So far this year the Suncorp Group Ltd (ASX: SUN) share price has fallen around 1.5%, underperforming both the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) and its rivals QBE Insurance Group Ltd (ASX: QBE) and Insurance Australia Group Ltd (ASX: IAG).
But following a solid half-year result in February could the Suncorp share price soon start to head in the right direction again?
I think it could. Especially as I believe Suncorp's shares are great value at present. At 15x estimated FY 2017 earnings Suncorp can be picked up at a significant discount to both QBE and IAG which trade at 17x forward earnings.
Furthermore, Suncorp provides investors with a market-beating fully franked trailing 5.3% dividend. By comparison, IAG's shares offer a fully franked 4.2% dividend and QBE offers investors a partially franked 4.2% dividend.
But what about its performance?
As I said in February, I felt the insurance giant's half-year result was solid yet unspectacular. Half-year revenue from ordinary activities increased 10.8% to $8.6 billion and cash earnings rose 5% to $584 million.
Pleasingly Suncorp delivered a big improvement in its insurance trading ratio. This important metric is an insurer's underwriting result. It is equal to its net earned premium less net incurred claims and operating expenses, plus the investment income on assets backing technical reserves.
During the half its underlying insurance trading ratio rose from 10.1% to 11%. The good news here is that CEO Michael Cameron believes it is on a path to 12%.
In my opinion this result showed that its new operating model is working and I feel confident that further improvements in the business will come in due course, increasing the company's overall profitability.
All in all, I think Suncorp would be a great buy and hold investment today. Not least for those in search of generous and growing dividends.
