Thinking out aloud about SUN.

SUN is a business where the top line has gone nowhere for 5 years.


Whilst the graph above is visually striking enough to convey the absence of revenue growth, the decomposition is more instructive. Some parts are growing, albeit slowly, some parts are declining, akin to being placed into run-off.

Little has happened in margin measures, with expense & loss ratios remaining more or less unchanged over time, as a proportion of premiums.


The returns to float (income from technical reserves, and shareholder funds) have declined in line with lower yields. All of those things mean an unsurprisingly flat share price trajectory over the past 5 years.


Throw in the below headlines from today’s AFR, and you’ve got a fairly challenging investment thesis.


With the key bit being shown below, from the natural hazards update. It’s not quite the end of October, and, based on the upper end of the range, have consumed about half the equally divided full year allowance.

In other words, it does raise the prospect of a downgrade, and certainly raises the prospect of negative analyst revisions to consensus estimates.

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