Brisbane-based Suncorp (ASX: SUN) has seen its profits rise by nearly 40 per cent in the first half, but the company will cease underwriting travel insurance and will no longer offer personal loans.
In its December half results announced today, the company saw earnings rise by 39.5 per cent to $509 million, driven by higher earnings across all businesses.
However, net profit after tax (NPAT) fell by 23.7 per cent on the prior corresponding period to $409 million.
To further simplify its operations, SUN has announced it will no longer be offering personal loans to focus more on home lending.
Further, the group will permanently cease underwriting travel insurance under all brands. Customers with current policies will not be impacted by the decision.
According to Suncorp CEO Steve Johnston (pictured) the decisions to exit the sectors, which will not have a material impact on the company, were made to streamline the business.
"What is less obvious in the financials, but no less important, is the work we have done to reshape and simplify our business," Johnson said.
"We have put in place a new operating model and structure, one that is better aligned to the areas of greatest opportunity.
"With a new operating model, structure and team in place, we set about defining a program of work through to 2023."
Suncorp says its positive cash earnings result reflects higher earnings from all three business lines (insurance, banking, and Suncorp New Zealand), with strong top-line performance and higher investment returns.
Much of the group's NPAT was generated by its Australian insurance business, with segment profit after tax up 109.8 per cent to $258 million.
Johnston said the results demonstrate that the focus on the core business and digitisation is yielding positive results.
"Over the past year, we have refocused our strategy, continued to implement the ongoing regulatory program of work, improved our customer services, reinvigorated our brands, further digitised our business and become more efficient," he said.
"I am proud of how the group has delivered on these commitments and been true to our purpose in a challenging year.
"We are seeing improved momentum in our Australia and New Zealand insurance business as evidenced by strong top-line growth, while our bank is also delivering improved performance."
The company has declared the payment of a fully franked dividend of 26 cents per share, flat on the prior corresponding period, representing a payout ratio of 65 per cent of cash earnings.
Shares in SUN are up 2.68 per cent to $10.74 per share at 11.38am AEDT.
Business News Australia
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