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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