Suncorp is selling its life insurance business at a loss as revenue and profit slips

(Brook Mitchell / Getty Images)
  • Suncorp posted a 1.5% drop in full net profit to $1.06 billion.
  • It is also selling its life insurance business TAL Dai-ichi Life Australia for $725 million.
  • The sale will result in a non-cash loss of $880 million.

Suncorp posted a drop in full year revenue and profit as the regional bank announced the sale of its life insurance business.

Revenue fell 11.17% to $15.45 billion. Statutory net profit fell 1.5% to $1.06 billion and cash earnings were down 4.1% to $1.098 billion.

The sale to TAL Dai-ichi Life Australia, one of the world’s largest insurance groups, for $725 million will result in an after tax non-cash loss in 2019 of about $880 million.

However, Suncorp expects to return about $600 million to shareholders following the completion of the sale.

At the close, Suncorp shares were up 4.7% to $15.70.

“Six months ago, we committed to a stronger second half, as the benefits of our strategy begin to flow through,” says CEO Michael Cameron.

“I’m pleased to report a 34% uplift in NPAT on the first half.”

Second half net profit was $607 million compared to $452 million in the first six months.

Over he 12 months,m profit at the bank division was down 5.3% to 375 million.

Total dividends for the full year were up 11%, including fully franked ordinary dividends of 73 cents per share and a special dividend of 8 cents.

Cameron says the Business Improvement Program has exceeded the net benefits target by $30 million, up from an expected $10 million.

“Digitisation of the business is beginning to drive our strategy to increase the number, and range of services, that our customers can choose to access through Suncorp,” he says.

The sale of the insurance arm includes a 20-year strategic alliance with TAL to offer life insurance solutions through Suncorp’s Australian distribution channels, including its digital channels, contact centres and store network.

Cameron says the sale of the life company will simplify Suncorp’s business model andprovide a significant release of capital to shareholders.

“The long-term strategic alliance between TAL and Suncorp will allow us to offer excellent value to Suncorp’s Australian customers,” he says.

Profit after tax at Suncorp’s Insurance Australia rose 2% to $739 million in the 12 months to June.

The results overview:

Source: Suncorp

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