Suncorp shares edged higher in yesterday’s generally stronger market (the ASX 200 was up 0.4%) after it released a short statement saying it had received notice of a class action being filed against it involving superannuation commissions paid to financial advisers.
Macquarie continues to envisage earnings headwinds for Suncorp and a risk to consensus estimates. The broker believes the company's cash return targets are becoming increasingly unachievable. Some change to FY20 guidance is expected at the August result.
Credit Suisse expects the increased natural hazards allowance and reinsurance cover for FY20 will reduce the downside risk to earnings. This should be a benefit by way of a reduced discount to Insurance Australia Group ((IAG)).
Macquarie considers impairment levels in the March quarter are unsustainable. The broker continues to expect margin pressure and believes the company needs to lower its margin guidance range by -5-10 basis points in FY20.