AUB Group Limited (AUB) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I'm David Clarke, Chair of the Board of AUB Group Limited. Welcome to our 2021 Annual General Meeting. It is now 10 a.m. and as there is a quorum of shareholders present, I declare this Annual General Meeting of AUB Group Limited properly constituted and opened. As we begin the meeting, I'd like to acknowledge the indigenous people on his land we conduct our business, around Australia and New Zealand, and convey my respect to their communities, culture and elders past, present and emerging. In response to the government-mandated restrictions and the potential health risks arising from the COVID-19 pandemic, we're holding the AGM virtually this year. Shareholders can participate in the meeting via the online meeting platform, ask questions and vote on the resolutions. Once it's considered safe and practical, we will consider returning to the practice of a physical face-to-face Annual General Meeting. This morning, I will provide a brief overview of our business and achievements during the 2021 financial year. And our CEO and Managing Director, Michael Emmett, will then provide an update on our business and key results as well as provide an outlook for the 2022 financial year. We will then move to the formal business of the meeting and the resolutions set out in the Notice of Meeting. However, I'd like to begin by introducing new directors. Peter Harmer; Robin Low, who chair the Board, Audit and Risk Committee; Paul Lahiff, who chairs our Remuneration and People Committee; Cath Rogers; and our CEO and Managing Director; Michael Emmett. Also with us today are company secretaries Richard Bell and Elizabeth McGregor; Mark Shanahan, our Chief Financial Officer; and Michael Wright from our auditor, from Ernst & Young. In addition to receiving the financial statements and reports, there are 6 further items of business: one, the adoption of the remuneration report; two, the reelection of Cath Rogers as a director; three, the election of Peter Harmer as a director; four, approval to increase the nonexecutive directors' fee CAP; five, approval of issue of 3-year performance options to Michael Emmett; and six, approval of issue of share rights -- share appreciation rights for Michael Emmett. There will be an opportunity for questions on each resolution and also during the general discussion following the formal business. I will now give a brief summary of the questions and voting procedures for this virtual meeting. An online meeting guide which explains how to participate in the meeting is available on the AUB Group's website and in the download section of the online meeting platform. [Operator Instructions] To ask a question by telephone, you must enter your unique telephone PIN number obtained from Link Market Services. If you do not have a telephone PIN, please contact Link on the helpline number at the top of the screen. We will stay addressing the questions until the relevant item of business. Shareholders and proxy holders can vote via the online meeting platform. To vote, select Get a Voting Card and enter your shareholder or proxy holder details. When your voting card appears, select the required instructions, for, against or abstain for each resolution and click submit your vote. A poll will be conducted on all resolutions. Votes will be excluded in accordance with the Corporations Act and the ASX Listing Rules. The proxy votes received prior to the meeting will be shown after discussion on each individual resolution. I advise the meeting that I will be voting for undirected proxies in favor of the resolutions, as indicated in the Notice of Meeting. To ensure that all shareholders and proxy holders have an opportunity to vote, I now open the poll. Voting will stay open until 5 minutes after the close of the meeting. Link Market Services is the returning officer for the meeting. The results of the poll will be announced to the ASX as soon as they are available. If you need assistance with using the online meeting platform, please contact the help line number at the top of the screen, 1 (800) 990-363. At our meeting today, Mike and I will report to you on AUB Group's performance and the outlook for the year ahead. This is my sixth year as the Chairman of this company, a year of continued success and challenge with an execution focus aligned to our strategic agenda and an excellent financial result for the AUB Group shareholders. Financial year 2021 has been challenging and difficult economic environment for our clients, partners and communities. I am, however, pleased to report our business continues to deliver resilient financial performance driven by strong organic growth. In financial year '21, AUB Group delivered above our original guidance with another strong result where the underlying net profit after tax increased by 22.9% compared to the previous year. Despite this challenging and uncertain macroeconomic environment, our balance sheet remains strong and the corporate entity with cash generative, with $60 million in operating cash flow. We have access to $89.5 million in cash and debt funding and the gearing ratio improved to 28.5% as at 30 June 2021. As a result of our financial performance and capital position, the directors approved a final fully franked dividend of $0.39 per share paid on 11 October 2021. This, together with an interim dividend of $0.16, results in a full year dividend of $0.55, a 10% increase on the financial year 2020 and a payout ratio of 62.5% on underlying net profit after tax. The group's focus on delivering and execution of strategic priorities continue to be a success, with key highlights including an acquisition of 360 Underwriting, which became the cornerstone for our restructure of the Underwriting Agencies division. Additionally, acquisitions of Experien, QRM and YDR continue to validate the success of our mergers and acquisition agenda. The group also successfully exited Altius following the exit from Allied Health in the previous year, and this completed our strategic exit from the health and rehabilitation sector. Looking ahead, the group's financial year '22 strategic focus will be primarily a continuation of the previous year's objectives. However, the ongoing economic uncertainty will make further and future assumptions difficult. In July 2021, we welcomed Peter Harmer to the Board as a Non-Executive Director, and he is standing for election at this meeting. Peter is a respected senior executive from the insurance industry and brings considerable industry and executive expertise and experience to the Board. He had previously served as the Managing Director and CEO of IAG Limited. He was the CEO of Aon Limited UK and he is currently serving as a Non-Executive Director of Commonwealth Bank and nib Holdings. The appointment follows the planned retirement of Ray Carless from the AUB Group Board on 31 August 2021. Ray has been an outstanding contributor to AUB during his time as a Director and I want to thank Ray since for his service and contribution and wish him all the very best for the future. Robust environmental, social and governance, that is ESG, practices remain an area of focus for the Board and management, while our clients, colleagues and shareholders are becoming increasingly interested in how we manage sustainability within our business. In the past year, we were pleased by the material progress made towards establishing an integrated approach to ESG, which will result in increasing -- increased transparency, accountability and reporting against objectives. The Board is committed to ensuring the business acts responsibly in how we engage with our partners, clients and suppliers, and how we support our colleagues, how we manage our impact on the environment and how we contribute to the communities in which we operate. As a result, we have implemented policies, training, recruitment and recognition practices that deliver a diverse and inclusive workplace, and we are building our capability to proactively manage our impact on the environment. The group has met the challenges of the pandemic and resultant public health orders to redesign our approach to the workplace. The group has undertaken a variety of market-leading initiatives designed to materially uplift employee welfare, including remote working, home office allowances, mandatory ergonomic checks, access to health and well-being program, as well as vaccine incentivization to support health authorities to deliver a path out of the pandemic. The initiatives have required financial and nonfinancial investments deemed essential for the longer-term welfare of our employees and the business. We have an additional remuneration item to vote on this year compared to previous years. The Board believes the company has significant opportunities to grow over the next 5 years, part of accessing those opportunities and, where appropriate, acting on them requires all aspects of the company to be performing. We have a management team led by Mike Emmett, who are showing a rare combination of risk awareness, growth orientation and high-level leadership skills. The key purposes of the one-off scheme, being put forward for consideration under Resolution 6 are to provide a potential reward for transforming the business and longer-term outperformance of stretch performance targets, drive a longer-term focus and ensure that executives have a strong sense of share ownership to align the management team with the interest of shareholders. We believe the company with the current management team has a very exciting future ahead of it, and retaining for the long-term and incentivizing our key leaders is an important component of achieving that future. In conclusion, on behalf of the Board, I would like to thank our shareholders for your commitment and support through the past year. I'd also like to commend and express my gratitude to AUB Group partners and employees for their continued resilience and focus during a challenging year, while also acknowledging the ongoing support from our clients. Although the uncertainty from the pandemic continues to loom over us, I am hopeful that we will see a return to more normal business life in the near future. I would now like to hand over to Mike to give you an update on your business and the key results, as well as an outlook for the financial year 2022.

Thank you, David, and good morning, everyone. While the past year had an immense challenges for our clients, our staff and our partner businesses, it is the disciplined execution of our growth and profitability strategies that enabled us to deliver record financial performance. The group placed circa $4 billion in premium, a significant increase on prior years, and our premium retention improved to an all-time high of 93%. Once again, the foundations of our strong business model, the strength of our client value proposition, the depth of client relationships and the diversity of our portfolio delivered a solid result for the group, with underlying net profit after tax growing by 22.9% to $65.3 million. This underlying net profit after tax includes the impact of a change in the accounting treatment for the cost of IT projects utilizing Software-as-a-Service solutions. During the year, excellent organic profit growth of 16.3% was supplemented by an accretive 10.9% profit contribution from acquisitions. FY '21 underlying revenue grew by 11.6% on the prior year to $651.8 million, and progress from strategic initiatives helped strengthen our EBIT margin by 360 basis points to 31.9%. Australian Broking, our largest operating business, is performing well. Revenue grew and the operating margin expanded. Broking margins have now improved by 400 basis points since FY '19. And our investment in BizCover has been very positive, with annual growth in revenue of 35% and profit before tax of 66% on a pro forma basis since investment. In the Agencies division, a new operating structure, the acquisition of 360 Underwriting and the rollout of the new Sentinel Agency system are all contributing to the performance improvements, with FY '21 profit before tax growing by 14% and margin expanding by 100 basis points. We anticipate further growth in Agency profit as momentum builds in FY '22. The financial results in New Zealand are expected to improve in early FY '23 as the business is still in the early stages of transformation, with a large system implementation currently underway. An update on strategic priorities. The execution of key projects has assisted the acceleration of underlying revenue, margin and profit growth over the past 2 years. During FY '21, we initiated numerous business mergers, realigned client portfolios, made strategic disposals and rationalized entities to create scale and a simpler business. Over the past 2 years, we've reduced the number of operating entities from 105 into 75. In the process, we have improved the performance of low-profit, and in some cases, loss-making portfolios, and created specialized businesses that are winning new clients in the market. The objective is to leverage the scale and margin benefits of more significant Austbrokers members to develop fewer, bigger, better-run and more profitable operations in the AUB portfolio. Our focus on strategically aligned and disciplined acquisition has continued, with investments during FY '21 with Experien, Bestmark, QRM, 360 Underwriting, YDR and TLC Underwriting, and we continue to be able to add quality businesses to our group. Although I will say, we are highly selective in our approach to acquisitions and the careful deployment of our capital to generate attractive returns for shareholders. While the current focus is on Australia and New Zealand, the AUB business model is well suited to multiple countries worldwide. The careful and considered expansion to new territories is anticipated in future. The group's technology landscape has rapidly transformed, delivering cost-effective solutions for clients and network partners. ExpressCover and Sentinel adoption is building, and we commenced Project Lola in New Zealand, a new broking and quote-to-bind solution for rollout later in FY '22. Outlook and progress in FY '22. The continued delivery of strategic priorities will continue to drive AUB Group's long-term success. Our overall strategic intent is to invest in and grow networks of pre-eminent brokerages in target geographies and to maximize AUB Group's share of income arising from risk premiums placed through the networks by investing in complementary businesses, such as, a portfolio of agencies offering risk products relevant to our clients and their insurance needs; central services that leverage our scale and reach to optimize margins for network members; risk assessment and loss adjustment services that support clients and brokers; and in the medium-term, wholesale brokerages, especially in relevant foreign jurisdictions to assist with complex placements. In FY '22, we will continue to execute the clear growth and profitability-enhancing strategies we've outlined over the last 2 years. In this financial year, we'll continue to extend and increase the Agencies division, further optimize our network of businesses, execute on a pipeline of acquisitions and continue to enhance our partner proposition, including by further extending our technology solutions. Already during early FY '22, we've made good progress as follows. In Western Australia, SRG completed the acquisition of GibbsCorp, while in New South Wales, Finsura completed the acquisition of on Vaughan & Monaghan, a leading Sydney brokerage. Both acquisitions deliver enhanced scale and efficiency to these businesses. AUB Group has purchased iaAnyware, a broking software business. Insurance Advisernet uses iaAnyware across Australia and New Zealand as their core broking system, with several market-leading features exclusive to this platform. The investment will enable additional development of iaAnyware functionality and add to the software solutions available to Austbrokers members. The combination of iaAnyware, ExpressCover and Sentinel, together with the in-development Lola system, offers a full suite of contemporary software solutions to brokerages and agencies in Australia and New Zealand, strengthening the value proposition for members of Austbrokers, NZbrokers and The Insurance Alliance and complementing our network-wide use of EBIX CBS solution. Capitalizing on the acquisition of Bestmark in FY '21 and its merger with Citycover and Comsure to form Austbrokers Comsure, we've now completed Austbrokers Comsure's acquisition of WRI, an existing Austbroker to further our ambition of creating Australia's leading national brokerage, specializing in services to motor dealers and manufacturers. Similarly, Hiller Marine and SURA Marine completed a portfolio merger to drive increased alignment and efficiency. And in Victoria, Austbrokers Countrywide acquired 2 branches from Adroit, enabling both businesses to better focus on their respective target geographies. Austbrokers Member Services continues to refresh insurer arrangements recently entering into new agreements with 2 significant insurer partners, both agreements delivering improved terms and outcomes. The Insurance Alliance has launched an exclusive partnership with a newly established independent broker network, The Broker Co-op with the 5 founding brokerages now utilizing a subset of Austbrokers services. And finally, earlier today, BizCover launched a new direct SME insurance platform in South Africa. Called Bi-me, an acronym for Business Insurance Made Easy, the venture is a partnership with Hollard and Discovery that leverages BizCover's market-leading technology to target the insurance needs of more than 2 million small businesses in South Africa. AUB Group’s strong momentum from FY '21 has continued into the first quarter of FY '22. And as a result, we reaffirm our full year guidance provided earlier in the year. We anticipate underlying net profit after tax in FY '22 of between $70 million and $73 million, representing growth in FY '21, 7.2% to 11.8%. Allowing for businesses sold during FY '21 and non-continuing COVID incentives, this represents growth from continuing operations of 15.7% to 20.7%, and this translates to an underlying earnings per share outlook of between $0.943 per share and $0.983 per share. I'm proud of how we as an organization have operated in the face of the adversity our customers and our teams have coped with over the last 18 months. FY '21 was a year of extraordinary ups and downs, and our business continues to demonstrate remarkable resilience. I'm so thankful to our clients who trust us with their business critical risks and grateful to our teams who go above and beyond to deliver for our clients. FY '22 is already looking to be brighter and freer, with recent freedoms and reopening borders bringing much-needed response and a resultant increase in economic optimism, which we anticipate will benefit our network of businesses. I look forward to updating you on our progress during the year. Thank you. And I'll now hand back to David.

Thank you, Mike. I'll now turn to the formal business of the meeting, taking each resolution in the order set out in the Notice of Meeting. At each resolution, I will respond to the questions which relate to that particular resolution. And after the formal business, I will also address any general questions and comments, and I encourage shareholders and proxy holders to send us big questions, and I see there are some that have already been submitted on the online platform. As noted earlier in this meeting, voting is now open, and shareholders and proxy holders can vote by the online platform. A Notice of Meeting was provided to shareholders on 8th of October 2021. Notice of Meeting is available in the download section of the online platform and on the AUB Group website. I table the Notice of Meeting and propose that they be taken as read. The first item of formal business is to receive the annual financial report, annual reports of the directors and auditor for the financial year ended early 30 June 2021. The annual report is available on the AUB website and in the download section of the online platform. No resolution on this item is required, but I now invite shareholders and their proxies to comment or ask questions on the reports. Questions may also be asked to the auditor in relation to the conduct of the audit, content of the audit report, accounting policies adopted by the company and the independence of the auditor in pairing it out. I will now take questions on this item, and I'll be assisted by Richard Bell, our Company Secretary, and the telephone operator, if there is questions that come in. So we will start with questions from the online platform. And once we've dealt with those, we will then go to the questions on the phone -- on the -- operator. So Richard, are there any questions from the online platform?

Yes, Chairman. Could you give some details on the capabilities for your [ competitor ] platforms, ExpressCover and Sentinel?

I think the best person to answer that is Michael Emmett, our CEO. I could give an answer, but he will give a much better one. So, Mike?

Thanks, David. So ExpressCover is a -- is a platform designed to support our brokers royalty directly in contact with clients. So you imagine a client is with the broker, the broker's doing a physical inspection the of their premises, having a discussion about their insurance needs. And they're able to -- using an iPad or a laptop, they're able to generate a selection of quotes suited for an SME business, and that ranges from an all-encompassing [ this type ] product all the way through to professional indemnity or public liability, management liability or personal accident or cyber, et cetera, the full suite of products that an SME client would require, and they can get contestable quotes and multiple quotes from an insurer effectively instantly. So at that point. Whereas the rest of -- generally, in the insurance environment, unfortunately, commercial insurance, you aren't able to get instant quotes or immediate quotes. So that's ExpressCover. And then Sentinel is a system that's designed to be able to support our underwriting agencies to be able to provide responsive quotes and support to brokers in supporting their clients. Those are the 2 systems.

Thank you, Mike. We'll now go to the next question from the online platform. Richard?

Thank you, Chairman. The question asked most was on Scope 1 and Scope 2 emission amounted to 1,000 tonnes of CO2. Question on that is, since this is a very low number and that [indiscernible] tonnes. The question is what is the value be the [indiscernible] in the model?

Well, I will answer that question. Certainly, I think we -- most people would agree that the climate risk is a material concern of the global economy. We feel it's important to record even though, as you point out, it's a low emission number. I would also point out it's come down from the previous years. So that's part of the good work that has been done. And our business feel that in battling climate change everyone has a role to play, however large or small. And certainly, from our network and employee base, they feel the same way. They wish to participate in however they can. As a financial services organization spread through a network of smaller offices around the country, our emissions are relatively low. But we still, nevertheless, we work on making our contribution through reducing travel requirements and those sorts of things. I'm also happy to talk about our broader ESG policies and progress, which is outlined in the annual report. And many of those policies are aimed at how we can improve the work environment for our employees, which has occurred over the past year and manifest itself in higher employee engagement. But that's the answer to I think the question was asked. Richard, are there any further questions?

One further question is backlog, Chairman. You did touched on relation to the balance of the statements, optimize our network, which was part of the [indiscernible].

Well, given that outline in Mike's words, I might ask Mike just to expand on that.

Thanks, David. So we went to a phase of acquiring businesses as individual stand-alone businesses. And as you heard earlier, I referenced that in FY '19, we had at the end of FY '19, 105 or so businesses on a comparative basis. And optimizing has really entailed looking at ways in which we can leverage that portfolio of businesses better and a mixture of businesses that have common focus areas around specialty products or specialty industry areas. I referenced Austbrokers Comsure are focused on particularly the motor dealership and motor manufacturing industries. And so we've consolidated businesses, either by buying a business, for example, in that case, Bestmark, and then merging existing businesses or recently the acquisition of Comsure by WRI. This is to put in place a national footprint. In the same way, we certainly have seen opportunities for us to leverage the scale and the capabilities of some of the businesses by merging some businesses into others. So it's really about on a case-by-case basis, looking at ways in which we can better leverage and optimize the footprint and the network of businesses that we are undertaking.

Thank you, Mike. I will now take questions on this item on the telephone line. So operator, are there any questions on the phone?

There are no questions, Chairman.

Thank you. There are no further questions or discussion on this item, we'll move on to Resolution 1. Resolution 1 is the adoption of the remuneration report for the year ended 30 June 2021. Under the Corporations Act, the company is required to present to shareholders the remuneration of Board it forms part of the directors' report. The vote on this resolution is advisory only and does not bind the company or directors. However, the Board will take the outcome of the vote into consideration in future reviews of the remuneration policy for key management personnel. I will now take questions on this resolution. So Richard, are there any questions from the online platform?

There are no questions, Chairman.

Operator, are there any questions on the phone?

There are no questions, Chairman.

There are no questions. I'll now put the resolution to the meeting. The proxy votes are displayed on the screen. I'll now move to Resolution 2 and 3, which concern the Election of Directors. Resolution 2 is the election of Cath Rogers as an -- sorry, apologies, the reelection of Cath Rogers as a director of the company. Cath is retiring by rotation and standing for reelection in accordance with the company's constitution. As Cath's details are set out in the Notice of Meeting and the Board with Cath -- supports for the reelection of Cath as a Non-Executive Director. And I'll now invite her to speak briefly in relation to her reelection.

Thank you, Chair. Good morning, shareholders and proxy holders. I joined the AUB Group Board in May 2018, and it has been my privilege to serve as a Non-Executive Director over the past 3.5 years. Some of the highlights for AUB Group over this period have included a change in CEO and leadership team, which has recalibrated the trajectory and ambition of the company; a reinvigorated risk culture and capability; extensive M&A activity, including the BizCover investment; improved technology capability and product offerings to the benefit of AUB brokers and clients; and renewed growth, operational efficiency and strong shareholder returns. My background, which spans roles in strategy consulting, investment banking, private equity and venture capital across a number of sectors in Australia, the U.K., the U.S., Latin America and the Middle East, contributes to the diversity of experience and perspectives, which is valued and encouraged at the AUB Board. As a director, I am particularly passionate about ensuring that the customer remains at the forefront of all that we do. Technology and innovation, leveraging my experience as an investor, entrepreneur and director in high growth ventures, with suite of operational excellence and responsible corporate governance with a focus on diversity, inclusion and sustainability. I'm excited by the prospects for AUB's future and then committed to navigating the challenges and opportunities presented by climate change, technological disruption and a rapidly evolving operating environment. With your support, I look forward to serving AUB through its next phase of growth. Thank you.

Thanks, Cath. I'll now take questions on this solution. Richard, are there any questions from the online platform?

There no questions, Chairman.

Operator, are there any questions on the phone on this matter?

There are no questions, Chairman.

Thank you. There are no questions. I will now put this resolution to the meeting, and you'll see the proxy votes played on your screen. Thank you. We'll now move on to Resolution 3, which is the election of Peter Harmer as a director of the company. Peter was appointed as a director on 22 July 2021, and is retiring and standing for election in accordance with the company's constitution. Peter's details are set out in the Notice of Meeting and the Board, with Peter abstaining, of course, supports the election of Peter as a director. I'll now ask him to speak briefly in relation to his election.

Thank you, Chairman. Ladies and gentlemen, the world is becoming more and more complex, ambiguous and disconnected, and that has only accelerated with the onset of COVID-19. In this environment, risk is only ever increasing and individuals and businesses are finding it ever more difficult to make informed and sensible decisions, decisions that do not [ needlessly ] in parallel with safe and secure future. It is more of an imperative today than ever before that people have access to professional, cost-effective advice that helps them manage their risks and put in place the appropriate insurance arrangements, but provide proper safeguards in the event the unthinkable happens. Working with our broking partners, your company, AUB, is completely focused on ensuring individuals and businesses are served in this way. Through the development of professional standards that ensure the quality of advice, through the selection of and partnering with the right underwriters for each risk type, through the development of new and innovative products designed to meet new and emerging risks, and through the use of digital and technology tools to improve the customer experience and lower operating costs, thereby enabling savings to be reinvested. That's why I'm honored to put myself for election to the Board at AUB. I've spend over 40 years in both the domestic and global general insurance industry, in excess of 25 of those years as a CEO of insurance broking firms and most recently as the CEO of IAG, Australia's largest listed insurance company. Throughout my career, I have been focused on building purpose-lead organizations, enhancing the energy of the employees that is released when people feel their work has real meaning, to design and execute transformational change in the areas of culture and leadership, in digital and technology, in new and valued customer experiences, and in understanding the risk to communities posed by climate change and how best to manage and prepare for the risk. With your support, I'm looking forward to bringing these perspectives to the Board table to support management, staff and AUB's broking partners as they continue to deliver high-quality risk advice and insurance solutions to their customers. Thank you.

Thank you, Peter. Now I'll take questions on this resolution. Richard, are there any questions on the online platform?

There are no questions, Chairman.

Operator, are there any questions on the phone?

There are no questions, Chairman.

There are no questions. I'll now put the resolution to the meeting, and you'll be able to see the proxy votes displayed on the screen. Just to remind you that the -- I'm not announcing whether any of the resolution is being carried or not because it's a poll and the poll will close 5 minutes after the conclusion of this meeting. And the results, as previously said, will be announced to the ASX as soon as possible. I'll now move to Resolution 4, which concerns an increase in fee cap of non-executive directors. Resolution 4 is to increase the maximum annual fee cap for non-executive directors from $850,000 per year to $1.1 million a year. The Board is seeking an approval to increase the maximum fee cap for a number of reasons, including succession planning, workload and responsibility. I'd like to emphasize that this is a maximum limit and does not necessarily indicate that fees will be increased to that limit. Now I'll take questions on this resolution. Richard?

There are no questions, Chairman.

Operator, are there any questions on the phone?

There are no questions, Chairman.

I now put the resolution to the meeting, and you can see the proxy votes displayed on the screen. I now move to Resolution 5 and 6, which concern the issue of securities to Michael Emmett, Managing Director and the CEO. Resolution 5 is for the issue of performance options to Michael in accordance with the terms of his employment contract and ASX Listing Rule 10.14. Company is seeking shareholder approval to issue 53,277 performance options to Michael. This issue relates to his third annual grant under the company's long-term incentive scheme. The number of options has been determined based on Mike's long-term incentive opportunity, which is 100% of his fixed remuneration of $1 million. These options may vest after [ 2 ] years of ongoing employment from 1 July 2021. Vesting is subject to the achievement of earnings per share growth criteria and relative shareholder return criteria. I'll now take questions to resolution. Richard?

There are no questions, Chairman.

Operator?

There are no questions, Chairman.

There are no questions, I now put the resolution to the meeting. And again, proxy votes are displayed on the screen. Thank you. Resolution 6 is the issue of share appreciation rights to Michael Emmett. Again, in accordance with ASX Listing Rule 10.14, the company is seeking shareholder approval to issue 508,388 share appreciation rights to Michael. This is a one-off grant and is intended to enable meaningful participation in longer-term outperformance of returns to shareholders. Share appreciation rights may vest after 5 years of ongoing employment from 1 July 2021. Vesting will require stretch performance against earnings per share target over a 5-year performance period. And I would add that any shares vested must be held by Mr. Emmett for another 2 years, making the scheme 7 years in total. I'll now take questions on this resolution. Richard?

There are no questions, Chairman.

Operator?

There are no questions, Chairman.

Thank you. There's no discussion on the resolution to the meeting. The proxy votes being displayed on screen. Thank you. That now concludes the formal business of the meeting. I'll now take general questions.

Richard, are there any questions from the online platform?

Yes, Chairman. First question is, in the event the 2022 AGM is again held virtually, will the Board commit to endorsing technology by live streaming by video -- procedure rather than audio [ as ever ]?

Thank you for the question. And certainly, I think at this stage is that, if feasible, we would like to hold a physical face-to-face meeting in 2022. And look at it out -- we hope that, that is the case. If that's not able to or if we're not able to do that, we will certainly going to do that. And in addition, we would also consider holding a hybrid meeting, which is one where there's an online webcast, possibly with video or -- and in addition to the face-to-face meeting. We'll just have to look at the -- what suits best for our shareholders. We do understand that some people -- most people have gotten used to not traveling. And so therefore, the convenience of viewing something from the home office is appealing. So I do understand that and we will do that. There is different cost scenarios associated with different meetings, different meeting formats that is. But I would conclude by saying I would prefer us to go back to a face-to-face meeting if that is possible, but also acknowledge that we may need to have a broadcast of some form of that face-to-face meeting as well. Any other question, Richard.

Question. AUB's brokers have come from acquiring and consolidating brokerages for a number of years. Is there a point that there will be a limited option for continued inorganic growth? How far away is it?

It's a good question but a difficult one to answer. Certainly, we continue to find opportunities for organic growth as we work through our business. So Mike talked about the consolidation of brokers, and that is still what we believe, considerable distance to go. We do -- part of the business model is to continue growing through acquisition, and with each acquisition comes an ability to find growth opportunities -- organic growth opportunities within those acquisitions, in particular, by merging with other brokers. We do continue to look at larger acquisitions that we think suits the business. In fact, BizCover are a good example of that. So I'm reluctant to put a time frame on how long we will keep being able to improve the margins through efficiency and consolidation in our business. I personally think that it's a core skill that the business needs to have. One of the reasons in the past we perhaps not grow as quickly as we might is that we were acquiring businesses but not been moving forward to consolidating, and getting the value at all from consolidation. And as a consequence, we were building scale that weren't getting as much margin improvement as we wanted. So I see this is a continuing process. But in addition, there will be, as we've pointed out from time to time, those strategic acquisitions that are larger [indiscernible]. Every business, I think may reflect is that the organic growth part may be limited, but it's remarkable how much can be found as skilled executives, experienced executives apply themselves to the particular task. And of course, the technology improvements that you've heard Mike talk about earlier are also helping that enormously. So I hope that gives you some sense of [ how we're behaving ]. Any other questions, Richard?

Yes, Chairman. Climate change increases the risk of uninsurable properties and increases the risk of cost actions in your business, which may make insurance unavailable or unaffordable. What impact of AUB is unchanged having on its insurance growth in business?

Well, thank you for that question. I'm going to ask Mike, our CEO, to answer that question because I think he will give a better answer than I.

Thanks, David. So I guess, climate change is one of the greatest threats in the world that, frankly, humanities over those. Having said that, what the insurance industry has demonstrated for 300 years is the ability to adapt and evolve, and be able to take -- identify ways in which to take these great threats and the impairment into opportunities. As António, the CEO of Lloyds, has described climate changes in the insurance industry's greatest opportunity. And I concur with that. I think now the opportunity for us as a broking group is to provide -- adapt and respond and build skills that we work with our insurer partners and our underwriting agencies with other products that incorporate the risks of climate change and the threats so that we can get clients advise. And so frankly, the more complex the environment is, the more diverse and significant risks are, the more necessary and critical insurance risk advice and support is. And that's really what we pride ourselves on, which is strong, quality and competence around technical insurance advice for our clients.

Thanks, Mike. I see there are no further questions in the online platform. Operator, are there any questions on the phone?

There are no questions, Chairman.

Thank you. If there are no further questions, I am about to close the meeting. Before doing so, I will remind shareholders and proxy holders to complete and submit their voting cards. Voting will end in 5 minutes up and close of the meeting and a countdown timer will appear at the top of the screen in the online platform. As previously said, the results of the meeting will be announced to the ASX as soon as they are available. I'd like to thank you all shareholders for your participation today and for your ongoing support of AUB Group. We very much appreciate it. And now I declare the meeting closed. Thank you.