UBS has looked at the key drivers of the margin outlook for Suncorp Group and concludes that margins have likely bottomed in 1H and should recover over coming periods, with upside risk should company initiatives be delivered, details of which remains limited.
Underlying insurance margins have fallen to historically low levels and despite industry data suggesting a slowing of premium rate increases in Australia, the broker expects premium rates to accelerate again in 2021, especially in property lines (home and commercial).
The company’s share price has underperformed the ASX200 by over -15% over the last 12 months. The Buy rating and $11.15 target are unchanged.
Sector: Insurance.
Target price is $11.15.Current Price is $10.34. Difference: $0.81 – (brackets indicate current price is over target). If SUN meets the UBS target it will return approximately 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).
