SUN +4.47%: moved higher after reaffirming FY26 guidance, with the insurer continuing to expect its underlying insurance trading ratio at the top end of the 10–12% range despite elevated natural hazard claims.
- Insurance trading ratio guidance: Top end of 10–12%
- Natural hazard claims: ~$250m above allowance
- Gross written premium growth: ~3%
A key strategic development was the new five-year aggregate reinsurance agreement, providing $800m of annual protection (up to $2.4bn total) to better shield the balance sheet from large catastrophe events. While natural hazard costs remain elevated, the company has reiterated its outlook, suggesting pricing discipline and reinsurance protection are helping absorb the impact.
The update highlights the resilience of Suncorp’s core insurance franchise, with management focused on maintaining strong margins even through a period of higher claims volatility. We liked the update today, which should lead to a higher degree of stability in earnings and dividends moving forward. We own SUN in the Active Income Portfolio.
MM is long & bullish SUN for Income
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