oversight. In particular, Suncorp is subject to prudential supervision by APRA, which requires Suncorp, amongst other things, to meet minimum capital requirements within its operations. Any significant regulatory developments, including changes to prudential regulatory requirements, accounting standards and tax laws, could have an adverse effect on how Suncorp conducts its business and on Suncorp’s financial condition and results of operations. Suncorp’s business and earnings are also affected by the fiscal or other policies that are adopted by various regulatory authorities of the Australian government. The nature and impact of future changes in such policies are not predictable and are beyond Suncorp’s control. The general insurance, banking or wealth management industries could be subjected to changes or additions to existing governmental regulations that may impair Suncorp’s financial performance. If Suncorp does not meet regulatory requirements, it may be subject to penalties, including fines or the suspension or cancellation of authority to conduct business. Noncompliance may also give rise to adverse publicity and damage to Suncorp’s reputation.

Queensland legislation affecting Suncorp —Queensland legislation imposes certain restrictions on Suncorp including an obligation to maintain its head office in Queensland. These restrictions could potentially inhibit Suncorp’s operations in the future as well as any future takeover of, or by, Suncorp.

Systems risk —General insurance and financial services businesses rely to a significant degree on information technology systems, with day-to-day operations of each aspect of business being computer based, as are the systems used to calculate and monitor underwriting risks, reserve modelling and reinsurance arrangements. Failure of such systems could result in business interruption, the loss of customers, damaged reputation and weakening of competitive position and could therefore adversely affect business and profitability.

Climate change —Climate change might lead to more significant and frequent weather related claims. Climate change may adversely impact the performance of general insurance and financial services businesses.

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Risks (continued)

GENERAL RISKS

Market price —The market price of Suncorp shares will fluctuate due to various factors including investor perceptions, domestic and international investment markets and economic conditions, and other factors that may affect Suncorp’s financial performance and position. The market price of Suncorp shares could trade on the ASX at a price below their issue price.

General economic conditions —As Suncorp conducts all of its business in Australia and New Zealand, its performance is influenced by the level and cyclical nature of business activity in Australia and New Zealand and, in particular, the State of Queensland, where its business is concentrated. Suncorp’s business activity is also influenced by both domestic and international economic and political events. There can be no assurance that a weakening in either/or both of the Australian and New Zealand economies, and the Queensland economy in particular, will not have a material adverse effect on Suncorp’s financial condition and results of operations.

Interest rate risk —Adverse movements in interest rates, both in Australia and abroad, may impact Suncorp’s earnings in each of the Banking, General Insurance and Wealth Management businesses.

Credit ratings —The price of Suncorp shares and Suncorp’s ability to access debt at a reasonable cost may be affected by a downgrade to its credit ratings.

Taxation implications —Future changes in Australian taxation law, including changes in interpretation or application of the law by the courts or taxation authorities in Australia, may affect taxation treatment of an investment in Suncorp shares, or the holding and disposal of those shares. Further, changes in tax law, or changes in the way tax law is expected to be interpreted, in the various jurisdictions in which Suncorp operates, may impact the future tax liabilities of Suncorp.

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