Business SummarySuncorp Group Limited (SUN) is a Queensland-based financial servicesconglomerate offering retail and business banking, general insurance, lifeinsurance, superannuation and investment products in Australia and NewZealand. SUN has following five core businesses: Personal Insurance,Commercial Insurance, Vero New Zealand, Suncorp Bank and Suncorp Life.

Personal Insurance: This division includes the provision of personalinsurance products to customers in Australia including home and contentsinsurance, motor insurance, boat insurance and travel insurance.

Commercial Insurance: This division includes the provision of commercialinsurance products to customers in Australia including commercial motorinsurance, commercial property insurance, marine insurance, industrialspecial risks insurance, public liability and professional indemnity insurance,workers' compensation insurance and compulsory third party insurance, loanprotection insurance and equity and cash benefit insurance.

General Insurance: This division includes the provision of general insuranceproducts to customers in New Zealand including home and contentsinsurance, motor insurance, marine insurance, business insurance, ruralinsurance, construction and engineering insurance, travel insurance, publicliability and professional indemnity, and directors' and officers' liabilityinsurance.

Banking: This division includes the provision of personal and commercialbanking, agribusiness, property and equipment finance, home, personal andsmall business loans, savings and transaction accounts and foreignexchange and treasury products and services superannuation, fundsadministration services and financial planning in Australia.

Life: This division includes the provision of life insurance products,superannuation administration services, financial planning and fundsadministration services in Australia and New Zealand.

Latest ResearchFollow the yellow brick road

The sector’s healthy 2018 reporting season was underpinned by strongGWP growth. On a like-for-like basis, IAG’s GWP growth was >4% withstrong performances in Australia (largely personal and commercial raterises) and New Zealand (largely higher motor rates and volumes andhigher commercial rates). Excluding NSW CTP, the outlook in Australia isfor ongoing rate increases in both lines and modest volume effects, whileNew Zealand should continue to benefit from further rate and volumeincreases. The story is similar in terms of pricing momentum in QBE’sAustralasian business, up by ~7% (+18% in commercial property, +9% inworkers’ compensation, +9% in strata and +6% in commercial packages)excluding CTP. On a constant currency basis, QBE’s GWP was 1% lowerbut this can be traced to the NSW CTP scheme reform, non-renewal ofunprofitable credit card portfolios and reduced LMI

activity. QBE’s strong pricing momentum in commercial lines shouldequally apply to SUN’s commercial book. APRA data on GWP growth(consumer lines 6-8%, commercial lines ~4% growth) further corroboratesthe sector’s strong top line themes. Given the above and including the factthat 63% of Australian GWP is consumer-based, SUN’s 2019 outlook for4-6% consumer GWP growth in Australia then appears more than

GICS - Insurance

Suncorp Group Limited

ASX Code: SUN Price: $15.21 12 Mth Target Price: $16.00 Rating: Hold

Important Disclaimer - This may affect your legal rights: Because this document has been prepared without consideration of any specific client's financial situation, particular needs and investmentobjectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement withBell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell PotterSecurities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate.Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document.This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. This is generalinvestment advice only and does not constitute advice to any person.Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in thiscommission. Bell Potter Securities and its associates may hold shares in the companies recommended.

Snapshot

DateMarket Cap.Shares on issue12 Month High12 Month Low

22 August 2018$19,750m1,298.5m$15.96$12.43

RatingRating12 Mth Target Price

Capital GainGross Yield

Implied Total Return

Hold$16.005.5%7.7%13.3%

Investment FundamentalsFYE 30 Jun 2018A 2019F 2020F 2021F

Profit $m 1,098.1 1,258.5 1,298.5 1,366.6Profit (norm)* $m 1,098.1 1,258.5 1,298.5 1,366.6

EPS* ¢ 85.2 98.8 103.1 108.0EPS Growth % -4.6 16.0 4.3 4.8P/E* x 17.9 15.4 14.8 14.1P/E Relative % 0.0 0.0 0.0 0.0

DPS ¢ 81.0 80.0 82.0 84.0Yield % 5.3 5.2 5.4 5.5Franking % 100.0 100.0 100.0 100.0* Adjusted for goodwill and unusual itemsSource: Based on Bell Potter estimates

Share Price Chart

Total Return on $10,000 Investment

achievable. We have thus increased our expected Insurance (Australia)GWP growth rate from ~4% to ~5% (being the mid-point of the targetrange). We have also increased our expected New Zealand GWP growthrate from ~2% to ~5% and this is now in line with the “mid-single digit”target. The overall impact on the Group is top line growth of 4.2%(previously 3.5%) that now sits in the middle of the 3-5% target.

For more information see research 22 Aug 2018.

GICS - Insurance

Suncorp Group Limited

ASX Code: SUN Price: $15.21 12 Mth Target Price: $16.00 Rating: Hold

Important Disclaimer - This may affect your legal rights: Because this document has been prepared without consideration of any specific client's financial situation, particular needs and investmentobjectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement withBell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell PotterSecurities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate.Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document.This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. This is generalinvestment advice only and does not constitute advice to any person.Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in thiscommission. Bell Potter Securities and its associates may hold shares in the companies recommended.

Snapshot

DateMarket Cap.Shares on issue12 Month High12 Month Low

22 August 2018$19,750m1,298.5m$15.96$12.43

RatingRating12 Mth Target Price

Capital GainGross Yield

Implied Total Return

Hold$16.005.5%7.7%13.3%

Investment FundamentalsFYE 30 Jun 2018A 2019F 2020F 2021F

Profit $m 1,098.1 1,258.5 1,298.5 1,366.6Profit (norm)* $m 1,098.1 1,258.5 1,298.5 1,366.6

EPS* ¢ 85.2 98.8 103.1 108.0EPS Growth % -4.6 16.0 4.3 4.8P/E* x 17.9 15.4 14.8 14.1P/E Relative % 0.0 0.0 0.0 0.0

DPS ¢ 81.0 80.0 82.0 84.0Yield % 5.3 5.2 5.4 5.5Franking % 100.0 100.0 100.0 100.0* Adjusted for goodwill and unusual itemsSource: Based on Bell Potter estimates

Share Price Chart

Total Return on $10,000 Investment

Profit & Loss ($M)2014A 2015A 2016A 2017A 2018A

Net Earned Premiums 8,583 8,553 8,679 8,171 8,359Claims Expense -6,468 -6,200 -5,940 -5,948 -6,092Underwriting Profit 1,285 -960 -532 -1,097 -1,258Investment Income 4,004 3,641 3,399 3,129 3,103Unrealised Gains 513 428 -- -- --Profit Before Tax 1,175 1,662 1,567 1,608 1,577Income Tax -438 -522 -462 -523 -505Outside Equity Int. -7 -7 -7 -10 -13Profit after Tax 730 1,133 1,098 1,075 1,059Significant Items after Tax -- -- -60 -- --Reported Profit after Tax 730 1,133 1,038 1,075 1,059Preference Dividends -- -- -- -- --

Cash Flow ($M)2014A 2015A 2016A 2017A 2018A

Premiums Received 10,928 11,018 11,280 11,466 11,627Outward Reinsurance Paid -1,244 -1,379 -1,325 -1,495 -1,568Claims Paid -9,038 -9,355 -11,767 -9,186 -8,825Reinsurance Received 2,406 2,531 2,298 2,213 2,134Net Operating Cashflow 1,687 -441 -2,732 195 -1,879Acquisitions & Investments -18,724 -- -- -28,598 -32,108Sale of Invest. & Subsid. 18,730 -- 2,598 29,178 31,587Net Investing Cashflow 2 1,095 3,463 406 -240Proceeds from Issues 400 -- -- -- --Dividends Paid -1,088 -1,386 -1,025 -831 -865Net Financing Cashflow -2,593 -879 -234 -262 1,257Net Increase Cash -904 -225 497 339 -862Cash at Beginning 2,641 1,741 1,514 2,018 2,357Exchange Rate Adjust. 4 -2 7 -- -4Cash at End 1,741 1,514 2,018 2,357 1,491

Ratios and Substantial Shareholders2014A 2015A 2016A 2017A 2018A

Profitability RatiosClaims Ratio % 75.36 72.49 68.44 72.79 72.88Expense Ratio % 9.67 38.73 37.69 40.63 42.17Combined Ratio % 85.03 111.22 106.13 113.43 115.05Return on Equity % 5.29 8.38 8.09 7.80 7.58

Safety RatiosSolvency Ratio % 160.17 157.23 156.15 168.57 166.92

Top 5 Substantial ShareholdersFIL Limited and the entities 6.5%Barclays Group 5.2%The Vanguard Group,Inc 5.0%

Balance Sheet ($M)2014A 2015A 2016A 2017A 2018A

Cash & Equivalent 895 1,216 1,798 1,840 1,165Receivables 12,391 12,158 12,746 14,092 13,682Investments 22,023 22,178 19,415 19,593 19,834Other Current Assets 6,420 3,152 3,198 2,808 2,924Current Assets 41,729 38,704 37,157 38,333 37,605Receivables 38,317 42,585 43,840 45,025 47,767Investments 6,485 5,336 5,466 4,254 4,511PP&E 205 191 183 200 211Other (inc Intangibles) 7,693 8,835 9,102 9,297 9,239Non-Current Assets 52,700 56,947 58,591 58,776 61,728Total Assets 94,429 95,651 95,748 97,109 99,333Trade Creditors 2,158 -- 1,843 1,999 2,062Unearned Premiums -- 4,655 4,812 4,931 5,014Outstanding Claims 9,272 9,998 9,734 10,952 10,176Borrowings 47,164 48,734 49,211 47,503 48,498Provisions 379 278 65 106 68Other -- -- 844 799 747Total Liabilities 58,973 63,665 66,509 66,290 66,565Unearned Premiums -- 53 58 34 22Outstanding Claims 11,275 -- -- -- --Borrowings 10,033 8,526 8,720 9,958 14,396Provisions 58 93 110 121 129Other (inc Creditors) 291 9,796 6,781 6,916 4,248Non-Current Liabilities 21,657 18,468 15,669 17,029 18,795Net Assets 13,799 13,518 13,570 13,790 13,973

Current Analyst Recommendations *

* Source: Morningstar. This chart shows the spread of recommendations from thosebroker analyst's in Australia with research coverage of this stock.

Principals & DirectorsPrincipals

Company Secretary Ms Kristy HuxtableMr Darren Charles Solomon

Directors

Ms Christine Frances McLoughlin(Non-Executive Director)Dr Zygmunt (Ziggy) Edward Switkowski(Non-ExecutiveDirector,Non-Executive Chairman)Mr Michael Andrew Cameron(Chief Executive Officer,ManagingDirector)Dr Douglas Francis McTaggart(Non-Executive Director)Ms Sally Herman(Non-Executive Director)Ms Audette Evelyn Exel(Non-Executive Director)Mr Lindsay James Tanner(Non-Executive Director)Mr Simon Machell(Non-Executive Director)

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Suncorp Group Limited

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