SUN rallied +6.1% on Monday as the market assumes all of the regulatory boxes will get ticked for ANZ to buy SUN’s banking division for a healthy $4.9bn, we will be left with another standalone pure insurance play with plenty of cash to flow back to shareholders over the coming years. The deal will allow SUN to focus on its core business and it could easily be re-rated as its business model simplifies but climate change continues to scare many investors when they think about insurance exposure medium-term making meaningful valuation expansion feeling unlikely.
- We see rerating valuation potential compared to its peers but after treading water for 12 months MM is likely to adopt a wait-and-see approach towards SUN.
MM is neutral to mildly bullish SUN around $11.80
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