Suncorp Group shares (ASX:SUN) jumped 3.34% today to A$19.18, a move that carries more weight than a typical session swing for an insurer that markets have long treated as a low-volatility, defensive holding. The company beat expectations on NPAT, with the A$1.03bn actuals more than 2% above expectations.
Earnings were 4.5% higher on the year, with the firm also making a special dividend of 10c, and announcing a buyback of a further $250million of it’s own shares.
Coming in to the report, Suncorp has also announcement of a five-year aggregate reinsurance agreement that provides A$800 million of annual protection and up to A$2.4 billion in total cover over the term. That kind of arrangement does not lift revenue, but it reduces the unpredictability of claims costs, and that reduction in volatility is worth real money in a sector where catastrophe seasons can swing earnings sharply.
Natural hazard costs on the latest period were over A$2bn, coming in A$254million above the allowance, yet the company still returned a final dividend of A$0.52, which was 1cent above expectations, for a 70.5% payout ratio. For FY27, the GWP growth guide is for 3-5%.
Looking to analysts, the consensus price target sits at A$19.28, essentially just above the latest closing level of A$19.29, whilst on the chart, the setup is constructive without being stretched. Suncorp is trading above its 50-day moving average of A$18.83, which in turn sits above the 200-day average at A$17.37. The shorter-term exponential averages are similarly aligned, with the 20-day above the 50-day.
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The past 12 months have told somewhat of a tale of two halves for Suncorp holders, with the share price falling 30% into March 4th, before bouncing off A$14, and adding 37.1% to now. Bulls will be hoping that the worst is now firmly in the rear-view, although a negative 4.29% return on the year suggests that the A$20 level could prove pivotal should momentum continue.
