Hiscox Ltd (HSX) Earnings Call Transcript & Summary

Good afternoon. Good afternoon to everyone here in London and hello to everyone dialed in around the world. Welcome to Hiscox's first ever Capital Markets Day. It's only been 124 years in the making. But why now? Well, we have built a unique global diverse business with market-leading platforms in retail, small commercial and high net worth insurance as well as London market specialty and reinsurance. The last 3 years have been periods of significant change and extensive management action. Retail growth momentum is now building. And we have captured the opportunities of the hard market in big ticket in a disciplined way. In retail, we expect to keep taking market share as momentum accelerates to double-digit growth in 2028. Over the last 2 years, we have taken action to improve our expense efficiency, we now have the momentum and the management know-how to accelerate these actions, which will generate a further $200 million per annum of profit improvement in 2028 and onwards. The majority of the $200 million benefit will be recognized in retail, reinforcing management confidence to drive retail margin improvement, while continuing to invest in growth. The changing shape of our group with retail becoming a greater contributor of profit and the actions we are taking to materially improve operating leverage enables us to introduce our first group profitability target and a further step-up in our capital returns. We will achieve a mid-teens return on tangible equity through the cycle. And the Board has also approved a further 20% step-up to our final 2025 dividend per share, subject to final ratification ahead of the full year 2025 results. And joining me today, and you'll hear from them in a moment, are my retail CEOs, Mary, Jon and Robert, They'll be followed by Shali, our Chief Operations and Technology Officer, who will explain how we will achieve the $200 million of profit improvement in 2018 and beyond. And finally, Paul will set out what all of this means for shareholder returns. Now before I hand over, I want to remind you of full and what Hiscox is. Hiscox is a truly unique business. We're a global specialty underwriter with a market-leading brand, an excellent reputation for service, innovation and underwriting and an incredible legacy built over a century. We have a diversified business with strong presence in the U.K., U.S. and Europe. Our diversity creates resilience and we are agile in responding to changing market conditions, whether they're macroeconomic or geopolitical. There are multiple examples of symbiotic relationships across our business. These include financial and operational synergies. And importantly, our ability to come together across multiple businesses to win new growth opportunities. And you'll hear more on these for my colleagues in a moment. We're a growth business with optionality across the portfolio to pursue profitable growth through the insurance cycle, 14 consecutive years of growth attest to this. We have an omnichannel distribution approach with all roads leading to Hiscox. We're deeply connected across all our markets with brokers, partners and customers. And we use the latest technology to enhance our distribution, allowing us to profitably underwrite even the smallest of commercial risks. We have an uncompromising focus on technical excellence, consistently delivering market-leading loss ratios and increasingly augmenting our underwriting process with the latest technologies. Our balance sheet is strong, able to fuel our big growth ambitions and weather extreme stresses. Our reserves are prudent, resulting in an unbroken record of positive reserve development for almost 20 years. And in our retail business, we write a small ticket less complex and less volatile risks, typically small business and high net worth individuals. Today, this business makes up over 50% of our premiums. Our Retail business has more than doubled over the last 10 years in constant currency, and we've added 1.1 million customers. The small commercial part of our business has more than tripled over the same period, growing at a CAGR of 12%. This is where we see the very large long-term structural growth opportunity. And we're capturing this with discipline, at pace and profitably. We write large, complex and volatile risks through our London market and reinsurance platforms. Both of these are market-leading delivering excellent returns over many years. The combination of our platforms and capabilities deliver consistent growth, attractive profits and significant capital diversification. Over the last 10 years, we have achieved an average return on tangible equity of 11.6% and returned $1.7 billion to our shareholders. Now both retail and big ticket will grow but given retail's vast structural opportunity and more consistent growth and profitability profile, it will continue to become a larger proportion of the group. We're already seeing the benefits of this in our capital efficiency, which we're sharing with our shareholders with a further step-up to our ordinary dividend announced today. Now zooming in on our more recent track record. Over the last 3 years, we have delivered strong financial results, underpinned by material earnings growth. driven by both underwriting and investments. Along with the changing shape of the group, this is generating substantial capital and has allowed us to both rebase our progressive dividend with a step-up of 15% at the end of 2024, and to announce 2 consecutive share buybacks. And after a period of consolidation in retail in which we've added new leadership, we invigorated our brand, replatformed much of our core technology and refocus our distribution, we're now achieving an attractive and improving growth trajectory. All underpinned by highly motivated and engaged expert colleagues around the world. But what makes us Hiscox? Well, first and foremost, it's our entrepreneurial business builder culture. This is built on the foundation of expertise in risk management, a low ego approach and high degrees of empowerment for our colleagues. This is critical in us building solutions to address the needs of our customers. It drives us to explore and innovate, it means we empower and have impact, and we attract and retain the best. A strong component of our culture is our customer focus. We are here to deliver peace of mind and build resilience for our customers. The outcome of daily efforts is reflected in our market-leading retail claims Net Promoter Scores and premium retention of 89%. Our underwriting ecosystem, and this is not just about underwriters, but how a whole system of marketeers, pricing analysts, risk analysts, claims teams, reserving actuaries, technologies and underwriters work together to build great customer propositions. I respond early to changing customer needs and market conditions. Now a key focus of today is the unique business and immense opportunity we have across Hiscox Retail. Our Retail business is a diverse platform, diverse across geography, product, channel and customer. We're a specialist insurer, we don't do mass market. We have very large long-term structural growth opportunities across each market, and we're excited about all of them. Our customers are small businesses and high net worth individuals. And by small business, I mean, typically, enterprises with revenues of less than 100 million, but with a very strong bias towards the very small businesses. And by high net worth, I mean, household with a net wealth of over 1 million. Our premiums average out at just over $1,500 a policy, and the limits are correspondingly low, although we do write some larger retail customers as well. We're building market share with discipline and consistently achieving market-leading loss ratios in the 40s. And we've maintained this loss ratio profile whilst more than tripling our small commercial insurance business over the last 10 years. Our strategy is to provide tailored specialist insurance to selected sectors and professions, leveraging our powerful brand and our market-leading underwriting ecosystem. Through the use of technology, we provide an omnichannel distribution platform for customers to access our expertise in the way they want. Our customer propositions are designed to meet their complex current and emerging risk management needs, this is all underpinned by our culture. Our footprint is in markets where there are meaningful numbers of our customers or our target customers and where our specialty proposition are relevant. We have reach across the U.K., U.S. and Europe, this is a huge advantage compared to many of our competitors as it lets us both serve our brokers with a global approach, opening Hiscox to cross-market opportunities others cannot serve, and ensures that the best practices and successes in one market are quickly replicated in others. And you'll hear more on that from my colleagues in a few moments. These markets remain fragmented, often underserved and they're relatively early on their digital adoption journey, and they're projected to grow for many many years to come. This is the strategic underpin to our retail platform. Now we have established access to the specialty markets over 30 years yet we're very much at the start of our growth journey. In small commercial, we've often been a first mover in terms of product and distribution. This is not truer, but in many of the specialist niches you'll hear about from Mary, Jon and Robert in a few moments. And as for distribution, we have pioneered digital direct channel, and auto underwriting, complex insurance in each of our markets. Today, we also underwrite 68% of our retail premiums and almost 100% of our DPD premiums, making our platform both efficient and scalable. This head start continues to benefit us. We have the data, we have the capabilities and the brand to make better decisions grow profitably and create real value. Our access is unique. It is multi-country, it is omni-channel and is backed by our market-leading underwriting ecosystem and distinctive brand and culture. This unique access has enabled us to achieve 19 consecutive years of organic growth, and we have done it properly, and we expect this to continue as we move forward. Over recent years, we have rebuilt momentum, deliberate management actions across leadership, brand, technology, distribution, are leading to increasing growth momentum year-over-year. And we enter the next phase of our journey with large ambitions with much more high-quality growth to come. Now as you can see here, the structural growth opportunity is immense. I'm not sure that would really kind of does it, it is huge. Our target addressable market is over 300 billion, of which around 150 billion is serviceable today with our current products and distribution. Over time, we will narrow the gap between target and serviceable markets. We have vast opportunities in each of the markets with immense potential in the U.S. and Continental Europe and ample remaining room to grow in the U.K. Our ambition is clear, to grow ahead of the market and keep taking share and we will do this profitably. Our target markets are benefiting from supportive long-term tailwinds. Under insurance remains a reality but the gap is closing slowly. Customer purchasing preferences are increasingly digital, and we have built market-leading platforms and capabilities in each of our markets and across channels. We have the strategy, we have the platform, we have the team to capture the large long-term structural growth opportunity in retail, and we are doing it profitably. Central to all of this is the power of the group. Being part of Hiscox, our heritage, our expertise, positions each of our businesses to capture the vast opportunities ahead. Leveraging the power of the group, we are deploying the best of Hiscox to the rest of Hiscox. We're accelerating retail growth by doubling down on our existing specialty sectors, by expanding into new specialist areas, by adding distribution capability, adding more products, and we are expanding into new geographies. And we're simplifying our business to deliver material operating leverage. All of these actions are driving retail growth acceleration, which will reach double digits in 2028. I'm now going to hand over to my team to show you how we're doing it and why we are best place to win. Jon, over to you. [Presentation]

Thanks very much, Aki. Hi, everyone. I'm Jon Dye, CEO of Hiscox U.K., really great to be here this afternoon to talk about the U.K. business. I know I'm very conscious that this afternoon, I have the opportunity to talk to both shareholders and some U.K. customers. I've been the U.K. CEO for about 2.5 years now, before that, I was the CEO at Allianz UK for 8.5 years, during which time I doubled the size of the company to create the second largest P&C insurer in the U.K. I also chaired the Association of British Insurers between 2019 and the end of 2021. I've seen a lot in the 36 years that I've been in the market, and I'm very excited by the opportunity here at Hiscox. This is a great platform to build on with GBP 676 million worth of premium and over 0.5 million customers. We also have a fantastic brand with 83% prompted awareness and 43% spontaneous awareness, making us the second most recognized insurer in our markets, despite a much lower brand budget than many of our competitors. Our brand is backed up by our reputation. We are rated exceptional on FIFO, while our direct commercial customer satisfaction was at 94% last year. We have strong relationships with our brokers who voted us their Personal Lines Insurer of the Year at the U.K. Broker Awards 2024. Our strong broker and customer relationships are underpinned by our specialist underwriting expertise and our excellent claims services, which has a Net Promoter Score of 78, and importantly, we are increasingly digital with 51% of our business, also underwritten. Let's have a look at our journey. We have a long pedigree in many of our lines. For example, we've been writing Fine Art for over half a century, and our flagship high net worth home insurance policy was launched 35 years ago. For much of the last 25 years, we've owned steadily in our commercial business. We are focused on growing in our specialty sectors and expanding our product base where we saw an opportunity to lead the market in new areas, most importantly, in professional indemnity. As the business grew quickly, this created some challenges, which were then compounded by Brexit and the pandemic. It's taken time and work to fix this, but as you can see, the U.K. business is rebuilding that growth momentum. Let's take a look at our business today. The U.K. business is highly intermediated with the significant majority of our business written through brokers, either on an open market basis or through schemes. Let me explain what the scheme is. A scheme is simply where the broker has developed a proposition for a particular customer segment and needs a carrier as a partner. We are more heavily weighted towards commercial insurance and the vast majority of that premium is with businesses with revenue of under $10 million. However, we have the opportunity and capabilities to grow our shares in each of these customer segments. As you can see from the products we provide, we're a specialist insurer with a focused offering that meets our clients' needs. We have a strong professional indemnity book, a product for which we are very well known in the market. Now we believe there is a clear structural opportunity. As you can see, the U.K. is a big market, and there's no headroom issue for us, with plenty to go at in areas where we're known for our specialisms. We have 3% of our serviceable addressable market in the commercial sector, which has been growing ahead of the U.K. economy for the last 10 years and is projected to grow a further 6% annually to 2030. There's an even broader opportunity beyond that in our SME target addressable market, which is worth around $25 billion as of today. With the effective management actions that Hiscox U.K. has taken, I expect the U.K. business to take share and grow ahead of the market. Within the high net worth market, as you can see, we already have a meaningful market share. This market is growing considerably over the last 10 years and is projected to continue that strong growth over the next 5. It's a market where business is sticky and where quality of service is absolutely critical. I highlighted our claims NPS of 78 earlier, that gives us an edge in winning and retaining this business as our customers know that we'll be there for them when they need us most. So while we already have a great position in the high net worth market, we can continue to take share and lead the market. Now let's look at some important market trends. Our specialist focus means the recent consolidation of the U.K. intermediary market is an opportunity, not a threat. Larger brokers are reducing the size of their insurer panels and cutting smaller carriers. For example, one of our brokers are shrinking their core commercial panel from 75 insurers to 12. As a leading specialist insurer in the U.K., we are being retained where others are not. We have fantastic products, a great claims service and a brand that our partners love. That same process is happening with schemes, where brokers are transferring the schemes from their recent acquisitions to their own strategic partners. We are a major beneficiary of this trend and have agreed terms on a multibillion pound deal just in the last couple of weeks. The next trend we are seeing is increasing digitization of distribution across both broker and direct. Within our direct business, an increasing proportion of our small commercial customers want to buy their product online rather than through our contact center. In the broker channel, intermediaries increasingly want to trade digitally and have made significant strides in the last decade, most notably through digital trading such as the Acturis panel. We are taking advantage of that trend, and we're the only carrier with a high net worth property product on Acturis, which is used by the vast majority of our brokers. This has helped us to take advantage of the opportunity in the high net worth market as a number of smaller players have either exited the market or been acquired. With a well-known product and outstanding claims service, we're winning new business while retaining our existing customers. Importantly, the U.K. has seen a step-up in growth momentum, both in policy count and premium. To grow ahead of the market, there are three actions we're taking to accelerate our policy and premium growth. Go deeper in our chosen sectors, expand into new niches and supercharge distribution. Let's take each of those in turn, starting with going deeper in our chosen sectors. We can't be everything to everyone. We are focused on building our share of the market in sectors where we can leverage our strengths as a specialist. There are 12 sectors where we're focused on building our market share. Importantly, each of these sectors requires expertise, either at the point of underwriting or claims. For example, in media, you may need to have cover for when a star can't attend a photo shoot. That's not a risk, everyone in the market will want to cover. Being a specialist means that we say yes more often. We understand the business, and we're comfortable to write the risks and help them navigate the challenges with claims when something goes wrong. Each of these sectors is already substantial for us with at least GBP 10 million of premium and 5,000 customers in each and every one. Those on the left, as you can see, are the sectors where we're known for our specialisms and are already front of mind for our brokers. We are one of their go-to carriers to ensure those risks. For those on the right, we're still building our market position. We have the capabilities to service that business, and we already have a level of scale, but there's much more that we can do. We're engaging with our brokers, making them aware that we will cover risks in that sector with a broad underwriting appetite and bringing our excellent claims service. At the same time, we have focused advertising, targeting customers through sector-specific channels. Now I'm sure that most of you in the room will have seen our ads on the London underground. We are also reaching chartered accountants, marketing and design consultants and IT professionals, amongst others, through tailored content in trade media and professional forums. And there's an opportunity to do a lot more to underwrite the whole customer. Key to this is the quality and scope of our proposition. While we have great products in each of these sectors, there's more that we can do to build a bigger share. In the U.K., we're also constantly reviewing our offering to identify where we can add more features to our policies, be it additional insurance products or additional services. A great example is LeakBot, a leak detection system that we offer free to our high net worth household customers to increase resilience and provide early warning of escape of water. Additionally, within our segments, we offer wordings that are tailored for our customers' needs. For example, we cover tutors for the risk of failing to educate. We can continue to build on this, offering coverage that protects against more of the risks our customers face. Finally, by continuing to build on our strong expertise in these sectors, we can price and quote more complex risks, including those at the larger end of the market. Let's move on to look at expanding into new niches. We have 12 sectors at the moment, but there are significant opportunities to move into additional areas that require specialist underwriting capabilities. There are three ways that we're doing so. Firstly, we can develop into adjacencies, such as landlords cover, where we're preparing to launch a new direct product in the coming months. Through our existing relationships, we already have the skills and capabilities required to underwrite this product. Then there are those areas where we don't currently write in Hiscox U.K., but the wider Hiscox Group does. Taking better insurance where our European colleagues are building up significant capabilities. We're working with them, our American colleagues and one of the largest brokers in the world to explore the market and identify opportunities. Finally, there are brand new niches that we can expand into. The foundation of our retail business was expanding into emerging professions such as IT and management consultants. We're analyzing the market and identifying underserved but growing areas of need. For example, we're one of the first in the market with a comprehensive green energy consultant product. And finally, supercharging distribution. To better capture these opportunities with supercharging distribution across both our broker and direct businesses. With the consolidation of the broker market we need to be easy to trade with, to ensure that we remain front of mind. We've been scaling up our schemes offering while organizing around our sectors. This is allowing us to target bigger deals within the market. We're also working to get to yes more quickly, in a competitive market the sooner we can give an answer, the more likely we are to win the business. To do this, we're deploying AI enhanced new business triage tools. This allows our underwriters to prioritize the business we want to write, while automatically declining the business that sits outside of appetite. We're also giving brokers better access to decision-makers leveraging our regional teams across the U.K. and further empowering frontline staff to make decisions. Finally, we're expanding our digital distribution adding more products to Etrade, which provides brokers with a quote "Much more quickly and efficiently than through an e-mail submission." As I said earlier, we are the only provider with a high net worth property product on the Acturis panel and there are more opportunities to lead in this space. In the DPD channel, we distribute most of our business directly with only a small portion through partnerships. We are developing our partnership proposition, allowing us to access a broader range of customers that we presently don't touch. We can also digitalize our direct private client offering. We have already proved that we can digitalize this complex product in the broker channel. Our customers' preferences are evolving, and we need to move with them and deliver more, digitally. Finally, we can simplify and enhance the customer journey ensuring that our customers find the process as seamless as possible. The U.K. is a great business. Our underwriting is excellent, and we are specialists in our markets. We also have a premium brand that is recognized and respected by our target customers and intermediaries. This is underpinned by our best-in-class claims service, which our customers know and trust to be there for them. We're there in the channels that our customers want to use, be it through brokers or directly with us. And through our sector specialisms, we're able to meet their needs while maintaining our underwriting excellence. This puts us in a fantastic position to take market share in both the U.K. SME and high net worth markets of $27 billion, expanding beyond the 4% that we currently have. Thank you very much for your time. I'll now hand over to Mary. [Presentation]

Thank you. Thank you, Jon. As I've said before [indiscernible] secretly awesome. Good afternoon, everyone, it's great to be with all of you today. I'm Mary Boyd, Hiscox USA CEO. I'm now almost a year into my time at Hiscox, and a little bit about myself. I've spent 30 years as a business builder working for companies, including Chubb and the Hartford. And prior to Hiscox, I was CEO at Plymouth Rock. Over this time, I've built my business applying a few consistent principles. Firstly, building strong relationships, both within our teams and also with our trading partners. Secondly, leveraging data analytics to drive technical and operational excellence. Thirdly, using technology to transform the experiences of our customers, partners and our team. You will hear more on how I'm applying these principles across Hiscox USA to accelerate our growth and our efficiencies. Now I'm often asked what I found at Hiscox when I first arrived. Well, I found a unique business with first mover advantage, strong capabilities and deep relationships in one of the most attractive insurance markets globally. Hiscox is a proven business builder, we have grown 150% over the last decade to write over $900 million in premium in 2024. We have powered our omnichannel distribution to serve over 600,000 customers today. We reach our customers wherever they prefer and can flex as needed to outperform market cycles. Hiscox USA has redefined the small business insurance market and set the standard for simplifying the complex. And today, over 3/4 of our business is auto underwritten and this is truly market leading. We have built a strong brand in the small commercial arena. We are proud of our excellent prompted brand awareness of 73%, boosted by our most recent campaign, there's no business like small business. High-quality claims service is synonymous with Hiscox, and that is exactly what we find in the U.S. with a 61 claims Net Promoter Score. And we have a market-leading partner panel of carriers, brokers and agencies. Then looking at our team, I have found a lot of exceptional talent, including people who have been with Hiscox USA since inception. And I've supplemented this with some new additions to my team. Nick Sinkus, who has joined from Chubb Small Commercial as our Chief Underwriting Officer; Frank Lamantia, our new Chief Technology Officer, who joined from Bold Penguin and Alexandra Furth, our Chief Claims Officer, who joined us from AIG. This carefully curated group of individuals joins the other incredibly talented executives on my U.S. leadership team and positions us well for the future success. So a quick snapshot of who we are. Let's move on to how we got here. Our first steps into the U.S. retail market were almost 20 years ago when we entered the broker market. However, the real breakthrough came in 2010. When we took our experience from right here in the U.K. to become the first mover in the U.S. direct and digital small business market. Our story has been one of gradually expanding our appetite and course correcting when necessary as our growth strategy evolved. In 2019, we decided to really sharpen our appetite on small business. Now this included the strategically important decision to reposition the business towards smaller customers to be more like Hiscox U.K. in Europe, doubling down on our technical expertise. Making that change is always difficult, and this has not been without some disruption to performance, but we now have a clear and consistent risk appetite that is right for the business. Brokers who are reengaged in a channel that is back to growth. Brokers have been an essential part of our history and will be a valuable part of our future. In DPD, we replatformed between 2021 and 2023. And today, our new technology is live and over 99% of our DPD business is auto underwritten. And then following a challenging couple of years, I am confident and very excited about our business as we accelerate forward. We have invested consistently in our brand, technology, product and connectivity over almost 2 decades to build the business that we have today. America's leading insurer for entrepreneurs and the preferred partner of their advisers. There are 35 million small businesses in the U.S. and we are serving this market across all 50 states. As you are probably aware, Hiscox USA does not write personal lines, and today, almost 60% of our premiums are in the DPD channel, but the mix may flex as we grow and as the market cycles merit, this optionality makes us nimble and resilient. And to remind you, our digital partnerships and direct business, what we call DPD is where we write risks for the smallest business on an admitted basis. And to give you a sense of the scale, the average premium is about $1,000 but our expertise and capabilities mean that we're able to auto underwrite almost 100% of this business. Now looking at our customer profile, we serve a nice balance of blue and white collar professions, including management consultants, professional services entertainment, media, health and well-being, tech and all the way to things like landscaping, retail and janitorial. And with over 80% of small businesses underinsured, it is not surprising that 60% of our new DPD customers are first-time buyers of insurance. This is good news, because we are trying to serve more entrepreneurs than ever before, and we expect to grow our customer base in every single segment. Now the vast majority of our customers today are nano and micro businesses. However, now that we have reset our appetite in the broker channel, I expect the proportion of small, medium and even select large businesses to increase, but our overall focus on nano and micro will not change. Finally, on product. professional and commercial liability are our core offerings. But we expect the share of Cyber and BOP to grow as we have started to launch our latest versions of these products. Now let's take a look at our market. The U.S. is the largest addressable market for Hiscox Retail with $222 billion of premium written across our target addressable market. Of this, $83 billion is within our current serviceable appetite. Over time, as we expand our appetite, we expect to narrow the gap between the target and serviceable markets. Our market share is very small now at just over 1%, which leaves a lot of room to grow. There isn't a single carrier that has an overly dominant share in the U.S. even the largest is barely 5%. This offers us an opportunity to disrupt and grow, especially as the market is forecasted to grow at 6% per annum through 2030. The digital direct market is forecast to see even faster growth at 7%, and we already have a respectable share of 9% of the nano-micro market. And in broker, though our overall share is small and the market is competitive, there are areas where we have built reputation and meaningful scale, such as broker E&O, where we have a 7% market share and are considered a leader. Now our ambition is straightforward and clear, to outgrow the market and continue taking share. There are three key trends that we are seeing across the market that are impacting our business. First, like the U.K., we're seeing digitization across all of the channels. This is similar to what happened in [ personal lines ] where today, motor and homeowner products are largely digital across all of the channels. This took many years to mature as it required automation, reliable third-party data and sophisticated pricing algorithms capable of handling millions of data points and over time, I expect this will repeat across our market. We are already seeing signs of this with brokers launching automated quoting platforms and the emergence of comparative rating. Having been the pioneer of digital direct, Hiscox USA is well placed, we are already extending our digital capabilities to other channels. This year, we've already launched new algorithmic rating and AI triaging tools in broker Cyber, and this is very similar to the approach in Hiscox U.K. This speeds up the underwriting process from hours to just a handful of minutes. And over time, we expect to extend these capabilities across our business and free up our underwriters from admin tasks to instead have more time to innovate develop new propositions and win more new business. And Shali will talk more about this. Second, we are seeing the appetite of the retail channel widening. The admitted market is becoming more confident to write risks they were previously referring to the E&S market, that is particularly true in areas like Cyber. Hiscox USA is already getting ahead of this. As you will see later, we are providing retailers access to our products through their wholesaler relationships. Further, our investments to digitize our broker channel are allowing us and our brokers to become more efficient and compete more effectively. And over the medium term, we will explore new channels. The third market trend is market efficiency. Technology and digitization are improving segmentation and risk pricing. AI and machine learning are improving the way carriers interact with partners and customers. Hiscox USA, specialist DNA and first-mover insights mean we are already working with capabilities others do not have. But we will continue to combine the latest technologies and efficiencies to drive operational excellence and build new customer-focused capabilities end-to-end and ensure Hiscox continues to set the market pace. There are three levers that we are pursuing to accelerate growth across our U.S. platform. First, we are expanding our solutions that means unlocking progress for more entrepreneurs. Second, we're expanding our distribution, that means deepening our existing position as the preferred partner to our customers, advisers and meeting our customers where they are. Third, we will expand our platform approach, that means adding more third-party products and services and continuing to build our position as the go-to community for small businesses looking to ensure their progress. Now let's take each of these in turn, starting with expanding solutions. Having initially entered the U.S. market with a professional liability focus, today, we've expanded our suite of products tailored to complex needs of customers. In DPD, that includes general liability and professional liability, Cyber and BOP. And in broker, and includes professional liability with healthcare, media tech, entertainment and cyber, but we are not stopping there. We are steadily expanding our existing product range by adding new features and entering new sub classes. And for example, in our broker cyber offering, we're updating coverage terms and implementing the latest technologies in segmentation and rate for risk capabilities. We'll also be developing new products and refreshing certain existing ones, such as in our digital BOP product, where we are updating our terms and our coverage. And as we continue to expand our solutions, we expect our cross-sell ratio to increase and we see room for upside on our current levels based on our experience in the U.K. and in Europe. We have the know-how, the expertise and the products across the group and over time, we will deepen our existing proposition by adding more services, building a community where entrepreneurs can access the services they need, some provided by Hiscox and other by trusted third parties but which free up small business owners to do what they're best at and avoid costly mistakes. Now turning to distributions, the first look at our partners today. Let's start with our digital partners. You can see our network is diversified across almost 200 partners. We have a broad panel of wholesalers, insurance carriers and digital aggregators or e-agencies. Today, we already work with 9 of the top 15 U.S. insurers. So 10 years ago, most of our partnership premiums came from insurance carriers. This was already a very successful strategy when we entered the market, and we're building our brand. Today, we have extended our digital capabilities to wholesalers, this allows them to trade digitally and plug Hiscox into their model, while also offering access to their network of retail brokers and independent agents, this widens Hiscox's reach even further and deepens our relationships. While digital aggregators are currently a small component of our partnership model, we expect they will continue to remain a feature of the market into the future. Now we are working closely with our partners. And over the last couple of months, I have met with those representing over 3/4 of our premiums. In each case, there are great opportunities to grow together. On top of that, since replatforming, we have now added over -- we have added 63 new ones. These are agents and aggregators, which reflects our market trends. The mix of our partnerships will continue to evolve, but the partnerships model will remain key to our business. Now let's look at brokers. You can see how connected we are across the broker market. We already partner with all top 10 U.S. wholesale brokers and all top 10 of the largest global brokers. These deep relationships each represent big opportunities for us, and what we have across brokers and partnerships today are deep relations that with the leading players in U.S. commercial insurance, a very strong position to build from. So what steps are we taking to expand our distribution further? In direct and digital partnerships, we are extending our leading quote-to-bind experience into self-service capabilities consistent with our operational excellence principles. And in partnerships, we are steadily expanding our appetite to meet even more partner and customer needs. We are increasingly cross-selling and embedding our products within our partners' sales and service experiences. And in broker, in addition to digitizing our processes, we're leaning into our specialist DNA and expanding our appetite. For example, in areas like Allied Healthcare and Mediatech, we see significant headroom for growth. Now over the last several months, I have dedicated hundreds of hours to meeting with our brokers and partners and listening to understanding their needs and ensuring that we are giving them the best of Hiscox every day. That there is complete clarity on what operational excellence is, in that we know exactly how to execute on that. You're seeing this progress already in U.S. broker and more is on its way. We are continuously looking at new distribution opportunities, such as working more closely with independent agents, but our omnichannel approach ensures we already have access to this market through our digital partnerships. And finally, turning to our platform approach. We plan to harness the power of our leadership in direct, our brand and marketing and the community of 600,000 entrepreneurs that we serve. Today, we have just one third-party product that we sell to our customer base, and that's workers' compensation. We now intend to establish a multi-product and service agency model, the Hiscox Agency. These partnerships could be with companies we already trade with, strengthening existing relationships or completely new partnerships of mutual benefit. This, of course, is a long multiyear journey, but it's an approach we're very excited about because everyone wins. Most importantly, our customers win because they can access all of their small business needs in just one place. Our partners win, because they sell their products and services to our high-quality prospects and customers. And Hiscox wins because we increase our reach and relevance, deepen our partnerships, enhance customer retention, generate more efficiency from our marketing spend and generate more fee income. What you've heard from me today boils down to our clear rights to win in this attractive and vast market. We retain a first-mover advantage and have clear rights to win, thanks to our specialism and expertise and entrepreneurs. Our leadership in DPD, our reach through a specialist product set and multichannel distribution approach, our distinctive brand and of course, the capabilities we get from the power of Hiscox Group. We are in the business of ensuring the progress of business. We want all routes to lead to Hiscox. The opportunity for Hiscox U.S.A. is huge and building on our strategy, we are accelerating our growth and capturing it. Thank you. Thank you for listening so attentively. I will now hand over to my colleague, Robert Dietrich, CEO of Hiscox Europe. [Presentation]

Thanks, Mary. Good afternoon. I'm Robert Dietrich, CEO of Hiscox Europe. I've been at Hiscox for a very long time. and I'm really excited about our future. I joined Hiscox in 1997 as the seventh employee in Germany, when we knew all our clients by name. And it's been a very fulfilling journey for me to see our European expansion over the years. I spent 15 years as Managing Director of our German business, which we grew from 30 million to a circa 190 million today before taking on my current role in which I oversee all our operations across Continental Europe and Ireland. Hiscox Europe today is a meaningful contributor to the group. Over the last 10 years, the business has delivered excellent growth, growing from 21% to 27% of the overall retail book. It takes years to build the kind of strong scalable European platform that we have today. We have seen many companies come and try, but often exit after only a couple of years. We have built a platform and playbook with huge potential. Today, we write over 600 million of premiums and serve over 400,000 customers, growing our business at a 12% CAGR over the last 10 years. Our growth has been profitable and efficient as we combine disciplined underwriting with a digital-first approach. We auto underwrite almost 80% of our business, this frees up our underwriters to solve new complex risks, portfolio underwrite and manage our broker relationships. Together with our single pan-European platform, we can serve small businesses profitably and generate further operating leverage as we scale. Hiscox Europe is currently 10 countries. Our diversified footprint provides resilience and leverage. We do things together where it makes sense and operate locally where it makes a difference. A great example of this philosophy is how we train underwriters at Hiscox. Our underwriters are trained centrally but operate locally, combining market knowledge within consistent expertise in our special sectors. We are deeply connected across our European markets, working closely with over 1,000 brokers. We care deeply for our brand and reputation. Our focused underwriting approach means we are well known and respected in our core segments with prompted brand awareness of 65%. Our reputation for high-quality service is evident in claims NPS, which remains constantly high at 77, all supported by our philosophy to pay valid claims quickly. I love this slide. We started in Europe from scratch, but being part of the Hiscox Group was a clear advantage as we took our experiences and relationships from the U.K. to build a high-quality specialist retail insurer. The journey has not always been easy, the market is complex as we navigate different cultures, languages and standards. But once overcome creates a strong barrier to entry. We have successfully overcome these obstacles and are now benefiting from our hard work. Since 2018, we've more than doubled premiums, a clear sign that our strategy is working. Brexit was a turning point as it encouraged us to grow as a stand-alone business in Europe with our own dedicated management team. And while we've been delivering strong growth, we have also been investing to build leading technology capabilities, as you will hear from Shali later. We expect our existing growth momentum to continue as we see huge potential in all areas. Our portfolio is well balanced geographically that brings stability and opportunity. To give you a sense of the potential, since 2018 we have doubled our premium in Germany and increased by 70% in France. These countries have large economies comparable to the U.K. Our presence in these markets is still developing, and insurance penetration is relatively low. We have a lot of room to continue this trajectory. Turning to the business as it stands today. The majority of our business is written to brokers, but we also engage with customers directly and through partnerships. Like in the U.K., when we started, we focused on high net worth individuals. However, today, the majority of our business is commercial lines. We like the combination of the two, the entrepreneurs of today are the high net worth customers of tomorrow. Within Commercial, the largest portion of our book are nano and micro businesses. We offer modular products and auto underwrite close to 80% of these policies giving it speed, scale and the flexibility to adapt to our customers' changing needs. That is important because it allows our underwriters to dedicate more time to complex cases such as large technology companies, where more tailored approach is necessary. Turning to the product set. We have a well-established high net worth business that covers household, classic cars and art. On the commercial side, like both the U.K. and the U.S., we have deep roots in professional indemnity, and we still see huge potential as this area continues to grow. We have a history of supporting emerging professions and risks such as management consultants and cyber. When we started writing Cyber almost 15 years ago, the understanding of this risk was still developing. We thought this is one of the largest future threats to our customers and set up a task force to respond. We brought together our tech underwriters where we are a leading insurer, our kidnapping and ransom team who understand how organized crime works and [indiscernible] market and cyber specialists in the U.S. We developed the approach and confidence to support our clients and underwrite the risk, being [indiscernible] pioneers for small business in Germany, France and the Netherlands. And it paid off. Today, we are the go-to SME insurer for Cyber, with a 20% market share across our European markets. To summarize our business today. Our business today is a diversified specialty insurer with opportunity across multiple channels and countries, targeting SMEs and high net worth individuals, which brings me to the current structural [indiscernible]. Europe is the second largest market for commercial insurance globally. In the 10 countries we operate, the target small commercial market is 64 billion. Today, we only serve half of this market, but plan to increase this as we expand our appetite over time. Over recent years, we have quickly grown our small commercial market share to almost 2%, and we see huge opportunity to continue that trend. The high net worth market is much smaller at 4 billion, we already have a respectable 4% share with pockets of deeper penetration such as in the Netherlands, where we have a 20% share. What we see today is that high net worth individuals don't always buy the right insurance. Specialist high net worth brokers are limited, and the market is ultimately underserved. As such, our aim in high net worth is to continue growing steadily with the market. There are currently 3 key trends that we see in Europe. Much like the U.K., Europe is experiencing broker consolidation. As a result, brokers are much more mindful of managing cost and wish to work with a smaller set of carriers, those that can work at a pan-European level. As we have already demonstrated, Hiscox Europe has this capability. We already have a pan-European deal with a leading digital MGA and are in advanced conversations with one of our strategic partners to work with them across 16 markets. We have specialized teams in Europe that manage those relationships, plus we're aim to tap into the vast experience we have across the group. The second trend is around customer expectations. These are evolving fast. Whatever the route, customers expect their journey to be easy, simple and fit for their needs. Which brings me to the third trend, digitization, very much the same as in the U.K. and the U.S., although it is fair to say that Europe currently lacks those markets in terms of digital adoption, with variations country by country, with the Netherlands being more advanced than, say, Iberia. Our new core system means we are ahead of this trend, making it easier for our partners and customers to connect with us. That might be through a direct portal via custom-build API for a broker or through embedded insurance solutions. Whatever the route, our technology infrastructure and the power of the Hiscox Group means we can capitalize on all of these emerging distribution trends and customer expectations. We have strong foundations in place and a plan to maintain our strong and consistent growth trajectory. So how are we going to do it? First, we are leading in our specialist sectors getting ahead of emerging risks and innovating. Second, we are supercharging our distribution partnership across all channels. And third, we're expanding our footprint in Europe. Turning each of these. We have leading market shares in special sectors that's not by accident. We have deep understanding of our sectors, we built bundled coverages that customers can't find elsewhere, and we have simpler process leading to fast underwriting decisions. We select our sectors strategically. They need to be big enough to make it worth the effort and we need to bring a clear advantage through our specialist expertise. We've done that in areas such as entertainment and tech where we have a 24% share of our [indiscernible] despite fierce competition. And we have developed new specialist products in areas where we can lead such as professional coaches, recruitment companies and new emerging risks like e-reputation. Turning to Step 2, supercharge distribution. You have heard about our focus on meeting our customers where they are, and this is where that comes to life. The broker channel is critical for us. We have deep relationships with both local and global brokers. A good example is a relationship we have recently established with the Portuguese branch of one of Hiscox's U.K. strategic brokers, demonstrating the power of the Hiscox Group. In MGAs, we are leveraging our experience in the U.S., U.K. and London market. Our relationships are specialists and strategic where we provide niche bundled products with fast underwriting decisions solidly based on our view of risk and underwriting appetite. That is how we signed the partnership across 5 different countries, managed by one central team, distributed through one platform, using one wording and one pricing engine. We are seeing similar trends with banks in Southern Europe. Their own risk appetite is narrow, and they want easy solutions to more complex risks. That's what we provide to one of Spain's largest banks. Here, our risk apart complements their offer. We provide management liability and professional indemnity through a bespoke API that connects them straight into our uniting system. For our partners, we provide their customers with an easy way to access the insurer need. For example, we have a partnership with a platform where freelancers who advertise their services must have insurance. We digitally embed our professional indemnity insurance, making it easy for these customers to meet this requirement. The same need for simple is shaping how people buy insurance directly, more and more customers want to buy for themselves. We offer a customer portal that has easy user interfaces and self-service options. And nearly 100% of this business is also underwritten, so it's very scalable. Each of our channels is different, but they all need the same strong foundations, good technology, automation and great products. And finally Step 3, expanding our geographic footprint. We currently operate in 10 countries across Europe that together represent close to 70% of European GDP. We have a Center of Excellence in Lisbon that supports our pan-European operations driving economies of scale. We are also well progressed in the rollout of our new scalable technology with one system across all markets. These solid foundations, together with a proven track record of successfully entering new markets now offer us optionality for faster expansion into new geographies. There has been one large [indiscernible] missing from our footprint. So I'm very excited to say that we have now entered Italy, 10th market. Let me tell you a bit more about this. We have had our eye on Italy for a while. It's a very good strategic fit for our business with almost twice the number of micro enterprises compared to Germany. This large market is opening up with an increasing demand for digitization and product innovation from our strategic broker partners. We can partner with them on leading digital solutions and offer products like Cyber and emerging PI where we have deep expertise. Now building a new country takes time. We have acquired a small local team to give us people, front-end tech and the distribution channel. Given our strong foundations, this investment is marginal. Combined with our existing single pan-European platform and technical underwriting capabilities, we will skip the usual 10-year-plus ramp-up and go straight to growth, reasoning platforms that we already have in place. So this really is very, very exciting for Hiscox Europe. Today, we have outlined the vast opportunity for Hiscox in Europe. We are well placed to capitalize on this opportunity through leading in special sectors, supercharging our distribution partnership and expanding our geographic footprint. These strategies are supported by deep broker relationships, scalable technology, a trusted brand and agile execution. These foundational strength together with the power of the Hiscox Group, put us in a fantastic position to take a market share of $68 billion target market, expanding beyond the 2% that we currently hold. It's a great time to be growing this business, and we are just getting started. Thank you for your time today. Now I pass back to Aki, who will summarize our retail session.

Thank you. Thank you, Jon, Mary and Robert. So in summary, what you've heard so far today is our markets are large, they're fragmented they're underserved, and they're growing strongly, fueled by material positive tailwinds, and Hiscox is uniquely positioned to capture this opportunity, and we're doing it profitably. You've also heard how we've built a distinctive business with clear rights to win. We've established unique access to the specialty market over the last 3 decades, our brand, our culture, our customer service ethos, our strategic assets, established over [indiscernible]. We have a proven market-leading specialty underwriting ecosystem, built over generations, and now being further augmented by the latest technologies. And we have an established U.S. and pan-European omnichannel distribution platform like no other. And in recent years, we've taken deliberate and decisive management action, refreshing the leadership team, technology, brand and distribution. And these actions are taking effect. Our retail growth momentum is accelerating and expect to continue accelerating as we further supercharge our distribution as we double down into our existing specialty sectors as we expand into new sectors, add more products, add more geographies and take the best of Hiscox to the rest of Hiscox, this strategy and these actions would accelerate our retail growth to double digits in 2028. Now I'm going to invite my colleagues back on the stage for our Q&A. Now just as a reminder, this is the first of 2 Q&A opportunities. There'll be a second Q&A after Paul and Shali have completed their presentations. This really is an opportunity to get to know our retail CEOs better and to understand the businesses better. Now just as an aside, one of our CEOs, Mary, has got an airplane injury. So she's trying to back out a little bit so if she stands up, she may need to stand out.

I was just sitting on the chair.

So she may need to stand up and just stretch a little bit so don't be alarmed, but bear with this.

Okay. So with that in mind, please, we will take questions. Ivan?

It's Ivan Bokhmat from Barclays. I've got 2 questions, please. I mean, first one, on the accelerate growth, I guess, going to double digits. Can you perhaps talk about it separately on the underlying assumptions and what's happening to the broader markets on your assumption self inflation, your assumptions of pricing? Are we going to get pricing still positive and so on. And the second question, perhaps if you could talk a little bit more about what margins do you generate per 3 segments? Is there a material difference in what -- and where you are the 89%, 94% combined ratio ranges between the 3 divisions and how this has been evolving?

Thank you for those questions, Ivan. In terms of growth expectations at the overall retail level, and I'll ask in particular, Jon and Mary to perhaps comment on how they're going to accelerate growth from where we are today. But in terms of growth expectations at the overall retail level, I think as we've said many times in the past, the retail market is not really characterized by pricing cyclicality. In recent times, we have seen prices increase, but that is largely to reflect the spike in inflation. Otherwise, this is -- the pricing tends to move very -- within a very narrow range. So when we talk about our growth expectations, there is no major inflation or price increase reflected in that. And as you've seen from the presentation, our expectation of market growth is around the 5% to 6% range, and we will grow materially in excess of that. And then to your second point in terms of margin, as you know, we don't provide the detailed margin. In our individual segment level at the overall retail level, we're very pleased with the margin that we are achieving. And you can see that from our results over the last few years, and that is contributed by all of our businesses. But perhaps Jon and Mary, if you could just comment on how we're going to accelerate growth from where we are.

Yes, of course, glad to do so. I can yes, so when you remember from the presentation, we expect the U.K. market to be growing at 6%, and we've said that we expect to be growing ahead of that so that's our intention. If you look at what we've done over the last 2 or 3 years, we've signed up a whole bunch of new distribution deals with brokers. Some of those are still maturing, so they won't all be in our numbers yet. We've been using technology to increase our production. So I'm going [indiscernible] couple of examples from my presentation, our new business, Triage and our digital products on the Acturis panel are both helping to drive forward our high net worth proposition, which is already growing in double digits. We've reinvested in our brand, and we've refreshed our management team. So all of those things are already having a discernible impact. And now what we're doing is going deeper into our chosen sectors. We've spent a lot of time in the last few months talking to our brokers about that's landing exceptionally well. We're expanding into new niches, and we're going to supercharge our distribution in both broker and direct, and that's how we're going to keep our growth momentum going forward.

Great, thanks. We're also seeing the momentum building across Hiscox USA. Since our replatform, we've seen our core direct business continually having double-digit growth. So that's steady and that we expect that to continue. Our traded businesses, our broker business, as I was referring to earlier, that business has been shrinking as a result of the refocusing of our appetite, but that has now moved back towards growth. We really in the first quarter, we moved back towards growth, we finished 2024 at a minus 4 but we're -- we grew at 1.5% in the first quarter. And that really is a credit to the initiatives that we put in to make sure that our underwriters are aligned to their brokers that we are -- we have a clear appetite and our brokers we engaged. And then when we talk about our digital partnerships, as I've mentioned, I've been spending a ton of time with the digital partnerships. But if we were to go back to the slide that I was talking about earlier, every one of those 3 categories are growing, and they have been growing, where we expect that momentum to continue. As we supercharge that growth, it's going to be a set of initiatives that are a few categories, one, we are definitely -- we're refining our classes to expand those where we see sub-classes have opportunity for future growth. We're working with our partners to continue to mutually improve the journey for customers to get them through the funnel even within our existing appetites better together, which is really great because that's true partnership. We're also putting into place improvements to our compensation strategies that will drive net growth in a targeted way. And then also, we are -- we also for newer partners that we've added or that we have, we're working on ways to help get them up and running faster, so they can deliver material growth. And that all is consistent with what I talked about before, which is really just expanding our solutions, expanding our distribution and expanding in our platform.

Faizan?

Faizan Lakhani from HSBC. I just wanted to dig into the fact that you're growing into new distribution channels, especially in the U.S. What does that really entail in terms of growing that partnership from Ato Z? And what is sort of the end product? Does it differ between Europe and the U.S. in terms of the type of end product you have into the partnership? Is it more embedded? Is it -- do they click through to your website, trying to understand how that really works? And secondly, in the broker channel, how do you differentiate yourself with your peers? Is there something specific in terms of the structure? And so just understand that.

Thank you, Faizan. Mary, over to you.

Sure. So in terms of the partners and distribution U.S. So we really -- as I mentioned earlier, we have the 3 different partners, the 3 different types, right? So in terms of growing with distribution, sometimes it's growing deeper within those partnerships. As we are expanding our sub classes, we find opportunities to refine and then grow further within those subclasses. In other cases, we just may be able to add new partners, right? And also, as I mentioned, wholesalers as part of our wholesale broker partnerships that we already have, more and more of them are recognizing the need to participate in a way that helps them be relevant for their retail relationships. And so when we can extend our product called Hiscox NOW is the brand name we have in the U.S. and where they can extend Hiscox NOW to their retail partners makes them more valuable to those retail partners and extends our relationship deep into there, and that's one of the ways that we can do that.

Do you want to comment broker channel?

Sure in the broker channel. So actually, for one, that's one of the ways, actually, because we find when we're working with our brokers, in the traditional products, we not only are we now much clearer and they're much clearer on what our appetite is, right? In terms of where we are in small commercial. And so -- but as we're also have improved our technical expertise just off the team, and we've developed it whether it's enhanced by capabilities and individuals or as we have better data and analytics over the course of time, we've been able to build our data sets. We can expand our classes and write a little bit up into that medium as I mentioned earlier, some select larger businesses. And so that makes us more relevant as we can be there to solve more solutions for those complex risk needs of the entrepreneurs. In addition, we just have -- as a team, we're out there engaging with our brokers in a way that is very visible, very engaged. We are meeting where they are. There aren't a lot of companies that have their teams out in offices delivering training, doing the blocking and tackling that really needs to get to, as our brokers are just saying, getting back to basics, and we're doing that. We're showing up and leaning into those strong brand relationships that Hiscox has known.

Thank you, Mary. Abid?

It's Abid Hussain from Panmure Liberum. I've got 2 questions, I think. The first one is on serving the customer. So you're investing some $200 million, just want to get where that is, what's the breakdown where you're spending that? And then sort of attached to that is where is the biggest area of improvement that will ultimately enhance your ability to serve the customers. So what sort of benefits are you going to get from serving the customer and then hopefully, ultimately capturing new business? So that's the first question. And then the second one is on upside or potential upside. I'm just trying to get my head around this. So the -- is there any premium growth baked into the $200 million efficiency gains that you're expecting out to 2028? Or should we see all of the expansion into the addressable market occurs after 2028? And so there's upside thereafter?

Okay. Thank you for those questions, Abid. So firstly, in terms of how and where we're going to be investing the $200 million, where I suggest is you're going to get a lot more color on this in a few minutes. So if you hang on, you can ask that question again once Paul and Shali have done their piece. But just to clarify one point, if I did understand it properly, the $200 million [indiscernible] profit-proven expectation, in 2028, no, it is not. That is purely from efficiencies that is not factor in the premium growth that we are also expecting. In terms of how we are improving serving our customers, again, perhaps I'll ask Robert to comment on the improvements that we're making in our customer interactions and what we've done over the last few years.

Yes. Thank you very much. So there's a few things in there. I mean, one is that I mentioned that we invested quite a lot in our core system that is pan-European. That enables us that we can connect easier with our partners. So we also see our brokers as our customers. So the future of small business is not going to be sending e-mails backwards and forwards, it's APIs or its broker portal. Now that's one, and that includes self-service functionality. The second would be one on clients. We are there where they want to buy. That can be brokers, that can be a direct portal that can be embedded insurance. Now we monitor where our target clients are buying, and we always want to ensure access to these clients. And that is the automation, the ability to buy insurance on a Saturday evening. That's what we are improving.

Thank you, Robert. Just over here.

Hi, Darius Satkauskas, KBW. A few questions, please. The first one, you spoke about the amount of automation in the business. I think you mentioned 80% in Europe, 70% in the U.S. What is the [indiscernible] average in sort of those jurisdictions? And where do you think you can get to in the medium term? What's the limit in that? What do you think drives that loss ratio advantage you highlighted in the U.S. relative to [indiscernible]. And then last one is on the 200 million profit benefit. I mean a lot of the marketing spend or some of the marketing spend could be seen as investment in brand. Should we assume that, that the marketing spend relative to today is not seeing cuts to get to that 200 million or not?

Okay. Thank you. Thank you, Darius. So I guess just taking each of those in turn, I'll go back to front in terms of -- if I understood it properly, within the $200 million of profit improvement we will not be cutting back on investment to drive growth. There is plenty of other opportunity that we are going after within our business. In terms of loss ratio advantage, with a fantastic underwriting ecosystem, right? And it's not just in the U.S., we have a loss ratio advantage in every market and frankly, in every business, including reinsurance and London market. This is who we are. You heard from Robert earlier on, we have underwriters in every market, but the training is central. This is the genesis of the business. This is how we were formed underwriting first and everything else comes after. And we live by that. Jo has led that, he has developed our faculty of underwriting over the last few years to bring even more added focus and frankly, bring it into the 21st century. So it really is down to the people, the data and the technology. But first and foremost, it's the people that we have who are first-class underwriters, and they give us that advantage. In terms of commission, again, I'll hand over to Jon in a moment to maybe perhaps provide a perspective on how far automation ultimated underwriting can go. But again, you find this question properly. We have varying levels of auto underwriting within each of the businesses. I just -- it's dependent on evolution and type of business we're writing across all of his folks. The average is 68% -- sorry, across all of Retail Hiscox it is 68%. Within our digital platforms, it's 99 plus, I mean I want to say 100%, but there may always be somewhat risk there isn't. Jon, do you want to comment on where do you think automation could go?

Yes, for sure. So I mean, just to build on the point you made there, Aki. I mean if you look across the U.K. business, in our direct commercial business, the number would be in the high 90s. And we're pretty close to the [indiscernible] in terms of making auto underwriting real for those customers. In the broker world, well, I mean, as we move forward with things like the digitalization of our high net worth product, that will naturally drive up levels of auto underwriting in that business too. And as I said earlier, I mean, I think we believe that there are many other product lines where we can take leadership positions with Etrade and that will naturally drive more auto underwriting there. I mean the schemes portfolio we have in the U.K. broker business, we don't consider that be auto underwritten that's portfolio underwritten. So there will be some elements, I think, always where we're not counting that in our auto underwriting number. But from where we are now, for sure, the number can go up quite considerably.

And Jon, in your business, youth, you've also introduced new GenAI products or solutions in the distribution side. So it's not quite auto underwriting, but this is automation on steroids across the business. If you want to comment on that. I think Mary has also applied that more recently in one of the product lines in the U.S. as well.

Yes, I may have an example on the ecosystem, if you like I can share to.

Okay. So just to pick up on Aki's point there. We have a new business Triage through functionality in our broker high net worth business now, which is powered by AI. What that does is read the broker submissions and automatically reject the cases that are outside appetite. So that happens instantly, which is good for the broker actually because they know immediately that we're not going to do it. And what that means for us is that our underwriters spend all of their time working on cases that inside appetite. That, together with putting our product on the actress panel, digitally, as I was just describing, has really made a huge impact in terms of our production in that market. And in that market, we are growing at double digits already.

What was the productivity again?

Well, I mean, I think -- I mean Shali's going to talk about it later. So let's save that one for her. I don't want to steal all the material. Mary how about you?

So in our case, where ours is an augmented underwriting versus the completely straight-through version of that, our underwriters are doing twice as many [indiscernible] month so that's pretty fantastic. But the one thing to one of your -- to answer your question and an example of the ecosystem that Aki referred to, we have reconnected our marketing -- our -- our core direct marketing with our underwriting appetite and are able to then because we know which subclasses we would like to bid on if we're buying leads, for instance, right, if we're doing that a thing to convert to new business. And so therefore, we can make sure that the new business that we're acquiring in terms of the type of business we're spending money to market to, are exactly the kind of business that we feel like we're going to write at the right price for the right loss ratio to help do that. So that's not something that every company has. It's the difference to the old, what's the business you want versus the business you get, we can go get the business we want. And therefore, we can help engineer a better result because it's just by the class of business we're good at it. And then when it's auto underwrited, we take the human error out of it.

Thank you guys. James?

It's james Shuck from Citi. First of all, thanks for the presentation. It's quite impenetrable segment to the outside because we don't really have the data. So it's very useful. Mary, my first question is kind of the U.S. seems the way you describe it, it's very much aligned to the distribution channels. The other countries are more aligned to the tailored position in the industry segments. So my question is really kind of should you be looking kind of bringing more products to the table should you be looking at a panel stroke, MGA structure? I know there's a very large peer that recently got sold recently that uses that MGA type structure. So interested to see how you're thinking about third-party capital? How are you thinking about bringing external providers to round out the products, particularly in terms of Cyber, which could actually be one of the most important ways of acquiring some of these target customers. Then on Europe, I thought it was interesting that the focus is very much on the brokers. There wasn't really much on the agents. I was just wondering kind of how you think about targeting those agents as companies like [indiscernible] that do slightly different things in adjacent area, but would you go after the agents as a target segment? And then finally, just on the I'm going to try it kind of comes back to the kind of trying to get a feel for the margins in the different business. But the premium is just over half of the retail premiums half of the group mix. Can you give me a rough indication of how much capital is allocated to the retail business? I presume it's about 25%, but any kind of nudge on that would be helpful.

Very good. Thank you very much for those questions, James. I think it's pretty clear who was going to answer them. So Mary, you're going to take the question on U.S. distribution versus tailored segments and whether an MGA or panel type approach might work. There's a slide in Mary's deck, which if you can get to it or U.S. agency slide, which you have in. And then Europe, Robert focused on brokers versus agents, et cetera. So let me address that third question first, which was retail and capital. I'm sure on pause on stage, you can ask you again to give you more detailed answer. But look, I think suffice to say, in terms of capital intensity, the reinsurance business is our most capital-intensive business, followed by London market. Retail is the most capital efficient. And increasingly, as we build scale, and get [indiscernible] through operating leverage, that capital efficiency just improves. We haven't quite disclosed the specific dynamics, but it's materially more capital efficient than our big ticket businesses. So maybe if we begin with Robert and then Mary?

Very happy to. So as I said before, we go there where the client buys. So the majority of our business is now by our brokers, and this is crucial for us. However, we do have partnerships with other insurance companies, and we tap into their own agent network. So this is partnerships where we complement the offer of the insurance company because of expertise or capabilities that we have. Now what I've learned over the years in Europe, it's not the same definition what the agent is in every country. So a tight agent in Germany is not allowed to sell somebody else's product if the company doesn't have that. That's very different to Italy. So if that is an opportunity and we can build a service model around that, we would tap into that. What we're not planning to do is create our own agent network just because it's too expensive. And for now, we just have other more priorities than that. But overall, we are happy with the overall development of our business. So we're getting access to our clients.

Yes. And so in our business, in terms of the products that we have across the different channels, we actually we have -- we're continuing to as I mentioned earlier, we're going to expand our solutions, expand our distribution and expand our platform and this market is enormous $222 billion target addressable market, $83 billion in the service addressable market, which will that $83 billion will expand as we expand our appetite and also as we expand our products. So that is already in our expectation. And so that gets us to where I think you're asking us about. But even without that, we're under $1 billion there is so much room for us to grow within our serviceable addressable market across an omnichannel distribution. I really have little doubt that we can achieve our goals given the strength of our capabilities, the strength of the Hiscox Group and all of the initiatives that I've previously highlighted. This talks about our platform approach as well. And so this also allow us to get -- to utilize our digital partnerships as well because where we already have the 600,000 customers that we have the ongoing direct marketing. There are partners that we work with today that would love to sell their products. through our distribution, which only gives us the opportunity to also generate more income that way. There are many different ways that we can expand our model and our distribution, and these are some of those. So similar to what Robert was saying, our strategy is already multifaceted. So we think we have a lot of runway there.

I think that if I'm right, you do offer your liability product, it's not underwritten by someone else, right?

In the U.S.? No. So what we offer is work is comp, which is underwritten by somebody else which we -- for which we collect fee income. And the -- should go back to that slide. Well, I mean, what this effectively says in a sentence is part of Mary's strategy for the U.S. is that is part of the area that we would expand because there's a whole market out there where we are not going to specialize, but customers need the products. And actually, some of those products are provided by our existing partners to whom we provide specialist insurance. So there's a reciprocity that will emerge as part of the strategy we have for the U.S. Workers' comp was the first. Will?

Wasn't deliberately hiring. Will Hardcastle, UBS. I guess if we take the double-digit growth for 2028 for retail. It sounds like and I won't be exact. I'm not sure I got the Europe number exactly, but the target addressable market is going to grow 6% or maybe it's 5% to 6%, including Europe, something like that. How much to get to digits there for the expansion into the -- or sorry, the service of addressable market outlook, how much is increasing the target addressable market? And therefore, what sort of market share growth are we really implying in overall. It's probably very small in that 10%, I imagine. And then the second one is just thinking -- it's linked with that slide that was showing a couple of times there. I'm not sure I understand the look is comp fee income benefit and you're not willing to put on your books. I'm struggling to really sort of think out of hand of what other services they would be. Because I think you're pretty comprehensive on the coverage. Is it just those customers will get bigger and that therefore, that's not a typical customer. And you for that or is it adjacent noninsurance type services?

So in terms of the -- I'll take the last question.

[indiscernible]. In terms of the -- your question regarding overall growth, Yes, you're right, I think within the tables that we've shown, our expectation is that the market will grow somewhere around 5% to 6%. We said double-digit growth. I didn't say 10 but that is a double-digit number. So we do expect to grow materially in excess. And just to give you an idea of where we've come from. I mean the last sort of 10 years, I think Robert's business cumulatively has grown about 150% faster, i.e., cumulatively, you stack up [indiscernible]. Mary is about 75% faster than the market. Jon is less so, we need to accelerate that a little bit more. So you'll see more acceleration from Jon's business, more acceleration from Mary's business. Robert is more or less there or thereabouts, but we expect a bit more acceleration with the -- you can't get away with it. More acceleration, please. So I mean you can all do -- we can do the math. We do expect the market to grow, and we expect to grow faster than the market. It will be meaningful, it will be a meaningful expansion of our market share. Mary perhaps maybe you have another -- I think we need to explain the agency model again and how it's going to work.

Sure. So when we think about what a business owner is actually needing to buy to ensure their business and that can vary in a number of different ways. The agency model today, we sell coverage, you're right. So even a small business owner that might be [indiscernible] liability, professional liability, Cyber and BOP, they may also -- they're going to need a workers' compensation, commercial auto, they might need life and health insurance. So the additional capabilities to buy their insurance, personal auto, homeowners, we could actually service those types of policies through an agency model platform, getting access by providing access through other partnerships that we have, they already have those products, we have the quality prospects and customers we can make -- we can all grow all rose to Hiscox, right? This is one of the benefits of the fact that we do have a strong omnichannel model. We are investing in the marketing dollars to grow our customer base, when we have those customers coming to us, we will make more out of every dollar we spend when we are cross-selling those with other companies' products. And so when we talk about how we're going to get more efficiency and how we're going to harvest margin, this is one of the ways.

Okay. Andreas?

Andreas van Embden from Peel Hunt. I just have a question about the competitive environment and your pricing power, particularly in direct commercial, so excluding high net worth and the broker business. I just wonder if this -- I think in the U.S., it's the admitted market which means you can't really change your rates that often was in the U.K. and probably in Europe, there's more flexibility in pricing. I just wonder what is your prime power in the U.S.? How agile are you to react to competition compared to pricing power in the U.K. and Europe? And my second question is the aggregators, they've made a huge influx in a number of markets in Europe, particularly the U.K. and the Netherlands and are moving gradually some of them into commercial, small commercial. Do you see this happen in your core markets? And is this a threat or an opportunity for you in the future to accelerate growth? Or does it mean more price competition in the future?

Okay, thank you. In terms of competitive environment on direct commercial, I mean the 2 areas where we have meaningful direct commercial businesses are in the U.S. and U.K., so perhaps you can compare and contrast and our ability and agility to reprice. And then in terms of the aggregate phenomenon, again, Mary perhaps you could comment on that. I would caution you're going to have to explain in the U.S., the context of the aggregate is quite different to how we understand it in U.K. and Europe, okay. Mary, why don't you kick off?

Sure thing. All right so one of the places where we -- when I talk about the aggregators and that was in our digital partnerships, right, that was a portion of our pie. I think in the U.S. they're more digital agencies so where if we would imagine the brick-and-mortar or that's how we call U.S. the building that has the agency in it and that agency might be sending to the point of a comparative radar, you might just be sending your quotes out on e-mail to say, "Hey, all to your 5 different carriers, I'd like to get a quote for this customer." And so you are still -- you're as an individual, married be the comparative rater because I'm comparing the quotes there. Yes, the technology exists in these digital agencies that they might have -- they might be building technology to do that, to your point because all in terms of digitization and automated calculation of pricing, that is that phenomenon happening. However, what we're seeing in the U.S. when we see the digital agencies that we're working with, where they may have automation that helps them be more efficient, they are actually considering the quality of the business, the match the underwriting appetite, the retention, the operational effectiveness and efficiency and the partnership of who they're working with. They're really working like any other agency partnership, and they put value around where they're directing their leads and they do it one to one where they can because what they recognize is that if you're just going to put something through and run it different price, that agency is working really hard to make less money. And so and they're putting it in front of a person that they're going to have to -- they're paid to do that. And so what they're trying to do is actually make it turn it into a direct-to-consumer business where they actually optimize their own use of algorithms and data marketing their dollars and putting it through in a really intelligent way. And because we have so much we have created the digital partnership channel in the U.S. and have so much expertise in it, when we work with the folks in the U.S. and that piece of our pie, they find that they really appreciate the level of expertise we have, so we can participate in a really sophisticated way.

I mean the one thing that I would just add is that it's not standard insurance that we're providing, it's [indiscernible]. And therefore, the experience of some of the companies that would send that business to the aggregate has been mixed, including some of our partners. Do you want to comment on that?

I do. Yes, that's fair. Actually, in the U.S. also, so the use of comparative radar technology is widespread, which I think is different. It sounds like particularly in the U.K. And so you could have for something that would be the nonstandard pricing. That's just a different customer set and price is going to be the -- chasing it to the bottom there is and the economics is different. That's not our customer set either way or either. Where there is use, whether it's in personal lines, auto or home in the U.S. or if it doesn't or anything in commercial, the customer set really matters. And so the value of what I was just describing in the agency also really matters. And so the trends that we'll see, I expect will follow the same pattern that we saw in Personal Lines, where the customer class that we're dealing with really will drive how the experience goes, and how the economics goes of the channel.

Okay. How about commenting on the ability to reprice?

Sure.

Grow the contrast in the U.K., Jon, if you could do that.

[indiscernible] Jon for a second. Yes, so in the U.S., we have -- we actually write both admitted product and access and surplus products. So we can do both ways. And we -- and when it comes to admitted products, we have states where they are filed and use, which you just let them know you're doing it. We have states that are used in file, you use them, then you file, which is the same thing. And there's also states that are prior approval. And generally, with other than 1 or 2 exceptions, which can be the they're known to be a little bit more difficult and we all run this business and so therefore, we work through the planning around how to do that. We need to make sure that we know the rules, we follow them and we get the execution done properly that's how we manage it. But we do have excess and surplus, and we -- and our book is a combination of both.

And I think even within the admitted filing, you can file the ratings sort of algorithm in a way that gives you flexibility within parameters. So it's not as if you issue a filing which is approved and it cannot shift the pricing at all.

Yes, the filing is not mandated. There's just guidelines.

Jon?

Yes, in the U.K. for our direct commercial business, we can change the prices as often as we like. And as you can imagine, we're looking at the market the whole time to strike the right balance between volume and margin.

Okay. Ivan, you got another question? I think we're -- okay. I think that would be the last question. We're down to the last couple of minutes.

I mean I wanted to return to a topic that I think we've been raising with some consistency. Especially in the U.S., the business is being sold in part through large partners where at some point, they might want to distribute products that you're selling. So I'm just wondering how you think about that over this 4-year period of how material is there the risk that some of your large, let's say, personal lines insurer go into small ticket business? And what could stopped them from doing that? How much of a risk is that to your business?

Okay. We go back to that slide, too, since we're at the picture. I'm sorry, you're going to take this one at the beginning. The picture of the partners.

Was that 31 something. Okay.

So when [indiscernible] a question, but I would just put us -- look at the picture on the left. Every one of those, every part of that pie is growing, right? And when we -- the wholesalers and aggregators are not manufacturing any of those products. So there's never that risk that you're just describing there. And inside the insurance carriers, most of these carriers they are where they are when it comes to the product. And if they were to enter into a product that we're writing, it's not going to put our entire portfolio at risk. It's a really large market. It's a fair question, but it definitely is one of those that we see considerable growth opportunity even with -- if some of them decide to step into a place like that.

Thank you. I mean, I guess -- I mean, the only thing to add to that is the product we are providing their specialist products. If I take you back to some of the KPIs that I spoke about earlier within the DPD channel, almost 100% of that business is also underwritten. So there's no underwriter involved and that enables us to write $1,000 policy and still make money from it. And unless you have that capability, you simply cannot make money. Now is not the time to share the information, but there's a whole lot of carriers in the U.S. that do this, but don't make from it. So those carriers that are working with us, they're winning because they get fee income, we get the business, and we make money because we've invested in the technology and the brand to be able to auto underwrite this. So yes, they could enter the market. The question is, I think you're asking why, right? What's the motivation? And how much are they willing to invest? And how long are they willing to invest for but as Mary says, the market is huge. We're going after it. And I think we've got a platform that's going to win. So thank you very much, everybody. Great questions. We've now got a 30 minute break, and then we'll come back for Part 2, where you'll hear from Shali and Paul, and we have another attempt of Q&A. Thank you very much. [Break]

So good afternoon, everybody. I'm Shali Vasudeva. I'm the Chief Operations and Technology Officer at Hiscox. Like Paul, I'm a Hiscox boomerang. I rejoined the business earlier this year. I was struck by the energy, the collaboration and the entrepreneurial culture here, and I'm very excited to be back. I have spent over 30 years delivering transformation and technology with the last 15 years [indiscernible] in the insurance sector. Before Hiscox, I was the Chief Operating Officer at AXA U.K. & Ireland and there, I led a major transformation program to automate underwriting, digitize claims and launch new tech-enabled propositions. It wasn't just about systems, the transformation simplified operations and improve customer and colleague experience. So I'm excited to bring that knowledge back to Hiscox to deliver the next stage of our operational and technology evolution. So as you've heard, Hiscox is a high-quality business focused on specialist risks with a powerful growth engine. We've grown significantly over the last 10 years, driven by a culture that's entrepreneurial, ambitious and quick to act opportunity but with growth comes complexity. At one point, we had over 10,000 vendors and close to 1,000 IT applications across the group. Our underwriters were spending to 40% of their time on admin work rather than growing the business. That complexity makes it harder to scale, it slows us down, consuming time that should be focused on growing our business and serving our customers. So to unlock growth, we are changing how we operate. We are simplifying, streamlining and modernizing. So we are accelerating our change agenda across the whole of Hiscox. Already over the last 2 years, we have delivered material improvements in our operating leverage, and we see significant opportunities to drive further improvement. And today, we are announcing our target to deliver $200 million of annual P&L benefit in 2028 and onwards. Now the program has 5 clear goals. Each one is directly tied to unlocking commercial and operational value. Now why do these matter? Efficiency matters particularly in retail, where the average premium per policy is just over $1,500 so we need to keep cost to serve in check without compromising service. And speed matters, the faster we can respond to a broker or customer, the more likely we are to win the business and customer experience matters. Customers expect intuitive, frictionless and digital-first experience and culture matters. Our people want to work in a company that helps them do their best work, not one that frustrates them with clunky systems and outdated processes. So we have the plan, we have capability, and we are already delivering. But this is not about changing everything. We're being deliberate about what to change and what to keep, nurture and protect. So let me give you an example. We provide a best-in-class claims service with a market-leading claims NPS of 72, which we're incredibly proud of. So if you're a high net worth customer in the U.K. and your house is on fire, you call Hiscox, you get a real person in our U.K. contact center, and that person provides incredible support and empathy as well as a really slick service. This is our DNA, and it's something that we will preserve. The issue is we do almost exactly the same thing when you've broken your laptop. And in this case, you don't -- you probably don't need the same high-touch experience. You just want to go online, order a replacement and have the bill settled automatically. So our change agenda lets us deliver both, digitization where we can, human touch where it counts. So to unlock scale and operating leverage, we're implementing a number of initiatives, many already in flight, and they're focused around 3 themes. The first one is operational excellence, and that's all about simplifying and automating processes while removing duplication. The second is technology which is also about simplifying and reusing the best of Hiscox tech across the rest of Hiscox. And the third is procurement, managing vendors strategically to drive better value. So let's take a closer look at how we're delivering operational excellence. So there are 5 levers. The first one is about process. So we're standardizing workflows and embedding continuous improvement. For example, we've implemented a new financial reporting tool that enables better collaboration and standardizes reporting across the group. The second is automation. So you've heard from our CEO, our Retail CEO's, we already auto underwrite close to 70% of our retail business, and we see further opportunities. In London market, we have implemented an AI lead underwriting tool, starting with sabotaging terrorism, and this reduces [indiscernible] from 3 days to under 3 minutes. We're now rolling it out across other lines starting with major property. As you've heard from Jon and Mary, we've introduced AI supercharging solutions into U.K. high net worth and recently U.S. broker. This automatically declined submissions that sit outside our appetite, allowing our underwriters to prioritize the business that we want to write. The third area is around Centers of Excellence. So we've already set up a successfully set up a number of these, including for AI, data, cyber and reinsurance. Our Centers of Excellence break down silos that help deepen expertise across teams. For instance, our AI Center of Excellence has enabled our Re & ILS team to reuse the AI tech developed in London market. This tool ingests data from broker submissions, freeing up underwriters' time. And we're rolling these out more broadly, including in areas like process excellence, fraud and recovery. The fourth area is shared services. So we've established a hub, as you heard from Robert in Lisbon with 15% of our workforce located there. And it's already supporting Europe retail finance and technology. We're scaling this model, bringing in functions that are critical to retain but can benefit from consistency and scale like IT support and operations. Our fifth area is around right sourcing. So we're aligning work with our strategy for in-sourcing critical capabilities and outsourcing noncore activities always under Hiscox's oversight. Now this is most advanced in technology. Over the last year, our tech team has in-sourced strategic functions like app development and Cyber support into Lisbon, while outsourcing infrastructure to our [indiscernible] partners. This approach helps us protect critical capabilities and lean on our partners for specialist knowledge while reducing cost. The change is already delivering results, saving us 2 million annually, with 15% of that transition now complete. So as you've heard, across all 5 levers were not starting from scratch. We are focused, deliberate and we're making progress. Now let's move into an example that helps brings this all to life. So our claims change program that we started in late '24 is accelerating, and we'll complete this over the next 3 years. The first stream of the program focused on simplifying the process of making a claim. So we have designed and introduced a standardized digital intake. So regardless of how the customer first contacts us by phone, mobile, broker or online, they get a smooth, consistent experience. And that also allows us to triage and boot claims more efficiently, increasing the number of complex claims paid within 5 days to double what it is today. The second stream gives claims handlers a unified digital workspace. What that means is it's a single user interface that pulls together the data and the tools they need to work smarter and faster so no more jumping between systems or chasing down updates. And we expect to automate 10% to 15% of the task of our claims workload. And our third stream brings together our fraud and detection -- fraud and recovery functions into a Center of Excellence. These teams will have more streamlined workload and use proven AI tools to flag suspicious claims and identify subrogation opportunities much earlier in the process. So we are combining the best of human judgment and machine intelligence to make our claims professionals more effective. This is expected to significantly improve our detection rates and recovery amounts. Okay, let's move on to technology. Over the last decade, we've invested in modernizing our core systems. That work has created a solid foundation for our business. Following this, we have built -- we built our customer connectivity and local workflow solutions. This has driven efficiencies across our retail business. More recently, we have implemented new gen AI tools. So we talked to you about the one -- our innovation in London market, but our use of gen AI doesn't stop there. In Ireland SME, we have introduced a tool that ultimately triages broker submissions, the most time-consuming task for the underwriting teams. This is going live in Germany in Q3 and other countries afterwards. As you heard from Jon in our U.K. high net worth business, we have introduced a gen AI-based assistant, helping to reduce case handling times up to an impressive, Jon, 40%. It's a real productivity boost, and it improves the colleague experience at the same time. Now the focus is on leveraging the power of the Hiscox Group by reusing the best tech and removing duplication. So we are reducing our application estate by nearly 30% over the next 3 years. That alone is cutting licensing costs, simplifying support and making it easier to roll out new functionality across the group. We have learned valuable lessons from decades of experience. This isn't about launching long, costly core system programs. It's about scaling the great ideas we already have in the business while continuing to innovate at the edges. And this is how we are bringing the best of Hiscox to the rest of Hiscox. As you've heard from our business unit CEOs, our stakeholders are becoming increasingly digital, and our tech is already delivering better outcomes for all our stakeholders. So for our customers and partners, as Robert mentioned earlier, we have launched a new portal in Europe. It's now being rolled out in the U.K., U.S. and the Re & ILS businesses, and it offers modern interface, faster performance and improved integration with internal systems. For our distribution partners, we're building a global platform that automates the ingestion and processing of complex data that we receive from brokers and MGAs. This reduces manual handling, cuts turnaround time and gives us better control. And for our colleagues, we have developed a workflow automation tool in Iberia that is now being rolled out across Europe, with the U.K. and the U.S. to follow. So this is freeing up our underwriters' time -- underwriters to spend less time on admin and more on underwriting. So to summarize, our technology strategy is simple: modernize where needed, reuse what works and simplify everything. And this creates a leaner, faster and more scalable environment. So our third theme is around procurement. And it's an area that we are already driving real value. So in the past, the lack of a centralized procurement function led to fragmented vendor relationships and missed opportunities for scale. This has changed. We've built an experienced procurement team, launched a group-wide source-to-pay platform and embedded stronger governance. So over the past 2 years, we have rationalized our vendor base from over 10,000 vendors to around 3,500 today. And we continue to work towards our target of 2,000. That has already freed up capacity to manage relationships more strategically and unlock better value. So a good example is in tech professional services. We have consolidated vendors simultaneously during -- driving 27% cost savings while improving quality. Beyond cost, our relationships with tech -- with major tech players like Microsoft and Google have evolved from being transactional to strategic. So we're now codeveloping AI tools together and accessing much better commercial terms as a result. And we're applying the same logic elsewhere across legal services, marketing and facilities. It's about mutual value, performance and alignment of goals. So as you've heard today, we are creating a leaner, faster and more scalable business while protecting what sets us apart: our entrepreneurial culture, underwriting excellence and that human touch when it matters most. Our accelerated change program is already underway and will deliver $200 million of annual P&L benefit in 2028 and onwards. We are already seeing tangible results, and we are accelerating momentum and focus. So we have the capabilities and have demonstrated valuable proof points with a disciplined approach to execution. I'm now going to hand you over to Paul, who's going to take you through the numbers. Thank you.

Thank you, Shali. Good afternoon, everyone. I'm Paul Cooper, the group CFO. Thank you for joining us today. You've heard how we're going to unlock further growth while driving operating leverage. We're announcing today the launch of a new group target of a mid-teens operating return on tangible equity through the cycle. This is a step-up from the average ROTE of 11.6% delivered over the last 10 years despite the adverse impact from the introduction of the global minimum tax, which increases our ETR from an average of 9% over the last 3 years to between 15% and 20% from 2025 onwards. I'm going to set out how we will deliver this step-up in returns on a more consistent basis. We have 3 levers to pull: unlocking further profitable growth, driving even greater cost management discipline and optimizing our capital stack. This will be delivered by executing on our strategy and through retail becoming a larger proportion of the overall group with a lower volatility profile. Looking at our new KPI. Operating ROTE will provide a clear review of the core underlying performance of the group by excluding the impact of market movements on fixed income investments and claims reserves, FX and other one-off benefits and expenses such as restructuring costs. Adjusted opening equity excludes intangible assets, as they are not distributable, as well as temporary differences which unwind over time, such as unrealized gains and losses on investments and the impact of discounting under IFRS 17. To achieve a step-up in ROTE, it is essential that we drive operating leverage in the business, growing revenue faster than our costs. On growth for retail, our ambition is to accelerate to double digit in 2028, taking share of the market. Volumes will therefore be a key driver of our growth for both 2025 and beyond. In big ticket, we're focused on managing the cycle, and so do not set growth targets, but instead grow when conditions are attractive. You've heard from Shali how we're improving our operational excellence, technology and procurement solutions. We expect to achieve improved operating leverage from these initiatives by evolving our expense base, resulting in a P&L benefit of around $200 million and a business that is truly fit for scale. These actions will accelerate the change in relationship between premium and expenses, increasing the jaws as these initiatives take effect. Looking at these actions in a bit more detail. Our ongoing change program will continue to improve the way we run the business while generating significant expense savings. Using 2024 as a base, we will realize an annual P&L benefit of $200 million in the 2028 results through net cost reductions. This is before taking account of inflation and FX. The $200 million benefit represents more than 1/4 of our 2024 PBT. Roughly 1/3 of this benefit will be released through -- realized through claims. The other 2/3 of this benefit will come from our addressable costs, which include customer technology, head office and operations. Starting from our 2024 expense base, the $200 million benefit will be spread across our segments and central costs, with the majority to be recognized in retail. The benefit will be across claims, realized in the loss ratio, attributable expenses realized in the expense ratio and non-attributable expenses, which fall outside the combined ratio. These initiatives reinforce our confidence to drive margin improvement in retail within our stated operating range of 89% to 94% while we continue to invest in growth through marketing and pricing. Turning to the change cost and benefit profile. The program has already commenced, and a number of initiatives are in flight. Our change program will be cost neutral for the first 2 years before the benefit ramps up from 2027 and achieves an annualized benefit of $200 million in 2028 onwards. In order to deliver the program, we anticipate incurring cost to achieve in the region of $200 million, with a high watermark of around $100 million in 2027. And these costs are a combination of technology and restructuring spend. Given that this is a group program and the nature of the spend is nonrecurring, we will recognize the cost to achieve centrally without allocating to segments and outside of operating profit. The benefits will be recognized in the segments. We will continue to exercise strong financial stewardship over the program, providing you with regular updates. Turning to capital. As a reminder, our capital management philosophy is to deploy capital for profitable growth, maintain a strong balance sheet and pay a progressive dividend. Firstly, on growth, we maintain a disciplined approach, only deploying capital where we expect to earn attractive returns. As you have heard, we have a significant structural opportunity ahead of us to grow our retail business. We will continue to hold capital that can be deployed for opportunities as they arise. Secondly, balance sheet strength remains important to us, and we're focused on maintaining our conservative reserving philosophy and a robust solvency position. I will comment more on solvency in a moment. Thirdly, we have a progressive dividend. As Aki announced earlier, we plan to increase our final 2025 dividend per share by a further 20% at year-end. This follows a 15% step-up in the total dividend per share for 2024. This is driven by our confidence in delivering returns through the cycle as retail becomes a larger share of our business, while our cost base reduces and becomes more efficient. Thereafter, we expect to return to a more steady period-on-period increase in DPS growth. For our interim dividend, our policy going forward will be to pay 1/3 of the prior year total ordinary dividend per share, providing more clarity on midyear capital returns. After satisfying these conditions, we will continue to return any surplus capital. Turning to our balance sheet strength and solvency. The group is evolving, with retail becoming a larger component. And given retail's lower volatility and our greater confidence in its growth and profitability outlook, we're introducing a new solvency target range of between 190% to 200% after the payment of the final dividend in the respective year. As a reminder, on a pro forma basis, at year-end, we had a BSCR of 198%. And this was after taking into account the wildfire losses and announced capital returns. As you can see on this slide, our target solvency comprises capital required for our S&P A rating, a loss absorption buffer and a management buffer. Our S&P A rating is not a fixed point against the BSCR and will move around. The loss absorption buffer is intended to withstand a 1 in 100- to 250-year windstorm, along with some economic stress. We hold a management buffer to provide flexibility to capture growth opportunities. Turning to balance sheet efficiency. Given the strong capital generation derived from 2 consecutive years of record profits, the debt leverage of the balance sheet has reduced to around 15% at the 2024 year-end. And as you can see, there is room for some efficiency here. We have significant financial flexibility to appropriately deploy leverage in supporting the group's strategic objectives. At present, around half of our business is cyclical, but as the share of retail, which has a lower volatility profile, grows, we have the financial flexibility to make our balance sheet more efficient. So to wrap up, we have a significant level of confidence in our ability to deliver attractive cash distributions and a mid-teens ROTE through the cycle. This will be supported by clear and phased P&L benefits of $200 million from our change program, which will drive operating leverage. The changing shape of the group as retail grows is creating material financial flexibility, allowing us to operate with a BSCR in the range of 190% to 200% and appropriately deploy headroom in the group's leverage in supporting our strategic ambitions. Our confidence in delivery is reflected in a step-up in the final dividend per share of 20% for 2025, subject to final ratification by the Board ahead of the full year results. With that, thank you for listening, and I will now hand back to Aki.

Thank you, Shali and Paul. Today, you've gained deeper insights into our business and met some of our exceptional leadership team. Over the past decades, we have built a unique specialty business, differentiated through its entrepreneurial culture, our technical excellence, the exceptional service we provide to customers and brokers, a distinctive brand and unique access to attractive specialty markets in U.K., U.S. and Europe. And this positions us well to realize the significant opportunities across all of our retail markets, which remain underpenetrated, fragmented, but evolving fast. We have ambitious plans to capture this opportunity and to unlock further high-quality growth in our retail business. As you've heard, we're supercharging distribution. We're going deeper and entering new niches. We're expanding our footprint in Europe. We're accelerating our ongoing change agenda to simplify our business and drive material operating leverage. And finally, as our retail business becomes a larger share of the group, this creates new flexibility and confidence that our shareholders are benefiting from. I'd like to conclude with a summary of my commitments. In retail, our growth ambition is to accelerate to double digit in 2028. Accelerating the group's change agenda will improve efficiency and realize $200 million of P&L benefit in 2028 and onwards. With retail being the main beneficiary, this further reinforces our confidence to not only operate sustainably within our combined ratio range, but to also drive margin improvement over time while we continue to invest in growth. The changing shape of the group, with retail becoming a greater proportion and the confidence in our strategy, has enabled the Board to set new guidance. We will step up our operating ROTE to mid-teens through the cycle. And subject to final ratification, we will increase the 2025 dividend per share by 20%. Execution is already underway. Our shareholders will benefit immediately. The first $25 million of the $200 million will be realized this year. Our retail growth acceleration is already underway in excess of 6%, and that momentum will continue to build. And we're sharing the benefits of the changing shape of the group with our shareholders this year through a second consecutive step-up in our ordinary dividend. So thank you for your time and attention. I'm now going to invite Shali and Paul back on stage. And we will take further questions. And Will is very quick off the trigger. All right. Okay. So...

I'll let you sit down first. I won't delay as you're pouring the water. Will Hardcastle, UBS. Really simple, yes or no, I think. The first one is that thinking about this $200 million saving, that is the drop down to the P&L bottom line doesn't get absorbed by inflation -- for simplicity, doesn't get absorbed. It's not needed to absorb high premium growth. So that essentially just drops to the bottom line. The second question, it begs the question, I guess, why has the retail combined ratio -- that's a big number. Why has the retail combined ratio target range not been improved? Because if the majority falls through there, presumably, the majority is an attributable, that's probably worth at least 3 points or so by '28 on a combined ratio. So it's sort of linking those 2 together.

Okay. Thank you for those questions, Will. I guess, again, taking the 2 parts. In terms of the detail of where we expect the benefits to come through, Paul will cover that. Firstly, in answer to your first question, the answer is yes. In terms of the combined ratio and where retail operates, look, as you heard us say, we're confident that we expect to see margin improvement as the business grows and as the -- these cost efficiencies begin to come through. And we're very confident that that will take place. In terms of -- I'd encourage you to think about it in terms of the total package that you're seeing today. We're targeting double-digit growth into 2028. And you can see evidence of growth acceleration over the last few years, from 4 to 5 and now to 6, and momentum is building. We're targeting $200 million of P&L benefit, some of which will be realized this year, indeed, is already realized. Thirdly, we're guiding to a through-cycle ROTE of 15%, which is a material step-up in what we delivered over the last 10 years. And the confidence in our strategy in the changing shape of the group has enabled us to not only step up the final dividend for this year, subject to final Board ratification, the DPS this year by 20%. That's on top of 15% total increase last year, and two, I might add, consecutive share buybacks, with a second well underway. I think we've completed about a quarter perhaps.

[indiscernible].

Yes. So take it in that context, but Paul, perhaps provide a bit more detail.

Yes. Thanks, Will. So from a geography perspective, I think the important point that you heard from Shali is the $200 million is broad-based that benefits the group. The majority, however, does fall within retail for those benefits. And so I pointed out in the presentation, there's about 1/3 of the benefit goes to claims, about 2/3 goes to expenses. Now the important point for the IFRS 17 aficionados in the room is that some of it will fall to the non-attributable, which is clearly outside of the combined ratio. So in order to sort of think about how to model that, it's probably useful to look at the 2024 year-end splits of the costs that we've incurred, both by segment and corporate center, but also by the split of non-attributable and attributable. And I think that will give you a reasonable basis to sort of start the work on that. Clearly, I'd say it's a proxy. As you start -- as the accelerated change program matures, then clearly, that fall will be a bit more precise, and we'll come back and update you on a very regular basis. I think the other aspect, and just building on the point that Aki made, is that the $25 million of benefit will be within the adjusted operating profit metric. And therefore, we'll already start to enhance the ROTE target. If you think about the principles, what we're saying is keep the sort of nonrecurring costs and items outside of the adjusted operating profit. And to get a better understanding of the underlying performance, focus that within. And clearly, the benefits are within. However, the sort of cost to achieve that you saw are on a nonrecurring nature, so they will be outside.

Abid, and then Ivan.

It's Abid Hussain from Panmure Liberum. So I think you've already answered my -- sort of the $200 million sort of cost to achieve the breakdown of that. So I won't ask that. The other two questions I've got is, firstly, on the ROE. Can you just give us a sense of what the cross-cycle ROE is for the retail business? Is it above 15%? Is it 15%? Or is it below 15%? It's got to be one of those. And then any sort of breakdown perhaps by geography on retail as well, please? And then the second one is on the incremental earnings. I'm just trying to get a sense of how much incremental P&L can you get from the expansion strategy from 2028 onwards on top of the $200 million efficiency strategy. So it feels like it's quite easily a $75 million to $100 million on top of the $200 million from that sort of premium uplift. So if you could just give us some sort of dimension to that, please.

Thank you, Abid. In terms of cross-cycle ROTE by country and business unit, okay, what we -- the disclaimer that we provided today is -- and it's the first time we've done this, and it really belies the confidence that we have in the strategy and the momentum that we're seeing in the business, but it is a group ROTE, return on tangible equity, through the cycle. In terms of the attractiveness of the various businesses, they're incredibly attractive. Each of the businesses deliver very attractive return on tangible equity, and we're very satisfied with the result. In terms of incremental earnings, Abid, I think that's for you to figure out, right? I think we've provided enough information for you to model that out. Ivan, and then Alex.

I think my first question would be more on the operations and I think a little bit general. But as we think about the 3 platforms within retail, I mean, can you talk about how many of the functions are centralized, how many of the functions are done separately? I mean, what are the synergies across the businesses in broad sense maybe in terms of how costs are split or anything that can help us think about how integrated the business is? And secondly, it's probably more about those ROTE targets. So this is a new target, I guess. It's now operating ROTE. Maybe you can provide what the number was for the past couple of years. I mean, I guess considering how profitable the industry would have been, we're above 15%. So just wondering, what's your view on how the trajectory of that ROTE might look like for that normalization? And then the final question, I think, also is a little bit different. The faster growth in retail and maybe the disciplined deployment of capital in large ticket, how does that affect your capital requirement over the next 4 years? How do we -- how fast do we think it's going to grow?

Okay. Thank you, Ivan. In terms of part 1 of your question, the level to which the various different businesses are integrated or the platforms are integrated and the synergies, Shali will cover that. In terms of historic ROTE, I'm sure Paul will provide some color on that as well as the -- our thoughts on trajectory. And then in terms of faster growth and capital requirement, again, Paul, I think that's one for you.

Yes.

Shali?

So okay, if I go first. So we have some -- we've already adopted some synergies across the business from an operational perspective. They are in areas like technology, cyber, more and more in our data space where we're using a lot of the capabilities, and then we're increasing those synergies as we develop more change initiatives. The change initiatives that -- the change agenda that we've got now on the table will look at further synergies. So it will look at -- we recognize that each of the markets are different, and there's a local representation that absolutely needs to be within the market and locally within the business unit. But there are definitely some common areas like the ones I talked about, whether it's increasing some of the sort of Center of Excellence. So a really good example is if we're all using the same technology, then managing and maintaining that technology should be sitting in a Center of Excellence, or if we're all deploying process reengineering capability, that could potentially sit in a Center of Excellence. So the way we're developing the program now is to identify which ones would create value for us to bring together as part of the synergies, and that's exactly what we're doing. So our objective is to find the ones that would create value and continue down that journey because we've already started to do some of that already.

Just a follow-up on that one, if I may. So I don't know if there's -- is there a process to centralize things? How far are we down that process or maybe the other way around?

Maybe if I just kind of give you a sort of overarching perspective. The historic evolution of the business has been not to do that, and it served us very well. But it does create a degree of complexity and duplication. And we're looking at each area of duplication and complexity. And frankly, duplication doesn't really add value, complexity may, and we have to judge each of those. So to give you an example, and I think Robert spoke about this earlier. The poster child for what we're doing here is in Europe. We have one core technology platform. We rolled it out in Germany. It's now live in France. We're rolling this out in Iberia and then -- and in other countries. And actually, what we're learning through that process is it's not quite as simple as core technology platform in a box, but we're getting close to being able to do that in the next sort of year or so. So that's one instance where we started this process. There are multiple other areas where we are looking at, and technology is a great area for this, where one business unit has experimented and done really well in using a particular technology. And the other businesses have not been on that same path where we can then reuse that. So I guess on a -- in terms of the scale, we are towards the beginning of that journey in terms of our ability or how much reuse there is for us across the group.

Yes. And then I think the second and third parts of your question are really for me around looking at capital management through 3 lenses. There's a sort of operational execution, the strategic and then the balance sheet itself. And what you've heard from today, if you take the strategic aspect, we see a massive opportunity for growth in retail. It's lower volatility. And you can see the changing shape of the group is changing over time from a sort of operational perspective. There's 2 components. There's, firstly, that $200 million that drops to the bottom line in 2028, and you've seen the benefit profile that increases over the years from 2025 through to 2028. But the other aspect that we talked about is really driving efficiency and productivity across the group. So you've heard that from Shali, but what this does is really drives the jaws opening over time. So what you'll see is that revenue is growing faster than costs. So those are the components. How does it sort of then wash through around our thinking from a capital management perspective? The specifics is about your returns from the last 3 years and how they might change. I think on one of the earlier slides, you would have seen it's gone from 12% to 20% to 24%. So that's sort of the rough trajectory over the past 3 years. The group is highly capital generative. But then you've got to put that through the capital management framework that we have. So deploy capital for growth, we've been doing that for big ticket. We -- you've heard how we're going to continue to compound the growth within retail. Maintain a strong balance sheet. I've outlined today the new BSCR target that we're going to manage to and operate within. So we'll be within that 190% to 200% final dividend. We announced today the increase in the final of the 20% and then returning any surplus to shareholders. So you've seen us announce, and we are a fair way through, but it's in excess of $300 million that we've announced and started to return over the past 2 years.

Darius?

Darius Satkauskas, KBW. Two questions, please. The first one is on leverage headroom. Could you please try and help us sort of quantify that? Where would you see the ceiling for how high you take your leverage ratio to? And is it conceivable given that you've got a BSCR target that you would borrow to return capital to shareholders, I suppose? Is that what your deployment of leverage headroom means? Yes. That's it.

Thank you, Darius. Paul, do you want to cover that?

Yes. So the sort of balance sheet leverage question, it's going to be taking into account not just looking purely at leverage, but also the quality of capital on that balance sheet. So we've said we want to maintain the A rating. We'll operate with BSCR of the 190% to 200% range. With regards to leverage, you can see from the slide that's been called out that in recent times, we've been traveling around the 20% to 25% sort of historically. So we don't have a target, but clearly, what that provides with the significant capital generation that we've delivered over the past couple of years, if our start point is 15%, we've got material financial flexibility to support our strategic ambitions. Now that might be -- and you can see -- you've heard from Aki in the first part of the Capital Markets Day that we are an organic business, and we deploy capital for organic growth. But from time to time, we might do some organic bolt-ons like we've done for Italy that Robert mentioned, getting into access there.

James.

James Shuck from Citi. I just wanted to ask about the calibration of the return on tangible equity. It feels a little bit apples and pears. You've removed the discounting rate effect from the denominator. But in the numerator, you kind of -- it's a change in the IFIE, but you've left the discount rate benefit in. So my question is, kind of why didn't you kind of totally remove out the impact from discounting? And if it's a change in IFIE, then what is the starting point that -- and how do we roll that forward? Should we look at it in relation to reserves and just think about the change on that? So that's the first question. The second one, again, just returning to the mid-teens through the cycle. I mean, if we're at 24% now, then the cycle might be 5 years. Are you essentially saying that you think the trough cycle will be 0% if we think 5 years, is that right? I just want to get a feel for that cycle evolving. And just a quick one at the end. I mean, you're specifically calling out LPTs, which I thought was interesting. I thought you were largely done on that, but are there things that you're looking at the moment that we might see emerge?

Okay. The question on the technical aspects of ROTE, I think I'll do. Yes?

Why not?

In terms of how we're thinking about LPTs, again, Paul, I think you can provide some context on that. In terms of the ROTE through the cycle, look, if you look at -- if you take a backward view first and over the last 10 years, which I think -- I mean, who knows how long the cycle is? But if we take the last 10 years, you had the back end of what was a hard cycle then coming off and then a prolonged soft cycle, a bit of COVID in there, and then a few years of a hard market. Over that period, we delivered a ROTE of 11.6%. So from that, there's a material step-up. That's what I would interpret from this that -- because we can't predict what the next shape of the cycle is, but what we are seeing is relative to before, our return on tangible equity is going to be materially better because of the levers that we've identified and that Paul has kind of taken you through. Paul, to you.

So really, the high-level principles behind moving to the ROTE target when we sort of start looking at the overall recognition and inclusion and exclusion is really to say, give us a real view of the underlying performance of the business. And therefore, what we've done is excluded nonrecurring items, and the LPT is one of those items. The other aspect is, as you've mentioned, what we've excluded from the denominator is to say, take the discounting out, and I'll explain why in a second. And then within the numerator, it's really the changes that are due to timing. And the timing will either be on the mark-to-market from a fixed income perspective or it will be the mark-to-market changes that are in the reserves and the change in that aspect. Now we could have also excluded the initial discount and the unwind of the IFIE as well. So 2 further matters. But if you look historically, they broadly offset, they're kind of close to net 0. I think the difference last year was single-digit million. So there's always a simplistic aspect of saying leave those -- these points in. So that's the sort of thinking around the -- what's in. So nonrecurring, remove timing. The main reason and one of the considerations around discounting is we compare ourselves and want to be compared not only sort of on the listed U.K. peers, but more importantly, on the U.S. and Bermuda. And as you know, they don't report under IFRS 17, not all of them. And as a consequence of that, they don't have the discounting in them. So it's more an apples with apples with peer group, and that's what it's enabling us and yourselves to do. So that's sort of technical aspect. In terms of LPTs and [indiscernible] point...

So if I may, just a starting point for the IFIE, are we just going to lock in what that was in year-end '24?

No. So what will happen is that will flow through in 2025, and you'll -- that will just go through adjusted operating profit, but we'll also have the initial discount. So those, as I said, historically broadly upset when you look at the P&L, but -- so that was that aspect. And then in the LPT, the important point is we've only pulled out of adjusted operating profit, the sort of day 1 initial charge. So the ongoing ups and downs of that, we'll continue to recognize, as you would expect. Now the reasons for doing those loss portfolio transfers vary. So it might be that we no longer write the class, and therefore, the expertise tends to leave. We've heard how we're an underwriting outfit. If the underwriting expertise leaves, and indeed, the claims handling expertise leaves, then we tend to take up an LPT to basically protect ourselves where we no longer have that in-house. Another reason may just be purely from adverse development. If we have some concerns around that, then it's a sort of prospective -- proactive way of protecting ourselves. And the last bit is simply around recycling from a capital management perspective. I personally would much rather sort of have capital deployed into growth and underwriting opportunities than tied up in the reserves and the reserve risk aspect.

I think if you just, James, pass it one back.

This is Vash Gosalia from Goldman Sachs. I just have one question is probably answered throughout today's session. But what -- so you -- potentially what I've understood, and if I've understood it correctly, is your basis of underwriting or your expertise in underwriting is what helps you achieve your 44% loss ratio. But at the same time, probably your combined ratio is in line with peers. It's not very different. So what I'm trying to then get at is if all the initiatives that you've spoken about today is going to help you improve potentially a combined ratio still within the 89% to 94%, and then you're saying that you are also going to grow the top line. I'm just trying to sort of piece together as to why both will happen at the same time because I would assume if you want to grow your top line faster than the market, you would potentially have to then give up some of the pricing, which would be negative on your combined ratio, but then you're also saying your combined ratio marginally improves. So I'm just trying to piece the 2 together. It'll be helpful if you could just share some color on this.

Yes. Yes, absolutely. So let's go back, and then we'll go forward. So over the last 10 years, our commercial business has tripled in size, right? And some of the statistics I quoted earlier, I think the U.S. business has grown 75% effectively if you stack over 10 years in excess of the market. Europe has been about 150%. U.K. has been lower than that. And the overall retail business has grown materially faster. The loss ratios remained in the 40s, okay? So we've been able to achieve that growth and maintain the loss ratio. Now part of the reason for that is these are not standard markets. I mean, you've heard that, you saw the 3 videos. Those are just a small example of the types of business we write. These are specialists. They're not standard. This is -- customers are not looking for the cheapest, and we are not the cheapest. What they're looking for is the best, the best cover that's tailored to their needs, a business that they recognize, a business that provides first-class claims service. And that's what we do. So what they're looking for is value, generally speaking. And so this is a value-based proposition that we're providing to our customers. And as we expand our knowledge and understanding, we're going to new niches with that same ethos of providing value. Look at specialty markets, margins tend to be a bit better, right? Loss ratio is better. Now the expense ratio does tend to be higher because it -- we're -- firstly, we're investing to drive growth, and we do that. And that's already within the existing expense ratio and combined ratio. Secondly, as you heard from Shali earlier, the claims service, there was lots of efficiencies that we will now generate over the few years. It is high class, and for certain classes, will be high touch, okay? So I guess the way to think about it is we have delivered market-leading loss ratios, excellent combined ratios whilst growing our business well ahead of the market, okay, well ahead of our markets. As we look forward, we are now seeing significant opportunities to generate expense savings. And I won't go through that again, but Shali and Paul explained that. So that's going to be the additional factor. The growth has been there. We're already delivering that growth, indeed, the last couple of years. We've increased our marketing by 30% to 40%, and the combined ratio has improved. So we've proven we can do it, and this will happen again over the next few years.

And sorry, just a follow-up. You're confident you can do it at a larger scale, I mean, even when Hiscox is much bigger than it was 5, 7, 10 years ago?

We've done it. We're doing it now. Yes. Any -- Alex, yes. Alex -- yes. Alex, and then Andreas, did you have a question? Yes.

Alex from [indiscernible]. James kind of answered -- asked the question more intelligently than I was going to ask, so I'll try and do something different. Is today's summary of transparency and certainty of what you've always done as a great business? Or is it a step change in speed and growth? And if so, what's changed?

So we've made a lot of change over the last few years, right, whether it's been the team that we have. So we now -- we have a fantastic leadership team that's made up of -- I'll call them Hiscox veterans who've been here 20, 30 years. They joined the business in short trousers. And then we've also brought in some fantastic talent to complement. We have -- if you cast your mind back to the technology slide that Shali took us through, we've had a decade of investing heavily in technology and replacing many of our core technology platforms. That has given us a strong foundation now to do what we are -- what we're setting out to do and what we've already begun to do. And then, frankly, if you go back 4 or 5 years, we had some challenges during the 2020, COVID, 2019 in the U.S. So those things are behind us. So part of what we've been doing over the last few years is refreshing the team, rebuilding growth momentum, completing the heavy lifting on the technology, reinvesting in the brand, and Jon has talked about that eloquently, about what we've done in the U.K., and really upping the cadence in our distribution function. And you're seeing the result of that come through over the last few years. So if you think about our growth rate, it's gone from 4% to 5% to 6% plus in the first quarter of this year at a time when actually the inflation led pricing increase in retail has come down. So if you -- ex-inflation, the growth rate has increased materially over the last few years. So things are different. We're much more confident about our ability to continue that momentum. And again, to replay some of the facts that you heard earlier. In Jon's area, we've signed more broker deals than ever over the last 24 months. But they do take about 24 months to mature because you're renewing the business annually. Those are yet to really come through in a big way in Jon's numbers. We're just expanding into a new country. We haven't done a new country for a long time. But we now have the confidence from the management's perspective, from a technology perspective to go into new countries. And we can do -- we think we can do that very efficiently. So the paradigm is different, right? The future is incredibly exciting for us. The markets are huge. We have a great team. Our technology platform is solid. And we have brought in capability that is going to accelerate the change program that we've spoken about. Andreas, you get the last question.

Great. Quick question about the business model. Obviously, the business model traditionally at Hiscox has been balancing out the retail to have longer tail business against the wholesale business. As you generate more growth in retail, and obviously, you're optimizing your capital efficiency, is there a point where that diversification benefit is not optimal anymore, therefore, you still want to strike a balance between having a sizable wholesale business as that retail business grows? I.e., this strategy, will this allow you to maintain your risk appetite within Hiscox Re during the soft market -- potentially soft market in the next few years? Or should we expect retail to be 75% of premiums in 3 to 4 years' time? And the second question is on your capital management model. If I think about the S&P A rating plus the loss absorption buffer, at what type of a solvency level is the floor that you do not want to go below so I could just figure out more or less what is your management buffer?

Thank you, Andreas. Paul will cover the details of the capital question and the S&P A rating. In terms of the overall shape of the group, balance is an interesting word, right? So again, if you go back to it, there's a chart, I forget which slide it is, that shows the progression of the group over the last 20 years. Retail -- the one thing that's consistent about that chart is that the retail proportion has been growing all the way through, right, to something that was materially less than 50% to close to 50%, now above 50%. But we have 3 great businesses, right? We will continue to grow London market and reinsurance when the market opportunity is right. And you know us to be disciplined players in managing the insurance cycle, which really applies to the big-ticket businesses, not retail. Retail is much more consistent growth. I won't repeat, but now we've got a cadence within the business. And with the initiatives that my colleagues have put into play, we're confident of that growth momentum accelerating. Now I think over the next sort of 4 or 5 years, unless you assume -- when I say double digit, I mean 50%. I think the proportions are probably going to involve like 60-40 as opposed to 75-25. And at the sort of house view level, the capital diversification benefit we receive will still be very material. We're a long way off from that becoming an issue for us to consider.

Yes. And so I talked about the presentation that really, what we don't want to do is put the A rating under any pressure, but that clearly moves around depending on the composition of the group, the risks that we're undertaking, the profile of reserves, premium and cat. So that's sort of the straightforward answer. I think really that we have been at pains to sort of present today and talk about how we're thinking about it. So there's the A rating, but very much, there's a loss absorption buffer. And it's not just about sort of cat risk, but this is about any tail event, for example, that that loss absorption buffer is there for. And then, of course, we want to retain the management buffer because we've heard today how many opportunities there are out there. We've got lots of opportunities to grow. We've got the opportunity -- we want to maintain that management buffer so we can take advantage of those opportunities. Some will be cyclical-driven, some will be the opportunities that we see in retail.

Thank you, Paul. Thank you very much, everybody. I'd like to, firstly, thank all my colleagues for time and effort and telling the Hiscox story and also to the thousands of colleagues who are working very hard to make this -- working hard every day to make this a reality, and finally, to thank all of you for your patience. And just as a sort of final comment, the future for Hiscox is incredibly exciting, and we're incredibly motivated and passionate to deliver it. And just as a reminder, our growth rate is increasing across the retail businesses. We're confident in our ability to achieve double-digit growth in 2028 and to grow ahead of the overall market for many, many years to come. We're confident in our ability to achieve $200 million of P&L benefit in 2028. The first $25 million, Paul will report to you on by the end of this year. With the actions that we've spoken about, both the growth, the changing shape of the group and the expense efficiencies, our ability to deliver a material step-up in return on tangible equity, again, is something that we are confident of achieving through the cycle. And our shareholders are benefiting immediately from all of these actions through a further step-up in capital returns. So thank you very much for listening.