Conduit Holdings Limited (CRE) Earnings Call Transcript & Summary

Good morning, and good afternoon, everyone. Welcome to the Conduit Re First Half of 2022 Results Call. Please note the disclaimer on Page 2. Today, after a brief introduction by our Chairman, Neil Eckert; our CEO, Trevor Carvey, will present the first half of 2022 highlights; followed by Greg Roberts, COO, providing an update on the underwriting side of the business; Elaine Whelan, our CFO, will then cover our key financials before some final key remarks from Neil.

Thanks, Antonio. Yes, the [ before the ] rest of the team is going to tell you about the results for the first 6 months. I'd like to spend a couple of minutes giving you some thoughts. Conduit is now beyond the startup phase, and that's visible from the maturity of the operation we've built, the skills in our team and most of all the support that we've received from brokers and clients. Since we started in December 2020, we have now passed the $1 billion mark of ultimate written premiums. As they now increasingly earn through the quality of our results to start to surface. Beyond the [ second ] start to our journey, I'm pleased, that the way that we've handled the Ukraine numbers, we've been transparent in that and disclosed the full loss including, and I would stress, including our aviation. The beauty of our business is the simplicity. We're a pure-play reinsurer low policy count, which enables us to assess exposures to events such as this. With that, I'll pass on to Trevor.

Thanks very much, Neil. Yes, the first 6 months of 2022 demonstrated, I think, that the business we've put together has become a real engine for growth. It's our commitment to produce a portfolio that's got lower volatility. But within it, when we blend and write the overall portfolio, we're not overreliant on any one specific class or category of business. I think we view that as a significant strength and it's something that we are firmly [ wedded ] to. So year-on-year, our gross premiums written increased by more than 70%. And gross premiums written of $359 million. On an ultimate basis, we've written almost $500 million of premiums, which is up 49% on the first year, half year 2021. And it was actually pretty close to the total figure for the total of last year. So real commendation, I think, to the team there and the work that they've done. Greg Roberts will talk more shortly on make up the portfolio generally, but it remains broadly 70-30 in terms of noncat versus cat. And I think that's include where it's wise to be skewed towards in this market. And the industry, just a general comment is really offering up great value, really good value, in that space. And it's something that we can take advantage of as pricing continues to improve. As regards to cat, though, first half of 2022, has been reasonably active. And the frequency of catalysts around the globe, ranging from LatAm crop losses to Australian floods has been prevalent, but we're pleased to report that we had generally minimal exposure to those nat cat events in the first half year. Moving on to Page 4, which is the next slide. I've got a slide here, just a few words around the operating expense and the trend that is in place in a start-up business such as ourselves. From a premium growth standpoint, I think it shows the tremendous work, which as I mentioned, the team has done over the last 18 months and has generated almost $750 million of cumulative written premiums. This, of course, means now that we're seeing the benefits from an expense view point and operating expense ratio, as expected has been solidly trending downwards quarter-by-quarter to around currently the 80% mark. The operating expense generally is a key advantage to what I'd call the Bermuda-based treaty model and as part of the design process when we put the plan together originally. So [indiscernible] up or build up costs were a big feature in year 1 and creating the new brand entity in bringing that to the market. It's not great to see the more normalized state of the business emerging through. On that, I'll pass to Greg and he can talk through more details on the underlying division and segmental business in the overall market.

Thanks, Trevor. Moving on to Slide 5. So across the portfolio, we're showing 70% growth, which has been built on our reputation for underwriting discipline as well as focus and great service. I'm not going to read all the comments here, but as you can see, we've seen significant growth in each of the segments. All driven by specific characteristics, especially from the payers and territories in which we target and operate in. Capacity certainly remains a constraint in the current market, and we're seeing opportunities driven by some of our peers, reducing their reinsurance supply and interest and ability to deploy in some of those sectors. Additionally in the current inflationary environment, impact on casualty and the discipline, which leads specialty risk to be unbundled is leading to better price risks, again, starting to meet our targets. So first of all, [indiscernible] to stress that our pricing figures are all net of inflation here. Thus our -- these represent in excess of inflationary lows. And these are obviously the reference points that flow through our pricing models. So year-to-date, portfolio has seen a risk-adjusted rate change net of inflation weighted across the portfolio of 4% with particularly strong increases on the property side. And during the July renewals, we executed the approach we told you we would do from the Q1 trading update. And that took advantage of the existing capacity crunch, primarily on the property market. And as for the rest of the year, we continue to execute our plans to build a well-balanced and highly diversified portfolio. We opportunistically provide capacity to geographies and perils, which may experience further supply shortage. And or as a consequence, you see the first half loss experience. So Slide 6 is a quick and familiar reminder of a strong pricing environment in which we're operating in. The chart here is for Marsh provides an aggregated view at a global level. And it shows that albeit at the pace of the price of increase has slowed down since 2020. At the global pricing levels is still increasing by a healthy 9% in the last quarter measure. So I'll stress here that this is a global level index. And bear in mind that rates here have been rising on a compound basis over the last 3 years. Our information is interesting that some pockets are starting to reaccelerate. As for example, specialty corrections sensibly post-Ukraine and capacity withdrawing Premier's such as the property cat market. Moving to Page 8. We remain cognizant of inflation through our pricing and risk selection. And most appropriately, the impact on company's profitability is a hot topic today. We believe it's important to distinguish the effect of inflation on prior years and reserves and also how inflation is taken into account into forward-looking pricing for the current and future businesses. With regards to prior year's reserves, Conduit benefits from being a young company, which started writing business in January 2021. We clearly benefit from not having multiple back years of reserves, which must be viewed through the lens of a time as a significantly different inflationary environment as to the point in which risks were written. As we've been operating for only 18 months, we've built our portfolio in a relatively high inflationary environment, which is embedded in our pricing tools and our approach to risk selection. As for pricing, our approach to it is to build inflation into our pricing estimates on a very detailed basis, case-by-case basis and class-by-class basis. As an example, [indiscernible] treaty portfolio, we have the lowest hit ratio here amongst our classes of business. And one of the main reasons we find it difficult to accept risks is some of the presented industry assumptions on inflation. We do find that generally, we run higher. I'd also like to repeat that as a strategic choice from the start Conduit doesn't write, auto trade credit or mortgage products often thought about significantly in these inflationary environments. So with this, I'll pass to Elaine to present the financial items.

Thanks, Greg. Hi, everyone. I'd like to take a run through a few over half year numbers on this slide. As you heard, we've had significant growth in our gross premium written for the half year compared to prior year, although that growth is entirely in line with our plan. Also with the numbers we currently have to quota share this premium from the 2021 underwriting year writing and earning through into this financial year. Around 95% of the 2021 underwriting year ultimate premium is now written, about 80% of that earned in line with our previous guidance on that. We expect 2021 ultimate premium to be almost fully written by the end of this year and about 95% earned. With the 2022 underwriting year, we've continued to see more opportunities in quota share versus XL. So we currently expect it will follow a similar writing and earning pattern, but that's obviously impacted by how much business we fill in the books in the second half of the year. Our earnings and written percentage is also increasing relative to the same time last year as our book matures. That's also bringing down our other operating expense ratio. We expect that to come down further as we grow the book and as earnings continue to mature. Our net loss ratio was 67.8% for the half year, 56%, excluding the impact of our bookings for Ukraine. Loss estimates for 2021 loss events remain relatively stable. As we mentioned, a bit more quota share written than initially expected this year. That's meant our acquisition cost ratio has remained at a similar level to the prior year. We do expect potentially more [ XL ] opportunities in the second half of this year. But given the timing of that, our acquisition cost ratio will likely remain at these higher levels for the rest of this year. We've declared convention dividends of the 2022 financial year of $0.18 per share, the same line as last year and in line with our dividend policy to provide between 5% and 6% of IPO capital raised. I'll flip to the next slide to talk about investments. [ Through routine business ] strategy, we're keeping [ duration ] fairly low relative to our liabilities in the current environment. Duration is currently at 2.4 years versus around 3 years now on our reserves. We're comfortable with that for now, although we look to increase duration a little bit, a bit further down the line. Our unrealized loss of $54.3 million for the half year is clearly mostly driven by rising rates and rising rate expectations that is aided by being moderation, and we also don't have any risk assets in our portfolio. Our portfolio remains high quality and again, no risk assets. So we don't have any concerns about defaults or impairments.

Thanks, Elaine. So a few final thoughts before the Q&A session. After 18 months of activity, Conduit Re remains on positive trajectory for growth, profitability, and we enjoy good support from our clients and brokers, and we think that is some extent due to our pure-play reinsurance status. We built a quality underwriting operation, which in July parts the $1 billion mark of ultimate premiums written since the IPO. So that's sort of landmark for us. We're perfectly positioned at the time where there is a shortage of reinsurance capacity. We are still in the phase of significant growth. And as our business is normalizing, our combined ratio will trend towards our target of mid-80s in steady state. Our first half results have been affected by the Ukraine conflict, but the fourth right approach we've taken to assess and communicate our exposure as part of what Conduit stands for transparent and data-driven. Last but not least, the continuing hardening of the market providing us with a substantial opportunity for profitable growth and to build out our pure-play reinsurance business. So that ends the presentation. So let's go to Q&A with analysts and investors asking questions.

Great. Thanks, Neil. [Operator Instructions] Thank you.

Ben, do you want to ask a question? One second, Ben.

I had 2 questions. Firstly, I was wondering if you could unpick the sort of mid-80s combined ratio that you're targeting in a steady state, maybe with a particular focus on where you see the sort of the cat loss load going? And the second question I had was, could you give us an update as to the moving parts in your capital position in the first half? How that has evolved, may also align for the dividend, the uncovered dividend that you've paid?

I think, Ben, I think where we are for the half year in terms of what we've produced as a combined ratio, that $105 million there. There's just under 12 points about is based on -- from the Ukraine losses. And then we have a little bit in there of cat losses, which I would say are a bit above average. So you can knock off a few points for that as well. And then I think when we get to more of a steady state. There's also a couple of points which come on to the extension [ sort of two ]. Business mix is kind of the last part of that. The acquisition costs that we see coming through from -- on the quota shares and once we get into more of a steady state, we'd expect that to come down to a few points as well, and that gets us into that kind of mid-80s underlying trade of the book that we're seeing coming through. So that's one of where we're heading to. On the capital position, what was it specifically that you were looking for?

We'll just how available capital against required capital has developed from the point of view, I guess, any binding constraints that you might have as the business has grown. And obviously, as you've incurred a loss in the first half.

I think then the binding constraint is, I'll call it, self-inflicted in terms of how we look at where we want to keep our P&Ls relative to capital. the business plan was put together with a 5-year time horizon, and we're clearly building into that. So we're in a position of significant excess capital at the moment.

Okay. Sorry, could I just come back on the sort of on the cat load as you see it, how significant you see that would be? Because obviously, the exact amount of catastrophe business that you're writing, I think you've indicated that that's probably a little bit below where it was against the original plan.

Yes.

So yes, in terms of the way that the loss ratio is made up then, which we discussed this before. It's a combination of [ attritional large ] and then cat for us because we are very broadly 70% non-cat business. Majority of our loss ratio is non-cat, so it's in the attrition of the large component. So kind of 70-30 blend is not a bad guide to the way that we think about cat versus attrition and large than the component. The interesting thing for us obviously, as we're emerging through the first 2 quarters, and it really is start 2 quarters for us. Q2 has been a great position for us to be in absent a significant cat involvement in our own portfolio and obviously [ offset ] Ukraine. We can see the underlying portfolio emerging through. And that's really, we feel now in Q2, it's really validating the approach that we've taken, which is the about putting a portfolio together has reduced volatility and we position ourselves in the value chain where we believe the risk value is, and that's really coming through now in Q2. We're very pleased with that.

Tryf, do you want to ask a question?

I just have 2 questions. The first one is on premiums. Obviously, these have grown and actually year-on-year. I was just hoping to get a sense for what is the growth you would anticipate for the second half? Maybe as a rough guide you can give us sort of some expectations, how much the second half premiums will be as a percentage of the total maybe. Another question is on the specialty lines. Premiums seem to be sort of flat for just the second quarter. Any comments why you haven't grown here. And I was wondering if this is mainly due to the renewals across specialty lines coming up in the second half. And I guess more broadly in what areas are you getting the most excited about when we look forward to 2023.

On the second half guidance. I think fair to say that we would expect to see growth at a lower rate than we've seen in the first half. On an ultimate premium basis, we expect to be ahead of the ultimate premium that was in the IPO plan. I think on a written basis, we expect to be kind of in and around that level plus or minus whenever we end up on that depending on what the opportunities are there, but I think in and around that kind of level of quantum.

So on the specialty piece in particular. So that second quarter is quite an interesting period in specialty arena, particularly the costs of subclasses that we target. So we certainly saw opportunity or create an opportunity to come on the back of renewals of contracts that were starting to be effective for some of the loss activity. We don't think that's fully materialized yet. So we expect some of those contracts to provide opportunity, perhaps later on in the year as well. So you're in a kind of world of here of backups and other sort of interesting processes that go on there. So we think that's some of the experience we expect to see in Q2. We think that's still going to come later on in the year as well.

Just to add a couple of points to that. It's been reported sort of in the press and the word unbundling has been mentioned quite a bit with specialty. It has a feature which we're aware of several years ago that the specialty markets started to bundle and become less transparent. And I think what we see emerging and the only signs are certainly for the renewals in [indiscernible] is that, that transparency has got to improve. We are comfortable looking at the underlying classes, providing we can price. And the issue is that we've seen in the last few years as that's been bundled in our view, it hasn't been possible to get a clear line of sight through to the underlying risk and the underlying loss expected. So specialty generally for us, I think is a -- is one that will improve at an increasing rate in the market. Really, the key for that is, I would say, probably Q1 next year when that largely been through.

Yes. I think 3 last question about which areas you are most excited about 2023?

Crystal ball and then. So I mean, obviously, we have a plan to continue to build our diversified portfolio out, and it is progressive across all lines of business. For pockets of interest, I mean, Trevor just mentioned again, specialty. We associate sort of the unbundling concept with better discipline, frankly. And from the risk-taking side, we're always -- it's our DNA to allocate premium to risk. And so the concept of unbundling starts to allow us to do that where we can isolate premium to the underlying risks and allocate it accordingly. And that's what effectively describing how our portfolio is built. So specialty, certainly we're interested in seeing how that develops. And the obvious one is property. And property spans a broad range of subclasses, cats being one of them. we have built and we executed a plan of diversified risk taking. And that means we don't run and don't intend to run any new peaks or accumulations that otherwise are in our original plan. But obviously, as we grow our business, we're able to take more risk in line with our plan and frankly, those markets are coming towards us. So there's certainly opportunity there. And as we've talked about in prior presentations, we're very keen to see that market continue to trend towards a point where if you think of property cat, you can sell, for example, capacity on a named peril or regionalized basis. And that's quite exciting for us, again, with that concept of being able to build a portfolio.

Thank you, Tryf. Barrie, do you want to go ahead with your questions?

Yes, apologies. I just have a couple of questions, if I may. First of all, I think the proportion of quota share, excess of loss has fallen whilst you've increased the proportion of just normal excess of loss. I wondered if you could give perhaps the background to that. And the second question I had was a more general one. You talked about the business emerging, if you like, from a startup phase. Now I get that in terms of the financials as the proportion of expenses start lowering compared to revenue. But what other benefits are you starting to see as a result of the maturing of the business?

Barrie, so on the quota share versus excess of loss, as we've sort of talked through this and so walk through this concept previously. We still see rate advantage in the primary markets. And as a pure-play reinsurer, the quota share is a mechanism for us to get closer to that primary market and to absorb the sort of repricing of risk at those levels. But we also noticed that we do know volatility is starting to price better. And by definition, that is the product of excess of loss. So as our quota share develops, the earned premium is coming through our base and our exposures are broadening still we're able to write more volatile products like the excess of loss product into our portfolio as planned. And it's a simple function of just the development of the portfolio. There's an element of cyclical behavior to that as well. When you think of the reinsurance market, at which point treaties are typically incepted. If you take U.S. casualty, for example, for us, that's a quota share dominated portfolio, which is quite consistent through the year, whereas the [ property ] account is more quarterly.

Okay. Yes. And just Barry, on the second part, business emerging from a startup phase and the benefits of crew a couple of areas speak to mind on there. Obvious one is on the [ lathe ] breadth of the contract clients and classes that we see, just renewing a book of business a year on gives us the opportunity to scale into that, adjust lines and grow into it where we think the opportunities are there. And then there's additional touch points with those clients with the full team in place. It means if you like, an exponential add-on to that and that other opportunities arise. So what's probably surprised me, I'll be honest with that, is the number of contracts that we've seen in the course of our first 18 months. And when we relate that in conversations with clients, I think they've been surprised at the -- which you can make an impact in the market from a relatively early phase and early stage. So that's been good. The other one is what I call benchmarking, just a collection of data. Greg is a great one for this, a great advocate of it. And it's what we've been able to do in collecting areas like casualty triangles from vast amounts of submissions. It gives us a really good window on the emerging patterns there, it informs our view of things like inflation. I think we have a very solid and robust view around that. And then on the property side, I forget how many millions of locations that we trapped in [indiscernible], Greg?

$1.6 billion.

$1.6 billion. There we are. So within our cat property monitoring software and system, that's the number of locations that we are covering and trapping. So it gives us a good insight. So majority of data, I guess, variety is kind of one of the key and benefits as we grow.

Yes. Barry, going back to your first question, the quota share XL percentage is down because the rest of the account has grown. So and in effect, that part of the account is static, but we're seeing growth elsewhere in the portfolio.

Andreas, you may ask your questions?

I think I'm live now. Just 2 questions. One on the attritional loss ratio and one on acquisition costs. If you just strip out Ukraine, maybe a couple of points for medium-sized cats, from the first half loss ratio, I get an attritional somewhere in the mid-50s. Has there been any surge in attritional losses during June 1st half over this a normal pattern. And if I break down of attritional losses, are they really coming through the property book? Or is it more driven by casualty cut to attritional claims? And the second question on acquisition costs. Elaine, you mentioned these would remain high in the second half of the year. But I think you also commented that you would be expanding your XL treaty book. How long does it take for these acquisition costs to sort of kind of come down as you grow your XL portfolio? And maybe could you comment on the casualty ceding commissions, whether these are coming down or not?

Okay. So breaking out the loss ratio, we backed out Ukraine for you there to get to 56. Within that 56, there is an element of cat in there, what we'd probably call more traditional type cat and small cat that we do reserve for so that there is a little bit in there but also an element of large losses in there. So small and large losses, we don't split out and disclose separately. The other thing that we're also doing is making sure that we are taking a fairly prudent approach to reserving in our early stages as we also there's a little bit of overlay that.

One of the other drivers of the loss ratio in an acquisition in Q1 as the XL cost, CD costs, obviously, are earned all in Q1 as well.

Yes. Yes. And then on the acquisition costs, I mean we had -- we have talked about our acquisition cost ratio coming down a little bit this year because we expected our quota share to XL going to move from, call it, 75, 25 to 65, 35 on we're probably going to be closer to 70, 30, maybe a little bit over that this year. We have also seen some of our 2021 larger treaties exceed expectations on a premium basis, that bump things up a little bit too. I think in general terms, on the 2022 treaties. We have had some benefit from being able to negotiate on those commissions and bring them down a little bit. On the quota share, there's obviously a deferral of the benefit of that as those contracts earn out. And second half of this year, we do expect to see a little bit more in terms of [indiscernible] opportunity, and that will bring things down as well. I think we would expect it to come down at points, but I think a lot of that will depend on what we see running into one on one renewals as well in terms of where we think that the blend of our business is going to be and how successful we are in negotiating in those conditions.

And if I might comment on the question around casualty ceding commissions, really hot topic for us. We sort of referenced in the past that one of the sort of ultimate sort of impacts to whether we write risk or not has often been the fact that we can't get there on the ceding commissions and deductions in the risk transfer chain. There are certainly just looking back over the first half, there were certainly transactions that were issued with increased sales. As Trevor just mentioned, we make sure we're aware of what's out in the market, but that's not necessarily the same as what we're writing. So our experience was very stable. But we do know there are certainly deals out there that pushed very hard on seed rates and perhaps at times got those increased seed rates, but ours was very stable.

Thanks, Andreas. Derald, do you want to ask your questions?

Just a few questions, please. So the first one, I'm interested to get some high-level thoughts, right? So how do you see the current cycle evolving? I mean how is it different to what we've seen in the last 3 years or so? And then the second one, a bit money market, what is the rating level you've assumed within the mid-80s combined ratio guidance? For example, are you assuming rates to stay strong where they are until the end of 2023? Or are you assuming some changes there? And the third one, just a short one. The P&L level you have 2 hurricanes, that 3.3% of tangible capital at the half year. Could you remind me how has that changed from the year-end level? And what is the maximum limit that you would be comfortable writing at?

Okay. Just in terms of current cycle and perhaps the rating levels. The current cycle, how does that compare now to the last 3 years? What are the differences within that? I think, obviously, what we're seeing is an increasing awareness, we see in the market of the weaknesses of writing very large cat towers and catastrophe exposures, and overreliance on the models. I think that's emerging now more and more, it's a consensus, which seems to be building out there. We've seen obviously a number of entities who decline to continuing involvement in the cat space by writing those types of products. To be get honest, it's not a surprise to us. We kind of had a pretty much a fixed view that the models at the tail were at best unreliable and probably unrepresentative of emerging risks within the industry including climate change. So I think now what's happening is the way the markets evolving is we're seeing that cat space not being sufficiently supplied. There are opportunities there now for us to trade into. And we're open for cat business, providing we can get the structures that we'd infer. And I think there isn't the weight of alternative money should we say that's sitting there to fill the gaps that they have done in previous cycles. On the specialty side, obviously, inflation is the big topic. And as the world comes to realize and the insurance industry emissions industry needs to price in the effect of claims inflation and that increase at an increasing rate. That is just run through all the conversations. I'm sure you know in boardrooms and risk meetings with clients all the way through the industry. The presence of inflation is a key part of how reinsurance is bought and how we priced it. So I think that awareness is here to stay. And in that respect, it gives kind of robustness to rating levels. It's probably very often said that it's bottom up. And I think it's a ground up lead rating change, and I think that's just an awareness that the well is a change both on a client standpoint and from an inflationary aspect. Do you want to answer that?

Yes. Derald, so it's Neil here. The hard market is changing. It was a market that was till -- and it's now, in our view, a market that is moving towards being capacity constrained. And where brokers could previously over place business. Some of the big placements, they are struggling to complete those placements. So we would describe it and have described it in part of our presentations as moving towards a capacity crunch. And I think we've also expect to see further hardening of the 1st of January, irrespective of how the rest of the year pans out. The other thing I'd say is that the mid-80s combined is based on today's pricing. So that's my answer.

So on the topic of the P&L. So when comparing to last year, obviously, we had a smaller portfolio with different combination of property, casualty and specialty across the portfolio. So that continues to move to plan for Year 2. Our plan remains not to accumulate large buildings of collections of P&L in any 1 territory. We remain largely under our policies as set in the business plans. And as Trevor just said, it's a really interesting area for us when you think about inflation and tail risk. Our plan is, as a reminder, to be very thoughtful about tail risk. And in fact, most of the way in which we deploy our risk appetite, we get back the tail risk. So it's a measure that enables us to look at risk. It's a function of pricing still as well, and those markets are still moving towards us. So I still use the phrase keeping some powder dry, which is a comment around being able to take opportunity going forward.

Stan, if you want to go ahead with your question.

Just a quick one on reinsurance. So you noted the ceded premium went up in the half year-on-year? I looked ahead of premium growth. So I was wondering, I mean, could you comment on any changes in structure year-on-year that might be worth dosing?

I'll take that. So our reinsurance purchasing is per plan and as per budget and design. And as a reminder, our portfolio is growing. So our purchase of reinsurance products to support our portfolio will flow as the business grows as well. As a reminder, again, with quota share deployed versus excess of loss, we have a sort of progressive buildup of exposure as opposed to a heavier excess of loss book, where you could be sort of sit on that exposure on an in-force basis instantly. So our sort of way in which we buy reinsurance is perhaps different to that of a much heavier excess of loss ratio.

Just add a couple of other points to that. Efficiencies to scale what we saw this year. Obviously, it was a relatively tight retrocessional market at Jan 1 on the back of some of the storms last year. The limits that we buy are manageable. We're not buying in the hundreds of millions. We are a manageable client, I think, for our partners. So we did increase our limits. We bought back through the existing partners and that is a couple of new. So for us, it was just about growing into our skin by more limit, but getting some efficiencies of scale. So really happy with what the team achieved. And I think as a couple of our carriers described us at year-end, we weren't one of their problem children. They had other problems and they would seem very happy to sort of continue the relationship. So yes. Team develop without [indiscernible].

So Stan, there's no real change in structure to the program. The program we purchased is roughly in line with what we said at the time of the IPO, and we just bought slightly more color.

Ben, I can see you have a follow-up question. Do you want to go ahead? I need to hand to you. I don't know if you have anything else, Mike? Go ahead.

Okay. Sorry. Yes, just a follow-up. I just wondered if you could be a bit more explicit about your inflation assumptions in the second half of the year, maybe how they changed over the course of the half year? And also some color by the 3 different lines and maybe also by geography to give us some sense in terms of how conservative you're being.

I'll pick. So our view of inflation is a continual iteration that's the best way to describe it. And as Trevor mentioned earlier, our understanding of inflation and the effect of underlying exposure is aided by the amount of data we collect and the more we understand about the risk. So if you think about it, we don't pick an inflation figure at the beginning of the year in kind of crystal ball it. We effectively moderate it as we collect more data. Okay, casualty, as an example, we clearly think sort of 7% to 9% as a as an inflationary impact on a book like that. Property is slightly more interesting because there are techniques at the primary level to revalue the underlying risk more transparently, I suppose. And then over that, we'll then be over our [indiscernible] sort of claims inflationary pressures, the old averages of demand surge and disruption in supply chains, et cetera. But revaluation of original risk on property but can happen quite quickly. Specialty much more bespoke is the best way to describe it. Has subclasses of business in there that as mentioned in the slide when we talk about class-by-class and transaction-by-transaction, they can vary significantly. And a number of factors in there, whether it be energy related and or geography related with supply chain and logistics disruption. Very important to work those through largely from a ground-up basis.

So Ben, we -- I mean, to be handed on this. We don't disclose specific inflation numbers because it's part of the client contract negotiation. So I mean, basically, we know what our inflationary assumptions are, and we think we are being proven conservative.

I don't see any other raised hands. So I think we can conclude the call now. Obviously, if you have any follow-up questions, please get in touch, and we'll try to answer them as soon as possible.

Thanks, everyone.

Cheers.