OUTsurance Group Limited (OUT) Earnings Call Transcript & Summary

Good morning, everyone. Thank you for the opportunity to present to you on the interim results of the OUTsurance Group Limited. Maybe just a quick note. We don't expect to go down. But with some of the communication interruptions experienced since Friday, should we go down, just give us a minute to restart things aside and we should be back up but we don't foresee that, but just in case. So I'm going to be providing you with an operational review and then Jan, our group CFO, will be providing you with the financial review. Then I'll give a brief outlook and then we'll step over into the question-and-answer session. So to start with the operational review. We always focus on the macroeconomic trends, inflation and interest rates and now they impacting on our operational performance. So starting with CPI inflation. Historically, claims inflation was quite closely linked to CPI inflation. But what we've seen in the last few years is a bit of a dislocation and there's certain things driving this. And I think it's important just to briefly step over those. When you look at claims inflation, it's driven by trends in your claim frequency, but also trends in your claim severity. And these have been notable in the last few years. So first on the frequency side, I think the most notable one causing real growth and causing claims inflation to be higher than CPI inflation is climate change and the increase in natural peril claims that we see because of the climate change and more urbanization. So that's been a feature. And that's also why we don't see claims inflation stepping down as fast as what you see with CPI inflation. And also why it's peak at a higher level. When considering the severity side, there's actually a few factors also driving that. The first one is really supply chain issues, which we've seen on both the car and on the home side, driving higher claims inflation. And there's also been the matter of vehicle theft where we've observed the theft towards more expensive vehicles. And that's also driving the severity side. We've also observed an increase in solar penetration that's further driving some real growth in claims inflation. And then even on cars, we've seen just an increase in technology senses and those things driving higher repair costs. So CPI inflation historically quite closely linked to claims inflation, but lately, claims inflation has been outstripping that and we foresee that to continue to be the case in the near term. Then looking at interest rates. We saw the period of cheap money sort of through December '20 and 2021 and then a steep increase in interest rates. That has benefited our investment income and we foresee interest rates while we expect them to normalize in the second half. We don't expect them to go back all the way to the period of cheap money. I think an important consideration is just also in our group with a composition of premium from the different countries. It's worth noting that the float in Australia and it will also be the case in Ireland is bigger relative to your premium income. And such, we expect our float to grow faster than our premium income. And there's really two reasons for that. The one is that in both Australia and Ireland, a much larger portion of your premiums are paid annually as opposed to monthly and that boosts the float. And the second one is really long tail claims. Your bodily injury claims, which in South Africa, that's covered by the Road Accident Fund; in Australia, that is CTP; and in Ireland, is part of your standard product. Those are long tail claims and you have more reserves for those, and that's also boosting your float. So just in terms of interest rate and its impact on our group in the long run, it will be a bigger factor going forward. And then the last macroeconomic trend is just the exchange rates where you can observe the general deterioration of the rand over time, and that is boosting our growth and expect it to continue to do that in the long run. So I mean the point worth noting is that already 62% of our premium comes from Australia. So it is quite material. Then if we were to look at the key operational themes for OUTsurance in South Africa, we saw persistent high inflation being the primary driver of growth in our Personal Lines business. You'll know that our Personal Lines business has got a very high market share, and that's why it's more linked to the economy. And as such, high premium inflation was a bigger driver of the growth that you see as opposed to just unit growth. And that's why we're also saying the real growth opportunity is fairly limited because this business is so closely linked to the economy. We've seen a pleasing claims ratio performance through proactive pricing, claims cost and product management. I think our South African team deserves a pat on the back for that one, because there were quite a few headwinds to navigate and successfully coming through that was a job well done. High-value vehicle theft remains a concern. And I think the key part here is just in the long run, safety of people and also driving affordability. And I think that's why it remains key to define solutions to that. And we observed various small natural peril events that impacted the claims performance in the 6 months, but despite those, you would have seen the positive claims outcome. And just for context, I mean, we had to retain all those events. None of them went into our reinsurance program in South Africa. In terms of business OUTsurance, we've seen inflation boosting premium growth there, claims and, therefore, premium inflation boosting growth. The profitability of our OUTsurance brokers was negatively impacted by the one-off take-on of the OUTsurance Life face-to-face force that caused a big step-up in head count, without the necessary in the same productivity of mature, short-term business brokers. Also, our focus on the margin and realizing breakeven meant that we didn't appoint additional short-term brokers over and above those and that would have impacted in slower revenue from there. That said, I mean, that's now been absorbed. And going forward, we expect the normal run rate to resume. And then, I think, we've observed a pleasing claims improvement in our OUTsurance brokers. And we've highlighted before why we believe so much in this business model. But just to highlight that again, I think the first thing is we do own the client relationships there. So it does give us better pricing power, especially in times of high claims inflation. I mean, there's no risk of someone telling us they might move the entire book if we increase a premium or something like that. The second one is that all of this business is administered on our own systems. That allows you to execute better in terms of pricing and underwriting as opposed to where you have to fit into the IT priorities of some external platform. And I think the third one is our own product. So when you have challenges like loadshedding claims, I mean, you can also make the necessary product design amendments without being locked into a product, which is not necessarily your own. So overall, we strongly believe in this model, and we're confident that we'll be able to resume a faster scaling up of this business going forward. In OUTsurance Life, we saw continued strong new business performance in the funeral segment, mainly driven by the Shoprite funeral partnership. We also saw encouraging growth and embedded value in VNB margin in the Shoprite Funeral segment. And then we also saw favorable impact of yields compared to the previous year. Then looking at the Youi operational themes, I think, we saw elevated claims inflation continue to support premium growth, particularly on the home side. And Youi business activity was also stimulated by increased shopping activity because of high renewal increases that's prevalent in the market, supporting improved unit growth. And then, I think, a key factor, we show in our presentation, we achieved 22.5% gross written premium growth, but our bottom line is not growing at the same rate, and it's really two factors driving it. And the one fact that's been listed here is we had ZAR 678 million more retained natural peril losses at Youi than compared to the corresponding 6-month period. We also have a graph later on, showing the long-term trend. So we're certainly not considering with the last 6 months as a complete exception. It's more a return to the norm, if you consider the long-term trend versus last year, which was quite below average year in terms of natural peril losses at Youi. Looking at Youi business. We've seen the accelerated growth on the back of the BZI launch on the Steadfast platform, and then we also see ongoing growth of Youi Direct from a low base. And as we know, commercial direct tends to focus on the smaller businesses, it is a relatively small segment, but quite a profitable one. Then stepping over to Youi CTP, we're quite pleased with the improvement shown in both the claims ratio and the cost ratio of Youi CTP. When you start a new business containing bodily injury, you have to have a high level of prudence in your reserving initially because of the low claim frequency but also because of the long development pattern of these claims. And now as over time, we're able -- as we build up more credibility, we're able to reduce the amount of prudence built in there as we have better stats. And that is quite encouraging to see the margin on Youi CTP improving quite a lot. Then if we look at the graph on the left-hand side there, you can see our group gross written premium there. And with the change in accounting standard, we sort of focusing on the traditional short-term insurance measures as well. So our short-term or our property and casualty business, as we like to call it P&C, and that accounts for roughly 97% of our business. If you look at the premium income there on the graph on the left, you see the compound growth rate of 12.9%. But I think importantly, if you look sort of from 2019 upwards, you'll see quite a decent acceleration. I remember, at full year 2018, our gross written premium was at a standstill. We had 0% growth, and we really had to revitalize that. And we invested in new ventures as well it's stronger investment in our core businesses, our core Personal Lines businesses and it's pleasing to see the accelerated growth since then. That said, we need to point out that at the moment, there is a bit of a tailwind in terms of higher claims inflation and also, the group premium growth was also supported by the 4.6% weaker rand to Australian dollar exchange rate. Typically, what we guide through the cycle, we still think mid-teens is achievable for our business given the runway created for organic growth in our different businesses. If you look at the graph on the right-hand side, that's our new business premium, and that had a healthy step-up of 38.8%. Again, that was supported by the persistent high premium inflation and the exchange rate as highlighted, but quite positively also stronger unit growth supported by higher shopping behavior. Then if you look at the graph on the left, it's quite an important one. We always guide investors around the volatility in our results. And I think that world has changed quite a bit, for the first reason is climate change, which is definitely driving this. If you look at the long-term trend, even if we were to go back further and look at the last 20 years, you'll see a constant upward movement here. I think, the other one is also our increasing exposure to Australia where you have more properties exposed to weather events. And I think the third factor to keep in mind is just the changing reinsurance world where retention levels went up significantly and as such, insurers retain a larger portion of that. So we always guide and say over a short period, our results can be more volatile because of this. But in the long run, we see it as a positive as is driving real growth in the short-term insurance industry. Over a 6-month period is even more volatile than over a 12-month period. So once we get to the full year, you'll probably see the results being a little bit more stable. But if you look at that kink there in the last 2 years, then you can clearly see December '22 been a very good year with sort of out of the normal low natural peril experience and this current year been much more normal, but then we had to retain the vast majority of those plans. So that gives good context. And then as I said earlier, one of the two big drivers really why our year-on-year, bottom line growth is not as strong as the top line growth, was the ZAR 678 million more retained natural perils. I think one has to separate that however, from our ability to achieve pricing adequacy and especially pricing adequacy on your working claims ratio or your attritional claims ratio. In the old days, people were also referring to natural perils as the acts of God and I think on the attritional one sort of the man-made losses. So if we look at the graph there on the right, you will see OUTsurance's working claims loss ratio improving from 49.5% to 48.7% which was quite pleasing considering all the headwinds there. And then even Youi, the working claims ratio improving from 51.9% to 50.3%. (sic) [ 50.8% ] So the real catch up in terms of pricing adequacy is more in the home natural peril space, but there's still a bit of catch-up to do, and that's why we're flagging that we expect claims and premium inflation to remain a bit elevated for a while longer. Then if we look at this slide, we always guide around our investment in new ventures and also our appetite around that. Importantly, as per the first bullet there is that you should really evaluate that on a full year basis because on a over a 6-month period, it can be more volatile. And there's our appetite of 10% of operating profit. What you'll see by looking at that last bar, I think it's quite prominent, the Ireland losses are ramping up, but that is quite normal for organic startup like that because you have the complete systems build before you launch, and so it's well within expectation and not out of the norm. On Ireland, might be flagging there, but we're expecting a launch in the next quarter. So we're approaching readiness for launch quite rapidly. In terms of OUTsurance business. I mean, it's pleasing to see the sharp reduction there. And as I highlighted earlier, I mean, the move of the OUTsurance Life brokers into that segment caused a bit of a ramp-up, which if it wasn't for that result would have been even stronger. And then, Youi BZI and CTP is mainly that ramp-up is mainly because of BZI. And as you know, BZI is mainly our home insurance book, and that's why it's more exposed to natural peril losses and with the step-up in the natural peril losses that caused an increase there. And as I flagged, that's why we believe premium inflation will remain elevated for a while longer. That's the operational review. I'm now going to hand over to Jan to take you through the financial review. Thank you.

Thank you, Marthinus, and good morning to all our listeners. I'm going to kick off with just taking you through the IFRS 17 transition. As you know, this is the first time that we are reporting as a group on IFRS 17 transition. And we also guided on our expected outcomes at the previous financial year-end. So I think, first of all, important context is that over the cycle, more than 95% of our earnings are typically generated by Property and Casualty or short-term insurance activities. So for this reason, the overall impact on IFRS 17 on our profitability in the group has been quite limited. However, disclosure changes have been quite significant. And for that reason, we have provided ancillary disclosure in our interim results booklet to reconcile the differences between how IFRS 17 presents our information versus how we think about our management KPIs in the business, which has substantially not changed. And those are our traditional volume measures. Overall, we've seen no impact on cash generation, dividends or regulatory solvency in the group and our transitional net asset value for the group was also fairly unaffected. When we consider the life insurance business, there we've applied the general model as compared to the PAA approach for the short-term activities. And OUTsurance Life has seen significant change in terms of its earnings profile as well as its transitional net asset value. As guided before, we expect a faster recognition of new business in terms of profitability and a slower profitability emerging from our in-force business and that's due to the fact that the increased margins, which we held under the IFRS 4 regime substantially released as part of the transitional impact on net asset value, where OUTsurance Life had a 40% increase in net asset value. Again, we don't see that the dividend profile of OUTsurance Life changes because of the transition to IFRS 17 our dividend profile for OUTsurance Life is substantially linked to liquidity management on the life balance sheet rather than accounting earnings. The second theme I wish to highlight and place emphasis on is the impact that share-based payments have had on the profitability profile of the group over the 6-month period. I think to take you back to our historical approach with regards to long-term incentives is that for the OUTsurance South Africa team, which is a large pool of participants in our long-term incentives, we historically used a share option scheme as the primary form of LTIPs within the group. With the listing transition in December 2022, we agreed to align our long-term incentives with -- closer to the norms witnessed in listed companies by using a conditional share plan. That transition removes the gearing effect of share options and therefore, creates closer alignment to the outcomes of shareholders versus the outcomes of long-term incentive plan participants. The change, however, was only made prospectively. And therefore, we still have two cohorts of share options in force today and that will incrementally roll off a cohort in September this year and the final cohort in September next year when the scheme will then be fully transitioned. Now these remaining options have created a fair degree of volatility. The fair value, the cost of these options to changes in the market price of the listed share and as a result of the significant increase in value that's being created in the market capitalization of OUTsurance post the listing transition, where the market cap has increased by ZAR 19 billion, we have seen that the mark-to-market of these options have created volatility in the share-based payments expense. And in particular, so over the last 6 months, where the share price increased by 24%. Now this increase in expense is being expressed over the performance metrics of only a 6-month period. And therefore, the impact is exacerbated on our cost-to-income ratios as well as the operating profit of the group. Importantly, the listing transition has not changed our remuneration philosophy in the group. Our LTIP schemes are calibrated to certain expected outcomes, and we need to see this increase in expense as an outlier that's linked to the listing transition and value creation since that period. I'll then step through the details of our financial results. Looking at, first of all, the OGL Group consolidated results, I'll remind listeners that we refer to OGL as the listed company and OHL as the holding company of the group's insurance interests. OGL still holds a portfolio of technology investments as well as asset management investments, which are prevalent investments before the listing transition of the OUTsurance business in 2022. We refer to that pool of assets as the Central or RMI Treasury Company. So looking at the normalized earnings performance of OUTsurance Group Limited, here, we've seen a 0.5% increase to ZAR 1.411 billion. The normalized ROE was 21.6%. When you study our interim results booklet, you'll see that the OHL Group has generated an ROE of 26.1% and the differential in ROE between the listed company and the insurance group is attributed to the holding company assets that are still in the RMI treasury company. Once those instruments are monetized, the ROEs will converge between the listed company ROE and the OHL ROE. Our normalized earnings per share was also up by 0.5%, diluted normalized earnings per share down by 0.1%, and our dividend per share is a positive 7.7% up, and we'll explain the reasons for the departure in the dividend growth profile compared to the earnings profile later in this presentation. When we look at the bottom table, we'll see that the insurance group or OHL had a 3.3% reduction in its normalized earnings, which are attributed to the key themes being higher natural perils claims, as well as the impact of the share-based payments expense. In the Central and RMI Treasury Company component, you will see that the strain has reduced from ZAR 58 million to a profit of ZAR 4 million, and that's on account of the reducing profile of head office costs that is associated with the simplification of the listing transition. But then looking at the Property & Casualty Group and for our regular followers, given the introduction of IFRS 17, we have created a subgroup called the Property & Casualty Group which is, in essence, an aggregate of OUTsurance short-term business in South Africa, the Youi Group, as well as the OUTsurance Ireland business, which will be trading by the next time that we report our results. This allows us to keep our volumetric measures, as explained earlier, which are not necessarily as applicable for the life business post the transition to IFRS 17. So Marthinus has touched on the strong 22.5% growth in our gross written premium as well as the 38.8% growth in annualized new business premium written. The operating profit was lower by 19.1% for the Property & Casualty grouping on account of those two key themes mentioned earlier. The normalized earnings result was down by 11.9%. The claims ratio has increased from 54.4% to 59.1% as wholly attributed to the increase in natural perils claims that we experienced at Youi. Also at play is a lower positive reserve runoff experience in the 6 months compared to the prior 6 months at Youi and that's further detailed in our results booklet. The insurance cost-to-income ratio was 30.4%. If one does adjust for the excess of share-based payments expense, and that was to the extent that it's higher than expected. The cost-to-income ratio would be 28.7%, which illustrates only a marginally higher cost component. Our combined ratio was 90% compared to 83.5% in the prior period. Looking then at OUTsurance. OUTsurance has two main operating divisions, being OUTsurance Personal and OUTsurance Business, Marthinus spoke to the key operational themes impacting these business units. What we have under gross written premium for OUTsurance personal is 8.9% growth. That's largely stimulated by inflation. If one excludes the effect of the first rand homeowners cover book, which is in the process of runoff, then the growth number translates to 9.8%. From an operating profit perspective, here, we've seen a very positive outcome of 18.1% growth in operating profit. We don't allocate the excess share-based payments expense to this level. when you study our results, you'll see that is captured in a Central segment that rolls up in the overall OUTsurance and in South Africa result. And therefore, the results in an operating segment is not skewed by that effect. The 18.1% improvement in operating profit is attributed to the strong premium growth, but also, as shown in the adjacent graph the reduction in the claims ratio from 52.2% to 50.9%, which is a real pleasing outcome delivered by the management team. Then moving to Youi. In our results circular, we have split Youi into three segments, being Personal, Business, and CTP components. The latter two components represent 8% of Youi's premium income, but are also fast-growing segments of the group. For the purpose of this presentation, we focus on the Youi Group's aggregate performance. Here, we've seen in rand terms, 31.5% growth in gross written premium. And if one considers the growth in Australian dollars, it's up by 25.6%, stimulated by the high inflation environment, but also good organic growth emerging in the personal direct business. The operating profit result was down by 31.6% and that is the effect of the natural perils. And therefore, the operating result has decreased from ZAR 945 million to ZAR 610 million. The fact that interest rates have increased substantially over the course of the last 2 years, that has played a buffering effect of absorbing some of the natural peril strain experienced with Youi's investment income overall more than doubling over the course of the 6-month period compared to the prior interim period. Our combined ratio for Youi was up to 94.4%, and that is as a result of the increase in the claims ratio to 64.4%. Encouragingly, we have seen a decrease in the cost-to-income ratio from 31.2% to 30% and that's based on very disciplined cost management at Youi as well as the positive effects of the higher turnover growth in the business. Then we'll move to OUTsurance Life results. So pleasingly, for OUTsurance Life, we have moved from a ZAR 15 million rand restated IFRS 17 result in the comparative period to ZAR 57 million in the current period. The improvement is largely driven by a change in the underwritten life business, where in the comparative period, we had fairly severe yield movement, which weighed on the results of that period. But also, we had the start-up strain associated with the face-to-face initiative, which was discontinued in June 2023. The funeral business, including our share of the Shoprite JV, that's improved from ZAR 18 million profit to a ZAR 33 million profit. And importantly, that is also our strongest driver in new business growth and margin improvement in OUTsurance Life in total. The central component to OUTsurance Life also contains excess share-based payments expenses for participants within the life insurance company. Overall, OUTsurance Life improved the headline earnings from ZAR 13 million to [ ZAR 70 million ] for the 6-month period. Our contractual service margin, which is IFRS 17 representation of the future profits contained in your in-force book and measurement debt has shown a pleasing 51% increase stimulated by strong new business growth, particularly in the funeral segment over the course of the last year. Our embedded value similarly increased by 29.7% and our VNB margin improved from 7.4% to 9.6%. The funeral business is having a positive mix effect here which is inherently a higher VNB margin component. And with that mix change over time, we have seen improvement in the overall VNB margin of the business. Importantly, that VNB margin illustrated here excludes the historic effect of the face-to-face channel, which weighed on the VNB margin at the time of reporting. Then I will conclude with a view on our capital position as well as our dividends. All our operating companies are trading a very strong solvency positions at the time of reporting. A new addition to our solvency coverage is the OUTsurance Ireland Group which has received a substantial component of the capital that it will require up until it is self productive from a capital perspective. The group's future capital commitments are more incremental and spread over a fairly long period of time to support the business. From a dividend payout ratio perspective, starting at the bottom right of this graph, OHL, which is the biggest driver of the dividend in the OHL Group increased its dividend payout ratio from 64.5% to 67.6%, with a growth in the absolute dividend despite the decrease we have seen in normalized earnings. The reasons for the fact that we could increase the dividend is due to the fact that Youi has paid a higher dividend payout ratio compared to the prior year. We've also seen a resumption in dividend flows out of the life insurance business where previously, we managed the business in accordance with the liquidity strain of the face-to-face initiatives where that no longer being in place, we are able to rightsize this balance sheet and we have started that process in September 2023 already. We also have less uncertainty regarding the reinsurance markets, which we're seeing are softening. And therefore, compared to last year this time, we had a higher degree of prudence to gear up for the reinsurance renewal season compared to this time around. So overall, we are seeing a 7.7% increase in the OGL dividend per share to 61.2 cents per share. That concludes the financial review. I'll hand back to Marthinus to take us through the outlook.

Thank you, Jan. Then to look at the operational outlook for the remainder of the 2024 financial year. As highlighted earlier, we expect elevated premium inflation to persist in the near term because of those catch-up relative to the natural perils, especially in the home segment. We forecast that interest rates have peaked and will likely show a gradual decline starting in 2024. Currently, investment income continues to benefit from that. And as I highlighted earlier, just note the long-term mix change where we expect float to grow faster than premium income. Reinsurance markets are showing signs of softening with reinsurers making stronger profits both on the underwriting accounts and on investments. As such, we expect a more normal reinsurance renewal. Then we've created good runway for organic growth, given our low market share in key segments. Just to highlight that, again, Youi Personal, we estimate around 5% market share in Australia commercial, less than 1% OUTsurance business, South Africa, around 4% market share. And then in Ireland, we'll be growing off a zero base. So good runway organic growth. That's not dependent on economic growth locally and abroad. Then we also highlighted the influence of climate change, solar penetration and electric vehicles, but even just the vehicle technology in general, that's likely to continue to drive real growth and cause insurance share of GDP to grow somewhat in our markets. Cost efficiency is a core focus area for our business to maintain target margins and drive long-term premium competitiveness. And as you saw, once you go down to a segmental level, you can actually see some of the gains that we've made because the big one-off share-based payment variation is excluded at that level. Then our market entry into Ireland is a significant strategic milestone and that's expected to give us more runway for growth and diversification because it's likely to be less correlated to Southern Hemisphere weather patterns and also have a larger bodily injury component which uncorrelated to natural perils. So we're quite excited about that, and we're positive about the launch in the next quarter. Then lastly, in terms of the wider group, we will continue to focus on the incremental simplification of the group through seeking monetization opportunities for the portfolio investments. The long-term goal is really to present the market with a focused business, focusing on our core strengths, some good cash generation, and large opportunity for organic growth because that's how we historically provided the best returns to the market. That is the group outlook. We're now comfortable to move over to questions and answers. Are there any questions on the call?

We have a question from Warwick Bam of RMB Morgan Stanley.

Two questions from me. Just if you could just elaborate on the BZI losses. Obviously, they contributed meaningfully in this half, ZAR 150 million loss. Can you just talk to, I guess, the quantification of that? And how you expect these losses to narrow over time? That's the first question. Second question is really on your regional growth profile in Australia. As to whether you're seeing any sort of incremental diversification benefits that might reduce your overall natural perils risk in Australia?

Thanks, Warwick, happy to speak to those too. So if you look at the BZI losses, if you remember when we took over that book -- that business, it was running at 120% claims ratio. And as such, we had quite a bit of catch-up to do in terms of pricing adequacy overlaid with that, you got the ever-increasing natural peril claims driven by things like climate change and urbanization, but also the reinsurance market, which got significantly harder. The key feature of the BZI book is, there is very much home heavy. It's much more home-based as opposed to car when you look at the direct business. And as such, when you go through a period with a big step-up in natural peril claims, it will be more affected than say your direct business. So that's also why we're flagging that and we still have some way to go to get to pricing adequacy. But we're still confident on traveling along that journey to get to pricing adequacy. Then in terms of your second question, we most definitely see improved geographical diversification. When we launched, we launched in Queensland and our market share there was quite a bit bigger than other states. And now over time, as the brand became more established, we see stronger growth out of the other states. I think CTP has also been a key driver of awareness of our brand in New South Wales, which is the biggest state and a state where we were previously underrepresented. So over time, we definitely see the diversification improving, and that should reduce the overall level of volatility and yes, CTP, another benefit of that is just the fact that it's uncorrelated to natural peril events. So hopefully, that gives you a bit of context around those two questions.

At this stage, we have no further questions on the lines.

Thank you. We have some online questions submitted. Marthinus. The first one is from Werner [indiscernible] There have been talks about the regulatory inquiry into the affordability of insurance premiums in Australia. Have you seen or experienced any interaction? And what is your view on this?

Thanks for the question, Werner. Yes, I think it's quite a relevant question. If you consider the very high premium inflation that's been observed in response to the claims cost inflation. If you look at Australia, I mean, a lot of the people are living close to water, if you look at the geographical spread of people. And what -- with urbanization and climate change, a lot of the time, you see what used to be the 100-year flat line now becomes the 20-year or the 10-year flat line. And really if you have to rebuild the same property once every 10 years, it's simply not economical. So as a first pass, all of that came on to insurers and they had to pay those claims. But then naturally, in order to remain solvent, you have to put up premiums. I think what is needed in the long run is a joint effort between insurers, but also government and even banks to make sure because there's some low-lying properties that simply people are going to have to be relocated. And then in other instances, investing in mitigation, I mean, infrastructure, dams and things like that can -- I mean, if you look at the return on those investments as opposed to a reactive investment in insurance, the returns on those investments are very strong. So we've had some engagements, and we're providing this feedback that a joint effort is needed between government banks and insurers to mitigate that to make sure that places aren't financed that's in low-lying areas, mitigation is built, but then also insurance focusing on affordability product design, rewarding resilient construction methods and things like that. So yes, it's a constant theme. I think Australia, the middle class is fairly affluent compared to South Africa, but this is really biting on those low-lying properties because the mapping is quite accurate and the prices are very high for those. So I don't think insurance in general is completely unaffordable. But on those instances where people have low-lying areas that's affected, I mean, built in low-lying areas, it's very material, and it is something that all parties need to collaborate on to solve.