Acquisition expense ratio – general insurance

Acquisition expenses expressed as a percentage of net earned premium

Acquisition expense ratio – life insurance

Acquisition expenses, including upfront commissions, as a percentage of new business

ADI

Authorised Deposit-taking Institution

Annuities market adjustments

The value of annuity obligations are determined by discounting future obligations into today’s dollars using risk-free rates. The value of such obligations fluctuates as market referenced discount rates change. The value of assets backing annuity obligations also fluctuates with investment markets. The net impact of both of these market-driven valuation changes are removed from the Life Insurance underlying profit and recorded as annuity market adjustments

APRA

Australian Prudential Regulation Authority

Banking & Wealth function

Suncorp's Banking & Wealth business provides banking and wealth solutions to personal, small to medium enterprise and agribusiness customers

Basis points (bps)

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

Business Improvement Program (BIP)

A three-year, company-wide program focusing on five streams of work including digitising of customer experiences, sales and service channel optimisation, end-to-end process improvement, claims supply chain re-design and smarter procurement and streamlining the business

Cash earnings

Net profit after tax adjusted for the amortisation of acquisition intangible assets, the profit or loss on divestments 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

Claims Handling Expenses (CHE)

Costs incurred in the investigation, assessment and settlement of a claim

Combined operating ratio

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

Commercial Insurance

Commercial products consist of commercial motor insurance, commercial property insurance, marine insurance, industrial special risk insurance, and public liability and professional indemnity insurance

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

Connected customers

A customer is considered to be connected if they have two or more needs met across the need categories of Home, Self, Mobility and Money, or if they hold four or more Suncorp products in a single need

Consumer Insurance

Consumer Insurance products consist of home and contents insurance, motor insurance, boat insurance, and travel insurance

Cost to income ratio

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

Credit risk-weighted assets

Total of the carrying value of each asset class multiplied by their assigned risk weighting, as defined by APRA

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

Diluted shares is based on the 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

Effective tax rate

Income tax expense divided by profit before tax

Embedded Value

Embedded Value is equivalent to the sum of the adjusted net worth and the net present value of all future cashflows distributable to the shareholder that are expected to arise from in-force business, together with the value of franking credits

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

Fire service levies (FSL) – Insurance (Australia)

The expense levied on premiums for insurance policies with a fire risk component, which is recoverable from insurance companies by the applicable State Government. Fire service levies were established to cover corresponding fire brigade charges

Fire service levies (FSL) – New Zealand

The expense levied on premiums for insurance policies with a fire risk component, which is recoverable from insurance companies by Fire and Emergency New Zealand. Fire service levies were established to cover corresponding fire brigade charges

Funds under management and administration

Funds where the Wealth business, in Australia and New Zealand, receives a fee for the administration and management of an asset portfolio

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

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

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 (Australia) function

Suncorp's Insurance (Australia) business provides consumer, commercial, personal injury and life insurance products to the Australian market. Consumer insurance products include home and contents insurance, motor insurance and travel insurance. Commercial insurance products include commercial motor insurance, commercial property insurance, industrial special risk insurance, public liability and professional indemnity insurance. Personal injury insurance products includes CTP insurance and workers' compensation insurance

Insurance funds

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

Insurance Trading Ratio (ITR)

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

Insurance Trading Result

Underwriting result plus investment income on assets backing technical reserves

Life insurance businesses

Life insurance businesses include Insurance (Australia)'s life insurance business, the wealth business within Banking & Wealth and New Zealand's life insurance business. This term is used when describing Suncorp's capital position, statement of financial position and embedded value which are structured around the Group's legal entity structure rather than business functions structure

Life insurance policyholders' interests

Amounts due to an entity or person who owns a life insurance policy. This need not be the insured. This is distinct from shareholders’ interests

Life planned profit margin release

It 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 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

Maintenance (or renewal) expense ratio

Expenses related to servicing in-force life insurance policies, including renewal or trail commissions, policy management and claim costs, expressed as a percentage of in-force premiums

Marketplace

Suncorp's marketplace is a connected network of brands, solutions, partners, and channels to empower customers to improve their financial wellbeing and deliver outstanding customer experiences and deepen Suncorp’s relationships with its customers. This involves building an ecosystem of partners that will provide a suite of relevant products and offers that meet the needs of the customer in the key moments that matter in their lives

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 earned premium (NEP)

Net written premium adjusted by the change in net unearned premium for a year

Net incurred claims - New Zealand

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

Net incurred claims – Insurance (Australia)

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

Net interest margin (NIM)

Net interest income divided by average interest earning assets. 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

New Zealand function

Suncorp's New Zealand business distributes consumer, commercial and life insurance products through intermediaries and corporate partners as well as directly to customers via joint ventures

Operating functions

Suncorp has three operating functions - Insurance (Australia), Banking & Wealth and New Zealand. The operating functions are responsible for product design, manufacturing, claims management and end-to-end responsibility for the statutory entities within Suncorp Group

Other underwriting expenses ratio

Other underwriting expenses expressed as a percentage of net earned premium

Outstanding claims provision

The amount of provision established for claims and related claims expenses that have occurred but have not been paid

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 net profit after tax for the Insurance (Australia), Banking & Wealth and New Zealand 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. Suncorp's reinsurance arrangements currently include a main catastrophe program, a 30 percent, multi-year, proportional quota share arrangement to reduce geographic concentration to the Queensland home insurance market and a natural hazards aggregate protection cover

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

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

Top-line growth

Top-line growth is derived from a weighted-average calculation of underlying year-on-year growth in Suncorp Group’s key business segments. Top-line growth percentage is calculated as growth in general insurance gross written premium (65% weighting), growth in retail and business lending assets (weighting 25%) and growth in life insurance in-force premium (10% weighting)

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 operating expense ratio – general insurance

Total operating expenses (acquisition and other underwriting expenses) expressed as a percentage of net earned premium

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

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 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