Suncorp : 2017 AGM CEO's Address and Market Update

ASX announcement

21 September 2017

CEO's address Suncorp Group Limited 2017 Annual General Meeting

Good afternoon and welcome to the 2017 Suncorp AGM.

I hope you enjoyed the video of our team doing what they do best, being there for our customers during the moments that matter.

Today I will provide:

• An overview of our results;

• An outline of our strategy, including the reasons for change;

• Metrics for our Business Improvement Program and Marketplace Acceleration; and

• Confirmation of our medium term targets.

Suncorp Group Limited | ABN 66 145 290 124 | Level 28, 266 George Street, Brisbane Qld 4000

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Net profit after tax was $1,075m, representing a 3.6% increase on last year. The result reflected good top line growth, disciplined management of margin, and a sensible balance between reducing overheads and investing in the future. With working claims now under control, the Insurance business achieved an underlying result well ahead of the prior year.

The final dividend of 40 cents took total dividends for the year to 73 cents, an increase of 7.4%, representing a payout ratio of 82% of cash earnings. ROE of 8.4% was also an increase on the prior year. The Total Shareholder Return for the 12 months was 28% (net of dividends reinvested), outperforming our peer group at 20%.

On 3 August, we announced our decision to accelerate our investment in the Marketplace. We expect that more intensive engagement with investors over the year will lift confidence and understanding of the benefits of our strategy.

Our new strategy and operating model are now fully embedded in the business. We've seen early signs of the deepening of relationships with improvements in our customer measures and good top line growth. We've grown customer numbers for the first time in years, through improved volumes and better retention. This is tangible evidence that the strategy is working.

We continue to digitise our business and we now have over 80 million digital interactions with our customers each year. More customers with deeper relationships will unlock significant value for shareholders.

We have a culture that values diversity. We seek to reflect, and be a part of the communities in which we operate and live. We pride ourselves on flexible work offerings with 82 per cent of our people accessing these arrangements. We continue to review our people practices to better facilitate gender equality. Our organisation recognises the value of mature aged employees with 11% of the team over 55.

I'm pleased that our employee engagement scores are above Australian and Global averages. Our ultimate goal is to be top quartile. There has been significant change at Suncorp over the past year and we constantly ask our teams to do more. Although this can be disruptive and can cause uncertainty, our people continue to deliver outstanding results. I'm very proud of their efforts, particularly the senior executive team.

Our impact on the environment is important. I'm pleased that we have achieved a meaningful reduction in greenhouse gas emissions and fuel usage. We also reduced our air travel by 22%. We will continue to drive further reductions this year and into the future.

In relation to the impact of major events like Cyclone Debbie, our comprehensive reinsurance programs help to protect our capital and reduce the earnings volatility in the insurance business. Our extra cover in FY17 worked extremely well, and we have extended those arrangements into FY18.

I mentioned it's been a year of change for Suncorp with the new strategy and operating model. Often people talk about our strong foundations, including our success over the last five years, and question why we need to change. There is increasing competition from both traditional players and from new technology operators. A significant number of our products are being commoditised, where lower prices are the only difference between Suncorp and others - this is not sustainable.

Our customers' expectations have dramatically increased and we are being measured against companies outside of our industry on aspects such as speed and functionality.

Financial Services offerings are increasingly complex and there is enormous choice. Trust is not automatic. As an industry, there is increased regulation and operating costs are growing.