Suncorp looks to reduce equity exposure
(Australia) Queensland bank and insurer Suncorp Metway has taken the wraps off its ‘financial services conglomerate’ structure, a five-year strategy aimed at dampening down its exposure to equity markets.
The new structure involves the company looking to increase its margins by operating its banking, insurance and wealth management businesses together.
The company will also reduce its general insurance shareholders funds in Australian equities from 85 percent to 40 percent in a bid to lessen earnings volatility. Suncorp currently holds some $900 million in GI shareholders funds.
Suncorp managing director John Mulcahy said under the old structure financial markets had been valuing the company "at a discount to the sum of its parts".
'The new initiatives…will ensure that our three business lines are growing strongly and operating efficiently, at least as well as our peers in the industry," Mulcahy said.
"By operating them alongside one another within a financial services conglomerate structure, we will extract cost savings and revenue benefits, meaning that our profitability will be consistently superior to our competitors.
"The market then will value our three business lines, together, at a premium. In that way, we will show that 1 + 1 + 1 can equal 4,' he said.
The company will also reduce its general insurance shareholders funds in Australian equities from 85 percent to 40 percent in a bid to lessen earnings volatility. Suncorp currently holds some $900 million in GI shareholders funds.
Suncorp managing director John Mulcahy said under the old structure financial markets had been valuing the company "at a discount to the sum of its parts".
'The new initiatives…will ensure that our three business lines are growing strongly and operating efficiently, at least as well as our peers in the industry," Mulcahy said.
"By operating them alongside one another within a financial services conglomerate structure, we will extract cost savings and revenue benefits, meaning that our profitability will be consistently superior to our competitors.
"The market then will value our three business lines, together, at a premium. In that way, we will show that 1 + 1 + 1 can equal 4,' he said.
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