Suncorp is the first Australian financial services company to be recognised by the Chartered Institute for Procurement & Supply with certification for its supplier governance and ethical practices. Our culture of flexible working, inclusion and diversity is helping the Group to maintain gender balance in leadership roles.
Our ambition is to create value for our shareholders by creating value for our customers. In a period of heightened regulatory scrutiny and increasing community expectations, 2018–19 has called on our ability to adapt and transform in driving toward this goal.
We operate in a dynamic market, influenced by new entrants, advancing technologies, new payment platforms, and redefined customer expectations. Our customers rightly expect us to not only respond to their needs but to anticipate and then meet those needs. These factors, alongside the Financial Services Royal Commission outcomes are influencing how we run our company.
Our digital strategy focuses on improving customer outcomes and strengthening the performance of our insurance and banking businesses. We are also enhancing our products and services, and continuing to drive operational excellence. Achieving this will rebuild trust and create a robust platform for growth.
#Improving customer outcomes
Last year we introduced a new Board Customer Committee to accentuate the voice of our customers in our boardroom. Already, we are understanding more deeply the quality and consistency of our customer service and are better assessing our products to ensure they represent fair value.
Importantly, at the heart of Suncorp’s purpose is supporting our customers when they need us most. Looking back, the year was characterised by several major weather events – floods in north Queensland, hailstorms in Sydney, bushfires in central Queensland and flash flooding in Melbourne – all devastating events which impacted thousands of customers, displaced communities and cost the industry billions.
Our teams mobilised across the country to help communities recover and rebuild. I am proud of our industry-leading response from our banking and insurance businesses which have set new standards.
#A responsible business
Our new Responsible Banking and Insurance Policy addresses environmental, social and governance risks, including those identified by the Financial Services Royal Commission, our own Risk Governance Self-assessment to APRA and the New Zealand FMA/RBNZ review.
Building stronger relationships with our key stakeholders is vital. I would like to thank everyone who helped us identify the most material economic, environmental and social topics facing Suncorp and the industry. These include deepening trust and strengthening conduct, increasing transparency and disclosure, ensuring our products represent fair value and understanding the impact of climate change.
Importantly, they are consistent with the priorities underway at Suncorp as we work to build a more responsible and resilient business.
#Responding to the changing regulatory environment
There is no doubt that 2018–19 was a defining year for financial services – marking the start of a new era for the industry.
There is no doubt that 2018–19 was a defining year for financial services – marking the start of a new era for the industry. As the Financial Services Royal Commission exposed areas where banks and insurers did not always act in the best interests of their customers, Suncorp is further prioritising customer outcomes, strengthening governance, improving transparency and aligning remuneration principles with these interests.
We are also addressing the outcomes of our APRA self-assessment which was conducted by the Board.
The review both identified a number of strengths across the Group, as well as areas for continuous improvement – such as increasing our focus on risk and compliance, strengthening our controls for issue identification, escalation and resolution and promptly dealing with customer remediation issues. Suncorp has already implemented a number of the recommendations including enhancing the focus on non-financial risks. The broader response to the self-assessment now forms part of our regulatory program of work.
#Dividend and capital return
A stronger second half performance, reflecting the benefits of our reinsurance protection, as well as a solid contribution from the Business Improvement Program and margin improvements in the core portfolio, has improved full year cash earnings. This, together with a strong balance sheet position, has led the Board to declare a fully franked final dividend of 44 cents per share. This takes the total full year dividend to 70 cents per share, with a pay-out ratio of 81.2%, above the top end of the target range.
In addition, in May the Company paid an 8 cents per share fully franked special dividend from the proceeds of the Australian Life Business sale; and subject to shareholder approval at the AGM in September, the Board proposes to distribute the remaining surplus capital from the sale in the form of a 39 cents per share return of capital with a related share consolidation.
The final dividend, combined with the capital return, will result in over $1 billion or 83 cents per share being paid out to shareholders in the next three months.
#CEO succession and Board appointments
In May, we announced the departure of CEO & Managing Director Michael Cameron. I would like to thank Michael for his leadership of a customer-first culture and accelerating our technology and digital capabilities.
Acting CEO Steve Johnston is a very experienced executive with a deep understanding of our core insurance and banking businesses. With the full support of the Board, he is leading Suncorp with renewed energy and focus to drive the business forward.
The Board is undertaking a comprehensive domestic and international search, and from a high calibre pool of internal and external candidates hopes to announce the new CEO in the latter part of the year.
Board renewal remains a continued focus. In September 2018, we farewelled Dr Ziggy Switkowski who served 13 years on the Board and almost 7 years as Chairman. Sylvia Falzon was also formally elected as a non-executive director and in October we welcomed Ian Hammond to the Board. Ian will be standing for election at the Annual General Meeting in September 2019, as will Sally Herman, who is seeking re-election.
Ian and Sally bring a wealth of financial services and insurance experience with a strong capability in governance, risk management and insights into evolving customer trends, as well as the external factors shaping our industry.
On behalf of the Board I want to thank our people for their genuine dedication to our customers, their hard work and commitment during a challenging year. And to our customers and shareholders, thank you for your loyalty and ongoing support.