Ann: Chairmans Address 2014 AGM, page-3

Another stock I don’t pay much attention to and have never been to a SUN AGM before.
Short impression…
We’ve cleared the books set the ship in the right direction improved the bottom line and have delivered.
And we haven’t stopped. 'There is more gas in the tank' and you can expect more growth, increased div ad more special dividends.
Some patronisingish praise for Queensland and Queenslanders but I think that must be expected at a SUN AGM.
Longer random scribble of what I think I heard and thought…
Dozens of brands, dozens of executives, lots of brands. Oh that is deliberate.  One company many brands all selling the same thing – peace of mind.
Costs are (now) well controlled. Balance sheet is strong.
Insurance has done well - the weather helped.
Shareholder loyalty has been rewarded. SUN has turned the corner.
Subdued natural hazards have helped but bottom line is insurance went well for SUN this year.
Bank going well now too - no more big problems with loans.
Good investment returns too.
Life problems have been dealt with.
Special div 3 years in a row now 40% increase this year overall.
Shareholders can expect more special divs and returns.
Div policy 40-80% of earnings (big range).
Life write down is just a valuation thing nothing to do with real money don’t worry about it. Basically it was on the books as being worth $X but it is really worth $X minus many dollars ($1/2 billion?) so we have made the adjustment.
The four C’s Customer Capital Cost and Culture.
Expect SUN to stay solely Aust and NZ focused. Believe they can grow business and profits by focusing on ANZ.  Service and personal contact and reputation as a differentiator.
Expect organic growth and small bolt on acquisitions.
SUN has 9 m customers in ANZ.
Margin < 9% 4 years ago. Over 14% now?  5% top line revenue growth.
Impaired loans down in bank.
Key strategy is to remove non-core areas hence: Less complex; Less risk; Less capital.
Yazi and floods cost SUN $1bn.
SUN is the ONLY insurer that provided full protection and complete cover for all their customers. Implication is SUN is the quality insurer and the only insurer you can really trust (this is my take on SUN too and I’m not sure why they don’t make more of this in their advertising and business and take the we are the best route – maybe they are).
Significant lobbying for mitigation in QLD (Roma Charleville). Deal was/is if mitigation is done SUN will lower premiums and it has done so.
Aim to be employer of choice. Hub concept is working in Victoria and Carindale.
Opportunity from FSI for SUN. Big four have some capital metric from 8.3 to 7.9% SUN and other A rated smaller banks have 15.2%. (However the big four have the federal government in their pocket guys).
Agressively targeting and pursuing improvement in the business. Should expect further capital returns and should expect at least 10% roe this year.
CEO wants to come across as a real go getter and set a high bar for himself. Says he is not done yet and there is plenty of “gas in the tank” presumably for him and for SUN.
SUN has preference shares? or just the convertible pref share things?
Q&A
Q $500M write down in life insurance who bears responsibility for that?
A Arh well, that would be the guys who have now left (except that a couple like Ziggy and the old guy who was up for reelection were also around back then). The good news is that it is behind us (minor squirming).
Q What is the nature of the bad loans?
A There are no more big bad loans. They have been dealt with – they gone.  It is just a normal loan book now with a normal distribution of risk that you would find in any $50bn set of loans.
Q Every time you turn on the tele there is some new internet based insurer trying to get you to sign up. What effect is this having on SUN?
Yes SUN is alert to new entrants and the challenges that new channels and technology brings.
Insurance has a high level of competition and there are no barriers to entry as there are in say banking. (Any scumbag can sell you insurance but you might not be able to make a claim against them when you need to.)
At times SUN does lose market share.
Insurance premiums are flat to lower. SUN still expects to grow particularly in personal lines (versus what?).
SUN is also delivering better quality in terms of paying out claims and doing it efficiently and effectively. SUN has 26 car repair shops out there that deliver on time (faster to get your car back on the road) and quality.