Suncorp Group Ltd: Cautious read into FY27 – reiterate Underperform

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Suncorp Group Ltd: Cautious read into FY27 – reiterate Underperform

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Suncorp Group Ltd

Cautious read into FY27 – reiterate

Underperform

Reiterate Rating: UNDERPERFORM | PO: 19.00 AUD | Price: 18.48 AUD

Weaker FY26 trading update, reinsurance renewals in-line 03 July 2026

SUN has delivered a slightly weaker than expected FY26 trading update and in-line FY27 Equity

reinsurance update. As a reminder, we double-downgraded shares to Underperform today

– see Insurance - Australia: Time to be selective, SUN down to U/P (3 Jul 26) report on

Key Changespotentially underappreciated higher reinsurance costs and a more cautious outlook on

margins. Given the slightly lower earnings outlook for FY26E, we lower our FY26 buyback (A$) Previous Current

to A$350m (previously A$400m). We lower FY26 estimates by 10% but raise outer years Price Obj. 19.80 19.00

by 1% on slightly lower reinsurance costs based on discussions with the company. We 2026E EPS 1.06 0.96

lower our PO by 4% to A$19.00 (from A$19.80) reflecting lower capital forecasts. 2027E EPS 1.13 1.14

2028E EPS 1.21 1.22

Small FY26 top-line miss… cautious read into FY27 2026E DPS 0.75 0.68

SUN’s FY26 GWP growth is expected to be 2.7% vs BofAe 2.8% and Cons 3.0%. We

think FX headwinds have increased (0.7%pts). The company has attributed the Freya Kong >>

downgrade to a weaker NZ economy and soft commercial market, as well as a marginal Research Analyst

Merrill Lynch (Australia)

reduction in demand in Australia. This carries negative read-across for IAG (Buy-rated), +61 2 9226 5840

which has a similar market presence though we think underlying growth expectations are freya.kong@bofa.com

already quite low (BofAe 1.9%). This also points to a more cautious FY27 outlook. Stephanie Deeb >> Research Analyst