![]() ![]() Turn our stock insights into action with a subscription to Morningstar Investor. Approval remains uncertain, but in our view, Suncorp does not drive price, innovation, or product development any more than the long list of other banks competing in the market hence we do not believe the acquisition materially decreases competition. With a decision by the Australian Competition and Consumer Commission due by the end of July 2023, we continue to expect the sale of Suncorp Bank to ANZ Group will complete in second half of 2023. We think the market is pricing in the sale of the bank, given most listed banks currently trade at material discounts to our fair value estimates. ![]() But, if claims inflation remains higher than expected, due to the number of claims, labour and material costs, or large hazard events, premium increases would likely persist at higher levels than we currently factor in. Our loss ratio of 74%, down from 76% in the first half, may prove too optimistic given industry data. Our forecasts assume no-moat Suncorp records GWP growth of 8% in fiscal 2023 and 4% in 2024, with portfolio exits. The loss ratio for home was steady at 82%. In motor the loss ratio of 78% is up from 75% in the March-2022 quarter, albeit down from 79% in the December 2022 quarter. However, the industry data suggests claims pressures have persisted. Based on Australian Prudential Regulation Authority data, industrywide gross written premiums increased 14% in the March 2023 quarter. The momentum in home and motor premium increases, plus higher investment income, are tailwinds supporting our earnings outlook and should more than offset claims inflation pressures. ![]()
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