Suncorp Group's (ASX:SUN) fiscal year outlook is showing 'increasing conviction,' bolstered by solid rate-driven top-line growth, a first-half catastrophe beat, and additional headroom in its full-year catastrophe guidance budget, according to a Thursday note by Jarden Research.
From a margin perspective, Suncorp benefited from a benign catastrophe environment, and an increase in its underlying Insurance Trading Result (UITR) margin, rising to 11.8% from 10.2% in the prior period.
Jarden believes that the company can beat its fiscal second-half UITR guidance of 11.8%
Despite cost-of-living pressures and broader regulatory scrutiny impacting consumers, Jarden Research sees potential for Suncorp to build margin buffers, which could extend its profitability as premium rates moderate.
Jarden also sees improved balance sheet flexibility for SUN and a more accommodative reinsurance market expected to support renewals later this year.
The investment firm maintained Suncorp Group's overweight rating but raised its price target to AU$20.85 from AU$19.20.
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