Suncorp plans to increase its dividend payout ratio to appease shareholders as it ramps up spending to build a digital marketplace.
Chief executive Michael Cameron has reiterated the insurer's plans to build an app that he says will radically change how customers interact with Suncorp.
He said the group will lift its dividend payout ratio above its range of 60 to 80 per cent of cash earnings to offset the impact of up to $100 million in spending.
"To ensure shareholders are not impacted by the additional one-off investment, we intend to increase the dividend payout ratio for this period," Mr Cameron told Suncorp's annual general meeting.
The company will revert back to its usual target range in 2018/19.
"There is a small window to deliver the core components of this strategy," Mr Cameron said.
"By accelerating the investment required to create the marketplace, Suncorp can capture this opportunity ahead of others."
The marketplace will provide customers with access to all of Suncorp's products, services and brands, including AAMI, through one channel.
The investment also includes converting Suncorp's entire network to its new branding and store layout, which has so far been rolled out to 150 stores.
Chairman Ziggy Switkowski also outlined Suncorp's aim to adapt and leverage off future technological changes, including driverless cars, chatbots and smart fridges.
The company is looking at how smart devices, including fridges, thermostats and interactive appliances, are connecting homes, he said.
"These products make the home safer, more energy efficient and intelligent, and are becoming mainstream," Mr Switkowski said.
Technology such as driverless cars will fundamentally change motor insurance, he added.
A research note from Citi analysts Nigel Pittaway and Virad Mathur said Suncorp had tried to address concerns around its marketplace spend.
"We doubt this will dispel all of the market's scepticism about the value of this spend just yet, however it should at least provide some ability to assess the merits of individual components," they said.
The Citi team also said CBA's announcement on Thursday that Hong Kong insurance giant AIA Group will buy its life insurance arm for $3.8 billion is a positive for Suncorp, which also wants to offload its life insurance business.
Shares in Suncorp closed 12 cents lower, or down 0.94 per cent, at $12.59 amid market-wide losses.
Share
