The loss incurred from the sale of its Australian Life Insurance business was the main reason why Suncorp's (ASX: SUN) profit plummeted in FY19, but shareholders will be rewarded for their patience with a generous payout.
Within months of the resignation of CEO Michael Cameron, the Brisbane-based company posted a net profit after tax (NPAT) of $175 million for FY18.
This represents a decline of 83.5 per cent on the previous year's $1.059 billion result, with the bulk of the drop coming from a $910 million after tax non-cash loss on the sale of the group's Australian Life Insurance and Participating Wealth Business.
The life insurance division was sold to Japanese insurer Dai-ichi Life Holdings for around $725 million, leading to a loss of approximately $880 million.
When the sale was first flagged the company promised it would return around $600 million to shareholders after the transaction.
Today it has fulfilled that promise, announcing a $506 million shareholder distribution which follows a special dividend of $104 million in May which came from the proceeds.
SUN shares rose 4.13 per cent to $13.235 each this morning.
"The proposed return, combined with the final ordinary dividend declared today would see over $1 billion in capital distributed to Suncorp shareholders over the coming months," said acting chief executive officer Steve Johnston.
Despite the negative result for its bottom line, Suncorp registered a cash earnings increase of 1.5 per cent for the year to $1.115 billion, bolstered by improved margin outcomes in commercial insurance and a standout result in New Zealand where NPAT shot up 81.5 per cent to $245 million.
"In a watershed year for the industry, dominated by the Financial Services Royal Commission, Suncorp's purpose has never been more relevant," Johnston said.
"Despite higher natural hazards and a significant increase in regulatory costs, the core businesses remain resilient. To create a more sustainable company which delivers high yield and above system growth, Suncorp is focused on improving the performance of its core banking and insurance businesses.
"We are embracing regulatory change to strengthen trust and improve customer outcomes, leveraging our investments in digital and data, and driving efficiencies to optimise the Group's cost base."
Johnston, who stepped into the acting CEO role in May, received remuneration of $1.77 million in FY19. Meanwhile, the company's CEO for customer marketplace Pip Marlow earned more at $2.077 million due to equity incentives.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
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