Suncorp (SUN) shareholders are to again receive a special dividend this year, despite a nasty problem appearing in the group’s life insurance business.
Late yesterday Suncorp told the ASX in a treading update that it was planning to give shareholders a higher than expected final dividend of 3c a share, and a one off special payment of 20c a share.
That means shareholders will receive dividends of 75c a share for the full year, up from 55¢ last year.
News of the higher dividend came despite the company telling the market that net profits for the 2012-13 year were expected to be between $480 million and $500 million, down sharply on the previous year.
The main reason for the fall was a loss-making deal to offload $1.6 billion in bad loans to Goldman Sachs for 60¢ in the dollar, or a loss of around $630 million.
SUN 1Y – Suncorp to pay special dividend despite mixed results
Chairman Ziggy Switkowski said in the statement that the special dividend was "to (again) reward loyal shareholders and return some of the capital raised during the global financial crisis."
Suncorp also paid a special dividend last year.
The surprise announcement was made after it finalised the sale to Goldman. The company releases its full year results on August 21.
News of the special dividend will help take pressure off what were a mixed set of preliminary figures from the company.
The company said it expects profits in its life insurance business to plunge to $60 million, down from $251 million last year.
Life insurers have been hit by falling profits in recent months because of increased payouts on income protection policies and falling renewal rates as the sluggish economy forces people to cut spending.
”The life insurance industry continues to be impacted by negative experience against lapse and claims assumptions,” Suncorp said in the statement.
In its major business, general insurance, (where it owns brands including AAMI, GIO, Apia and Shannons), profits are expected to nearly double to a range of $870 million and $890 million ,from $493 million last year.
But profits in the group’s core (good) banking operations will be all but flat – between $280 million and $300 million, compared with $289 million last year.
The ”non-core bank”, where it has housed troubled commercial loans, made a loss of about $630 million after the deal with Goldman Sachs.
The shares finished at $12.82.
