Operating as a pure play insurer will be a significant benefit to the Australian public, Suncorp says, and will make the insurer stronger as the industry faces volatility in global reinsurance markets and tougher capital requirements. 

The comments were made in a submission to the Australian Competition and Consumer Commission (ACCC), which will make its decision on whether a $4.9 billion sale of Suncorp Bank to ANZ can go ahead late next month. 

Suncorp and ANZ are pleading their case as the competition watchdog weighs the merits and consequences of the transaction. 

"The proposed acquisition, a cash sale, will provide Suncorp with an opportunity to be a 
 stronger insurer,” the submission, which the ACCC published on its website, said. 

"Simplifying the Group as an organisation will allow for greater focus on Suncorp’s insurance business, products and services at a time when there are increasing affordability and accessibility challenges for Australian insurance customers and facilitate technology innovation with follow on benefits for customers.” 

By divesting its banking assets, Suncorp will benefit from improved access to sources of funding, and shareholders will benefit from a return of over $4 billion, including around $1 billion to over 158,000 retail “mum and dad” shareholders who hold over 37% of issued shares.  

“Other transactions would not achieve this same result,” Suncorp said.  

Suncorp Group CEO Steve Johnston says insurance businesses in Australia play an integral role in the Australian economy yet are facing increasing challenges given hardening global reinsurance markets. 

“Suncorp operating as a pure play insurer will deliver significant public benefits to Queensland and Australia and comes at a time when the value of insurance has never been greater.” 

The ACCC has previously said it was "not clear” the proposed acquisition would be likely to overall improve the performance of Suncorp Group’s insurance business compared to a future without the proposed acquisition, and it flagged concern over likely impacts on home loans, SME and agribusiness banking. 

“The extent to which (benefits) might pass through to insurance customers is unclear,” it said. 

Insurers face increases in natural hazard costs which is escalating the cost of reinsurance, which Suncorp said may lead to higher consumer pricing, as might a drop in the available capacity/capital to support this risk from the reinsurance market. 

"There is increased volatility in global reinsurance markets, which has resulted in a reduction in reinsurance markets and sources of capital for reinsurers, increasing premiums on the reinsurance and a shift in the burden of loss from reinsurers to primary insurers,” it said. 

Suncorp said there was “no real commercial likelihood” of an acquisition by Bendigo Bank or any other mid-tier bank, and rejected assertions by Bendigo Bank and the Bank of Queensland that transactions other than ANZ’s could be available and attractive to Suncorp Group. 

“We continue to believe there to be no real commercial likelihood of any alternative transaction such as a merger with any other mid-tier bank,” Mr Johnston said.  

"The proposed transaction with ANZ is in the best interests of our customers, shareholders, employees and communities.”