Suncorp to reward loyal shareholders

Suncorp shareholders will again receive a special dividend this year, after the financial conglomerate said it would hand back surplus capital to investors.

Late on Wednesday Suncorp said it was planning to pay a higher than expected final dividend of 30¢ a share, plus a one-off sweetener of 20¢ a share.

It made the after-market announcement as it said profits were expected to be between $480 million and $500 million for the year to June, a significant fall on last year.

The main reason for the fall was a loss-making deal to offload $1.6 billion in bad loans to Goldman Sachs for 60¢ in the dollar.

All up, shareholders will receive dividends of 75¢ a share for the full year, up from 55¢ last year and slightly above what market analysts had been betting on.

Chairman Ziggy Switkowski said it was "pleasing to reward loyal shareholders and return some of the capital raised during the global financial crisis", after Suncorp also paid a special dividend last year.

The surprise announcement was made after it finalised the sale to Goldman. The company will issue a formal financial result on August 21.

Across its banking and insurance divisions, the Queensland-based company had mixed results.

While the dividend is likely to grab attention in the market, the company also highlighted deteriorating conditions in its life insurance business, where it expects profits to plunge to $60 million, down from $251 million last year.

Life insurers have been hit by falling profits in recent months because of increased payouts and the fact more people are not renewing policies in a weak economic environment. "The life insurance industry continues to be impacted by negative experience against lapse and claims assumptions," Suncorp said.

In general insurance, where it owns brands including AAMI, GIO, Apia and Shannons, profits were expected to jump to between $870 million and $890 million from $493 million last year.

Rival insurer IAG also said in July that it was on track to beat previous profit guidance, after benefiting from relatively few claims from natural disasters in the past six months.

In Suncorp's banking division, the "core" bank made a profit between $280 million and $300 million, compared with $289 million last year.

The "non-core bank", where it has housed troubled commercial loans, made a loss of about $630 million after the deal with Goldman.

These bad loans were a weight on the group, and it has been running down the portfolio of bad debts since 2009. In June it finalised a plan to offload some of the loans to Goldman and wind down the rest of the portfolio over the next year.

Chief executive Patrick Snowball said net profit after tax from its core businesses had risen 20 per cent.