SUNCORP GROUP LIMITED — Investor Presentation 2012

May 28, 2012

29 May 2012

ASX announcement

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SUNCORP FLAGS ANNUALISED SIMPLIFICATION BENEFITS OF $200 MILLION

Key points

• Building Blocks program already in place and on track to achieve $235 million of annualised savings by June 2013.

• New Group simplification program to deliver annualised benefits of $200 million from FY16.

• Group strategic assets – capital, cost, customer and culture – to drive Suncorp’s future competitive advantage.

• Underlying general insurance business performing ahead of expectation – targeting full year underlying ITR of 12 percent for FY12.

Suncorp Group today unveiled a new strategic simplification program that will deliver annualised benefits of $200 million from the 2016 financial year.

Speaking at Suncorp’s Investor Day, Group CEO Patrick Snowball said the program would invest in modern platforms and systems, reduce the cost of operating and maintaining legacy infrastructure, further streamline legal structures and transition more of the Group cost onto a variable footing.

“Simplification will ultimately deliver a lower cost and more productive organisation, with benefits that extend far beyond efficiency gains,” he said.

“It will result in a modern and forward looking organisation focussed on high quality services and value for money, and built around an ability to efficiently service customers.”

Suncorp’s simplification program, which will cost $275 million and be expensed from within operating budgets, will focus on the following areas:

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• Organisational redesign through the Group’s operational excellence program, which is aimed at increasing the productivity of Suncorp’s workforce and the quality of customer interactions;

• In General Insurance, decommissioning 14 legacy policy systems and consolidating general insurance licences, significantly improving the way Suncorp Insurance services customers;

• A staged investment to improve Suncorp’s core banking platform, as well as an enhanced risk management program moving the Bank towards advanced Basel accreditation; and

• Focusing employees on high value activities that deliver the Group a strategic advantage by using two global partners to provide support on a range of activities.

The new program builds on the foundations laid by the Group’s Building Blocks initiative, which is on track to deliver $235 million of annualised savings by June 2013.

Mr Snowball said Building Blocks savings have been achieved through the introduction of a common insurance pricing engine; improving motor claims, including the introduction of SMART facilities; procurement efficiencies; and by simplifying technology and reducing operating costs.

Group strategic assets

Mr Snowball said that, having built an efficient platform for the business, the next phase of the Suncorp’s transformation will be to drive value from the Group’s unique strategic assets – capital, cost, customer and culture.

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Suncorp Group Ltd- ABN 66 145 290 124 - GPO Box 1453, Brisbane QLD 4001 www.suncorpgroup.com.au

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“There are four specific reasons why it makes good business sense for us to retain our five lines of business and why, ultimately, the whole of Suncorp is greater than the sum of its parts,” Mr Snowball said.

“By leveraging the diversity and capital return of each of our businesses we can effectively direct capital throughout the Group to where it can achieve the greatest return while aggregating for scale achieves the cost benefits of an ASX 25 organisation without diminishing brand differentiation.”

“Enhancing the value of our nine million strong customer base provides us with a clear strategic advantage as does building on the common elements of our culture.”

Core businesses performing strongly

Mr Snowball said Suncorp’s businesses were performing strongly and broadly on track to deliver the growth targets outlined in May 2010, although some of these would be over a longer timeframe than originally anticipated due to volatile market conditions.

He also confirmed the underlying general insurance business had improved ahead of expectation in the second half and the Group would now be targeting an underlying margin of 12 percent for the full year.

“I am proud of our achievements over the last few years, particularly around our key commitments to improve the underlying general insurance margin and delivering the Building Blocks savings,” he said.

“In summary, our businesses have been de-risked and simplified, with an organic strategy focussed entirely on domestic Australian and New Zealand markets. We’re defensively positioned if markets continue to be volatile but we also have a platform for growth into the future.”

“All of this is aimed at improving the Group’s return on equity and taking the value we are creating through to our shareholders in the form of total shareholder returns.”

Ends

For more information contact:

Media: Jamin Smith on 0409 170 035 Analysts/Investors: Mark Ley on 0411 139 134

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Suncorp Group Limited - ABN 66 010 831 722 - GPO Box 1453, Brisbane QLD 4001 www.suncorpgroup.com.au

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Suncorp Group Limited
Investor Day 2012
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May 2012
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Introduction
Patrick Snowball
Chief Executive Officer Suncorp Group Ltd
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Suncorp investor day 2012 ...four takeaway messages

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1 The Building Blocks are in place and delivering
2 A further simplification program underway
3 All Group businesses are growing strongly
4 The Group strategic assets (‘the 4C’s) will drive competitive advantage
Suncorp’s transformation is on track
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Suncorp investor day 2012

Phases of transformation

One Company Many Brands

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Stabilise NOHC Building Blocks Simplification Emergence of the 4C’s
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Strengthening core businesses
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Agenda

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Part 1 – Introduction – Patrick Snowball
Part 2 – Simplification breakout sessions Part 3 – Group strategic benefits
General Insurance system decommissioning
and license consolidation
Capital John Nesbitt
Mark Milliner, Andrew Mulvogue and
Darren O‟Connell
Cost Jeff Smith
Suncorp Bank
David Foster and Jeff Smith
Customer Mark Reinke
Operational excellence and partnering
Culture Amanda Revis
Anthony Day, Matt Pearson, Vicki Doyle,
Jason McCracken and Jim Rush
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Building Blocks
Benefits being realised
Estimated benefits FY12 Benefits realisable FY13
250 Total $190m Total $235m
200
Pricing benefits
150
100
50 Claims benefits
0
Project costs
(50)
2009/10 FY10 2010/11 FY11 2011/12 FY12 2012/13 FY13
Annualised benefits of $190m for FY12
On track to deliver $235m in annualised savings
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Building Blocks

Benefits confirmed by underlying metrics

Underlying ITR Operating expenses

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$1,278m $1,261m
$1,235m $1,229m $1,211m
11.2% 11.1% At least
10.5% 12.0% $146m $151m $155m $144m $137m
1H12 11.1% is split: $277m $269m $279m $289m $291m
10.0% Australia 11.9%
New Zealand 1.5%
$812m $858m $795m $828m $783m
Movement in 1H
7.9% Movement in 2H
1H10 2H10 1H11 2H11 1H12 2H12 1H10 2H10 1H11 2H11 1H12
General Insurance Suncorp Bank Suncorp Life 7
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Simplification

The next phase of Suncorp’s transformation

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Simplified legal Simplified Simplified Simplified and
structure platforms organisation flexible capability
General Insurance
Operational
licence consolidation Suncorp Bank
excellence and
and system simplification
partnering
decommissioning
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Simplification
Financial impacts of simplification program
200
Simplification benefits
150
100
50
FY12 FY13 FY14 FY15 FY16
0
(50)
(100) One-off project costs
Net financial impact
Annualised benefits of $200m from FY16
One-off total project costs of $275m
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$m
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Emergence of the 4C’s
Identifying the Group’s strategic assets
• Diversification benefit of managing capital across Group
Capital • Fungibility of capital across NOHC and portfolio
• Deliver scale cost benefits on third party procured goods / services
Cost • Share scale on infrastructure (real estate, enterprise technology) and
non-unique business services
Customer • Realising the benefit of 9 million customers and 13 valuable brands
Culture • Operating as: “ One Company. Many Brands. One Team ”
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Stabilise
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NOHC Building Blocks Simplification Emergence of the 4C’s
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Strengthening core businesses

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Targets and commitments
Bank General Insurance Life
• 1-1.3x system housing • $235m annualised benefit from the building blocks
3 year focus:
lending growth program
• RoE >15% Core Bank • At least 3% increase in underlying GI margin by FY12 • Double new business
• Double digit in-force
By 2013:
•• >1m customers Increase main bank PI One functionally aligned, customer focused team, delivering portfolio growth & scale in pricing and claims • premium growth Reduce acquisition expenses
• customers by 50% Treble customers & • Reduce expenses as %
double branches in WA CI Market share growth of 3% over the next 3 years • of in-force premium Improve disability claims
& NSW
• Cost:income mid-40‟s experience
Vero NZ Double scale and profit over the next 3 years
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Stabilise NOHC Building Blocks Simplification Emergence of the 4C’s
Strengthening core businesses
Targets and commitments
PI - One functionally aligned, customer focused team, delivering portfolio growth, scale in pricing and claims
Achieved BANK - 1 to 1.3 times system housing lending growth by Dec 2010
BANK - Sustained RoE >15% in Core Bank
BANK - Over 1 million customers
GROUP - $235 million benefit from the building blocks program
GI - At least 3% increase in underlying GI Margin by FY12
BANK - Treble customers and double branches in WA and NSW
On track
BANK - Increase main bank customers by 50%
LIFE - Reduce acquisition expenses as % of new business premium
LIFE - Reduce expenses as % of in-force premium
CI - Market share growth of 3% over the next 3 years
NZ – Double scale and profit over the next 3 years
BANK - Cost to income ratio in the mid-40‟s
Delayed LIFE - Improve disability claims experience
LIFE - Double new business volume
LIFE - Double digit in-force premium growth with focus on retention
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Transformation

Establishing the platform...

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Establish
an efficient
platform Simplify the legal structure Complete the integration Reduce complexity
NOHC Building Blocks Simplification
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Transformation

Strengthening the core...

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Corporate centre
Bank General Insurance Life
Strengthen the
core business Personal Commercial
Vero NZ
Insurance Insurance
Shared services
Establish
an efficient
platform Simplify the legal structure Complete the integration Reduce complexity
NOHC Building Blocks Simplification
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Transformation

Driving competitive advantage...

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Capital Cost Customer Culture
Drive Group
competitive
advantage Corporate centre
Bank General Insurance Life
Strengthen the
core business Personal Commercial
Vero NZ
Insurance Insurance
Shared services
Establish
an efficient
platform Simplify the legal structure Complete the integration Reduce complexity
NOHC Building Blocks Simplification
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Part Two
Simplification breakout sessions
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Suncorp Bank simplification
David Foster and Jeff Smith
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Competitive Advantage
Suncorp Bank
The best bank for middle Australia • A+ credit rating
• Part of the Suncorp Group
QLD 125 branches • Strong capital and funding position
33 business
centres
695 ATMs Customer Satisfaction
WA 13 branches 1 business centre 165 ATMs SA 1 branch 1 business centre 201 ATMs NSW 41 branches 9 business centres • Consistently better than the majors in Queensland and nationally for
597 ATMs personal and business customers
ACT
VIC 8 branches 2 branch 1 business Recent Award wins
4 business centre
branches - increased Western Australia Opened five new customers 2.1x centres 754 ATMs TAS 1 branch 65 ATMs 31 ATMs new branches - New South Opened 16 Wales •• Money Magazine Bronze awards and Editor‟s Choice for the best bank online security CANSTAR five star Gold, Silver and ratings for
 Total customers base of 1,027,988 customers 1.4 increased business and personal products
 Complete customers growth of 32% x • Mozo People’s Choice Award for Top
5 banking accounts in Australia
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TNS Market Monitor, MFI Customer Satisfaction, Jan 11 to Mar 2012
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Strategic drivers Delivering results

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• Optimising distribution channels • Developing and training our people
• Simplifying systems - progressing the • Building and embedding a robust risk
Banking Platform Program culture
• Ongoing process improvement
Cost Culture
Big bank capability, small bank connection
• Profitable growth • Actively managing non-core portfolio
• Enhancing risk management - Basel
Advanced Accreditation
Customer Capital
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Simplification in action

Banking Operations: Extracting cost and improving efficiency

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Increase in files settled per staff member 2010- 2012, indexed
180
• Process improvement 170
160
• Imaging
150
• Automated workflow 140
130
120
110
 Productivity gains 100
 Better customer experience
 Lowered cost to serve 90
 Greater accuracy
Operations Imaging Automated
Excellence Worflow
Indexed at 0.7 20
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Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12
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Simplification in Action

Banking Platform Program

Situation

Solution

• 15 legacy systems on ageing platforms

• Specialist knowledge required to maintain obsolete systems

• • Existing systems don‟t talk to each other

• Few streamlined workflows

Implications

• Aging systems risk profile

• Cost and complexity

• A prudent approach to mitigate cost and risks

• • Staged program allowing for go/no-go decisions based on exploratory work and proven technology and systems

• Partnering with Oracle

• Issues with speed to market

• Diminished customer experience

• Undermined competitive positioning

• Poorly positioned to fully exploit growth opportunities

• Suncorp Group Limited May 2012

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Banking Platform

Three staged implementation program manages cost and risk

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CRM, Commissions and Trade
• Implement Customer Relationship Management and Bringing real benefits
1 • Commissions system (completed) Trade Finance system (June)  Better customer insight
 Better broker service
 Removed duplication
Origination and fulfilment  Accurate sales forecasts
• Simplify customer interfaces (enablers)  Improved data quality
2 • Upgrade or replace various platforms to deliver a complete  Richer reporting
system from origination to fulfilment
 Sophisticated online
service
 Reduced operational risk
Decommissioning and archiving  Learnings for phase two
3 • Remove complexity, extract cost and drive simplification
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Simplification of Banking Platforms Outcome for stakeholders

• Improved reliability

• Greater speed to market

• More intuitive systems for the user – both staff and customers

• Customer orientated versus a product system

• Better, more efficient service

• A stable, sustainable technology model

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• A system capable of scalability without additional investment

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Simplification in action
Decommissioning and licence consolidation
Mark Milliner, Andrew Mulvogue and Darren O’Connell
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Building blocks benefits achieved

Delivered ahead of schedule and contributing to ITR uplift

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10/11 11/12
H1 H2 H1 H2
Portfolio
Of Brands Managing as a portfolio of brands

Functional One Team
One Team
Model Program 
One
Suncorp AAMI
Pricing GIO APIA Vero 
Engine
One
Sun Home New AAMI Home AAMI Motor SUN Motor
Claims GIO Home Process APIA Home APIA Motor GIO Motor 
System
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Licence consolidation initiative Simplifying the General Insurance licensing regime

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Phase 1: Phase 2: Phase 3: Phase 4: Phase 5:
Restructuring Restructuring NOHC Life licensing GI licence
GI Cos Life Cos rationalisation consolidation
Complete: Dec 2008 Complete: Oct 2009 Complete: Dec 2010 Complete: Dec 2011
Suncorp Group
GI Domestic (Aust) Today Limited
• 5 licensed General Insurers
•• 4 CTP licences 4 WC licences Suncorp Banking Group Insurance Holdings Suncorp Limited Life Group Suncorp Services Suncorp Shared Group  Simplification Benefits
• 7 AFSL licences  Financial
• Statutory reporting for over 15 legal entities SGHPL VIL Other GI entities  Regulatory Strategic
• Over 20 GI regulatory returns
• 4 internal reinsurance treaties
NZ ops AAMI AAI SMIL Other GI
entities
GIOG
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Legacy simplification program Rationalising policy applications from 14 to 2 in the next 3 yrs

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• High complexity and duplication across the group
Currently: • Significant “lights on” technology and business costs
• High costs for simple changes across multiple brands
NOW 3 YEARS BENEFITS
14 policy application systems 2 policy • Foundation for a
application systems single customer
PI I - 90 view across
COGEN 3.0 products
AAMI • Superior and flexible
INSURE COGEN 1.5
PROTECT online capability
NICHE QLD CTP NICHE • Greater efficiency in
PROTECT COGAN 3.2 PACE PROTECT operations
NSW CTP PROTECT - POLICY • Harmonise our
COGEN 1.5 BINGLE NURV CENTER products
WCOMP • Reduce time to
COGEN 1.5 SOLAR ARIES market
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Simplification in action
Operational Excellence
Partnering
Anthony Day, Matt Pearson, Vicki Doyle, Jason McCracken and Jim Rush
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What is Operational Excellence?

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Define
Roles
Activities
Unit Times
Improve Measure
Skills Productivity
Process Quality
Culture
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Operational Excellence

How it works

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TOTAL PAID HOURS Maximising productivity is
Sick Leave about removing waste
Annual Leave
Meetings / Training
Rework / Errors
Pacing
Poor Process Design
Excessive Handoffs 10~50%
Duplication Lost Time
Core Work Hours
Poor Scheduling
Poor Customer Interface
Poor Load Balancing
Core Work Hours
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Life Operational Excellence Journey

Group leverage delivers accelerated outcomes…

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In Week 17 of a 24-week program End to end coverage from Claims,
Administration, Underwriting to Call Centres,
Business Development & Financial Planners
50% of Life’s employees participating
20% productivity uplift on track - releasing
in OE program across Sydney,
capacity to support growth at the front end
Brisbane, Wellington & Auckland
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Partnering – Personal insurance

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Recoveries and Settlements WNS - overseas Results
partnership • Faster invoice processing  Customer
• Large back office processing function • Reduction in cost per process  Cost
• Time and resource intensive
Results
Claims Assist AEGIS - Australian partnership • 200 FTE available on demand  Customer
• Improved customer experience • 50% reduction in upscale timing  Cost
• Flexible claims lodgement work force • Flexible during events
Distribution WNS - overseas partnership Results • Improvement in warm leads   Customer Cost
• Increased cross-sell opportunities generated  New
• Enhanced customer experience at low cost • Conversion currently at 30% business
Results
Finance Genpact and WNS - overseas partnership • Faster processing  Customer
• Management Information Systems • Reduction in cost per process  Cost
• Process simplification and automation
Lessons • Partnership selection
• Phased approached • Progressing cautiously due to financial and customer risks
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Partnering - Finance

3 year program

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Simplification Using Lean techniques to remove blockages
Automation Investing in one accounting systems
Standardisation One Suncorp way to achieve cost synergies: Oracle GL and one
accounting system vision
Consolidation Shared services entity and a lean Centre
Genpact partnering • Locked in productivity gains for Finance functions
• Target from 6% up to 60% for purchase orders
Procurement • Target from 13% up to 60% for supplier contract compliance
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Part Three
Strategic assets of the Group – 4C’s
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Emergence of the 4C’s
Identifying the Group’s strategic assets
• Diversification benefit of managing capital across Group
Capital • Fungibility of capital across NOHC and portfolio
• Deliver scale cost benefits on third party procured goods / services
Cost • Share scale on infrastructure (real estate, enterprise technology) and
non-unique business services
Customer • Realising the benefit of 9 million customers and 13 valuable brands
Culture • Operating as: “ One Company. Many Brands. One Team ”
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Capital
John Nesbitt
Chief Financial Officer
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Capital – Strategic Benefit Key Capital advantages

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Diversification • Leverage the diversity of managing capital across the group over the long
term
Fungibility • The NOHC provides greater transparency to facilitate capital efficiency
• Performance linked to risk and capital
Risk culture & • Scale to invest in advance risk management capability
Reinsurance • One of the largest global reinsurance programs
• A+ rated regional bank, greater access to wholesale markets
Bank funding • Only regional issuing covered bonds
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Major Oceania insurance losses since 1970 in $AUD million, at 2011 prices

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16,000
Christchurch
earthquakes,
14,000 Brisbane flood, Brisbane floods,
Cyclone Tracy Cyclone Yasi
12,000
10,000 Melbourne &
Perth hailstorms,
8,000 earthquake Newcastle Hunter Valley storm Christchurch earthquakes
6,000 Sydney
Brisbane hailstorm
hailstorm
4,000
2,000
0
1970 1975 1980 1985 1990 1995 2000 2005 2010
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Fungibility in action

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Maintain capital targets
Non-core run-off
Surplus assets released $300m capital
Group capital buffer
GI Life Bank
Vero NZ Suncorp Life Non-core Bank
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Cost
Jeff Smith
CEO Suncorp Business Services
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Costs – scale benefits Driving costs down across the Group

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Claims Ecommerce
Benefits released Benefits partly released
• 14 GI systems into 1 system • Leverage and reuse – delivering one platform
• Driving down costs that can be rolled across businesses
• Driving down training costs • One online development team, decreases
• Reduced support costs project costs, increases speed to market and
innovation
• Increasing customer responsiveness • Internet banking mobile app built for $100k
compared to major bank costing over $1
million
• Platforms for Suncorp Life and GI
Aggregating for scale, driving down costs and delivery times while improving quality
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Costs – scale benefits Driving costs down across the Group

• Real Estate Group Procurement

• Benefits partly realised Benefits yet to be realised

• • Combining technology and Real • Aggregation of approx 16,000 suppliers estate expertise lowers unit costs

• Aggregation of approx 16,000 suppliers lowers unit costs

• Supports flexible workforce which has improved employee engagement

• • 8 workstations for every 10 employees, released 37,000sqm of space

• Supplier Portal– eliminate leakage through automatic matching, ensures spend is with approved suppliers with agreed T&C‟s

• $1.1 billion in indirect spend, small efficiencies deliver material benefits

• Flexible work environments assisted customer response in Brisbane floods

Aggregating for scale, driving down costs and delivery times while improving quality

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Customer
Mark Reinke
Executive General Manager – Group Marketing
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Customer Synergy Unlocking low risk, dependable revenue streams

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GI Life Bank Competitive Leverage
Customer scale • Enhanced pricing from cross line data
Single client view across almost 9 million customers • Identification of potential new profit pools
Brand scale
Customer permission for key brands to provide broader range • Open up new, low cost revenue streams
of solutions
Channel scale • Generate leads when customers are in
Broad range of channels to access customers, with scale the market
volumes in each
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CUSTOMER SYNERGY
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Customer Synergy

Execution focuses on three areas

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In place In flight
• APIA Lifestyle
New • Bizi SME portal
innovation • Direct Super
• Life sales through GI brands • Advisor & broker funding
Capture existing • GI sales through bank channel • Bank/GI pricing leverage
opportunities • SMART shop customer • GI/Bank claim settlement
leverage
• Single customer view • Real time data
Build the enablers • Harmonised privacy policy • Online, mobile platforms
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Customer synergy

Delivering growth by leveraging brands across the group

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Suncorp Group Leverage
Brand PI CI Life Bank Outputs
  
83% of Direct Life sales are to
existing group customers
  
23% of group customers hold
   
products across more than one
business line
  planned
24% of Suncorp home insurance
  sold through bank channel
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Culture
Amanda Revis
Group Executive Human Resources
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Suncorp Culture

One Company Many Brands

Engaging our workforce Simplified people management frameworks Leadership Talent

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Positive trends are emerging...

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Employee • Trending upwards
engagement
Employee turnover • Down 20%
External job • Up nearly 10% this FY
applications
Talent • Internal appointments to strategically critical roles up 35%
70%
52% 54%
Benchmark: High
performing companies
fill 60% of senior roles
internally (BCG)
FY09/10 FY10/11 FY11/12YTD
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Leadership

A critical driver of cultural change

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Suncorp leadership
Comprehensive development
Talent management and succession planning
Employer of choice for women
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Conclusion
Patrick Snowball
Chief Executive Officer
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FY13 - FY15
Continuing the journey Reset targets and
drive for growth
FY12 - FY14
Improve Life EV
Identify further Core Banking
opportunities to drive Commercial Insurance
FY12 - FY13 value
Accelerate & embed
simplification Supply chain efficiencies
FY10-FY12 program Improve Group ROE
Realising the benefits
of Building Blocks
Simplification benefits $200m
Building Block benefits $235m
FY10 FY11 FY12 FY13 FY14 FY15 FY16
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Q&A session
Suncorp Group Executive Team
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Important disclaimer

This presentation contains general information about Suncorp Group Limited („Suncorp‟) which is current as at 29 May 2012. It is information given in summary form and does not purport to be complete.

It is not a recommendation or advice in relation to Suncorp 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.

The information in this report is for general information only. To the extent that the information may constitute forwardlooking statements, the information reflects Suncorp‟s intent, belief or current expectations with respect to its 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 stock exchange disclosure requirements).

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Contacts
Steve Johnston steve.johnston@suncorp.com.au 07 3135 3988
Mark Ley mark.ley@suncorp.com.au 07 3135 3991
Nicole McGinn nicole.mcginn@suncorp.com.au 07 3135 3993
Sam Miller samantha.miller@suncorp.com.au 07 3135 2415
Nick Perchey nick.perchey@suncorp.com.au 02 8121 9206
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