Suncorp Group Ltd Key takeaways - Reinsruance, Investment income, Perils, GWP Guidance

Research evidence excerpt

Suncorp Group Ltd Key takeaways - Reinsruance, Investment income, Perils, GWP Guidance

Siddharth Parameswaran AC Asia Pacific Equity Research

(61-2) 9003-8629 03 July 2026 J P M O R G A N

siddharth.x.parameswaran@jpmorgan.com

Investment Thesis, Valuation and Risks

Suncorp Group Ltd (Neutral; Price Target: A$19.40)

Investment Thesis

SUN appears to be in a simplification phase strategically and a consolidation phase

operationally, having sold both the Bank and the NZ Life business. The sale of the bank has

now received the necessary regulatory approval, removing short-term uncertainty for the

stock, and the expected capital return from the sale funds should be a near-term positive.

Pricing in the industry remains strong and continues to be a tailwind for Suncorp, with sticky

inflation showing signs of easing. The lower level of reinsurance for Suncorp relative to IAG

means less earnings certainty, but also allows more opportunity for earnings upside. We

have a Neutral rating, noting a slightly negative recent perils experience.

Valuation

Our June-27 PT of $19.40 is based on our $19.4 DCF valuation. We assume an equity risk

discount rate of 9.5% and include franking credits valued at 70% of face and terminal growth

of 3.0% in our DCF.

Risks to Rating and Price Target

Downside risks to our rating and price target include: 1) pressures on margins in general

insurance from interest rates, reinsurance costs/allowances, and efforts to achieve some

growth; 2) disappointment in revenue growth, particularly from volumes; and 3) inadequate

allowance for inflation, particularly given recent geopolitical events and increased oil

prices.

Key upside risks include: 1) the possibility of achieving the upper end of the 10-12%