87MW Suncorp Ins.27

RNS Number:3825N
Suncorp Insurance Funding 2007 Ltd
05 February 2008





Friday, 1 February 2008

Suncorp Integration and Insurance Update

Integration Update

Suncorp today said it was now on target to achieve annualised synergies of $325
million and incur one-off implementation costs of $375 million as a result of
its merger with Promina.

The new synergy target represents a $100 million increase on the pre-merger
estimate of $225 million annualised. One-off implementation costs will increase
by $20 million on the pre-merger estimate of $355 million.

The synergy upgrade follows a rigorous six month process which saw more than 400
employees from both the Suncorp and Promina businesses design the shape of the
new organisation.

Over 300 initiatives underpin the new synergy target. Implementation of priority
initiatives commenced prior to Christmas.

Suncorp CEO, John Mulcahy said he was delighted at the progress made towards
integration and the level of engagement from employees across the Group.

"We have put in place a robust and disciplined integration plan that will ensure
our integration targets will be delivered on time. The processes and controls
for quantifying synergy targets and the structure of the integration governance
program have been independently assessed by KPMG."

Mr Mulcahy said the company would provide details of the key areas of synergy
realisation and how benefits and costs would flow through to the P&L, at its
upcoming interim results presentation.

"Given the proximity to our first half results, we have decided to incorporate
an integration update into our February 28 presentation. This will allow the
market to very clearly analyse the benefits of the integration in the context of
the organic performance of each of our business lines."

Insurance Update

Mr Mulcahy said the company had committed to update the market on its revised
full-year insurance trading ratio (ITR). This would take into account a number
of significant weather events in the first half and finalisation of the December
31 mark to market of the technical reserves portfolio.




Weather Events

Mr Mulcahy said the claims costs associated with weather events in the first
half were now expected to total $280 million, well ahead of the Group's normal
provisioning of $100 million per half year. The events included:
Weather Event                                                                 A$
Floods in New Zealand, June 2007                                            20 m
Storms in Lismore, Northern NSW , October 2007                              60 m
Storms in Sydney, December 2007                                            170 m
Earthquake in New Zealand, December 2007                                     5 m
Storms in Melbourne, 12 & 20 December 2007                                  25 m
Total:                                                                    $280 m



More recently, there had been floods across much of Queensland and northern New
South Wales.

"The most recent flooding in central Queensland has so far resulted in
approximately 350 claims at an estimated cost of approximately $2 million.

"These events have been very distressing for all those involved and a serious
community issue. Our priority is to work with our customers to ensure that all
claims are processed as quickly as possible," Mr Mulcahy said.

Reinsurance

Mr Mulcahy also announced that as a result of the incidence of major weather
events in the first half, a decision had been taken to put in place a retention
buy down program which would provide protection through to 30 June 2008 from
significant natural hazard losses below the current catastrophe retention of
$200 million.

"The program essentially provides protection against significant hail, storm and
bushfire events with the Maximum Event Retention (MER) reducing to $100 million
for non-cyclone and non-earthquake losses.

"This would drop to $50 million in the event of a further loss"

The program was put in place for a total cost of $15.2 million.

Mark to Market - Technical Reserves

Mr Mulcahy said the ITR in the first half had also been impacted by the mark to
market impact of widening credit spreads on the Group's approximately $7 billion
technical reserves portfolio, where underlying investments are matched to the
expected payouts in the outstanding claims provision.

The mark to market is expected to impact the first half P&L by approximately $85
million.




"As we pointed out in December, this is purely an accounting and timing issue
which will reverse as the investments redeem or as credit spreads settle. There
is no question whatsoever about the quality of these investments, which are
largely semi-government and high quality corporate bonds," Mr Mulcahy said.

In commenting on general business matters Mr Mulcahy noted that beyond these
items, Suncorp's general insurance brands continued to perform strongly.

Revised Insurance Trading Ratio (ITR)

As a result of these items, Suncorp has revised its insurance trading ratio
(ITR) to 9% - 12%* from 13% - 16% for the full year ended June 2008.

The first half ITR, which will be announced at the Group's interim result on
February 28 is likely to be approximately 5%. This includes realised synergy
benefits of approximately $35 million.

Mr Mulcahy said the remainder of the Group's full-year guidance was unchanged.

*excludes synergy benefits and assumes 2H08 weather events remain within company
provision and credit markets remain as at December 31, 2007

ends

For further information, please contact:

Investors/analysts: Nicole Marques 0437 792 504

Mark Ley 0411 139 134

Media: Natasha Schmid 0434 073 045

Teleconference details

Suncorp will be hosting a combined analyst, investor and media teleconference
at: 10:30 AEST (09:30 Brisbane). Dial in details are as follows:

CONFERENCE ID: 33155669

International Dial In: +61 2 8524 6650 Australia: 1800 148 258
Belgium: 080071572                               Netherlands: 08000229451
Canada: 18668374489                              New Zealand: 0800667018
China North: 108006110127                        Norway: 80010112
China South: 108003610079                        Philippines: 180016120005
France: 0800908221                               Singapore: 8006162170
Germany: 08001814827                             South Korea: 007986121097
Hong Kong: 800965808                             Sweden: 020799376
Indonesia: 0018030612145                         Switzerland: 0800561529
Ireland: 1800720011                              Taiwan: 00801232398
Italy: 800788772                                 Thailand: 0018006121124
Japan: 004422062118                              United Kingdom: 08000569662
Malaysia: 1800180708                             United States of America: 18665862813






                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

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