Suncorp Group Ltd Profit Slips But Special Dividends Ahoy
Insurance and banking heavyweight Suncorp Group Ltd (ASX: SUN) released its report for 2018 today, revealing an 11% drop in revenue to $15.4 billion.
Suncorp, which owns the Bingle brand of car insurance and trades under many others like APIA, today filed its full-year results and included an update on its insurance division.
For the year to June 30, Suncorp reported a net profit of $1.06 billion, down 1.5% on the prior year, but anounced it will pay a final dividend of 40 cents per share plus a ‘special’ dividend of 8 cents per share. Both dividends are fully franked. That takes Suncorp’s full-year dividend payments to 81 cents per share.
The reported result compares to data compiled by Bloomberg which noted that analysts expected a profit of $990 million and full-year dividends of 73 cents. So it was a beat on analyst expectations.
Suncorp said all three of its divisions (Insurance, Banking and New Zealand) performed solidly, with a material improvement from the New Zealand operations.
Looking ahead into 2019 and Suncorp expects to achieve its target of a cash return on equity (ROE) of 10%, excluding the positive effects from the sale of its life insurance business (click here to learn what ROE means). Suncorp expects revenue growth of between 3% and 5%.
Suncorp To Sell Life Insurance TAL Life
Making headlines today was the announcement by Suncorp that it plans to sell its Life Business to TAL Dai-Ichi Life Australia after it conducted a strategic review and entered a heads of agreement.
Commenting on the review, Suncorp CEO Michael Cameron said his team assessed a number of options but, “concluded that a divestment of the business is the best option.”
The deal, which is worth $725 million, will see Suncorp incur a non-cash write-off of $880 million and around $600 million will be returned to shareholders in the bank’s 2019 financial year.
“Part of the arrangement will be a 20 year distribution agreement and the transaction will be accretive to our Cash ROE,” Cameron added.
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