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Operator: Good day and thank you for standing by. Welcome to QBE FY '24 Results. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chief Executive Officer, Andrew Horton. Please go ahead.
Andrew Horton: Good morning, and thank you for joining us today. I'll start by acknowledging the traditional owners of the many lands on which we meet today. For me, this is the Gadigal lands of the Eora nation and recognize their continuing connection to land, waters and culture. I pay my respects to the elders, past and present, and I extend this respect to any First Nations people joining us today. Now three years on from the launch of our new purpose, vision and strategic priorities, I think these are excellent results and showcased the benefit from our focus on improved and more consistent performance. So let's move to slide 4. We entered 2024 with a simple ambition to beat our plan for the year and continue to grow our business. On both fronts, I think we've done a great job. Headline growth of 3%, includes a drag from exited lines and crop. Excluding this, we delivered underlying growth of around 9%. Markets remain attractive for us, and we see another great opportunity for growth in 2025. Our combined operating ratio of 93.1%, improved by around two points. And importantly, we beat our plan for the year of around 93.5%. The result holds plenty of proof points in our strive to greater consistency, which I'll touch on shortly. We had a record investment result with a total income of around $1.5 billion, representing a return of almost 5%. And collectively, our return on equity of 18.2% was excellent and QBE's highest in well over a decade. Once again, we started a new year with financial markets calibrated to a higher for longer interest rate outlook, and this should support another year of excellent returns. Our balance sheet is in great shape and we've announced a final dividend of $0.63. This brings the full year dividend to $0.87, which is 40% higher than the prior year and represents a full year payout ratio of 50%. Let's turn to Slide 5. I wanted to start today with a recap of the journey we've been on. Three years ago, at the beginning of 2022, we launched our new purpose, vision and strategic priorities. Our strategy was underpinned by a desire to become a more consistent organization, more consistent in how we interact with our people, partners and customers and in turn, more consistent in our financial performance. We also had to do a better job at operating as one cohesive enterprise, better leveraging our unique international position and scale. Three years on, I think we've executed well. This slide outlines some of the most important initiatives, which have played a role in de-risking and reshaping our portfolio, reducing volatility and improving performance in North America. Right through this period, we've also grown our business consistently delivering mid-single-digit ex rate growth. We have the breadth, both by region and product to be capable of delivering mid-single-digit volume growth sustainably. Our ability to execute on these initiatives and improve performance would not have been possible without the greater alignment, stability and collaboration we enjoy across the enterprise today. Our teams are engaged and motivated and we're building a culture defined by performance, innovation and exceptional customer service. As I outlined at our half year result, we feel 2024 has been an important transition year for QBE. In recent years, our strategy and focus held the heavy bias towards portfolio optimization initiatives, including a number of portfolio exits, reserve transactions and actions to reduce property exposure. As we enter the new year, we feel our underwriting portfolio is in great health and balance. With the vast majority of our business performing well, we should be able to spend more of our time planning for the future, rather than addressing problems created in the past. This is reinvigorating for our people. It's more enjoyable to modernizing and growing our business than being preoccupied with remediation. So then what does the next few years for QBE look like and what do we want to be known for? Firstly, we're a uniquely positioned international carrier with strong presence and relationships across all key markets and platforms. This lends us a level of portfolio diversification, which now in better balance will drive more stable and predictable underwriting performance. We want to keep growing and effectively build on this better base. With numerous opportunities to deepen our core franchises, expand into adjacent markets and innovate around new product and risk, we have the right ingredients to develop sustainable mid-single-digit volume growth. We're now deeper into a number of important work streams on our operating model efficiency and effectiveness. Alongside growth, efficiency will be a primary focus for the year ahead and this will work -- and this work will unlock significant value. And finally, we want to be known for being highly disciplined in how we allocate and manage capital. We'll spend more time on each of these topics throughout the morning starting with a closer look at our underwriting portfolio on Slide 6. This chart provides a view of our underwriting result broken down by our key business focus areas, being commercial and specialty insurance, plus our reinsurance business QBE Re. We also hold two leading positions in two non-P&C classes, crop insurance in North America and Lenders Mortgage Insurance here in Australia. And finally, we have a consumer lines presence also here in Australia. The progression in this chart highlights the greater breadth of performance across our business. In the years past, our earnings mix was overly reliant on a smaller number of profitable sales. With the vast majority of our business now generating performance at or above target, our earnings are in better balance. This improved earnings quality combined with disciplined capital allocation and our diversification provides a solid platform for sustainable performance. Moving to the chart on the right, which we shared at the half year. This chart shows the proportion of our premium by those sales posting an underwriting profit versus those underperforming cells with a combined ratio above 100. It provides a different lens to many of the themes I just touched on showing the greater breadth and diversification in our earnings with our underwriting result being driven by a much broader mix of sales. While supportive markets have helped this trend, internal initiatives have arguably been more important. In my experience, poor-performing insurance businesses can have a vastly disproportionate impact on your results relative to the better ones. We spent many years focused on remediation, more consistent underwriting performance discipline and volatility. I think we've also shown good decisiveness in exiting a number of portfolios and established a good process for addressing underperforming sales. The benefits from these actions will be lasting. And this will -- in this picture, will continue to improve particularly as a residual impact from noncore lines is nearing completion. So, turning to Slide 7. So putting some numbers to the story how did this all play out in 2024. The three key drivers of our combined operating ratio all showed improvement versus the prior year and most importantly, greater resilience. Starting with the catastrophe costs. We came in comfortably below allowance, marking the third consecutive year where natural catastrophe costs have trended at or below budget, noting that 2022 included a provision for the conflict in Ukraine. With around $150 billion in global insured losses for 2024, one of the highest on record, we feel pleased with this result. Our efforts to reduce catastrophe volatility are now clearly translating into a more favorable balance of risks in this space. Turning to reserving. Our central estimate reserves were stable in 2024. This is the output of high-quality underwriting a number of reserve transactions to reinsure our most problematic reserves and more consistent reserving across the group. This comes in a year where many of our peers have had meaningful casualty reserving challenges. particularly in North America. For our North American division in 2024, we had releases across most core lines. Finally, on ex-cat claims. Excluding crop, our ex-cat claims ratio has steadily improved and I think we've navigated well through a difficult inflationary environment. Taken collectively, I think this year's underwriting performance provides a strong marker on the execution of our strategy and transformation, which our business has undertaken. We beat our plan for the first time in many years had strong growth in book value per share and our ROE of 18% is QBE's highest in well over a decade. Before moving on, while a lot worked well this year our performance in crop clearly missed the mark. I'm frustrated as our result this year suggests we're out of balance and yet we have everything necessary to achieve balance and should be doing better. This will be a key focus for the year ahead and Inder will give some more context shortly. Let's move to Slide 8. We've been talking at these briefings more regularly around our ambition for sustainable growth. I think the chart on the left highlights we've been quietly building a solid track record. We ultimately have all the right ingredients to be capable of sustaining this trend and want to deliver consistent volume growth around the mid-single-digits. In the very near-term, while there will be greater competition in some lines this year, rate adequacy is excellent across our portfolio and markets remain quite supportive. One of the most enjoyable parts of 2024 was having more time as a management team to focus on growth. We have really good alignment across the enterprise on our best opportunities and a better linked investment to support these priority businesses. Our diversification should be a source of competitive advantage both in terms of managing volatility, but also in terms of achieving steady growth. At our core, we are a commercial and specialty insurer and reinsurer. This slide shows that growth across each of these segments has been fairly consistent, which represent around 85% of our premium base. This has been a function of deepening our core franchises, leveraging existing capability and relationships to build presence in adjacencies and the launch of new products. As we look forward, we have great opportunities in each of these categories. In a number of our core franchises we've been investing in data and technology to improve straight-through processing, partner connectivity, and customer experience. We think these investments will drive differentiating capability with industry-leading tools and efficiency. We have a great brand, culture, and much improved stability in our key markets. Underwriters want to work for QBE and we've had great success standing up new teams, particularly where we can boost our profile in adjacent lines. In international, we've added capability in QBE Re and European Specialties, North America within construction, health care and large casualty and Aus Pac, we've expanded in construction, engineering and education. This year, we'll add capability in US E&S property, global cyber and write more business directly out of Bermuda. We've also laid foundations to build a more targeted multinational offering, bringing together the skills and relationships, we have across the enterprise. Finally, we want to foster an innovative underwriting culture and are known for our ability to solve complex problems. We've had great success playing a lead role in a number of broker facilities, and of just last month announced a partnership with Ki and algorithmic Lloyd's, underwriting platform. Digital and algorithmic underwriting models have been around for many years in various formats, and where we can take key partnership roles I think they have a role to play in a well-diversified portfolio. Across the entirety of our growth strategy are still relatively new Head of Distribution, Julie Minor, will add to these initiatives through driving greater strategic alignment, with our trading partners. Julie will also lead our new customer strategic priority, where through better segmenting of our customers by account size and the build of greater customer analytics and sales data, ensure we better serve the unique needs of our customers. In QBE's recent history, this will be the first time where we've had an enterprise distribution and customer strategy, which has been long overdue. So moving on to Slide 9. As we look out over the medium term, we want to be known for being disciplined and transparent in our approach to capital allocation and capital management. We have a diverse international portfolio, with products following different cycles. As such, capital allocation will be a key driver of our returns and value creation, and we're now in a better position to drive performance through more active portfolio management. We've included our capital allocation framework here. It's quite simple, we have an aspiration to grow ex rate, at around the mid-single digits. All our pricing models are calibrated to achieve a target return on capital, which works out to roughly 1.5 times, our weighted average cost of capital. These are very attractive financial returns. And understandably, we will always look to reinvest back into the business and grow provided we can achieve our pricing targets. We have a 40% to 60% dividend payout ratio, which would be highly dependable through market and economic cycles. And finally, we have additional levers to distribute surplus capital beyond the dividend as needed. As I flagged in the past, inorganic opportunities are not a major focus for us. We typically approach capital location and budgeting, through our annual planning process. As we look to 2025, markets are very supportive and growth remains our primary focus. Having just delivered an 18% ROE, capital flexibility is important. And if we can find the right opportunities, I'd love to beat our growth plans for the year. Over the medium term, however, with our capital in a very strong position, we intend to return any surplus capital, if opportunities for reinvestment and growth are not there. We'll consider the mix of any distribution between the ordinary dividend and additional capital management, as we go. Looking forward, we also expect our organic capital generation should improve. While our capital position has continued to improve both in quantum and quality, our net organic capital generation has been limited until very recently. Through recent years, there's been a significant strain on our business from higher inflation in our reserves, and associated premium rate increases. There's also been a strain on capital associated with rerisking, our investment portfolio. As such, other initiatives like asset divestments and LPTs have been important in supporting growth and our overall capital position. From here, we'd expect the strain from inflation to moderate, and we're now essentially at our target investment mix. So to conclude on the two charts here, the messages are fairly simple, the returns we're generating at the moment are excellent and there's great momentum in the business. Over the near term, we'll continue to way up the scope of returning surplus capital, with what remain attractive markets for growth and keep you posted as our thoughts evolve. With that I'll now pass to Inder.
Inder Singh: Thank you, Andrew and good morning, all. It's pleasing to deliver another year of strong financial performance. In 2024, we beat our underwriting plan, continue to drive profitable growth, delivered an exceptional return on equity of 18%, and on any measure our balance sheet is in the best health it's ever been. As Andrew referenced the initiatives to rebalance and de-risk our business, have given us a really solid foundation on which to sustain strong performance over the medium-term. I'll start with an overview of our results on Slide 11. GWP of $22.4 billion was up 3% over the prior period though closer to 9% excluding crop and business exits. The combined ratio improved by roughly 2 points to 93.1% on more stable reserve development and lower catastrophe costs. The investment portfolio delivered an annualized return of almost 5% supported by strong performance in both core fixed income and risk assets. The result includes a restructure charge of $147 million. This includes two key components: Firstly, we flagged a restructure charge of around $100 million for costs associated with the exit of North America Middle Market. Secondly, in August we announced a transaction to reinsure $1.6 billion of reserves with an up-front cost of around $80 million. Middle market reserves were roughly half of this transaction and we recorded $40 million of this cost in the restructuring line with the remainder absorbed in the group combined operating ratio. Our tax rate was 22%, slightly lower than the blend of corporate tax rates across our business as improved profitability in North America has allowed us to recognize previously off-balance sheet tax assets. These tax assets have now been fully recognized. And as we look forward, the group's tax rate is likely to reflect the blended corporate tax rates across our business and we expect this to be around the mid-20% range over the medium-term. Adjusted net profit was $1.73 billion, up almost 30%, resulting in a group return on equity of 18.2%. Our capital position remains very strong with the PCA multiple at 1.86x. The Board has declared a dividend of AUD0.63 per share taking the full year dividend to AUD0.87, which equates to a full year payout of 50%. Turning to growth on Slide 12. Headline growth of 3% was in line with our guidance. Excluding the impact of crop growth was 5%. And on further excluding the impact of portfolio exits growth was closer to 9%. This represents further compound rate increases of around 6% and ex rate growth on the same basis of 5%. As Andrew referenced, we are now building a track record of consistent mid-single-digit ex-rate growth. To support this momentum we are investing in initiatives to deepen our core franchises, grow our presence in adjacent, underpenetrated segments and capitalize on current market opportunities. A brief comment on the portfolio exits this year. The middle market runoff has tracked ahead of expectations with GWP decreasing from $500 million in 2023 to around $200 million in 2024. We also exited domestic third-party property relationships amounting to around $200 million. As a result, the total drag from exited portfolios in 2024 was around $600 million, amounting to around a three-point impact on the group's premium growth rate. The drag from exited portfolios will moderate from here. Our portfolio is in good health and balance. We have sound remediation plans in place for those remaining underperforming portfolios. Turning now to Slide 13 for some comments on our underwriting performance. We've delivered a very strong underwriting result of $1.2 billion in 2024, and we see further scope to drive improvement in 2025. Premium rate increases were supportive through the year at around 6%, albeit as we've previously flagged, the rate of rate increase continues to moderate. These rate trends reflect lower claims inflation, strong rate adequacy across most lines and lower increases in property classes following the substantial hardening in 2023. In the middle of the slide, we've included a view of our premium rate increase by business segment. It gives some clearer insight into what we're observing across the group. Following quite substantial rate increases in recent years, rates have been moderating in specialty classes, particularly within financial lines and more recently in a number of Lloyd's portfolios. Profitability is strong in the majority of these lines, and we are continuing to see some lift in competition. As we look forward, technical rate adequacy remains attractive across most specialty classes, and there are meaningful opportunities for targeted growth. Conversely, you can see that rates across commercial lines have been more steady. Our presence in this segment has a bias towards small- and medium-sized businesses in large mature markets where we hold strong shares. Pricing cycles tend to have less amplitude in these markets and rates will continue to reflect challenges associated with inflation in motor, construction costs and the ever-present risks around social inflation. Our combined operating ratio of 93.1% was better than our plan for the year of 93.5%. Catastrophe costs of around $1.05 billion were comfortably within our allowance for the year of $1.28 billion. This marks the third consecutive year where natural catastrophe costs have tracked at or below budget, which speaks to the progress we've made in reducing volatility across our portfolio. It's important to note that 2024 was one of the more costly loss years on record with industry catastrophe losses of around $150 billion. This included an active US hurricane season and a higher frequency of secondary perils. The ex-CAT claims ratio increased on a headline basis, though on excluding current year risk adjustment in crop, improved by around 1%. Claims inflation moderated slightly to around 5%. While this was in line with our expectations at an aggregate level, trends remain heavily nuanced by class and by region with a number of short-tail lines in Australia still working through persistency challenges. Overall reserve development was again favorable, and we were particularly pleased with the stable development around our central estimate reserving basis. Over the period, we saw releases in a number of North American short-tail classes, including crop as well as CTP and LMI in Australia. These were broadly offset by reserve strengthening in certain international liability and reinsurance lines. A brief comment on some of the recent industry events making headlines. Our thoughts are with those impacted by the tragic fires which occurred in California last month. Our teams have been working tirelessly to support our customers. We are still assessing our group net exposure to this event, but currently estimate this to be around $200 million, predominantly through certain North American portfolios as well as within the Lloyd's property book and also within our reinsurance business QBE Re. Moving to expenses. Our expense ratio increased to 12.2%, primarily reflecting higher change spend to support our modernization programs. This elevated level of chain spend will continue in 2025 and we expect the expense ratio to remain in the 12% to 12.5% range again this year. Andrew noted earlier that we see significant opportunity to become a more efficient and effective organization. And this together with the benefits from our modernization programs should support a lower expense ratio over the medium-term. Turning now to slide 14 for some color on divisional performance. We're very pleased to report that each of our three divisions delivered a year-on-year improvement in underwriting results. In North America, our combined ratio improved to 98.9% despite the drag from non-core lines and from crop. Disappointingly the crop combined ratio of around 99% was worse than we anticipated at our trading update in November. Although, the harvest rain early it did not translate into earlier claims notifications and we underestimated the impact from drought and commodity price weakness in a handful of states. We also experienced some late season weather on our private hall book. We're frustrated with the outcome and have initiated a series of actions to improve performance. When we disaggregate our performance by state it's clear that we have the opportunity to improve, we have the tools and diversification in our premium base to support better balance and more consistent results. We've recently strengthened our crop leadership team with the appointment of a new CFO and Head of Marketing and our razor focused on restoring our industry-leading performance in crop. Turning to international where performance was excellent. The combined ratio of 88.7% improved by around one point supported by strong momentum and favorable catastrophe experience. We spent a lot of time discussing actions to reduce property cat volatility in North America and in Aus Pac. International has also been actively focused on property derisking particularly in QBE RE and has significantly reshaped and improved its portfolio. The benefit of that work is clear in these results. QBE Re delivered a strong result in a heavy cat year and avoided many of the secondary perils we would have historically paid claims on. Our London, UK and European property books also performed well. The higher ex-cat claims ratio included a strain from large loss activity including exposure of around $70 million to the Baltimore Bridge event. The combined ratio in Australia Pacific improved by around 1.5 points to 92%. Catastrophe costs track broadly to plan following a more benign second half. The ex cat claims ratio deteriorated by around one point or 0.5 point excluding risk adjustment. While recent rate increases are supporting performance improvement across the majority of lines inflation challenges persist in motor and property and we've also seen higher claims frequency in New South Wales CTP. Turning now to slide 15 to give you some additional color on North America. This slide provides a view of core and non-core segment performance consistent with our disclosure in prior periods. Starting with core performance on the left, we've continued to execute well on our growth strategy. Excluding crop, GWP growth of 13% was driven by rate increases of around 7% and ex-rate growth of around 10%. Ex-ate growth was fairly comparable in both Commercial and Specialty segments supported by ongoing momentum in larger franchises such as accident health and a growing contribution from newer businesses like specialty casualty, health care and construction. The overall core segment combined ratio of 94% was consistent with performance in recent years. This was supported by strong results in Commercial and Specialty partly assisted by reserve releases in some short-term lines, but also impacted by the poor crop result I just referenced. In commercial, we are particularly pleased with the performance of our property programs book given the heavy remediation work we've done in recent years including significant improvement in pricing and terms. Our cat experience in 2024 was encouraging in this regard. Our share of Hurricanes Milton and Helen was substantially lower than comparable events in recent years and overall catastrophe costs for the core segment accounted for only 30% of North America's total cat costs. Turning now to the performance of the non-core segment. This was broadly in line with expectations with a loss of around $220 million. The main driver here was the exposure to convective storms in the first half with some additional impact from the hurricanes I just referenced in the second half. By way of a quick recap, North America contributed the majority of ceded reserves in the $1.6 billion reserve transaction we did last October. This included all middle market reserves and all remaining non-core long-tail lines. The two large reserve transactions we have completed over the last 24 months have been incredibly important for us, particularly given the current social inflation challenges in casualty classes we're seeing across the industry. As we look to 2025, we expect the GWP drag from remaining middle market and Westwood Homeowners books to be around $250 million with a negligible amount in 2026. We will have around $300 million in non-core net insurance revenue in 2025 with a small amount left in 2026. The outlook for the non-core segment in 2025 remains an underwriting loss of around $100 million and this is in line with our previous guidance. Moving now to slide 16. A brief word on our recent reinsurance renewal. Our key catastrophe and risk covers for 2025 remain fairly consistent and we continue to enjoy strong support from our reinsurance partners. Pleasingly, we were able to reduce the attachment point of our main catastrophe cover from $400 million to $300 million for North American, Australian and New Zealand events and to just $200 million for the rest of the world. The prior attachment point of $400 million had been in place for many years. Our ability to reduce this for 2025 speaks to our substantial reduction in cat exposure in recent years particularly in the US and in Australia and the overall improvement in the quality of the cat exposure that we write. We've spoken to you at length about our portfolio remediation actions and it's pleasing to have this progress validated by our reinsurance partners. This means our catastrophe retentions were reduced by over $50 million for peak perils as highlighted on the right. Taking all this into consideration we have set our catastrophe allowance for 2025 at $1.16 billion. This is calibrated to a probability of sufficiency around the 80th centile which is very consistent with our approach in recent years. The reduction in the absolute cat allowance from $1.28 billion is explained in large part by the runoff of non-core lines which carried meaningful cat budgets. We've again included our as-if analysis here in the chart on the bottom right-hand side. This overlays our 2025 reinsurance program across our historic cat experience. And as you can see this year's allowance would have proven adequate in eight of the last 10 years. Moving to an update on our investment portfolio on slide 17. Our investment book delivered a record year with total investment income of almost $1.5 billion, representing an annualized return of almost 5%. The fixed income return was fairly stable around 4.6%, and our risk asset portfolio performed well, particularly given some of the challenges in the unlisted property sector. The core fixed income yield exited the year at 4.3%, and it continues to hover around this level in early 2025. Our risk asset portfolio now represents around 14% of total assets, broadly in line with our target allocation. A brief reminder on the evolution of our strategy for the core fixed income portfolio, which we outlined last August. To better hedge some of the interest rate sensitivity that exists in our regulatory capital, we have built a portfolio of fixed income securities that will follow fair value accounting with mark-to-market impacts being recorded within equity or other comprehensive income. This portfolio has now reached around $3 billion to $3.5 billion, where it should remain broadly stable. These securities have a longer average duration than the remaining $23 billion core fixed income book, which has raised total duration to around 2.4 years currently. Moving now to slide 18. We've spoken about the improved quality and resilience of our earnings and the same themes clearly extend to our balance sheet. On any metric, our balance sheet is in great health, giving us ample flexibility to support organic growth. Our regulatory capital position ended the year at 1.86 times, up around 4 points. This was predominantly driven by an increase in our Core Equity Tier 1 ratio to 1.31 times as the quality of our capital continues to improve. Following the payment of the final dividend, we entered the New Year with a pro forma PCA position of 1.77 times. Debt to total capital continued to reduce and is now a fraction below 20%. It's pleasing that both S&P and Fitch recently revised their outlook on QBE from stable to positive, reflecting improvement in our earnings quality and operating outlook. Before closing, I wanted to flag the recent and successful launch of QBE's first catastrophe bond. The deal secures around $250 million of catastrophe coverage, which will support growth and diversify our access to alternative pools of capital. As a business, our presence and partnership with alternative forms of insurance capital is limited, but with a unique international presence, which spans almost all classes of business, we see great opportunity to bring additional diversification to our capital strategy. I'll pause here and hand back to Andrew.
Andrew Horton: Thanks, Inder. Let's now have a look at the outlook. For 2025, we see further growth and continued improvement in our combined operating ratio. We expect constant currency gross written premium growth to track around the mid-single digits. The drag from exited lines should broadly halve from around $600 million in 2024 to $250 million in 2025, which will represent a one to two point drag on group growth. For our combined ratio, we see scope to drive further improvement and expect a group combined operating ratio around 92.5%. This is a one point improvement from our 2024 plan of 93.5%, which is driven by the reduced strain from North America non-core lines, portfolio optimization initiatives and the benefit from favorable markets. And finally, on investment returns, our exit running yield was 4.3%. It's been challenging to try and predict the path of interest rates recently, but at present, increasing friction in global trade from tariffs would undoubtedly have inflationary consequences for parts of the world. Collectively, the outlook for returns remains excellent, and we'll circle back to discuss how the first half is tracking at our first quarter update on May 9. To close, we're generally excited about the opportunity ahead of us. Personally, I feel more confident about our future than at any other point in my time at QBE. I want to thank our 13,000 people for their effort and commitment. I'm extremely proud of the transformation we've been able to achieve together in such a short time. With that, I want to thank you for joining us and I'll pass back to the operator for Q&A.
Operator: [Operator Instructions] Our first question comes from the line of Andrei Stadnik from Morgan Stanley. Your line is now open.
Andrei Stadnik: Good morning, Andrew, Inder. Can I ask my first question around the target growth areas? Because I think some shareholders might have been thinking about capital management, but you highlighted back of growth areas. So, can you spell out a little bit more in terms of which regions and which lines of business you see in the attractive growth areas from here?
Andrew Horton: Yes. Let me start on that. I mean the aim Andrei is to try to grow almost everything if can because we do still think technical pricing across most lines is fine. We've outgrown before that public company D&O in the US is very tough at this point in time. And cyber is also a bit more of a challenge. But the aim is to try and grow everything. If you look at specific things, we still believe we can grow our presence in the reinsurance market at QBE Re. We start from a reasonably sized book of business that can grow. We're looking at our facilities business as well. So within QBS, we've announced we've signed up to the algorithmic underwriting of Ki. Our A&H business in the US specifically, it grows well each year and has good margins ever since we've been in that business. And therefore they have plenty of opportunities to increase their position in that market. And despite the challenges within the cyber market at this point in time, we start from a relatively low base. So we are looking to grow that, but are aiming to grow across the board.
Andrei Stadnik: Thank you. And my second question around the dividend. So you highlighted the payout range between 40 and 60, so is there a distinct possibility for the payout to go to about 60% in 2025 given the strong capital position?
Andrew Horton: Andre, I'm going to be really boring with my answer to this, but generally the way we look at it is when we get towards the end of the year, we'll see what our growth for '26 looks like our performance of '25 is and where the PCA range is. So we commit to distributing surplus capital if we're well above the range or outside the range because we want to make sure we bring it back within the range. So yes, I mean there is a possibility of that but that depends on how 2025 runs and how the market is looking in '26. So there is that possibility, but we're not committing to any particular data at this point in time. I want to see where we are. We'd rather reinvest if we can if the market opportunities are there.
Andrei Stadnik: Thanks so much.
Operator: Thank you. Our next question comes from Kieren Chidgey from UBS. Please go ahead.
Kieren Chidgey: Good morning Andrew, Inder. A couple of questions. Maybe just starting back on GWP growth you're guiding to. I guess mid-single digit with a 1% drag from exits so call it 6% underlying. Can you give us a sense of the breakdown, the composition of that between rate and volume? And Andrew, you also touched a couple of times on, I guess, some new facilities. Just interested on the -- if you can expand on the broader contribution currently from delegated authority facilities across the business.
Andrew Horton: Okay. So I'll start on the rate. I mean, we're planning I think on a rate of around 3% increase, right? 3% to 4% rate in 2025. There's a lot more to it, though, because we don't -- sadly, we don't retain every single bit of our business. So we have a retention rate in the mid- to high 80s and we have to replace that. But we're expecting rates across the total portfolio to be around the 3% to 4% mark. On the facilities, this is the -- the facilities that I was talking about under QPS are not delegated authorities where we're getting business to underwrite on our behalf. This is writing a broad range of diversified book. And we've announced -- which we do with a number of brokers. And there's just scope for those to continue to grow. One of them only started towards the beginning of last year. And therefore, we've got potential growth in that. And other brokers are looking at doing facilities in 2025. So I think there are going to be more coming into the market, which just gives an opportunity to grow that. Currently, I think we write around $1.2 billion of facility business. I'm looking to Inder to make sure, I don't get the numbers completely in the wrong ballpark, but I think that's roughly where how much we write at the moment and we could grow that.
Kieren Chidgey: Thanks. And second question on capital. You've talked to sort of increasing organic capital generation. You're already above the top end of your target PCA range. And you've committed today to returning surplus capital. Just a couple of questions around how we should think about that. Can you give us some metrics for how you will define surplus capital? Is it anything above 1.8 times? Or is it the midpoint of the range? Is it pre or positive? And also is that assessment only at the end of the full year? Or is it something you would even consider partway through the year?
Andrew Horton: It's a good question. So we're looking at it positive. So are we within the range after the dividend has gone out because the dividend goes out in relatively short order post the results. I think it's more of a full year issue than half year issue. I don't want to never say never because you may end up something unusual happening in the market. But I think it lends itself better to a full year issue, because we have a much better understanding of what the market is going to be like in 2026 as you get at least halfway through the year. And therefore, you have a better idea of your growth opportunities and then you have a better idea of what capital you need to support those growth opportunities. So in my view, it generally lends itself better to a full year discussion as we hit November, December, the December Board meeting we have and then on to the New Year. Inder, do you have different thought?
Inder Singh : I think you covered it.
Andrew Horton: Okay, fine.
Kieren Chidgey: Okay. And just sort of -- it's relative to the 1.8 to the midpoint of the rate?
Andrew Horton: No. Again, I think it's depending on how we feel about the market conditions. So we've got a range of 1.6% to 1.8%. It feels good to be near at the upper end of the range at this point in time, while growth is still good. So we have the capacity and capability to do that. Because we don't know we've been talking about the facilities. We don't know how many of these are going to come on stream and they can grow relatively quickly. Other opportunities can grow relatively quickly and want to be able to make the most of it.
Kieren Chidgey: Okay. Thanks. And one final question, just on crop. You're obviously disappointed by the combined ratio as would be shareholders. The gap between yourself and your largest peer Chubb is growing even though we're at 91% on an accident year basis into your 100. I mean you referenced a few things you're looking to change for 2025. Can you unpack a bit more around what they are, and also how are you actually thinking about the normalized combined ratio in this business moving forward in terms of what's been embedded in the guidance 2.5% core for the group?
Andrew Horton: Yes. So let me start on the beginning bit, yes, because we've had another competitor announced over the past 24 hours and their numbers are more sort of in line with ours. But you're right. I mean we must have a different balance in our book. I mean that must be the difference when we've got a difference in combined ratio. So we've got to look at can we optimize the balance in the book better and we should be able to do that. I mean we're a large crop insurer. We're writing in every state a reasonable amount where we've got balance of crops in that. We also need to look at the bespoke products we also write writing hail and so on elsewhere to make sure we haven't got too much of that, because historically that has not been -- hasn't made great money for us. So just looking at that balance, again. We've also got different balances in various books. I mean if you look at that and see if we can do it. Tools are there. So we have that opportunity to do it. The good thing is, because I was slightly concerned over the past five years is this fundamentally a lower-margin business with more extreme weather events and it shows that that's not the case that we can get a good balance in the book. A few states do have a major material impact to us so how do we get better balance away from those and into others. The second element was a more technical one, wasn't it?
Inder Singh: I think Kieren, we -- you're asking, I think whether we are changing our view on the, I guess, achievable combined ratio for crop. And I think as far as our plans for 2025, we feel that 93, 94-ish range is still what we're planning to. Clearly we've got a bit of work to do to make sure over the next couple of months that we set the business up to give us greater confidence we can get to that. A number of the actions that Andrew has highlighted already in train, and so we feel that's a sensible plan for this year. But clearly we've got some work to do.
Kieren Chidgey: Got it. Thank you.
Operator: Thank you. Our next question comes from Simon Fitzgerald from Jefferies. Your line is now open.
Simon Fitzgerald: Good morning. Thank you for taking my question. Just on the reinsurance costs, obviously, the changes in the attachment points look like a very good outcome for QBE. I was just wondering if you could make a few comments just in terms of the cost going into FY 2025. I'm interested to know on how we should think about the reinsurance expenses line in particular.
Andrew Horton: I think it was a relatively flat renewal, I think year-on-year maybe down a small amount. I mean one of the reasons that the attachment is low as we've done -- I think we've done a good job at de-risking the portfolio. So the view of the reinsurers as they've confirmed that, are happy to have a lower attachment for us. And based on our modeling and their modeling, the risk of attachment is the same at $300 million now than it was at $400 million a year ago. But overall the cost of the program didn't move much. It may be a small saving year-on-year but not a material saving to the group.
Simon Fitzgerald: Excellent. That's very helpful. Thank you. And then just in terms of the cap on maybe you could just sort of talk about, I think it was -- is it just two events and how that sort of works in terms of payouts, et cetera? Just interested to know a little bit more about that. But then also whether you might look to do other cat bonds throughout the year?
Inder Singh: Sure. So, look, excited that we've done our first cat bond. It is a very small part of the program. We're not relying on this to work in the context of the core part of the program. It is a single shot cover but effectively we have coverage over a three-year period. So – and it's really very much focused on the peak perils in North America. So look it's a start for us. Would we look at doing some additional. Yes, if we see the opportunities as growth emerges to do that we think it makes sense. Clearly there is a difference to traditional covers in the sense that you have some basis risk, so we need to be mindful of that but clearly has a better cost to it. So I think in the round it just is a nice evolution of our program. I wouldn't want to make too much of it as something we've come to rely on but it's a nice add-on to the program we already have.
Simon Fitzgerald: Yes that's very clear. Just one final question just in regards to the large exposures. You did mention you're starting to see some price weakness there. What's your sort of thoughts in terms of how much further that can go?
Andrew Horton: That's a good question. I mean all we can say is we expected the rate increase to be lower this year and we're in line with that. I think it depends on so many factors. It depends on how much more capacity comes into the market. It depends on the losses over 2025 or not or whether that's going to hold the market. I mean the market's got margin and therefore people are pricing at a high technical rate. And historically we can see rates move down when that is the case within the wholesale market in Lloyd's. Great beauty for us, it's only 10% of what we actually do. We've been there a long time. We've got a great book of business with long-term relationships and our aim is to hold it rather than see margin erode and rates go down.
Simon Fitzgerald: Yes. That’s good to hear. Thank you.
Operator: Thank you. Our next question comes from Nigel Pittaway from Citi. Your line is now open.
Nigel Pittaway: Hi, good morning, guys. First of all, if I could return to the crop business. I mean despite the pressure on the GWP from commodity prices, it does look as if the NEP is up quite a bit from $1.65 billion to about $1.89 billion, which obviously is probably due to lower reinsurance and the quota share and the Fed reinsurance pool. But I mean can you sort of maybe make some comments about how you're sort of managing the exposure of this business to the overall group? As you previously suggested reinsurance would be the tool to do that but I'm just interested in how you're thinking about that at the current time.
Inder Singh: Yes. Nigel I mean I think we've consistently guided that when you think about NEP, it should be in that 1.6 to 1.8-ish sort of range. And the GWP, obviously of the business has grown very significantly. So we continue to actively use the federal fund and the quota shares and other means to manage the volatility within that. I wouldn't really read too much into sort of the NEP year-on-year within that range. So as we look at 2025, we'd expect the NEP to be maybe around that $1.8 billion, as we look forward as well. But we see – in terms of how we use the different reinsurance means it's kind of more by state and by product necessarily then looking at the aggregate as a level of indication of more or less reinsurance. So I think it's getting a little bit more targeted with some of that portfolio balance. And then particularly I think what's really cost us is the – some of these non-MPCI products, which we can't really get insurance – reinsurance coverage for and that's the balance we need to manage.
Nigel Pittaway: Okay. And just on that I mean I know you sort of, you say a lot of the initiatives already in place and it's obviously easier to say than do. But with respect you have been trying to optimize and talking about optimizing the balance in the crop book for quite a while. So why is it proving so difficult? And why do you think what you're doing now will have the right effect?
Andrew Horton: It's a good challenge, I think Nigel. And of course, if it was a straightforward that these states always lose money and these will always make money we'd obviously be incredibly successful. We obviously just haven't done enough. So we did see more of certain states which historically have not done as well, last year. So what we can do is, look at whether we can see more. And it's a difficult balance, because it's not always the same ones and we may find we've done it wrong. But I'd rather have consistent pretty good return than trying to always go for an excellent return and it runs more volatility to it. So I think that's how we've got to see it, that we may be giving profit up by ceding more of some of the states into the federal fund but I think that might be a right solution to get it onto a better overall position. So we just don't enough. And the view this year, we need to do more. As you know the challenge is you place your chip sort of in March and then you have to wait for six or nine months to find out what's actually gone on and then you have to redo it. So you can't tweak much during the year. Once you've done it, you've done it. So I think that's what we have to do for 2025.
Nigel Pittaway: Okay. Thank you. And then just maybe moving more broadly to the North American COR [ph], as a whole, I mean if you do normalize crop down to 93 to 94 and allow for the lower drag from the runoff book. It does look as if you're in, with a shop could shot to 90 to 95 for North America next year? Is that the way you're thinking about it? Or do you think. That's still a 2026 aspiration.
Andrew Horton: Yeah. So yeah, the runoff book is going to be key to us, but that's the aim of what we've been trying to do in the U.S. all along. So yes, you're right.
Nigel Pittaway: So it could happen in 2025.
Andrew Horton: It could happen in 2025. It depends on the size of the runoff loss. I think we've planned close to the top end of that range.
Inder Singh: Yeah. I mean if you look at the 2024 results right, we're saying the core segment is at 94. There's some ons and offs. We've had some prior releases and some of the short-tail lines. It's offset by some cross-crop underperformance. But we still got about $100 million loss planned in some of the non-core businesses in 2025. So the plan if you just add up the numbers is a little higher than 95 Nigel, but we are pushing very hard to make sure we get within that 95 or better for all of North America. And clearly the runoff should be done and dusted when we get into next year.
Nigel Pittaway: Okay. Great. And then, maybe just sort of also just a question on sort of the cutting down of exposures vis-à-vis the growth. I mean obviously one of the areas I think you said you want to grow I mean it's just a question. I mean obviously you've done a lot of good work in cutting down those exposures. You didn't want how do you ensure when you sort of grow in those type of areas that you don't go and sort of pick it all back up again.
Andrew Horton: So I think that's another good point. Of course, Nigel, you look balance as you grow it. So we've got clear line of sight of what our property exposure looks like. So our property exposure in North America is obviously driven by some of the facilities we talked about business or writing in London and business with writing onshore in the U.S. You just ensure that when we're building the ins properly, but back we're building it in a balanced way. So we don't end up overexposed to any particular I think some of the programs historically supported have exposed in certain areas. And we felt the impact of that. So we've done a lot of work in making sure the program is a better balanced than they were as they look in terms of the total portfolio now.
Nigel Pittaway: Okay. Great. Thanks very much.
Operator: Thank you. Our next question comes from Siddharth Parameswaran from JPMorgan. Your line is now open.
Siddharth Parameswaran: Thanks. Just a couple of questions if I can. Firstly, just on the GWP growth guidance of mid-single-digits that you're giving. You said that about 3.5% of that is from rate. A couple of questions on that rate component. Firstly, just the -- that's similar to what we're seeing in the fourth quarter for your group. I'm just keen to get some color around just your confidence in being able to achieve that given what we are seeing is more capacity in commercial markets. And maybe if you could just give us some color by region around your expectations on rate for next year.
Inder Singh: Yes. I mean Sid just on -- we've sort of consistently cautioned around looking at quarter-on-quarter trends. So, that's the first thing I'd say. You got to look at the whole year of last year, it was around 6%. Clearly the rate has moderated as we've gone through last year. So, as we look at all of this year, we're saying it's really in that low to mid-single-digit range is where we're seeing it. Obviously, the trends are a bit different by region, but also by product. I mean here in Australia, we have called out the fact that there has been a level of persistency around inflation in motor and home. We are seeing that moderate through Q4. So, we're picking a lower rate for that call it around the mid to high single-digits here in some of the short tail classes. In areas like A&H in the U.S., for example, we continue to see medical cost inflation still being relatively high and that's just the nature of that business. So, we would see rate in that again being at the higher end, call it even high single-digits low double-digits depending on where medical cost inflation is. So, it does vary a little bit by class of business by region, but broadly speaking that low to mid-single-digits is a good reflection of where our portfolio is at when you look at the full year of 2025.
Andrew Horton: Also so far we started the year really close to plan in terms of rate, some up a bit, some down a bit on overall sitting here in the third week of Feb, it's on track. It doesn't mean that's going to be an indicator for the rest the year when things can change relatively quickly, but we feel pretty comfortable with the business we've renewed on Jan 1 that is in line with what we thought it would be.
Siddharth Parameswaran: Okay. Thanks for that color. Just a question for Andrew. Just your comment about your medium-term growth ambitions of mid-single-digit volume. I just want to be clear do you mean GWP or do you mean units ex-rates?
Andrew Horton: Yes ex-rate growth. Yes, it's looking at that. So, I think with the geographic spread and the product spread we have, there are always going to be opportunities for us. There are certain lines of business where we can definitely get more depth. We're obviously standing up certain lines of business which I talked about earlier on and health care construction in the U.S. where we can is from a relatively low base. These are things that are adjacent to what we currently do. So, I just think with the balance of the portfolio we have, the spread of the portfolio we have, the positioning we have in the markets. There are always going to be opportunities for us to get some growth and therefore we should focus on that.
Siddharth Parameswaran: So, is there a reason you're targeting less than that now? Are we to think that the cycle is not an attractive one?
Andrew Horton: Sorry, mid-single-digit right now?
Siddharth Parameswaran: The 5 plus 3.5. So, if 5 plus 3.5 is more than your guidance on mid-single-digit?
Andrew Horton: Less than 1 or 2 from the drag. So, yes -- are you just using the number 5 as mid-single-digits and then 6 and 4 and 7.
Siddharth Parameswaran: I'm just saying you're saying that's your ex-rate. Yes, that's your rate medium term.
Andrew Horton: I think mid-single-digit mind is -- yes, mid-single-digits in my head wasn't 5. I appreciate that's the mid of mid-single-digits. So, it was giving me -- us some flexibility rather than an exact point because I do agree with you there are going to be some variance around, but it's just looking for something. It's sort of easy to think through when you have a down market that there are no growth opportunities. And with our portfolio there are always opportunities to grow. We do have this gap for product in relationships and geography where we need to ensure we continue to look for growth opportunities even when the rating environment may not look that good because there are still bits of business we would like to write if we could get access to it. And, therefore, getting the organization to think in those terms and that's the whole idea of targeting mid single digits across the cycle as opposed to you only grow when the rates are going up.
Siddharth Parameswaran: Yeah. Okay. And just a final question, just inflation. If you could just give us some comfort on inflation by region any color on that and also versus your -- the rate that you're experiencing, I remember you said you were getting rate above inflation a year ago. Just thinking you can get some color on what you're seeing now?
Inder Singh: Yeah. Look I think we're broadly at a company level, Sid, we're looking to hold serve in terms of that dynamic. Clearly what we're seeing is inflation moderating as we've gone through the second half of last year. But having said that there are risks as we look forward. There's a lot of fluidity around politics, geopolitics around the world tariffs et cetera that could play into some of that. So we're mindful of some of the risks but the trends currently continue to suggest that inflation is moderating. So when we talk about rate in the low to mid-single digits we're also talking about inflation broadly in that range across the company. And as I said earlier there are differences by product by region, and I gave some examples of short tail view A&H in the US and you see that dynamic playing out across the book. But broadly assume that's in line-ish and then obviously we've got various other tools and means in terms of looking at retentions across business the mix of business that we have to manage some of that portfolio optimization to make sure as a company we continue to deliver strong returns.
Siddharth Parameswaran: Yeah. Okay. Thank you very much.
Inder Singh: Thank you.
Operator: Thank you. Just a moment for our next question please. Next we have Freya Khan [ph] from Bank of America. Your line is now open.
Unidentified Analyst: Hi, good morning. Thanks for taking my questions. Can I just please follow-up on your comments around crop? It sounds like some of the planned actions might take a while to come through, so does that mean just you're planning essentially slightly above 93% to 94% for 2025.
Andrew Horton: So no we're not planning for higher than that. So that's what we've actually got in the plan. And the aim is to take as much action as we place our positions, which is in a month's time as sort of we finalize what risk we want to take in a month's time. So we are working as much as we possibly can to see if we can get better balance in the portfolio than we had last year. Now, of course, we saw what was happening in the portfolio in December last year. And, therefore, we have had a few months to determine what changes we should make and what rate increase we should put through on those non-state control products. So no aim is to do as much as we can this year learn from this. And if we have to do more next year, we'll continue to do more next year.
Unidentified Analyst: Thanks. That’s clear. And then secondly on reinsurance, I guess, gross versus net growth outlook is that going to be fairly similar in terms of top line?
Andrew Horton: Yeah, I think it should be.
Inder Singh: I mean, I think what you've seen in 2024 is that some of the higher rates at the end of 2023 earned through. So you saw NEP being slightly higher than GWP in 2024. In 2025, we should see broadly equivalent.
Unidentified Analyst: Okay. Great. Thanks. And then finally, just any update on your aviation exposures from Ukraine? Because, we've seen a peer strengthening reserves quite meaningfully, overnight.
Andrew Horton: No, we haven't got any update and we feel comfortable where we're positioned at this point in time.
Unidentified Analyst: Okay. Thank you.
Operator: Thank you. Our next question comes from Andrew Buncombe from Macquarie. Your line is now open.
Q – Andrew Buncombe: Hi, guys. Thanks for taking my question. Just two on the guidance, please. The first one is on the GWP growth. Can you just remind us, how you set your GWP growth targets for the crop portfolio at the start of the year. Historically, my understanding was that you kept that number flat at the start of the year, until you saw how things flushed out at the end of March. Is that how you've done it for 2025? Thanks.
Inder Singh: Yes. Broadly speaking, yes. I mean there's obviously, a lot of volatility in crop prices, volatility factors, et cetera, Andrew. So, we don't try and get too precise on it. We've put an assumption in the plan. It's at around flat.
Q – Andrew Buncombe: Okay. And then my second question was around the combined ratio guidance and in particular the tailwind coming through from the change in the Ogden rate in the UK. Can you just remind us, when you booked that tailwind, was that in 2024? Or do you plan on doing that in 2025?
Andrew Horton: There's an amount of 2024 for it, Andrew. So, a relatively small amount, but it was in 2024 booked.
Q – Andrew Buncombe: Excellent. That’s it for me. Thank you.
Operator: Thank you. Just a moment for our next question, please. Next, we have Anthony Hoo from CLSA. Your line is now open.
Q – Anthony Hoo: Hi, good morning. Thank you. First question just on the ROE, you're talking about targeting ROE 1.5 times WACC. Are you prepared to put some numbers on that, even if not an absolute number, but just even relative to the 18% that you've reported for this year or last year?
Inder Singh: I mean, we can all do the maths on it. Look, you'd probably come up with in this sort of market around 13% 14%, Anthony. And – but, that's what's built into our pricing models. We also want to do a bit better than that as we can and balance the return between the underwriting book, the investment book, et cetera.
Q – Anthony Hoo: Yeah. Okay. Thank you. And then. Second question just on the North America non-core portfolios. You're guiding for a loss of around $100 million in FY 2025. I'm just wondering can you talk about are there any key risk factors to that outlook? Or do you have very strong visibility? Just a comment around that?
Andrew Horton: All I can say is the exposure is obviously falling away to some extent. So by default as the exposure falls away and we hope it should be making less loss. So we'll have less premium earning through on it. It's a really hard one sort of say, because it's been driven historically by catastrophes in the first half, mainly convective storms. So it's going to be weather-dependent. If it had a really active convective storm first half of the year, the loss could be larger. And if it's really quiet, it could be smaller. What we've just done is taken an average of what we've seen over the past few years, which is a relatively elevated number of cover storms prior to the years before this. So we have just taken an average position. Obviously, it could be worse it could be better.
Q – Anthony Hoo: Great. Thank you.
Andrew Horton: Thank you.
Operator: Thank you. We just have one follow-up question from Julian Braganza from Goldman Sachs. Please go ahead.
Julian Braganza: Good morning, guys. Thanks so much for taking our questions. I might just kick off just with the perils budget for 2025. So you said you've maintained it there at 80% probability of sufficiency, but can I just ask about the moving parts? So clearly, that took event -- it seems like it's taking a benefit from the reduction in non-core losses expected into FY 2025. But just in terms of the benefit on reinsurance, some of your lower retentions, should we be expecting a further pickup from that into your apparels budget? How should we be thinking about that given you've maintained this efficiency at 80%?
Inder Singh: Yeah. So it's a good pickup Julian because we want to make sure that people aren't double counting the effort between the non-core runoff, which actually a lot of it comes through the reduction in the cat allowance. And so think about the reduction in the cat allowance and the non-core run-off having some level of overlap. And effectively, the math is the same as we've done every year. We look at holding effectively an 80% probability of sufficiency or thereabouts and look at the exposures that we're writing. So it's a combination of that. And that's what gets us to that level for 2025. I would say that the reinsurance renewal is a very small net. I'm talking sort of 10 basis points in addition to that, right? So it's at the margin in terms of benefit from the cost reduction around the actual reinsurance placement itself which is what exactly what Andrew referenced.
Julian Braganza: Okay. And just to round it out but the lower retention themselves does that have any impact on the cat budget?
Inder Singh: Yes. I mean in the round, yes. But look what we try and set the budget on is your average annual allowance and that's around the distribution. Having a lower retention, sort of, helps in the modeling of it but I wouldn't say you can trace it exactly through. So it's all included, yes.
Julian Braganza: Okay. Okay. Great. Excellent. And then maybe just a second question on just that chart you showed on the WACC versus ROE I'd just be interested to understand just the differential between what your pricing assumptions are in that ROE vis-à-vis what's actually eventuating at 18% particularly is it all just yield driven? I mean just interested in also particularly pricing combined ratios was it actual that's contributed to that ROE strength versus pricing?
Inder Singh: Yes. I mean again we're talking about, sort of, concepts that we apply in pricing. We look at and we've been very consistent on this for a number of years. It's basically 10% plus risk-free right? And if you look at where average risk-free today across the world, it's probably in that maybe 3.5-ish percent range. So if you add that to 10% that's 13.5%, 14%. So effectively that's, sort of, the range that's baked into our pricing models. And within that we're assuming obviously some level of normalized yields within that. But that's the basis on which we're trying to then price products into the market.
Julian Braganza: Got it. But I mean the way to think about still combined ratio accretive from a pricing basis setting aside the yield?
Inder Singh: Yes.
Julian Braganza: Okay. Perfect. And then just a final question. Just into FY 2026 given where we stand here today I think what you've guided is that based on the runoff you sort of see those non-core losses coming off again into 2026 just on the stranded costs for the mid-market business any update on that? And anything else we should be thinking about given your results today going out further into 2026?
Inder Singh: Making progress. I think if you look at the 94 that we talk about for the core segment that is continuing to absorb some of the stranded cost that's coming off as the middle market business is running off. So, obviously, we're trying to go at the stranded costs but the residual obviously gets folded into the core segment. So we'll continue to look at the efficiency of the North American business as a core franchise as we go forward. So progress is being made but more to do.
Julian Braganza: Got it. Thanks so much for that.
Operator: Thank you for all the questions. This concludes conference call. Thank you again for participating. You may now disconnect.