“Suncorp Group Ltd (SUN) has announced the sale of its NZ Life insurance business (Asteron Life) to Resolution Life for NZ$410 million,” Raymond said.
“Analysing the sale is complicated by the recent change in life insurance accounting standards and its impact on earnings.
“Broadly, we think the sale price on a price-to-book multiple basis (approx. 2x) appears reasonable, while the earnings multiple of 11x-14.5x (depending on the earnings measure) is arguably less full.
“Nevertheless, we remain fans of the continued simplification of SUN’s business.
“We make relatively nominal earnings changes on the back of this update with SUN Financial year 2025/Financial year 2026 earnings per share (EPS) lowered by 1%-2%.
“Our price target (PT) rises to A$17.30 on life sale impacts (lost earnings versus additional capital) and a valuation roll-forward.
“We recommend SUN as an ADD,” Raymond said.
Suncorp Group Ltd (SUN)
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