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26 May 2013
Suncorp CEO John Mulcahy this morning announced his intention to resign from the company.
In a message to the Australian Stock Exchange, Suncorp said Mr Mulcahy will stay in the role “as the company transitions to a new CEO”.
Mr Mulcahy has been CEO at Suncorp since January 2003, when he was headhunted to complete the company’s $1.4 billion acquisition of GIO. He also led the controversial 2007 $7.9 billion acquisition of the Promina group.
Mr Mulcahy said in the stock exchange statement that the $900 million capital raising also announced today “is an appropriate time for the board to advise the market of our intention to commence the transition of leadership to focus on the next phase of the group’s development”.
Suncorp has been struggling over the past year in the face of massive weather-related insurance claims and poor performance by its subsidiary Metway Bank.
The announcement of Mr Mulcahy’s decision to leave the company followed Suncorp’s halt to share trading as it revealed it is mounting a $900 million capital raising.
The company also indicated it will achieve a first-half net profit of up to $270 million from a pre-tax profit of between $470 million to $500 million.
Group Executive Banking David Foster told staff the group’s net profit will be lower than expected “given the deteriorating economic environment; challenging funding market; increases in bad debts; and insurance claims costs associated with the November storms”.
“The bank’s profit before tax and bad debts for the first half of 2008/09 is healthy but this will be offset by a significant increase in bad debts,” he said.
He says the dividend will be cut to 20 cents, “reflective of the challenging market and economic circumstances”.
The capital raising involves the sale of Suncorp shares at $4.50, which is a 35% discount to its last trading price of $7.13.
In a personal note to staff, Mr Mulcahy says he wants to ensure “that the remarkable progress we have made with the Promina integration and the building of a much more resilient group continues.
“It is always difficult for a chief executive to pick the right time to change roles.”
He says the underlying performance of the business continues to be strong. “Our levels of customer service and satisfaction also continue to be above the industry average.”
“It seems to me that this is a good time… to transition to new leadership at Suncorp. I am very proud of what has been achieved during the past six years.
“I came to Suncorp at the time of the GIO integration. Since then we have had the Promina acquisition and integration. Our confidence in the future is reflected in the various initiatives we are announcing today.”
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