#111 November 2019 CESTRY Suncorp Group Limited Capital Notes 3 SUNCORP 11 November 2019 EM#2Important Notice This presentation has been prepared and authorised by Suncorp Group Limited (ABN 66 145 290 124) ("Suncorp") in relation to the proposed offer by Suncorp of Suncorp Capital Notes 3 ("Capital Notes 3") (the "Offer"). The Offer is made pursuant to a prospectus under Part 6D.2 of the Corporations Act 2001 (Cth) which was lodged with the Australian Securities and Investments Commission ("ASIC") on 11 November 2019 ("Prospectus"). Suncorp intends to lodge a replacement prospectus, which will include the offer size and the Margin, on or around 19 November 2019. Goldman Sachs Australia Pty Ltd (ABN 21 006 797 897) is the Arranger ("Arranger") of the Offer. Commonwealth Bank of Australia (ABN 48 123 123 124), Morgans Financial Limited (ABN 49 010 669 726), National Australia Bank Limited (ABN 12 004 044 937), UBS AG, Australia Branch (ABN 47 088 129 613) and Westpac Institutional Bank (ABN 33 007 457 141) are the Joint Lead Managers to the Offer ("Joint Lead Managers"). The information provided in this presentation is not personal investment advice and has been prepared without taking into account your investment objectives, financial situation or particular needs (including financial and taxation issues). Investors should read and consider the Prospectus (and any supplementary or replacement prospectus) in full and seek advice from their financial adviser or other professional adviser before deciding to invest in the Offer. Any decision by a person to apply for Capital Notes 3 should be made on the basis of information contained in the Prospectus and independent assessment as to whether to invest in Capital Notes 3, and not in reliance on any information contained in this presentation. A copy of the Prospectus is available at www.suncorpgroup.com.au/sunph. Applications for Capital Notes 3 can only be made using the Application Form attached to, or accompanying, the replacement Prospectus. This presentation is not a prospectus, product disclosure statement, disclosure document or other offer document under Australian law or under any other law. This presentation is not, and does not constitute, financial product advice, an offer to sell or the solicitation, invitation or recommendation to purchase any securities and neither this presentation nor anything contained within it will form the basis of any contract or commitment. All reasonable care has been taken in relation to the preparation and collation of this presentation. If there are any material changes relevant to the Offer, Suncorp will lodge the appropriate information with the Australian Securities Exchange ("ASX"). No representation or warranty, express or implied, is made as to the accuracy, adequacy, reasonableness, completeness or reliability of any statements, estimates or opinions or other information contained in this presentation. To the maximum extent permitted by law, Suncorp, its subsidiaries and their respective directors, officers, employees and agents disclaim all liability and responsibility (including without limitation any liability arising from fault or negligence on the part of Suncorp, the Joint Lead Managers and their related bodies corporate, affiliates and each of their respective directors, officers, employees and agents) for any direct or indirect loss or damage which may be suffered by any recipient through the use of or reliance on anything contained in or omitted from this presentation. No recommendation is made as to how investors should make an investment decision in relation to the Offer or Suncorp. Suncorp reserves the right to withdraw or vary the timetable for the Offer without notice. The information in this presentation is for general information only. To the extent that certain statements contained in this presentation may constitute "forward-looking statements" or statements about “future matters", the information reflects Suncorp's intent, belief or expectations at the date of this presentation. Suncorp gives no undertaking to update this information over time (subject to legal or regulatory requirements). Any forward-looking statements, including projections, guidance on future revenues, earnings and estimates, are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Suncorp's actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Any forward-looking statements, opinions and estimates in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Neither Suncorp, nor any other person, gives any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this presentation will actually occur. In addition, please note that past performance is no guarantee or indication of future performance. The distribution of this presentation, and the offer or sale of Capital Notes 3, may be restricted by law in certain jurisdictions. Persons who receive this presentation outside Australia must inform themselves about and observe all such restrictions. Nothing in this presentation is to be construed as authorising its distribution, or the offer or sale of Capital Notes 3, in any jurisdiction other than Australia and Suncorp does not accept any liability in that regard. Further, Capital Notes 3 may not be offered or sold, directly or indirectly, and neither this presentation nor any other offering material may be distributed or published, in any jurisdiction except under circumstances that will result in compliance with any applicable law or regulations. To the maximum extent permitted by law, the Arranger and Joint Lead Managers and their respective affiliates, directors, officers, partners, employees, advisers and agents of each of them, make no representation, recommendation or warranty, express or implied, regarding the accuracy, adequacy, reasonableness or completeness of the information contained in the presentation and therefore accept no responsibility or liability. This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States or to any U.S. person as defined in Regulation S under the U.S. Securities Act of 1933, as amended. This presentation may not be distributed or released, in whole or in part, in the United States. Neither Capital Notes 3 nor the ordinary shares of Suncorp have been or will be registered under the U.S. Securities Act of 1933 or the securities laws of any state or other jurisdiction of the United States, and they may not be offered or sold in the United States or to any person acting for the account or benefit of any U.S. person unless an exemption from registration is available. Capital Notes 3 are complex and may not be suitable for all investors. The investment performance of Capital Notes 3 is not guaranteed by Suncorp or any other member of the Suncorp Group. The risks associated with investing in these securities could result in the loss of your investment. Information about the risks associated with investing in Capital Notes 3 is detailed in the Prospectus. All amounts are in Australian dollars unless otherwise indicated. Unless otherwise defined, capitalised terms in this presentation have the meaning in the Prospectus. SUNCORP Capital Notes 3 2#3SUNCORP Agenda Section 1 Section 2 Section 3 Section 4 Appendix 1 Offer summary About Suncorp Key features of Capital Notes 3 Offer process Comparison between Capital Notes 3 and other types of investments Corporate responsibility framework Appendix 2 Appendix 3 APRA risk governance considerations#4SUNCORP Section 1 Offer summary#5Offer summary Issuer Suncorp Group Limited (Suncorp) Security Fully paid, subordinated, perpetual, unsecured, convertible notes Offer size $250 million with the ability to raise more or less Use of proceeds Ranking¹ Distribution Payments Term Offer structure Arranger JLMs Quotation | | || Suncorp is issuing Capital Notes 3 to raise Eligible Additional Tier 1 Capital, the proceeds of which it expects to use to fund the capital needs of one or more Regulated Entities within the Suncorp Group and for general corporate and funding purposes, including the partial refinancing of CPS3 through the Reinvestment Offer In a winding-up of Suncorp, Capital Notes 3 will rank ahead of Ordinary Shares, equally among themselves and other Equal Ranking Instruments (including CPS3, Capital Notes 1 and Capital Notes 2) and behind all Senior Ranking Creditors of Suncorp (including Suncorp Wholesale Subordinated Notes) Floating rate, quarterly, discretionary, non-cumulative payments, subject to no Payment Condition existing² Distributions are expected to be fully franked Margin expected to be in the range of 3.00% - 3.20% per annum over 3-month Bank Bill Rate Perpetual unless Converted, Redeemed, Resold or Written-Off Optional Exchange³: all or some Capital Notes 3 on 17 June 2026 or following a Regulatory or Tax Event, and all (but not some only) after a Potential Acquisition Event Scheduled Mandatory Conversion Date: 17 June 2028 Acquisition Event4: Suncorp must Convert Capital Notes 3 following an Acquisition Event Non-Viability Trigger Event: Suncorp must Convert Capital Notes 3, and if Conversion does not occur within 5 Business Days, then Capital Notes 3 will be Written-Off Institutional Offer, Broker Firm Offer, Reinvestment Offer and Securityholder Offer Goldman Sachs Commonwealth Bank of Australia, Morgans, National Australia Bank, UBS and Westpac Institutional Bank Suncorp will apply for Capital Notes 3 to be quoted on ASX under ASX code "SUNPH" The ranking of Holders in a winding-up will be adversely affected if a Non-Viability Trigger Event occurs. See Sections 1.3, 2.4.4 and 5.1.9 of the Prospectus. Payment of any Distribution is within the absolute discretion of Suncorp. Notes: 1 2 3 4 At Suncorp's option, subject to certain conditions being met and APRA's prior written approval. Holders of Capital Notes 3 should not assume that APRA will give its approval for any Exchange. Subject to certain conditions being met. SUNCORP Capital Notes 3 LO 5#6SUNCORP Section 2 About Suncorp#7Suncorp Group Leading financial services brands. in Australia and New Zealand AAMI Apia Asteron Life bingle SUNCORP OO- CIL CARAVAN AND RV INSURANCE GIO terri scheer SHANNONS verov Notes: 1 2 As at 30 June 2019. Source: ASX as at 8 November 2019. Based on the market capitalisation of the ordinary shares of Suncorp Group Limited. SUNCORP Capital Notes 3 Top 20 ASX listed company $17 billion market capitalisation1 $96 billion in group assets² ~13,000 employees in Australia and New Zealand² Approximately 9 million customers End-to-end ownership of brands 7#8Strategy The Suncorp Group's purpose is to create a better today for its customers The Suncorp Group's strategy is underpinned by four key priorities: 1 Improving the performance of the core business Ensuring all of the Suncorp Group's people and programs of work are aligned to improve the performance of the core businesses. In Insurance this means reinvigorating the multi-brand strategy; maintaining a disciplined approach to underwriting; developing new and innovative products; maintaining the Suncorp Group's claims capabilities; and using reinsurance to reduce earnings volatility. For banking, the focus is on building digital products and functionality; preparing for open banking; improving broker service levels; and maintaining high credit standards 2 Embracing regulatory change Strengthening trust and improving customer outcomes. Following the Royal Commission into Financial Services, the Suncorp Group is investing in a range of regulatory change projects and sees the new standards as an opportunity to deliver better customer outcomes. Improving shareholder returns is predicated on the Suncorp Group's ability to deliver customer outcomes in a fair, honest and efficient way 3 Leveraging digital investments and data capability Having invested significantly in building digital capability and the ability to utilise and analyse data over the last couple of years, the Suncorp Group has an opportunity to further scale its digital capability to better meet customer needs and reduce the cost to serve 4 Further improve operational efficiency Simplifying the business and embedding process improvement, operational excellence, digital and artificial intelligence into business as usual activities across the Suncorp Group SUNCORP Capital Notes 3 8#9Full year ended 30 June 2019 - - Notes: 1 2 Group top line growth of 2.3% NPAT from ongoing functions up 1.0% Cash earnings up 1.5% Ordinary dividend payout ratio of 81%, reflecting strong capital position FY19 FY18 Change ($m) ($m) (%) Insurance (Australia) 588 681 (13.7) Banking & Wealth 364 369 (1.4) New Zealand 245 135 81.5 NPAT from ongoing functions 1,197 1,185 1.0 Australian Life Business 23 78 (70.5) Other¹ (110) (63) 74.6 Accelerated Investment - (102) Cash earnings 1,115 1,098 1.5 Loss on sale of discontinuing operations (899) n/a after tax Acquisition Amortisation (41) (39) 5.1 Reported NPAT 175 1,059 (83.5) Total dividend (cps) 2 78 81 (3.7) 'Other' includes: a provision for remediation costs of $60m and Life stranded costs net of Transitional Service Arrangement revenue $13m. Includes special dividend of 8 cps in FY19 and 8 cps in FY18. SUNCORP Capital Notes 3 9#10Insurance (Australia) Total GWP (excluding FSL) of $8.1bn1 Portfolio by geography 5% 2% 4% 8% 24% 26% 31% Portfolio by product Portfolio by channel 13% 19% 5% 28% 8% 35% Queensland New South Wales Victoria Western Australia South Australia Tasmania Other Motor Home Commercial CTP Workers' compensation & other Notes: 1 As at 30 June 2019. 14% 57% 21% Intermediaries I Contact Centre Digital ■Direct Underwriting & Others 2 Following the sale of the Australian Life Insurance and Participating Wealth Business to TAL Dai-ichi Life Australia Pty Ltd (TAL) in February 2019, Suncorp provides life insurance solutions through a 20-year strategic alliance with TAL. 3 On 31 October 2019, the Suncorp Group completed the sale of its Australia and New Zealand smash repair business Capital S.M.A.R.T to AMA Group for an enterprise value of $420 million. The sale consideration comprises upfront cash proceeds and the retention of a 10% interest in the business. The Suncorp Group will have a board seat on the Capital S.M.A.R.T group holding entity. As part of the transaction, the Suncorp Group also announced the sale of ACM Parts Pty Ltd to AMA Group for a cash consideration of $20m. SUNCORP Capital Notes 3 10 10#11Banking & Wealth Total lending assets of $59.3 billion 1 Notes: 1 As at 30 June 2019. SUNCORP Capital Notes 3 Lending assets by portfolio Lending assets by geography 8% 11% <1% 4% 6% 10% 53% 81% 27% Queensland ■Housing Commercial (SME) Agribusiness Consumer New South Wales Victoria Western Australia South Australia and other 11#12New Zealand Portfolios by product Notes: 1 As at 30 June 2019 2 As at 30 June 2019 SUNCORP Capital Notes 3 General Insurance Total Gross Written Premium of NZ$1.7 billion¹ Life Insurance Total in-force premium of NZ$267 million² 1% 5% 5% 24% 17% 41% 52% 21% 34% Motor Commercial Term & TPD Trauma Home Other Income protection Other ■Group 12#13Capital position ($m) Capital management strategy Optimise shareholder value by managing the level, mix and use of capital resources Ensure sufficient capital resources to maintain and grow the business, in accordance with risk appetite Compliance with external capital requirements set and monitored by APRA and the RBNZ Sale of Capital S.M.A.R.T and ACM parts completed on 31 October 2019 Sale generates approximately $300m of excess CET1 CET1 As at 30 June 2019 SGL, Total GI² Bank² Life3 Corp as at Total as at Services 30 Jun 30 Jun & Consol 2019 2018 3,413 3,085 706 137 7,341 6,881 2,697 2,993 100 (10) 5,780 5,810 Excess to CET1 Target (pre div) Group Dividend 716 92 606 147 1,561 1,071 (571) (623) 990 448 CET1 Target Group Excess to CET1 Target (ex div) Common Equity Tier 1 Ratio 1.39x 9.28% Total Capital 4,533 4,473 706 137 9,849 9,585 Total Capital Target 3,677 4,157 100 (33) 7,901 7,952 Excess to Target (pre div) 856 316 606 170 1,948 1,633 Group Dividend Group Excess to Target (ex div) Total Capital Ratio¹ 1,377 (571) (623) 1,010 1.85x 13.45% Notes: 1 Capital ratios are expressed as coverage of the PCA for General Insurance and as a percentage of risk-weighted assets for the Bank. 2 The Bank and General Insurance targets are shown as the midpoint of the target operating ranges. 3 Life includes $506 million of capital that was returned to shareholders from the sale of the Australian Life Business as well as capital relating to the New Zealand Life Insurance business and the remaining Wealth business. - Suncorp Group expects to update the market on the use of these proceeds during FY20 SUNCORP Capital Notes 3 13#14Pro forma capital adequacy position1 As at 30 June 2019 $ million Suncorp Group Total as at 30 June 2019 Pro forma adjustment for capital return² (506) Pro forma adjustments for the Offer³ Pro forma adjustments for CPS3 Reinvestment4 Pro forma as at 30 June 20194 CET1 Capital 7,341 (6) 6,829 Additional Tier 1 Capital 1,150 250 (200) 1,200 Tier 2 Capital 1,358 1,358 Total Capital 9,849 (506) 244 (200) 9,387 Excess to CET1 Capital Target (ex 990 (506) (6) 0 478 dividend) Excess Total Capital to target (ex 1,377 (506) 244 (200) 915 dividend) Notes: 1 For more information on the pro forma capital adequacy position and the relevant assumptions and adjustments, see Section 4.5 of the Prospectus. 2 This adjustment reflects the return of capital to ordinary shareholders completed in October 2019, as outlined in Section 3.2.3 of the Prospectus. 3 4 These adjustments assume $250 million Capital Notes 3 were issued on 30 June 2019, net of issue transaction costs of $6 million, and net of $200 million of CPS3 reinvested as described in Note 4. The actual issue amount may be more or less than $250 million and, consequently, the issue transaction costs may be more or less than $6 million. Under the Amendments to the CPS3 Terms approved by the Directors, holders of the existing $400 million CPS3 may elect to reinvest the proceeds of their existing CPS3 in the new Capital Notes 3 instrument. The adjustment assumes that $200 million CPS3 are reinvested in the new instrument. The amount reinvested may be more or less than this amount. SUNCORP Capital Notes 3 14#15SUNCORP Section 3 Key features of Capital Notes 3#16Capital Notes 3 key features General Issuer Security Offer size Issue Price Ranking1 Term Distribution Payment Dates - Suncorp Group Limited (Suncorp) | | Fully paid, subordinated, perpetual, unsecured, convertible notes $250 million with the ability to raise more or less $100 per Capital Note 3 In a winding-up of Suncorp, Capital Notes 3 will rank ahead of Ordinary Shares, equally with all other Equal Ranking Instruments (including CPS3, Capital Notes 1 and Capital Notes 2), but behind all Senior Ranking Creditors of Suncorp (including Suncorp Wholesale Subordinated Notes) Perpetual (no fixed maturity date) unless Converted, Redeemed, Resold or Written-Off Optional Exchange Date: 17 June 2026 Scheduled Mandatory Conversion Date: 17 June 20282 The first Distribution Payment Date is 17 March 20203 Distribution Payment Dates are 17 March, 17 June, 17 September and 17 December in each year Notes: 1 2 3 The ranking of Holders in a winding-up will be adversely affected if a Non-Viability Trigger Event occurs. See Sections 1.3, 2.4.4 and 5.1.9 of the Prospectus. Subject to certain conditions being satisfied. If a Distribution Payment Date is not a Business Day, then the Distribution Payment Date will be the next Business Day. SUNCORP Capital Notes 3 16#17Capital Notes 3 key features Distributions Distributions Distribution Rate Payment conditions Distribution Restriction Note: I I - Distributions are discretionary, non-cumulative, floating rate payments and are expected to be fully franked Distributions are scheduled to be paid quarterly in arrears, subject to no Payment Condition existing the first Distribution Payment Date is 17 March 20201 Distribution Payment Dates are 17 March, 17 June, 17 September and 17 December in each year Distributions on Capital Notes 3 are expected to be fully franked. If any Distribution is not fully franked, then the amount of the scheduled cash Distribution will be adjusted to reflect the applicable Franking Rate Distribution Rate = (Bank Bill Rate² + Margin) x (1 - Tax Rate) Bank Bill Rate is the 3-month Bank Bill Rate on the first Business Day of the relevant Distribution Period Margin expected to be 3.00% - 3.20% per annum, to be determined under the Bookbuild 'Payment Condition' means: paying the Distribution would result in the Eligible Capital of the Suncorp Group not complying with APRA's then current prudential capital requirements as they are applied to the Suncorp Group (unless approved in writing by APRA); paying the Distribution would result in Suncorp becoming, or being likely to become, insolvent for the purposes of the Corporations Act; or APRA objects to the payment of the Distribution. If a Distribution has not been paid in full within 3 Business Days of the relevant Distribution Payment Date, then subject to certain exclusions set out in the Capital Notes 3 terms, Suncorp must not, without the approval of a Special Resolution, until and including the next Distribution Payment Date: declare, determine to pay or pay an Ordinary Share Dividend; or undertake any Buy Back or Capital Reduction. Failure to pay a Distribution when scheduled will not constitute an event of default Distributions that are not paid do not accrue and will not be subsequently paid 1 If a Distribution Payment Date is not a Business Day, then the Distribution Payment Date will be the next Business Day. 2 If Suncorp determines that a Rate Disruption Event has occurred, then, subject to APRA's prior written approval, Suncorp shall use as the Bank Bill Rate such Replacement Rate as it may determine and shall make such adjustments to the Terms as it determines are reasonably necessary to calculate Distributions in accordance with such Replacement Rate. Broadly, Replacement Rate includes a rate that is generally accepted in the Australian market as the successor to the Bank Bill Rate. Holders should note that APRA's approval may not be given for any Replacement Rate it considers to have the effect of increasing the rate of Distributions contrary to applicable prudential standards. SUNCORP Capital Notes 3 17#18Capital Notes 3 key features Summary of events that may affect Capital Notes 3 Note: For more information on the events that may affect Capital Notes 3 see Sections 1.2 and 2.2-2.5 of the Prospectus. SUNCORP Capital Notes 3 Issue Date 17 December 2019 Conversion You receive Ordinary Shares Optional Exchange Date 17 June 2026 17 June 2028 Mandatory Conversion Date Each Distribution Payment Date after 17 June 2028 If Suncorp chooses, and certain conditions are met. Capital Notes 3 will be Converted, Redeemed or Resold on this date If the Mandatory Conversion Conditions are met, Capital Notes 3 will be Converted on this date If Conversion does not occur on 17 June 2028, then it will occur on the first Distribution Payment Date after the date on which the Mandatory Conversion Conditions are met Redemption You receive the Issue Price in cash from Suncorp Resale You receive the Issue Price in You receive Ordinary Shares cash from a nominated third party purchaser Events that could occur at any time Tax Event or Regulatory Event Conversion, Redemption or Resale at Suncorp's option, if certain conditions are met Potential Acquisition Event or Acquisition Event Conversion at Suncorp's option, if certain conditions are met, in the case of a Potential Acquisition Event, or automatic Conversion, if certain conditions are met, in the case of an Acquisition Event Non-Viability Trigger Event Automatic Conversion or, if Conversion does not occur for any reason within five Business Days, Capital Notes 3 shall be Written-Off You receive Ordinary Shares Potentially perpetual 18#19Capital Notes 3 key features Optional Exchange and Conversion on Acquisition Event Exchange by Suncorp1 Suncorp may choose to Exchange all or some Capital Notes 3 on the Optional Exchange Date (being 17 June 2026) Suncorp may choose to Exchange all or some Capital Notes 3 after a Tax Event or a Regulatory Event Suncorp may choose to Convert all (but not some only) Capital Notes 3 after a Potential Acquisition Event Suncorp must Convert all (but not some only) Capital Notes 3 after an Acquisition Event (subject to certain conditions being met) Exchange Exchange means: Holder rights Resale by Suncorp Conversion into a variable number of Ordinary Shares with a value of approximately $101 per Capital Note 32 Redemption for $100 per Capital Note 3; Resale for $100 per Capital Note 3; or a combination of Conversion, Redemption and Resale. Holders do not have a right to request Exchange If Suncorp elects for Capital Notes 3 to be Resold, Holders will be notified and on the Exchange Date will receive $100 per Capital Note 3 Suncorp may appoint one or more third parties (Nominated Purchaser(s)) to purchase some or all Capital Notes 3 If the Nominated Purchaser does not pay the Resale Price of any Capital Notes 3 when due, those Capital Notes 3 will not be transferred and the Holder will continue to hold them until Capital Notes 3 are otherwise Converted, Redeemed or Resold Notes: 1 Suncorp's right to elect to Exchange is subject to APRA's prior written approval and subject to restrictions in certain circumstances. Holders should not assume that APRA will provide its approval. 2 The exact number of Ordinary Shares to be received depends on the VWAP of Ordinary Shares, therefore it may be worth more or less than $101 per Capital Note 3 on the Conversion date. SUNCORP Capital Notes 3 19#20Capital Notes 3 key features Mandatory Conversion The Mandatory Conversion Date will be 17 June 2028, provided the Mandatory Conversion Conditions have been satisfied on that date. If any of the Mandatory Conversion Conditions are not satisfied on this date, then the Mandatory Conversion Date will be the next Distribution Payment Date on which all such conditions are satisfied Capital Notes 3 may remain on issue indefinitely and may never Convert into Ordinary Shares if the Mandatory Conversion Conditions are not satisfied On the Mandatory Conversion Date, Holders will receive approximately $101 of Ordinary Shares for each Capital Note 3 The following diagram illustrates the operation of the conditions: -25 Business Days 12 May 2028 - 20 Business Days 19 May 2028 - 1 Business Day 16 June 2028 Scheduled Mandatory Conversion Date 17 June 2028 20 Business Day VWAP Period First Mandatory Conversion Condition Second Mandatory Conversion Condition Third Mandatory Conversion Condition 2 VWAP > 55% of Issue Date VWAP VWAP > 50.5050% of Issue Date VWAP Ordinary Shares are quoted on ASX Conversion Number = Issue Price 99% x VWAP The exact number of Ordinary Shares to be received depends on the VWAP of Ordinary Shares. The VWAP during the 20 Business Days on which trading in Ordinary Shares took place immediately preceding (but not including) the Mandatory Conversion Date that is used to calculate the number of Ordinary Shares that Holders receive will most likely differ from the Ordinary Share price on or after the Mandatory Conversion Date. This means that the value of Ordinary Shares received may be worth more or less than approximately $101 per Capital Note 3. Issue Date VWAP = VWAP during the 20 Business Days on which trading in Ordinary Shares took place immediately preceding the Issue Date. Notes: 1 2 SUNCORP Capital Notes 3 20 20#21Capital Notes 3 key features Mandatory Conversion Non-Viability Trigger Event Conversion following a Non-Viability Trigger Event Maximum Conversion Number Note: A Non-Viability Trigger Event occurs where APRA has provided a written determination to Suncorp that: the conversion to Ordinary Shares or write off of Relevant Securities in accordance with their terms or by operation of law is necessary because without the conversion to Ordinary Shares or write off, APRA considers that Suncorp would become non-viable; or without a public sector injection of capital into, or equivalent support with respect to, Suncorp, APRA considers that Suncorp would become non-viable. Upon a Non-Viability Trigger Event occurring, Suncorp must immediately Convert some or all Capital Notes 3 to Ordinary Shares If Conversion of Capital Notes 3 does not occur within 5 Business Days after the Trigger Event Date for any reason (including an Inability Event), then Conversion will not occur and Holder's rights with respect to those Capital Notes 3 are immediately and irrevocably Written-Off The number of Ordinary Shares a Holder receives upon Conversion is calculated using the formula on the previous page¹ but is capped at the Maximum Conversion Number The Maximum Conversion Number is calculated as $100 / (Issue Date VWAP x Relevant Fraction) The Relevant Fraction is 0.5 in relation to a Mandatory Conversion and 0.2 in the case of any other Conversion (including Conversion following a Non-Viability Trigger Event) The Mandatory Conversion Conditions are intended to help protect Holders against receiving a number of Ordinary Shares limited to the Maximum Conversion Number and accordingly worth less than $101 per Capital Note 3 (based on the VWAP during the 20 Business Days before the Mandatory Conversion Date) Since there are no conditions to a Non-Viability Conversion, the number of Ordinary Shares a Holder may receive on account of a Non-Viability Conversion may be worth significantly less than $101 per Capital Note 3 and a Holder may suffer a significant loss as a consequence 1 See Conversion Number formula on page 21. SUNCORP Capital Notes 3 21 24#22Capital Notes 3 key features Ranking of Capital Notes 3 in a winding-up 1,2 Higher Type Preferred and secured debt ranking I Unsubordinated and unsecured debt Subordinated and unsecured debt Perpetual and subordinated instruments Lower ranking Ordinary Shares Illustrative examples Liabilities preferred by law including employee entitlements and secured creditors Bonds and notes, trade and general creditors Suncorp Wholesale Subordinated Notes and other subordinated and unsecured debt obligations Capital Notes 3, CPS3, Capital Notes 1, Capital Notes 2 and any other securities expressed to rank equally with Capital Notes 3 Ordinary Shares Notes: 1 2 The ranking of Holders in a winding-up will be adversely affected if a Non-Viability Trigger Event occurs. See Sections 1.3, 2.4.4 and 5.1.9 of the Prospectus. For more information on ranking in a winding-up, see Section 1.3 of the Prospectus. SUNCORP Capital Notes 3 22 22#23Capital Notes 3 key features Key risks associated with an investment in Capital Notes 3 Capital Notes 3 are not deposit or policy liabilities of Suncorp or any member of the Suncorp Group, are not protected accounts under the Banking Act or protected policies under the Insurance Act, and are not guaranteed by any government or other person The price at which Holders are able to sell Capital Notes 3 on ASX is uncertain Unlike Ordinary Shares, Capital Notes 3 do not provide a material exposure to growth in the Suncorp Group's business There may be no liquid market for Capital Notes 3 The market price of Suncorp Ordinary Shares may fluctuate due to various factors Distributions may not be paid as they are discretionary and will not be paid if a Payment Condition exists. Payment Conditions include APRA objecting to the payment, Suncorp becoming or being likely to become, insolvent as a result of the payment, or the Suncorp Group not complying with APRA's capital adequacy requirements as a result of the payment The Distribution Rate will fluctuate over time (it may increase and/or decrease) as a result of movements in the Bank Bill Rate The amount of cash Distributions will also fluctuate depending on Suncorp's available franking credits There are a number of scenarios in which Capital Notes 3 may be Exchanged. It is uncertain whether and when Exchange may occur Holders have no right to request that their Capital Notes 3 be Exchanged. Unless their Capital Notes 3 are Exchanged, to realise their investment, Holders would need to sell their Capital Notes 3 on ASX at the prevailing market price. That price may be less than the Issue Price, and there may be no liquid market in Capital Notes 3 If Conversion occurs following a Non-Viability Trigger Event, the Holder may receive Ordinary Shares worth significantly less than $101 per Capital Note 3 Where Conversion does not occur for any reason (including an Inability Event) within 5 Business Days after the Trigger Event Date, those Capital Notes 3 will be written-off and Holders will not get back their capital or receive compensation in relation to those Capital Notes 3 In a winding-up of Suncorp, Capital Notes 3 rank for payment ahead of Ordinary Shares, equally with Equal Ranking Instruments (which include CPS3, Capital Notes 1 and Capital Notes 2), but behind all Senior Ranking Creditors See Sections 1.5 and 5.1 of the Prospectus for more information on risks associated with Capital Notes 3 See Section 5.2 of the Prospectus for more information on risks associated with Suncorp and the Suncorp Group SUNCORP Capital Notes 3 23#24SUNCORP Section 4 Offer process#25Offer structure Institutional Offer Offer to certain Institutional Investors who are invited by the Joint Lead Managers to bid for Capital Notes 3 in the Bookbuild Broker Firm Offer Offer to Australian resident retail and high net worth clients of Syndicate Brokers Reinvestment Offer Offer to Eligible CPS3 Holders to reinvest their CPS3 in Capital Notes 3. Eligible CPS3 Holders are: registered holders of CPS3 at 7:00pm (Sydney time) on 6 November 2019, shown on the CPS3 register as having an address in Australia and are not in the United States or acting for the account or benefit of a person in the United States Securityholder Offer Offer to Eligible Securityholders, being: Offer Size registered holders of Ordinary Shares, SML Floating Rate Notes, CPS3, Capital Notes 1 or Capital Notes 2 at 7:00pm (Sydney time) on 6 November 2019, shown on the applicable register as having an address in Australia and not in the United States or acting for the account or benefit of a person in the United States The final size of the Offer will depend on the volume of Applications received and accepted under the Securityholder Offer and the Reinvestment Offer Suncorp reserves the right to scale back Applications or increase the final size of the Offer if there is excess demand SUNCORP Capital Notes 3 25 45#26Reinvestment Offer structure What is the Reinvestment Offer? Who is an Eligible CPS3 Holder? Options for Eligible CPS3 Holders Dividend Differences between CPS3 and Capital Notes 3 What happens to CPS3 not reinvested? - Under the Reinvestment Offer, Eligible CPS3 Holders may apply for some¹ or all of the CPS3 registered in their name at 7:00pm (Sydney time) on 6 November 2019 to be repaid in the amount of $100 per CPS3, and to have the proceeds applied on the Issue Date to the Application Payment for Capital Notes 3 A CPS3 Holder is: a registered holder of CPS3 at 7:00pm (Sydney time) on 6 November 2019; shown on the CPS3 register as having an address in Australia; and not in the United States or acting for the account or benefit of a person in the United States Option 1 - apply online or complete a paper Application Form to reinvest all or some of your CPS3 in Capital Notes 3 Option 2 - apply through a Syndicate Broker to reinvest all or some of your CPS3 in Capital Notes 3 Option 3 - take no action and your CPS3 will remain on issue in accordance with their terms If you are an Eligible CPS3 Holder and your Application under the Reinvestment Offer is successful, you (like other CPS3 Holders) will receive a scheduled dividend payment in respect of CPS3 on 17 December 2019, subject to the payment tests in the CPS3 Terms (including that the Board resolves to pay the dividend)² Capital Notes 3 and CPS3 have different rights, benefits and risks, the Reinvestment Offer is not a simple rollover in a similar investment A comparison of the key differences is summarised in Section 6.2 of the Prospectus Your CPS3 will remain on issue in accordance with their terms Suncorp may elect to either redeem, convert or resell the CPS3 on 17 June 2020, but no decision has yet been made 26 26 Notes: 1 2 If you hold 50 CP3 or fewer, you must apply to reinvest all of your CPS3 if you wish to participate. If changes are made to the timetable such that the Reinvestment CPS3 Repayment Date does not fall on a scheduled dividend payment date for CPS3 (such as 17 December 2019), then, subject to the payment tests in the CPS3 Terms (including that the Board resolves to pay the dividend), a pro rata dividend will be paid in respect of each Reinvestment CPS3 on the Reinvestment CPS3 Repayment Date. SUNCORP Capital Notes 3#27Key dates1 Key dates for the Offer Record date for determining Eligible Securityholders (7:00pm, Sydney time) Lodgement of Prospectus with ASIC Bookbuild Announcement of the Margin Lodgement of the replacement Prospectus with ASIC Opening Date for Broker Firm Offer and the Securityholder Offer Closing Date for the Securityholder Offer (5:00pm, Sydney time) Date 6 November 2019 11 November 2019 18 November 2019 18 November 2019 19 November 2019 19 November 2019 10 December 2019 Closing Date for the Broker Firm Offer (excluding applications in respect of the Reinvestment Offer) (10:00am, Sydney time) Issue Date Capital Notes 3 commence trading on ASX (deferred settlement basis) Holding Statements despatched by Capital Notes 3 commence trading on ASX (normal settlement basis) Key dates for Capital Notes 3 First Distribution Payment Date Optional Exchange Date Scheduled Mandatory Conversion Date Key dates for CPS3 Holders Record date for determining Eligible CPS3 Holders for the Reinvestment Offer (7:00pm, Sydney time) Opening Date for the Reinvestment Offer Closing Date for the Reinvestment Offer (5:00pm, Sydney time) Closing Date for the Broker Firm Offer (applications in respect of the Reinvestment Offer) (5:00pm, Sydney time) Reinvestment CPS3 Repayment Date and scheduled dividend payment date for all CPS3 Optional exchange date for remaining CPS3 Note: 1 These dates are indicative only and may change without notice. SUNCORP Capital Notes 3 13 December 2019 17 December 2019 18 December 2019 19 December 2019 20 December 2019 17 March 2020 17 June 2026 17 June 2028 6 November 2019 19 November 2019 10 December 2019 10 December 2019 17 December 2019 17 June 2020 27#28Contact directory Issuer Suncorp Group Limited Simon Lewis Treasurer +61 7 3362 4037 Greg Volz Executive Manager, Capital Funding & Instruments +61 2 8121 0501 Kelly Hibbins Executive General Manager, Investor Relations +61 2 8121 9208 Arranger Goldman Sachs Joint Lead Managers Commonwealth Bank of Australia Morgans National Australia Bank UBS Westpac Institutional Bank Further information Capital Notes 3 Offer Information Line Joe Hunt Truong Le Steven Wright Nicholas Chaplin Enrico Musso Allan O'Sullivan www.suncorpgroup.com.au/sunph SUNCORP Capital Notes 3 +61 2 9320 1324 +61 2 9118 1205 +61 7 3334 4941 +61 2 9237 9518 +61 2 9324 2985 +61 2 8254 1425 +61 1300 402 422 28#29Appendix 1 - Comparison between Capital Notes 3 and other types of investments¹ Issuer Legal form Maturity Ranking in winding-up Transferable on market Standard term deposit Suncorp-Metway Limited Bank deposit One month to five years Senior to general unsecured creditors of Suncorp-Metway Limited Term deposits are not listed Protection under Financial Claims Scheme - Yes³ Suncorp CPS3 Suncorp Group Limited - Preference share Perpetual Suncorp Capital Notes 1 and Capital Notes 2 Suncorp Group Limited Unsecured, subordinated debt Perpetual Equally with CPS3, Capital Notes 1, Capital - Equally with CPS3 and Capital Notes 3 Notes 2 and Capital Notes 3 - Yes quoted on ASX - No Suncorp Capital Notes 3 Suncorp Group Limited Unsecured, subordinated debt Perpetual Equally with CPS3, Capital Notes 1 and Capital Notes 22 T Suncorp Ordinary Shares Suncorp Group Limited Ordinary share Perpetual Junior to all creditors, including Capital Notes 32 Yes quoted on ASX - Yes quoted on ASX Yes quoted on ASX - No No Floating (BBSW + 3.40% p.a.) Capital Notes 1: Floating (BBSW + 4.10% p.a.) Capital Notes 2: Floating (BBSW + 3.65% p.a.) Floating (Bank Bill Rate + Margin expected to be in the range of 3.00%- 3.20% determined under the Bookbuild) I Quarterly - Yes Non-cumulative Quarterly |- Quarterly - Yes Yes Non-cumulative Non-cumulative Distribution Rate Distribution frequency Distribution discretionary Distribution cumulative Restriction on Ordinary Share Dividends if distribution not paid Franking Interest rate is fixed (varies across different amounts, terms and interest payment arrangements) Monthly, quarterly, semi-annually, annually or on maturity depending on the term - No - Interest payments cannot be waived or deferred I - No | Variable dividends Semi-annually Yes Non-cumulative Expected to be fully franked - No Yes, until the next distribution payment date - Yes, until the next distribution payment date | Yes, until the next distribution payment datel - n/a Interest payments are not franked Expected to be fully franked Expected to be fully franked Expected to be fully franked No Yes Yes Yes No Yes, Common Equity Tier 1 Capital Non-Viability Conversion or Write-Off Treated by APRA as regulatory capital - No - Yes, Eligible Additional Tier 1 Capital - Yes, Eligible Additional Tier 1 Capital Mandatory conversion to ordinary shares No Yes, on a scheduled mandatory conversion date, or for loss absorption 17 June 2026 (Capital Notes 2), or upon specified events (e.g. acquisition or non- viability trigger event) | Yes, Eligible Additional Tier 1 Capital Yes, on 17 June 2024 (Capital Notes 1) and|_ Yes, on 17 June 2028, or upon an Acquisition Event or Non-Viability Trigger Event4 n/a Notes: 1 2 For more information on the comparison between Capital Notes 3 and other types of investments, see Section 1.4 of the Prospectus. The ranking of Holders in a winding-up will be adversely affected if a Non-Viability Trigger Event occurs. See Sections 1.3, 2.4.4 and 5.1.9 of the Prospectus. 3 4 Up to $250,000 in aggregate per Australian deposit taking institution (ADI) declared subject to the Financial Claims Scheme across all accounts that an account holder has with the Australian ADI. Conversion is subject to conditions except in the case of Conversion following a Non-Viability Trigger Event. SUNCORP Capital Notes 3 29 29#30Appendix 2 - Corporate responsibility principles RESILIENT PEOPLE AND COMMUNITIES We respect human rights and invest in the wellbeing and resilience of our people and communities. We are there for our people and our communities in times of need. TRUST AND TRANSPARENCY We are committed to building trust and doing the right thing. We are open and transparent in our dealings with our stakeholders. RISK CULTURE CUSTOMER CULTURE د شرج Note: For further information on the Suncorp Group's approach to corporate responsibility, please refer to www.suncorpgroup.com.au/cr/reports SUNCORP Capital Notes 3 PERFORMANCE CULTURE RESPONSIBLE FINANCIAL SERVICES We put our customers at the heart of everything we do and help them make good choices. We provide customers with access to affordable financial services that meet their needs. SUSTAINABLE GROWTH We seek to innovate and optimise economic, social and environmental outcomes throughout our business and value chain. 30 30#31Appendix 2 - Corporate responsibility roadmap Trust & Transparency Sustainable Growth در گرج Services Performance highlights Conducted a full materiality assessment of environmental, social and governance topics Published targets for key non-financial performance metrics Began implementation of the Banking and General Insurance Codes of Practice Progressed implementation of Suncorp's Climate Change Action Plan and Environmental Performance Plan ☐ ✓ Responsible Financial ✓ ✓ Published targets to reduce greenhouse gas emissions Completed climate-related risk and opportunity assessment Develop approach to climate change scenario analysis Developed a Responsible Insurance & Banking Policy to strengthen business practices in line with community expectations Continued to implement recommendations of the Vulnerable Customer Review, including training for key employees Launched Clontarf Foundation partnership to support Suncorp's Reconciliation Action Plan ☐ ✓ Resilient People & Communities Further embedded social impact measurement into new community partnerships ☐ Focus for FY20 Track and respond to insights from the social licence & trust research on an ongoing basis Fully implement the Banking and General Insurance Codes of Practice Further align business activity to the United Nations Global Compact and Sustainable Development Goals Conduct supply chain environment, social and governance (ESG) risk assessment and publish first Modern Slavery Act Statement Publish first Proxy Voting Summary Conduct climate change scenario analysis and publish findings in line with Task Force on Climate-related Financial Disclosures (TCFD) Implement the Responsible Insurance & Banking Policy and conduct portfolio ESG risk assessments Implement standards to support customers experiencing vulnerability including domestic violence, financial hardship, and accessibility Develop community sector partnerships to provide external referral pathways for customers experiencing vulnerability Focus leadership effort on employee engagement and purpose Expand the Future Ready program Develop Indigenous Employment Strategy and cultural awareness training for Suncorp's people Note: For further information on the Suncorp Group's approach to corporate responsibility, please refer to www.suncorpgroup.com.au/cr/reports SUNCORPO Capital Notes 3 31 31#32Appendix 3 - APRA risk governance self-assessment summary of findings Board & Senior Leadership Governance Suncorp's Board and Senior Leadership was generally found to operate well with an underlying culture of constructive challenge and collaboration. Board and Management reporting could be improved, including the provision of relevant customer, risk and performance metrics of the business. Non-Financial Risk management could benefit from greater visibility and focus. Risk Management & Compliance Suncorp's risk and compliance practices have matured over recent years. Opportunities exist to further uplift risk and compliance capability, including a greater focus on Conduct Risk. Inconsistencies were identified in the application of the Three Lines of Defence Model. Issue Management While more complex and severe customer complaints are given heightened attention, the lower level complaints would benefit from more focus including identifying themes and the management of emerging issues. Whilst Suncorp's people feel comfortable to raise issues, the systems in place have made it challenging to raise them simply, impacting the ability to quickly respond. Suncorp has a mature and professional relationship with its key regulators. Financial Objectives & Accountability When making investment decisions, Suncorp has structured criteria in place with no evidence of bias against risk and compliance related projects. However, there is an opportunity to increase the voice of the customer in these decisions. Suncorp's operating model has created some complexities in defining accountabilities, particularly where activity crosses multiple functions. Remuneration Suncorp's remuneration frameworks are regularly reviewed and challenged, with the Board playing an active role in their development. While Suncorp has the policies in place to impact individual performance results for poor risk outcomes, there are inconsistencies in their application Culture & Leadership Suncorp's culture benefits from a clear and consistent 'tone from the top' with a focus on openness, honesty and customer outcomes. However, there are examples of inconsistency in the application of this desired culture and there could be more done to embed the Suncorp culture model and risk culture principles across the organisation. Suncorp is responding to the recommendations identified in the self-assessment with progress reported to the Board regularly SUNCORP Capital Notes 3 32 32#33Appendix 3 - APRA risk governance self-assessment lessons 2018/2019 has reinforced the importance of trust and doing the right thing by customers, the community and shareholders. Suncorp has reflected on the lessons learned and is committed to building a more responsible and resilient company. Orientating around a natural disaster Suncorp people respond well in times of crisis (e.g. the Brisbane floods and Cyclone Yasi), often being the first on the ground helping our customers recover. This focus on orienting around a challenge can divert attention away from the delivery of operational excellence in the day to day running of the business. Prioritising non-financial risk Following the Global Financial Crisis, Suncorp has focused on managing financial risk including ensuring the financial stability of the organisation. This may create the potential for Suncorp's people to perceive that non-financial risk does not have the same priority. Complex operating environment Suncorp's operating environment has become complex with examples of policies, procedures and systems having evolved and being added to over many years. This complexity manifests in Suncorp's people needing to exercise judgement to do the right thing, which may lead to inconsistencies. Clarity of accountability Within the Group's operating model there are examples where Suncorp's people don't fully understand their accountability. This lack of clarity may impact the quality and speed of decision making by Suncorp's people. SUNCORP Capital Notes 3 33 33