SUNCORP-METWAY BACK TO BRISBANE'S NUMBER ONE

MAR 2010

SHORTLY after last year’s Brisbane’s Top Public Companies edition, Lihir Gold Limited (LGL) pipped Suncorp-Metway Limited (SUN) to the post as the city’s top player.

But after a management restructure, the banking and insurance company has reasserted itself as Brisbane’s No.1 by a long shot, with CEO Patrick Snowball (pictured) leading the charge.

Suncorp recorded a 41 per cent after-tax profit leap in the December half to $364 million, with the bulk of that coming from a general insurance profit surge of 89 per cent to $347 million.

Snowball says the increase in profitability is pleasing but the group will remain cautious with a conservative approach this year.

“This was an improved performance but it was coming off the previous financial year when the group had been impacted by a series of major weather events and the funding impacts of the global financial crisis,” he says.

“Although there is still a lot of work ahead of us to ensure Suncorp realises its full potential, this result has laid a sound foundation for the group’s future success.

“We have achieved our immediate priority of stabilising the group’s position, we have reinforced our capital and reserve position and a new executive team has been appointed.”

The company also plans to divest itself of 50 per cent interest in the joint venture insurance arms of the Royal Automobile Club of Queensland (RACQ) and the Royal Automobile Association of South Australia (RAA).

“While the joint ventures have proven to be good investments for Suncorp, the next phase of our development requires a full time focus on core operations,” says Snowball.

The company aims to complete the exit before its full year results presentation in August.

The reason for the up tick in insurance revenue can be largely explained by a less volatile claims environment and improved returns on investment portfolios.

“While the headline numbers are strong, once you peel back the benefits of a more favourable weather environment and improving investment markets you arrive at a margin that needs to improve,” he says.

“The focus of our general insurance strategy is to simplify and better align our front end, reduce brand overlap and improve revenues. At the back end our goal is to aggregate spend, reduce complexity and drive out cost.”

The banking arm also performed well with an NPAT of $4 million, compared to pre-tax loss in the previous half of $211 million.

As the company stabilises, two directors Martin Kriewaldt and Cherrel Hirst have announced their intentions to leave the board.

The board has also recently added Stuart Grimshaw as a director, along with new chief financial officer John Nesbitt who is expected to start in May.

CEO: Patrick Snowball
Market capitalisation: $10.6 billion
Revenue ’09: $7.948 billion
Profit ’09: $348 million
Staff: 16,687 total
Established: 1916 as State Accident Insurance Office and merged with Metway in 1996.