Attributable expenses

Operating expenses that are directly related to the fulfilment of current insurance contracts, such as acquisition costs, general operating expenses and policy administration expenses

Basis points (bps)

A ‘basis point’ is 1/100th of a percentage point

Cash earnings

Net profit after tax adjusted for the amortisation of acquisition intangible assets, recoverable amount adjustments on intangibles, the profit or loss on divestment and their tax effect

Cash earnings per share

Basic: cash earnings divided by the weighted average number of ordinary shares (net of treasury shares) outstanding during the period.
Diluted: cash earnings adjusted for consequential changes in income or expenses associated with the dilutive potential ordinary shares divided by the weighted average number of diluted shares (net of treasury shares) outstanding during the period

Cash return on average shareholders' equity

Cash earnings divided by average equity attributable to owners of the Company. Averages are based on monthly balances over the period. The ratio is annualised for half years

Cash return on average shareholders' equity pre-goodwill

Cash earnings divided by average equity attributable to owners of the Company less goodwill. Averages are based on monthly balances over the period. The ratio is annualised for half years

Cash return on average shareholders' equity pre-goodwill and intangibles

Cash earnings divided by average equity attributable to owners of the Company less goodwill and intangibles. Intangibles excludes any capitalised costs (software or broker commissions). Averages are based on monthly balances over the period. The ratio is annualised for half years

Claims Handling Expenses (CHE)

Costs incurred in the investigation, assessment and settlement of a claim, included as part of net incurred claims

Combined operating ratio

The percentage of net earned premium that is used to meet the costs of all claims incurred plus the costs of acquiring, writing and servicing the General Insurance business

Common Equity Tier 1 (CET1)

Common Equity Tier 1 Capital comprises accounting equity plus adjustments for intangible assets and regulatory reserves

Common Equity Tier 1 Ratio

Common Equity Tier 1 divided by the Prescribed Capital Amount for Life and General Insurance, or total risk-weighted assets for the Bank

Confidence level

Also referred to as “probability of adequacy”, represents the level of certainty that the estimated insurance liabilities, including the risk adjustment, will be adequate to cover future obligations

Cost to income ratio

Operating expenses of the Banking business divided by total income from Banking activities

Deferred acquisition costs (DAC)

The portion of acquisition costs not yet expensed on the basis that it can be reliably measured and it is probable that it will give rise to premium revenue that will be brought to account in subsequent financial periods

Deposit to loan ratio

Total retail deposits divided by total loans and advances, excluding other receivables

Diluted shares

Weighted average number of ordinary shares outstanding during the period, adjusted for potential ordinary shares that are dilutive, in accordance with AASB 133 Earnings per Share

Discount rate

The rate applied to future cash flows within the boundary of an insurance contract to reflect the time value of money, the characteristics of the cash flows and the liquidity characteristics of the insurance contracts

Effective tax rate

Income tax expense divided by profit before tax

Emergency services levies (ESL)

The expense levied on premiums for insurance policies, which is recoverable from insurance companies by the applicable State Government. Emergency services levies were established to cover corresponding emergency services charges

Equity reserve for credit losses

The equity reserve for credit losses represents the difference between the collective provision for impairment and the estimate of credit losses across the credit cycle, based on guidance provided by APRA

General insurance businesses

General insurance businesses include Insurance (Australia)'s general insurance business and New Zealand's general insurance business. This term is used when describing Suncorp's capital position and statement of financial position which are structured around the Group's legal entity structure, rather than business functions structure

Gross earned premium

The total premium on insurance earned by an insurer during a specified period on premiums underwritten in the current and previous underwriting years

Gross non-performing loans

Gross impaired assets plus past due loans

Gross written premium (GWP)

The total premium on insurance underwritten by an insurer during a specified period, before deduction of reinsurance premium

Illiquidity premium

An adjustment to the risk-free discount rate to reflect the liquidity characteristics of an insurance contract. The illiquidity premium increases the discount rate to reflect that the insurance portfolio is less liquid in nature than the reference portfolio upon which the risk-free rate is calculated

Impairment losses to gross loans and advances

Impairment losses on loans and advances divided by gross loans and advances. The ratio is annualised for half years

Insurance funds

Insurance funds explicitly back insurance liabilities. They are designed to match the insurance liabilities and are managed separately from shareholders' funds

Insurance revenue

The amount charged for insurance coverage when it is earned. This is equivalent to gross earned premium under AASB1023 less bad debts (part of operating expense in AASB1023)

Insurance service expense

Includes incurred claims and benefits excluding investment components, other directly attributable insurance service expenses, amortisation of insurance acquisition cash flows, and changes that relate to past service and future service on insurance contracts

Insurance Services Ratio (ISR)

The insurance services result expressed as a percentage of net insurance revenue

Insurance Services Result

Comprises insurance revenue, insurance service expenses and reinsurance income and expenses

Insurance Trading Ratio (ITR)

The insurance trading result expressed as a percentage of net earned premium

Insurance Trading Result (AASB 1023)

Underwriting result plus investment income on assets backing technical reserves

Insurance Trading Result (AASB 17)

Insurance services result adjusted for movements in claims liabilities, non-directly attributable expenses and investment income on assets backing technical reserves

Liability for incurred claims (LIC)

An obligation to investigate and pay valid claims for insured events that have already occurred. This replaces the outstanding claims liability under AASB 1023

Life planned profit margin release

Includes the unwind of policy liabilities which refers to the profit impact of changes in the value of policy liabilities due to the passing of time

Life risk in-force annual premiums

Total annualised statistical premium for all business in-force at the date (including new business written during the reporting period)

Life risk new business annual premiums

Total annualised statistical premium for policies issued during the reporting period

Life underlying profit after tax

Net profit after tax less market adjustments. Market adjustments represents the impact of movements in discount rates on the value of policy liabilities, investment income experience on invested shareholder assets and annuities mismatches

Liquidity Coverage Ratio (LCR)

An APRA requirement to maintain a sufficient level of qualifying high-quality liquid assets to meet liquidity needs under an APRA-defined significant stress event lasting for 30 calendar days. Absent a situation of financial stress, the LCR must not be less than 100%. The LCR is calculated as the ratio of qualifying high-quality liquid assets relative to net cash outflows in a modelled APRA-defined 30-day stress scenario

Loan-to-value ratio (LVR)

Ratio of a loan to the value of the asset purchased

Long-tail

Classes of insurance business involving coverage for risks where notice of a claim may not be received for many years and claims may be outstanding for more than one year before they are finally quantifiable and settled by the insurer

Loss component

An amount added to the Liability for Remaining Coverage and expensed to profit or loss where a contract or group of contracts is assessed as onerous at initial recognition

Loss ratio

Net claims incurred expressed as a percentage of net earned premium. Net claims incurred consists of claims paid during the period increased (or decreased) by the increase (decrease) in outstanding claims liabilities

Main Financial Institution Customer

A Bank customer that transacts every second day and spends $5,000 over a 90-day period

Maximum Event Retention

This is an estimate of the largest accumulated property loss (from a single event) to which Suncorp will be exposed (taking into account the likelihood of this event is up to one in 200 years), after netting off any potential reinsurance recoveries

Net incurred claims

The amount of claims incurred during an accounting period after deducting reinsurance recoveries and non-reinsurance recoveries

Net insurance revenue

Insurance revenue minus reinsurance premium

Net interest margin (NIM)

Net interest income divided by average interest earning assets (net of offset accounts). NIM is the percentage difference between revenue earned on interest bearing assets (loans) minus the cost of interest-bearing liabilities (funding)

Net interest spread

The difference between the average interest rate on average interest earning assets and the average interest rate on average interest-bearing liabilities

Net profit after tax (NPAT)

Net profit after tax attributable to owners of Suncorp, derived in accordance with Australian Accounting Standards

Net Stable Funding Ratio (NSFR)

The NSFR measures the amount of available stable funding (ASF) relative to the amount of required stable funding (RSF). The amount of ASF is the amount of capital and liabilities that are expected to be a reliable source of funds over a 1-year time horizon. The amount of RSF is based on the liquidity characteristics and residual maturity of assets and off-balance sheet activities. The requirement to maintain an NSFR of at least 100% was introduced on 1 January 2018

Net tangible asset backing per share

Total equity less intangible assets divided by ordinary shares at the end of the period, adjusted for treasury shares

Onerous contract

An insurance contract where the fulfilment cashflows allocated to the contract, and any previously recognised acquisition cash flows and any cashflow arising from the contract at the date of initial recognition in total are a net outflow

Operating expenses ratio

Operating expenses expressed as a percentage of net insurance revenue

Operating functions

The Suncorp Group comprises four businesses— Consumer Insurance, Commercial & Personal Injury Insurance, Suncorp New Zealand and Suncorp Bank. The operating functions are responsible for product design, manufacturing, claims management, and distribution. The core businesses have end-to-end responsibility for the statutory entities within the Suncorp Group

Past due loans

Loans outstanding for more than 90 days

Payout ratio – cash earnings

Ordinary shares (net of treasury shares) at the end of the period, multiplied by the ordinary dividend per share for the period divided by cash earnings

Payout ratio – net profit after tax

Ordinary shares (net of treasury shares) at the end of the period, multiplied by the ordinary dividend per share for the period divided by profit after tax

Prescribed capital amount (PCA)

This comprises the sum of the capital charges for asset risk, asset concentration risk, insurance risk, insurance concentration risk, operational risk, combined stress scenario and aggregation benefit as required by APRA

Profit after tax from functions

The profit after tax for the Consumer Insurance, Commercial and Personal Injury Insurance, Suncorp New Zealand and Suncorp Bank functions

Reinsurance

A form of insurance for insurance companies where, in exchange for an agreed premium, the reinsurer agrees to pay all, or a share of, certain claims incurred by the insurance company

Reserve releases

Reserve releases occur when provisions made to cover insurance claims made against underwritten policies are assessed as higher than long-run trends in actual experience

Return on average shareholders' equity

Net profit after tax divided by average equity attributable to owners of the Company. Averages are based on monthly balances over the period. The ratio is annualised for half years

Return on average total assets

Net profit after tax divided by average total assets. Averages are based on beginning and end of period balances. The ratio is annualised for half years

Return on Common Equity Tier 1

Net profit after tax adjusted for dividends paid on capital notes divided by average Common Equity Tier 1 Capital. Average Common Equity Tier 1 Capital is based on the monthly balance of Common Equity Tier 1 Capital over the period. The ratio is annualised for half years

Risk adjustment

The compensation that an issuer of insurance contracts requires for bearing the uncertainty attached to the amount and timing of the cashflows arising from non-financial risks as it fulfils insurance contracts

Shareholders' funds

Shareholders' funds are part of the investment portfolio and are managed separately from insurance funds

Short-tail

Classes of insurance business involving coverage for risks where claims are usually known and settled within 12 months

Suncorp Bank function

Suncorp Bank is focused on lending, deposit gathering and transaction account services to personal, small and medium enterprise, commercial and agribusiness customers

Suncorp New Zealand function

Suncorp New Zealand distributes consumer, commercial and life insurance products through intermediaries and corporate partners, as well as insurance and personal loans directly to customers via partnerships with the New Zealand Automobile Association.

Total capital ratio

Total capital divided by the Prescribed Capital Amount for Life and General Insurance, or total risk-weighted assets for the Bank, as defined by APRA

Total expense ratio – general insurance

Total expenses (commission and direct operating expenses) expressed as a percentage of net insurance revenue

Total risk-weighted assets

Bank credit risk-weighted assets, off-balance sheet positions and market risk capital charge and operational risk charge, as defined by APRA

Transitional excess profit and loss (TEPL)

Includes a profit normalisation mechanism which caps industry and insurer profits in the New South Wales CTP scheme

Treasury shares

Ordinary shares of Suncorp Group Limited that are acquired by subsidiaries

Ultimate net loss (UNL) – New Zealand

Financial obligation when an insured event occurs, net of the catastrophe treaty

Underlying Insurance Services Ratio (UISR)

The insurance services ratio is adjusted for reported prior year reserve releases and natural hazard claims costs above/below expectations, risk adjustment, loss component and any abnormal expenses

Underlying Insurance Services Result

The insurance services result is adjusted for reported prior year reserve releases and natural hazard claims costs above/below expectations, risk adjustment, loss component and any abnormal expenses.

Underlying Insurance Trading Ratio (Underlying ITR)

The insurance trading ratio is adjusted for reported prior year reserve releases and natural hazards claims costs above/below long-run expectations, investment income mismatch and any abnormal expenses.