Big hopes for Suncorp Life

Email Print

29 June 2009

New disclosure, new value and new market position – that’s what Suncorp wants with its wealth management business under the new name Suncorp Life.

Suncorp Group Executive Geoff Summerhayes says reporting on embedded value will be included in future life financial reporting to give all stakeholders a better picture of long-term value.

Embedded value measures the present value of future profits plus the adjusted net asset value.

The group says Suncorp Life’s embedded value on a traditional valuation basis has been independently assessed at $2.175 billion at December 31 last year.

The new name makes clear the company’s strategic focus on life risk.

Its ambitious plans call for Suncorp Life to push it way into Australia’s top five life insurance companies and become number two in New Zealand. It is currently number seven in Australia and number three across the Tasman.

JP Morgan analyst Siddharth Parameswaran says all bets are off for market positions until the effects of the Cooper Review into superannuation – which is expected to spill over into life – become clear.

“If the world were to stay as it is, I think it’s a bit of a stretch because [Suncorp Life] is not strong in group sales, where a lot of the big growth has been coming from,” he told insuranceNEWS.com.au.

He says past disclosures on Suncorp’s financial services business have been “terrible”, which is why it has been undervalued.

“[The rebranding] has clearly been done because they feel their share price has been undervalued.”

Mr Parameswaran says there should be some recognition of $1.4 billion capital in the embedded value.

“The number isn’t a big stretch, but we’re valuing it at closer to $1.3 billion,” he said.