Suncorp Group: Reinsurance program – tough outcome but expected
About the author:
- Author name:
- By Richard Coles
- Job title:
- Senior Analyst
- Date posted:
- 05 July 2023, 7:30 AM
- Sectors Covered:
- Insurance, Diversified Financials
- Suncorp Group (ASX:SUN) has finalised its FY24 reinsurance program, which as expected will see SUN face higher reinsurance costs and ultimately have less reinsurance protections in place this year (driving a higher catastrophe budget and capital requirements).
- SUN also disclosed FY23 natural hazards (A$1.275bn) have come in roughly A$100m above allowances (A$1.16bn).
- We lower SUN FY23F/FY24F underlying EPS by 5%-6%, factoring in higher reinsurance costs and more conservative bank bad debt assumptions. Our Price Target falls to (login to view) with our earning changes offset by a valuation roll-forward.
- Maintain our ADD call with greater than 10% TSR upside.
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