It’s very difficult to run both an insurance business and a bank successfully, while the more economically sensitive bank generally trading on a lower multiple to a pure insurance company, therefore weighing on the share price. We think the spin out of the bank to ANZ made total sense, and we now focus on SUN as a pure insurance business, with up to about $4bn in excess capital to return to shareholders. This may be quantified with the result along with the composition, i.e. a special div vs capital returns and this has the potential to significantly impact the share price.
NB SUN will report on the 19th.
- We like SUN and can see them outperforming the sector, along with QBE, pending this month’s results.
MM likes SUN into pullbacks <$15.50
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