Type: Public Company
Address: Level 18 Metway Centre, 36 Wickham Ter., Brisbane, QLD, 4000, Australia
Telephone: (+61 07) 3835 5355
Fax: (+61 07) 3832 5978
Web: http://www.suncorpmetway.com.au
Employees: 16,319
Total Assets: AUD 84.9 billion ($63.75 billion) (2006)
Stock Exchanges: Australia
Ticker Symbol: SUN
Incorporated: 1996
NAIC: 522110 Commercial Banking; 522120 Savings Institutions; 522320 Financial Transactions Processing, Reserve, and Clearing House Activities; 524113 Direct Life Insurance Carriers; 524114 Direct Health and Medical Insurance Carriers; 524126 Direct Property and Casualty Insurance Carriers
SIC: 6021 National Commercial Banks; 6022 State Commercial Banks; 6029 Commercial Banks Nec; 6081 Foreign Banks - Branches & Agencies; 6035 Federal Savings Institutions; 6036 Savings Institutions Except Federal; 6019 Central Reserve Depository Nec; 6099 Functions Related to Deposit Banking; 6311 Life Insurance; 6321 Accident & Health Insurance; 6324 Hospital & Medical Service Plans; 6331 Fire, Marine & Casualty Insurance; 6351 Surety Insurance
Suncorp-Metway Ltd. has grown rapidly into one of Australia's top financial conglomerates. The Queensland-based company is the country's sixth largest bank and third largest insurance group, and the second largest insurance group in New Zealand. Formed through the merger of Suncorp and QIDC, both owned by the Queensland government, with Metway Bank in 1996, Suncorp has extended its operations through a series of large-scale acquisitions, including GIO in 2001, Tasmania-based RACT Insurance in 2004, and Promina Group Limited, in 2007. The AUD 7.9 billion ($5.9 billion) acquisition of Promina Group Limited, one of the largest in Australia since the turn of the millennium, enabled Suncorp to double in size, boosting its total assets to AUD 85 billion ($63.75 billion) and its employees to more than 16,000 full-time equivalents. Suncorp operates through three major divisions: Banking, Insurance, and Wealth Management. Banking includes the group's retail banking operations, focused primarily on the Queensland, New South Wales, and Victoria markets, with 173 branches, as well as its business banking division, with 54 outlets. Suncorp's Insurance division provides a full range of personal insurance products, as well as workers' compensation coverage, compulsory third party insurance, and property, marine, rural, and related insurance products for the commercial market. Suncorp's Insurance division operates through a number of brands, including Suncorp, GIO, Vero, Just Car Insurance, and InsureMyRide.
The Promina acquisition, in addition to expanding Suncorp's general insurance portfolio, also established the company as a leading player in the Australian and New Zealand wealth management market. The company provides a full range of wealth management and investment services under the Suncorp name, as well as through subsidiaries Asteron, Tyndall, Standard Pacific Guardian, Guardian Trust, and Cameron Walshe. Altogether, Suncorp's operation includes 450 branches, offices, and agencies throughout Australia and New Zealand, serving more than seven million customers. The company posted total net profits of more than AUD 1 billion ($750 million) in 2007. Suncorp is listed on the Australia stock exchange, and is led by Chairman John Story and Managing Director John Mulcahy.
Suncorp Origins in the Early 20th Century
Suncorp was established in 1996 through the merger of two insurance entities, Suncorp and QIDC, owned by the Queensland government and Metway, the state's largest private bank. The merger not only created the largest financial group in Queensland, but also one of the largest in the Australia-New Zealand region. The new company, called Suncorp-Metway, also responded to a growing trend in the insurance and banking industries to establish large-scale "allfinanz" corporations. These companies, similar to the bancassurance model developed in the United Kingdom, packaged a full range of financial services within a single operation, and often under a single brand. In this way, companies were able not only to extend their range of services and products to their customers, but also to capture a larger share of each customer's financial services spending.
Suncorp-Metway, as the new company was called, had roots in the early part of the 20th century. QIDC represented the group's oldest component, having been established in 1902 as the Queensland Agricultural Bank, or Agbank. That bank initially served the region's rural market, providing financing and services to the farm community. Agbank quickly expanded, opening its first branch in 1903, in the then-prosperous town of Miles, before adding branches throughout the state. Over the next decades, however, the bank expanded its scope to include financial services for small and midsized business as well. In recognition of this, the Queensland government passed new legislation governing the bank's operations. This resulted in the creation of a new entity, Queensland Industry Development Corporation, which began operations in 1986.
The Queensland government had in the meantime also developed its own insurance arm, which grew out of the recognition of the need for government-backed workers' compensation insurance during the World War I period. The first step toward the creation of a state workers' compensation authority came in the late 1800s, with the passage of the Employers' Liability Act of 1886. This legislation established employers' responsibilities in the case of work-related injuries or illness, enabling workers to recover damages in a limited number of situations. In 1905, new legislation established a full-fledged workers' compensation standard. Employers were then encouraged, but not yet required, to seek insurance to cover compensation claims. Into World War I, these claims were filled by privately owned insurance companies.
In 1916, however, the Queensland government created the State Accident Insurance Office to provide mandatory workers' compensation insurance to the state's business sector. Soon after, the government enacted new legislation creating a larger insurance body, the State Government Insurance Office (SGIO). The SGIO was given responsibility for developing a range of insurance products, including fire, life insurance, and general insurance. The SGIO also took over the State Accident Insurance Office, which then became the SGIO's Workers' Compensation Department.
Moving Toward Merger in 1996
Over the next several decades, SGIO continued to expand its role, offering car insurance, as well as compulsory third-party insurance products. The SGIO also developed its own branch network, in part to service its growing operations in mortgage lending, through the operation of its own building society. The SGIO's management was initially placed directly under the state, with a commissioner as its head. This remained the case until 1960, when the Queensland government enacted new legislation establishing the SGIO as a separate corporation. The group then fell under state regulatory oversight, but its operations were led by a general manager and deputy general manager.
In 1971, the SGIO took another step toward full-fledged corporate status, forming its own board of directors. At this time, the workers' compensation operations were placed under a separate board. By 1976, as SGIO's insurance operations took on a more commercial orientation, the company closed down its building society operations. The next step toward the SGIO's move toward the private sector came in 1985, with the passage of the Suncorp Insurance and Finance Act. Under this legislation, the company dropped the SGIO name in favor of the Suncorp name. At the same time, Suncorp Insurance and Finance became an independent corporation, although 100 percent controlled by the Queensland government, and its employees lost their status as civil servants.
The third piece of the future Suncorp-Metway puzzle had been created in 1959, as the Metropolitan Building Society. In the late 1980s, Metropolitan joined the trend among Australia's building societies to expand into full-scale banks. As such, Metropolitan abandoned its status as a building society in 1988, reincorporating as a bank and listing its shares on the Australian Stock Exchange. Metway, as the new bank was called, then began acquiring a number of rival banks and building societies in the early 1990s. These acquisitions included Prudential Finance Limited in 1990, and the Household Building Society in 1992. By the mid-1990s, Metway had grown into Queensland's largest locally owned bank, with total assets of more than AUD 7 billion.
Financial Conglomerate for the New Century
In the mid-1990s, the Queensland government took steps to respond to sweeping changes in Australia's financial and insurance industries, and especially to the increasing convergence of the banking and insurance sectors into single, large-scale corporations built on the allfinanz model. In 1996, the government decided to spin off Suncorp and QIDC into a merger with publicly listed Metway. The new company, which then became Queensland's largest financial and insurance group, also became one of the largest in Australia, ranking fifth in the national market. By 1998, the company's combined total assets topped AUD 22 billion.
The Queensland government initially controlled 68 percent of the new company. Yet the government quickly made good on its promise to sell off most of its holding within five years. In 1997, the company conducted a public offering that reduced the government's stake in Suncorp-Metway to just 4 percent. One year later, the government sold the remainder of its shares in the company. The following year, Suncorp-Metway completed the integration of the Metway, Suncorp and QIDC operations, and launched a single unified brand, Suncorp-Metway. As part of this process, the company also trimmed its branch network, shutting down a number of redundant branches.
The completion of its integration phase enabled Suncorp-Metway to begin putting into place a new strategy for the future. The company sought to launch itself on a truly national scale, replacing its allfinanz model with a new financial conglomerate strategy. As part of that effort, the company sought to expand its mix of products and services, particularly in its more profitable insurance division. In 2001, the company made its first acquisition, of the general insurance operations of AMP, known as GIO General Ltd. That purchase enabled Suncorp-Metway to become the second largest general insurance group in Australia, with more than AUD 2 billion in premiums per year.
The company next carried out a rebranding exercise, adopting the Suncorp name for all of its operations in Queensland, and for its banking and wealth management operations outside of the state. The company's insurance business, excluding Queensland, took on the GIO brand. This rebranding was completed in 2002.
Suncorp continued to seek to build up its insurance business into the middle of the decade. The company acquired 50 percent of Queensland-based automobile club insurance RAA, a joint venture originally formed between AMP and RACQ. Suncorp bought out AMP's share of the joint venture in 2002. In 2004, the company boosted its insurance operations outside of Queensland with the purchase of Tasmania's RACT Insurance.
Suncorp then began preparations for a still larger acquisition of insurance giant Promina Group Limited. Initial preparations began as early as 2005. By early 2007, the two companies had agreed to terms of a merger, which, valued at AUD 7.9 billion ($5.9 billion), represented one of the largest completed in Australia's financial services sector since the beginning of the new century. The merger transformed Suncorp into a true giant in the Australia and New Zealand market, doubling its total assets to nearly AUD 85 billion ($65 billion). Promina had formerly been the Australian wing of U.K.-based insurance giant Royal & Sun Alliance, until it was spun off as a separate, publicly listed company in 2003.
The addition of Promina raised Suncorp's operations to a truly national level. The acquisition also served to transform the balance of the company's business, with its insurance division representing about 40 percent of its operations, compared to just 25 for its banking businesses. The shift prompted some analysts to speculate that the company might decide to refocus itself around its insurance operations in the future. In the meantime, the merger had already begun to produce synergy benefits; the company was able to post savings of some AUD 40 million by combining the reinsurance operations of Suncorp and Promina into a single unit. The company expected total synergy benefits to top AUD 225 million by the time it had completed the full integration of the two companies. The new Suncorp had firmly claimed a position at the top of the Australian financial sector in the new century.
Principal Subsidiaries
Asteron Life Limited; Asteron Life Limited (New Zealand); Australian Alliance Insurance Company Limited; Australian Associated Motor Insurers Limited; GIO General Limited; Hooker Corporation Limited; New Zealand Guardian Trust Company Limited; Suncorp Life & Superannuation Limited; Suncorp Metway Insurance Limited; Suncorp Metway Investment Management Limited; Tyndall Investment Management Limited; Vero Insurance Limited; Vero Insurance New Zealand Limited.
Principal Competitors
National Australia Bank Ltd.; Commonwealth Bank of Australia; Australia and New Zealand Banking Group Ltd.; Westpac Banking Corp.; Macquarie Bank Ltd.; Deutsche Bank Australia; Adelaide Bank Ltd.; JP Morgan Chase & Co.; Bank of Western Australia Ltd.; ANZ Banking.
Further Reading
"Acquisitive Suncorp-Metway Bags AUD550m for 45m New Share Issue, Price Jumps 12.8%," Euroweek, June 22, 2001, p. 16.
"Australia's Suncorp Cautions Against High Synergy Expectations," AsiaPulse, September 13, 2007.
Ayling, Phil, "Jones Turns Suncorp-Metway into Earnings Powerhouse," Australian Banking & Finance, August 31, 2001, p. 1.
------, "Speed More Important Than Innovation: Suncorp Chief," Australian Banking & Finance, October 18, 2004, p. 1.
Bright, Thomas, "New Product, New Name," Banker, December 1996, p. 57.
Foley, Kevin, and Joyce Moullakis, "Suncorp Makes Bid for Insurer," International Herald Tribune, October 13, 2006, p. 19.
Minder, Raphael, "Suncorp Offers AUD 7.9bn for Promina," Financial Times, October 13, 2006, p. 26.
"Mulcahy Acts to Gain Synergies at Suncorp," Australian Banking & Finance, July 15, 2003, p. 1.
"Mulcahy Stamps Authority with Executive Restructure," Australian Banking & Finance, March 31, 2003, p. 3.
"Suncorp-Metway Lifts National Aspirations," Australian Banking & Finance, June 27, 2001, p. 3.
"Suncorp Metway Ltd.," Australian Banking & Finance, August 16, 2002, p. 20.
"Suncorp Metway's Progress Continues," Australian Banking & Finance, July 30, 2006, p. 8.
"Suncorp Mobilises Strategic Plan," Australian Banking & Finance, October 31, 2003, p. 14.
— M. L. Cohen
