Suncorp: Banking on a Clean Exit as Outlook for Insurer Profitability Improves

Suncorp shares have risen around 20% in the last 12 months and now trade in line with our AUD 13 fair value estimate. On a forward P/E of 14 times and fully franked dividend yield of 5%, we think the earnings recovery after some difficult years is finally being priced in. Three sequential La Nina years had resulted in a material increase in large natural hazard claim costs.