FY19 results signal to UBS the company has solid leverage to commercial rate increases. However, volume losses across personal lines remain an issue. Results were in line with expectations.
All three divisions delivered stronger net profit with NZ insurance leading the way. However, the broker observes operating costs for FY20/21 remain stuck at $2.7bn.
Buy rating maintained. Target is reduced to $14.10 from $14.25.
Target price is $14.10.Current Price is $13.03. Difference: $1.07 – (brackets indicate current price is over target). If SUN meets the UBS target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).