Suncorp’s FY26 result was mixed at the headline level, with statutory and cash earnings down sharply on the prior year, but the underlying insurance business remained resilient. Importantly for us, the balance sheet remains strong enough to support a 10c special dividend and a further A$250 million buyback in FY27.
Key results:
- Cash earnings of A$1.04 billion, down 28%, but ahead of consensus for A$1.02bn
- Gross written premium of A$15.4 billion, up 2.7%.
- Underlying insurance trading ratio of 11.8%, broadly steady on 11.9% last year and at the top end of the group’s target range.
- Final dividend of 52c per share, plus a 10c fully franked special dividend – ahead of consensus by ~11c in total.
- Cash ROE of 10.1%, down from 11.5%.
The softer headline earnings largely reflected a difficult natural-hazard year and weaker mark-to-market investment returns rather than deterioration in the core franchise. Suncorp incurred around A$2 billion of natural-hazard costs, which came in A$254 million above its FY26 allowance, while underlying earnings actually increased 4.5%.
Premium growth also remained healthy across the Australian Consumer business, with Home GWP up 5.9% and Motor up 5.8%, supported by both pricing and unit growth. Commercial and Personal Injury also grew, while New Zealand remained the softer part of the portfolio.
Looking into FY27, Suncorp expects gross written premium (GWP) growth of around 3–5% and an underlying insurance trading ratio in the upper half of its 10–12% target range. Expense growth should also remain contained, with the total expense ratio expected to be broadly in line with FY26.
Capital management remains a major part of the story. Suncorp completed a A$400 million buyback in FY26 and will return a further A$356 million through the 10c special dividend and up to A$250 million of additional buybacks in FY27.
MM’s view: The headline profit decline looks worse than the underlying result. Insurance margins held up, premium growth remained positive and the group is still generating enough capital to fund both a special dividend and another buyback. We own SUN in the Income Portfolio and continue to like the combination of a resilient core insurance franchise, improving earnings protection through reinsurance and an attractive capital-return profile.
MM remains long & bullish SUN
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