Suncorp-Metway Limited (SUN) Share Price

SUN Company Profile

  Suncorp-Metway Ltd is one of Australia's top 25 listed companies and is Queensland's largest listed corporation. At 30 June 2008, the Group was owned by over 228,000 shareholders. The Suncorp Group is Australia's 5th largest bank and at 30 June 2008 the largest general insurance group by gross written premium. The Group's acquisition of GIO and AMP's general insurance business in 2001 increased the customer base and diversified the business mix with growth in personal and commercial insurance and workers compensation. Suncorp's acquisition of the Promina Group in 2007 further diversified its general insurance and financial services businesses, operating throughout Australia and New Zealand. The Group also has a 50% share in RACQ Insurance Limited and RAA Insurance Limited, with the major motor clubs, RACQ (Qld) and RAA (SA). Suncorp has a strong market share in personal and commercial insurance lines nationally and in New Zealand. Suncorp provides a range of banking and insurance products directly to customers through an extensive branch and agency network, call centre operations, on line facilities, and through intermediaries and corporate partners.

Financial Highlights

Diversified financial services group Suncorp today reported a net profit after tax (NPAT) of $556 million for the full year to 30 June 2008. The result featured solid underlying business performance, which was significantly impacted by volatile investment markets and adverse weather conditions.

Key highlights of the full year result included:

Bank profit before tax increased by 11.2% to $633 million. The result was at the top end of guidance and featured margin stabilisation in the second half, as well as maintenance of disciplined credit practices.

General insurance profit before tax of $307 million, significantly down on last year’s figure of $835 million after severe weather events and volatile investment markets impacted the bottom line. All insurance brands continued to perform well, achieving good premium growth across short tail products.

Underlying profit of $136 million for the wealth management business, down 9.3% on the 06/07 pro-forma result.

$104 million in synergy benefits realised in FY08, on track to achieve upgraded net annual integration synergy estimate of $325 million.

Banking

Suncorp's banking contributed $307 million before tax for the half year to December 2007, up 6.2 percent from $289 million in the half year to December 2006.

The banking division has $69 billion in assets, making Suncorp Australia's sixth largest bank.

There are 237 retail and business banking outlets spread mainly through Queensland, New South Wales and Victoria. The banking operations are divided between retail consumer banking and business banking, which caters predominantly for small to medium sized businesses.

More than 340,000 customers use the internet for their everyday banking needs such as paying bills, checking balances and transferring funds. Online enhancements include retail deposits, home, personal and small business loans and business banking, integrated margin lending, share trading and online cash management.

Retail Banking

Retail Banking provides home and personal loans, savings and transaction accounts, margin lending, credit cards and foreign currency services to over 800,000 customers through 177 retail outlets, ATMs, 24-hour call centres and on-line banking.

Business Banking

Business Banking focuses on the needs of small to medium sized businesses and more than 76,000 customers. The division has lending assets of more than $23.7 billion and seven major areas of operation:

Commercial Banking - Providing financial solutions for owner-managed small to medium sized enterprises with borrowing requirements of more than $1 million.

Corporate Banking - Managing relationships with the Bank’s largest (non-property) business, and corporate customers, including provision of working capital and term finance for clients with a total borrowing requirement of more than $25 million.

Agribusiness - Providing financial solutions and serviced relationship management for rural producers and associated businesses in rural and regional areas.

Property Finance - Providing term finance for property investors and project finance to professional property developers for a wide range of real estate developments.

Equipment Finance - A suite of leasing and rental products are offered to customers to meet their vehicle and equipment financing requirements.

International Trade Finance – Offering facilities designed to assist importers, exporters and domestic traders in their business activities, including working capital funding, importation of capital equipment, risk management strategies and export marketing tools.

Insurance

Suncorp is Australia's third largest general insurance group. The general insurance business includes personal insurance products such as home and contents and personal effects cover, motor and boat, compulsory third party insurance, workers compensation and a range of commercial insurance products tailored to the small to medium business market such as property, marine, rural and liability.

Suncorp's insurance operation contributed $172 million before tax for the half year to December 2007.

Suncorp acquired AMP/GIO General Insurance in 2001 and AMP Ltd's 50 percent shareholdings in motor club insurance joint ventures in RACQ (Queensland) and RAA (South Australia). Both of these joint ventures hold substantial market shares in their respective states. These businesses run independently and in competition with Suncorp's existing general insurance business.

Following the merger with Promina, Suncorp now serves more than 6 million general insurance customers throughout Australia and New Zealand and provides personal and specialised insurances through well known brands such as AAMI, Apia, Shannons and Just Car in Australia and Vero in New Zealand.

Compulsory Third Party insurance (CTP)

Suncorp is the largest CTP provider in Queensland. Drivers pay their CTP insurance through motor dealers on the purchase of a new vehicle or when they pay their motor vehicle registration renewal. In NSW only, drivers must purchase CTP insurance before they can renew their vehicle's registration. In Queensland the state government sets price bands to ensure the CTP scheme is fully funded whereas in NSW insurers can vary prices within each class of vehicle to suit marketing and business strategy.

Personal Lines

These include home and contents, personal effects, motor, caravan, and boat insurance. These are distributed both directly and through intermediaries via brands such as Suncorp, GIO, AAMI and Vero. Other niche brands including Apia, Shannons, Just Car and InsureMyRide.

Commercial

Suncorp sells a wide range of business insurance products to small and medium sized businesses as well as corporates. These products are distributed both directly and indirectly through intermediaries.

Workers Compensation

We underwrite workers’ compensation in Western Australia, ACT and Tasmania and operate the managed funds schemes in New South Wales.

Wealth Management

As a result of the Suncorp Promina merger, Suncorp acquired a trans-Tasman financial services suite of financial services brands now called Suncorp Wealth Management (SWM).

The business includes Suncorp Wealth Management and Financial Planning, Suncorp Investment Management Limited (SIML) and brands such as Asteron (Australia and New Zealand), Tyndall (Australia and New Zealand), Standard Pacific, Guardian Financial Planning, Guardian Trust (New Zealand) and Cameron Walshe.

Our products include superannuation (personal and employer-sponsored), managed investments (unit trusts and wrap service), life insurance (death, trauma and disability), other risk protection products (such as mortgage and credit insurance), financial planning and advice, and corporate and personal trusts and estate planning.

Our multi-brand approach allows us to provide these products and services to approximately 600,000 individual and small business customers through a number of channels. This includes 4,500 independent financial advisers and a 396 strong advisor network across Australia and New Zealand.

For the half year to December 2007, Wealth Management's profit contribution was $125 million before tax.

Total funds under management across Australia and New Zealand were $27 billion for the half year to December 2007.

Investment Management

Suncorp Metway Investment Management Limited ("SMIML") is a wholly owned subsidiary of Suncorp-Metway Ltd and is responsible for the wholesale investment management activities of the Suncorp Group. SMIML currently manages in excess of $14 billion in funds covering superannuation, investment funds, general insurance and life insurance and is currently a fund manager for Suncorp Life and Superannuation Limited, Suncorp Metway Insurance Limited and GIO General Limited. SMIML's range of wholesale investment products and services are individually tailored to suit our client's investment needs within defined and agreed levels of risk. Clients generally include corporate superannuation funds, general insurance companies, institutions, master trusts and corporate investors. Products and services include individually managed portfolios, unit trusts, a pooled superannuation trust and derivative overlay product, covering investment in domestic and world asset classes including cash, fixed interest, equities and listed property trusts via sector specific or diversified investment options.

History

On 1 December 1996, the Queensland Government owned Suncorp and QIDC entities were merged into the publicly listed company Metway Bank to create the new allfinanz group Suncorp Metway. At the time of the merger, SUNCORP was 100% Queensland Government owned and was operating as an allfinanz group with approximately $10 billion in assets. SUNCORP commenced business in 1916 as the State Accident Insurance Office. Not long after it changed its name to State Government Insurance Office (SGIO) and extended its operations into life insurance, general insurance and Compulsory Third Party. Over the years, superannuation, building society and finance operations were added. Metway Bank was Queensland's largest locally based bank with operations in New South Wales and Victoria. At the time of the merger, Metway Bank had approximately $7.1 billion in assets. It was established as the Metropolitan Permanent Building Society in 1959 and converted to bank status and listed on the Australian Stock Exchange in 1988. In 1990, Metway Bank acquired Prudential Finance Limited and, in 1992, the Household Building Society.

QIDC commenced operations in 1986, but evolved from the Queensland Agricultural Bank established in 1902. Initially operating primarily as a rural financier, QIDC expanded its activities to include commercial lending to small and medium sized businesses. At the time of the merger, QIDC had total assets of $3 billion and was wholly owned by the Queensland Government. The merger of the three companies was proposed by the Queensland State Government to create a more competitive financial institution better geared to meet the needs of the future. The merger also created Australia's fifth largest listed financial services group with the associated economic benefits of a major Australian corporate headquarters located in Queensland. The state government was initially the largest shareholder of the new group with a 68 percent holding consisting of shares and capital notes in return for the sale of Suncorp and QIDC to Metway Bank; the other 32% was held by existing Metway shareholders. At the time, the state government indicated its intention to sell down its holding in stages within five years to no more than 15%. In September 1997, the State Government announced a public issue of 100 million Exchanging Instalment Notes giving preference to existing customers and shareholders of Suncorp, Metway and QIDC. On completion of the offer, the State Government's effective interest in the company was reduced to around 4%. The public paid $6.10 for the notes in two instalments and these exchanged for ordinary shares on 1 November 1999, increasing the number of Suncorp Metway shareholders from 36,000 to approximately 111,000. Twelve months later the State Government announced a total selldown of its shareholding through a second Exchanging Instalment Notes issue. Like the first notes issue, the second issue attracted considerable public interest and was substantially oversubscribed. The public paid $7.10 in two instalments, the second being paid on 6 November 2000. These notes were exchanged for ordinary shares on 31 October 2001.

Also as part of the government selldown, shareholders were offered one ordinary share for every two shares held as at 1 December 1998, at a price of $5 per share. The merger and amalgamation of the three companies was completed in 1999. The new brand, Suncorp Metway, was launched in May 1999, enabling the delivery of the group's resources under one banner, the streamlining of the product range and elimination of duplication in the branch network. On 1 July 2001, Suncorp Metway acquired AMP's Australian general insurance interests, which increased the group's annual premium income to $2 billion, making it the second largest general insurer in Australia. The number of general insurance customers doubled and the business mix became more diversified, with growth in personal and commercial lines and the addition of workers compensation. The acquisition of AMP Ltd's 50% shareholdings in motoring club insurance joint ventures with the RACQ in Queensland, the RAA in South Australia was completed in January 2002 and in March 2004 we acquired RACT Insurance in Tasmania (100%). On 1 July 2002, we simplified our brand to Suncorp, which represents everything we do in Queensland and for Banking and Wealth Management outside of Queensland. The GIO brand is used for general insurance business outside of Queensland. On 20 March 2007 Suncorp merged with the Promina Group. This brought the number of customers to over 7 million and lifted total assets to $84.9 billion across Australia and New Zealand. Today Suncorp is Australia's fifth largest bank and at 30 June 2008 was the largest general insurance group by gross written premium. Suncorp employs over 18,000 staff and 35% of Australian households use Suncorp’s products and services. Suncorp's acquisition of the Promina Group further diversified its general insurance and financial services businesses, operating throughout Australia and New Zealand.

For more information www.suncorp.com.au