Suncorp retains stable outlook amidst earnings diversity concerns: S&P

It plans to return $2.5b in excess capital from the bank sale to shareholders in 2025.

Suncorp Group Ltd. retains a stable outlook, supported by S&P Global Ratings’ expectation that the group will maintain strong capital and earnings. 

However, S&P has lowered Suncorp’s long-term issuer credit rating due to reduced earnings diversity following the sale of its banking division and the pending sale of its life insurance business.

Suncorp plans to return $2.5b (A$4.1b) in excess capital from the bank sale to shareholders during the first half of 2025, subject to business needs. The company also intends to allocate additional surplus capital to its property and casualty (P&C) business or return it to shareholders over time.

The group’s P&C business, which operates across Australia and New Zealand, remains a key contributor to its strong credit quality. In 2024, Suncorp reported a profit after tax of $622.8m ($1b) for its P&C business. 

S&P anticipates a modest increase in profits over the next three years, driven by solid rate hikes, despite lower investment returns.

Suncorp maintains prudent capital management and reinsurance protection, having enhanced its capital targets following the sale of its banking unit, S&P said.

The group has also adjusted its targets to account for changes in taxation and reduced diversification, with a focus on maintaining a buffer above its prescribed capital amount targets, according to S&P.