QBE Insurance Group Limited (QBE) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the 2023 Annual General Meeting of QBE Insurance Group Limited. For those of you that I haven't met, my name is Mike Wilkins, and I'm the Chairman of QBE Insurance, and on behalf of your Board, it's my pleasure to welcome you to this hybrid AGM. We also welcome those joining us via the web and via teleconference. Before I begin, I'd like to acknowledge the traditional owners of the land on which I stand today, the Gadigal people of the Eora Nation, and recognize their continuing connection to land, waters and culture. I pay my respects to Elders past and present and to any First Nations people who are joining us today. There being a quorum present, I declare the meeting open. The notice of meeting, which was made available to shareholders on the 3rd of April of this year, will be taken as read. The minutes of the 2022 Annual General Meeting being in order was signed, and a copy is available for shareholders upon request via Computershare. Every effort has been made to ensure that this meeting runs smoothly. However, if any technological issues do arise and it becomes necessary to provide any procedural information in respect to this meeting, updates will be provided on our website. A recording of the meeting will also be available on our website. If you're watching the live webcast while also listening through the teleconference, you may notice a slight delay with the webcast. There are a number of procedural matters which I must draw to your attention. Firstly, how to vote at today's meeting. All resolutions at today's meeting will be decided by a poll, which recognizes the votes of those shareholders present today and those who voted by proxy, and it gives all shareholders an equal voice in determining the matters before the meeting. Each share in QBE carries 1 vote. Once I've opened the polls, shareholders who are attending in person can vote on their devices in the room via the Computershare platform by scanning the QR code on your blue attendance card with your smart device. This will take you to an online voting page. To cast your vote, select one of the options. There's no need to hit a submit or enter button as the vote is automatically recorded. You'll receive a vote confirmation notification on your screen. You can change your vote up until the time that I declare the voting as closed. For those shareholders without a mobile device, you may complete and sign the back of the blue attendance card and a Computershare representative will collect your voting card at the end of the meeting. Non-voting shareholders will receive a yellow card and will not have the ability to vote online. Shareholders attending online should refer to the instructional slide now on your screen for voting instructions. If you're eligible to vote, once voting opens, press the vote icon and all resolutions will be activated with voting options. To cast your vote, select 1 of the options. Once again, there's no need to hit a submit or enter button as the vote is automatically recorded. You can change your vote up until the time that I declare the voting closed. Consistent with how we've conducted our meetings in recent years, for those that are eligible to vote, you may vote on all resolutions at any time during the meeting whilst the polls are open. The items of business that we're considering at today's meeting are set out in the notice of meeting. For those of you attending in person, copies of the notice of meeting are available in the foyer. And for those of you attending online, the resolutions can be viewed in the platform. Proxy holders should note that all directed votes have been accumulated and recorded. Only proxy holders with open votes are asked to record a vote in favor or against a resolution or an abstention. And secondly, the protocol for asking questions at today's meeting. This is a shareholders' meeting, and therefore, only shareholders, their attorneys, proxies and authorized corporate representatives are entitled to vote and to ask questions. Questions relating to a shareholder's personal or business affairs, including as a customer, are not appropriate for the AGM, but they can be answered outside the meeting. arrangements have been made for shareholders to ask questions online or over the telephone and we'll open the lines later in the meeting. We'll take all questions on all items of business at the same time. Shareholders who are participating online may submit a question at any time and you may start to lodge your questions now. They'll be answered at the appropriate time of the meeting, and I refer you to the instructional slide now on your screen. To ask a question, select the Q&A icon. Select the topic your question relates to from the drop-down list. Type your question in the text box and press the send button. If you're having any difficulties in asking a question, please refer to the user guide which can be accessed through the platform. Shareholders who are attending in person will have an opportunity to ask questions when we've reached the relevant part of the meeting. We'd ask shareholders to use the microphones that are placed throughout the auditorium, so that we can all hear you clearly. Please show your voting card to the microphone attendant, and please introduce yourself to the meeting when it's your turn to speak by giving your name and any organization which you represent. I'll nominate the microphone from which I'll take the next question. [Operator Instructions] All questions today should be addressed to me as Chairman and should start with the item of business to which it relates. We ask that you keep your questions short and to the point, so that as many shareholders as possible have the chance to participate in today's meeting. Please also note that as our time is limited, it's possible that not all questions will be able to be answered today. And if we receive multiple questions on the one topic, they may be amalgamated together. We also ask that you choose one platform to ask your questions rather than submitting the same question through multiple platforms. Having now outlined the procedural requirements of the meeting, we'd like to play a video, which highlights QBE's vision and purpose. [Presentation]

Ladies and gentlemen, joining me here today is our Group Chief Executive, Andrew Horton, as well as my fellow directors, Jann Skinner and Yasmin Allen. Our other directors are joining via teleconference, Tan Le, Kathy Lisson, Brian Pomeroy and Rolf Tolle. Our Group General Counsel and Company Secretary, Carolyn Scobie, is also here with me today. Maria Dzopalic of Computershare Investor Services will act as returning officer for the purposes of conducting and determining the results of the poll. We also have partners from our external auditors, PricewaterhouseCoopers, Voula Papageorgiou and Renae Cooper, and they're here and available to answer questions on the accounts or the conduct of the audit. As I mentioned earlier, voting today will be conducted by way of a poll on all items of business. The items of business to be considered at today's meeting are showing on the screen now and are set out in the notice of meeting. I now put each resolution to the meeting and declare voting open on all items of business other than item 1, given no vote is required to be held on that item. The voting icon will soon appear, so please submit your votes at any time whilst the voting is open. I'll give you a warning before I move to close the voting at the end of the meeting. As set out in the Notice of Meeting, as the Chairman of this meeting, I'll be voting all undirected proxies in favor of each of the items of business that requires a vote today to the extent permitted by applicable law. I now formally vote all undirected proxies in this manner and all directed proxies in accordance with the directions provided by shareholders. The proxy results for each item will now appear on the screen. This year, we again asked shareholders to submit questions prior to the meeting. The key themes within the questions have been answered through my address. We thank shareholders for taking the time to submit questions as we certainly value your views. The past year has been a complex and mixed one for QBE. There have been some positive changes to the global economy and supply chains recover from the impacts of COVID-19 and our company has made good progress on its simplification journey and the delivery of its strategic priorities. However, the world has continued to face dynamic circumstances and uncertainties with war in Ukraine, higher levels of inflation and interest rates, liquidity challenges in the global banking system and the continued impact of environmental events. A changing climate continues to bring challenges for people and communities, and as an insurer, we see this firsthand. Flooding in the Eastern states of Australia through early 2022 was one of the largest Australian catastrophes on record. The Insurance Council of Australia in April of this year said insurance customers have lodged more than 240,000 claims totaling $5.81 billion as a result of the floods, making it the costliest extreme weather event in Australian history. In September last year, Hurricane Ian hit the United States and caused terrible destruction and the tragic loss of a number of lives. Hurricane Ian is the second largest insured loss on record in North America. In late December, winter storm Elliott also had a further significant impact on North America. And earlier this year, we witnessed devastating floods and Cyclone Gabrielle in New Zealand and catastrophic earthquakes in Turkey and Syria. In these circumstances, QBE's purpose of enabling a more resilient future resonates strongly. I'm proud of the role that QBE and the insurance industry more generally plays in assisting customers and whole economies to recover from major events and remaining all of our people and how they show up for our customers in their time of need. The catastrophe events occurring at the end of 2022 and into the first quarter are going to have an adverse impact on QBE in 2023, and Andrew will address this in his presentation later in the meeting. During 2022, QBE focused on its strategic priorities and on becoming a more consistent and joined up organization. We also maintained our commitment to delivering improved profitability and growth, and we were pleased with our full year statutory profit of $770 million and the growth that was evident across all of our divisions. This result was particularly pleasing when it's juxtaposed against a year of significant catastrophic events and economic uncertainty. Our balance sheet remains conservatively structured and our capital position is strong. At the 31st of December 2022, that capital position was at the upper end of our target range of 1.6x to 1.8x our regulatory minimum. Given the global economic uncertainties, which are evident in all of our areas of operation, and to enable us to take advantage of opportunities as they present themselves, we expect to maintain a strong capital position for the foreseeable future. Reflecting our confidence in the performance and outlook for QBE, the Board declared a final dividend of AUD 0.30 per share compared to the final dividend of AUD 0.19 per share in 2021. Sustainability remains fundamental to our future performance and is a key focus for the business and for the Board. We continue to evolve to meet the needs of our people, the environment, our customers and the broader community. In February of this year, we released our 2022 sustainability report and I recommend this report to you as a clear and comprehensive update on our sustainability agenda with several key commitments outlined in our sustainability scorecard, including transitioning our insurance and reinsurance underwriting portfolios to net zero greenhouse gas emissions by 2050. This commitment complements our 2020 commitment to transition our investment portfolio to net zero greenhouse gas emissions by 2050. We also set a new target to achieve net zero emissions from our global operations by 2030, and we remain focused to reduce our overall energy use and source 100% renewable electricity for our operations by 2025. We've made pleasing progress on these commitments, and we're currently determining an interim target for our underwriting portfolio aligned with the Net Zero Insurance Alliance protocol. The first NZIA target setting protocol was published in January of this year. In January 2022, we launched our Inclusion of Diversity policy. And in February of this year, we released new Inclusion of Diversity targets. The new targets are focused on maintaining an equal sense of belonging across 4 diversity demographics, gender, race and ethnicity, disability status and LGBTIQ+ identification. Across QBE, we're cognizant of gender diversity as well as the ways we differ, including diversity of culture, religion, thought, skills and experience. We have a target of 40% women in leadership by 2025. And in 2022, we saw an increase from 35.9% to 38.6%, supported by our ongoing focus on inclusion at every stage of the employee life cycle. Both the Group Executive Committee and the Group Board currently comprise equal numbers of men and women. QBE has been recognized as one of the top 100 companies globally for gender equality by Equileap in its sixth annual Gender Equality Global Report and ranking. The report provides a status update on gender equality in the corporate world globally and QBE is ranked #52 globally and 15th for all Australian companies. We're very proud of this achievement and the recognition that it brings, but we're even more proud of the opportunities that we're able to provide to all of the people of QBE. 2022 was a year of progress and achievement for QBE. This is evident in both our financial and nonfinancial measures, and our company is well positioned for the future. We believe that we've got the right combination of focus, people and opportunity to deliver that future. Our organization is well led by Andrew and his GEC colleagues, and I thank them and all of the nearly 13,000 people of QBE for their continuing focus, dedication and efforts on behalf of the company and its customers. I remain confident about QBE, and I look forward to being able to update you further on our progress in 2023 at next year's Annual General Meeting. I'll now ask Andrew to address the meeting.

Thank you, Mike, and good morning to everyone here today. I'd also like to acknowledge the traditional owners of the lands from where we're joining today and pay my respects to elders, past and present. Early last year, we launched our new purpose of enabling a more resilient future and this laid the foundation for us through a dynamic 2022. Equally, our new vision to be the most consistent and innovative risk partner provided clear guardrails as we seek to build meaningful and lasting relationships with our customers and partners. I'm proud of our people, how they've come together over the last year to be a more consistent and better connected organization focused on delivering on our purpose and vision. We've made pleasing progress against our strategic priorities and we refreshed our sustainability strategy to focus on 3 key areas. These are to foster an orderly and inclusive transition to a net zero economy, to enable a sustainable and resilient workforce and to partner for growth through innovative, sustainable and impactful solutions. Our 3 focus areas are resonating well with our people and provide opportunities to bring our enterprise together. Today, we released an update on performance through the first quarter. I'll start on growth, where another quarter of double-digit premium growth was a highlight. Group-wide renewal rate increases of 10% for the first quarter represent an improvement on the prior corresponding period across each division and were driven by a reacceleration in rate increases across property classes. Alongside ex-rate growth of 9%, QBE achieved group constant currency gross written premium growth of 14% for the quarter. On account of the stronger-than-expected start to the year, an expectation that rating will remain firm for the foreseeable future, we've raised our full year '23 growth outlook and now envisage group constant currency GWP growth of around 10%. Catastrophe activities remained elevated into the new year and underscored by two meaningful events in New Zealand. In the year to April, catastrophe costs are tracking at around $480 million and compared to our first half allowance of $535 million. Today, we've also flagged $130 million of adverse development on natural catastrophe events, which primarily occurred in late 2022, including winter storm Elliott in North America and certain Australian events. Based on our assessment of underwriting performance to date, we've amended the full year '23 plan group combined operating ratio to 94.5%. This continues to exclude the upfront impact of the reserve transaction announced in February. After what felt like another volatile quarter, we delivered a solid investment return for the quarter, underpinned by supportive interest rates. Our fixed income running yield improved, exiting the first quarter at 4.2%, while our risk asset performance was also sound with no direct impacts to note from recent turmoil in Northern Hemisphere banking sector. In regard to ASIC's pricing promise review, we continue to work with the regulator. Our strategic priorities continue to provide direction for the medium to long term, and our 2022 annual report outlines each of our 6 priorities and details our progress. In relation to portfolio optimization, we focused on developing multiyear enterprise portfolio mix targets, which will be embedded into our planning process. These targets have been calibrated to our ambition for sustainable growth and to be a less volatile business. Our strategic priority of bringing the enterprise together sits at the core of our strategy, and our objective is to unlock the value of QBE through initiatives that help us leverage capabilities across all our markets. We're seeing more collaboration across product committees, driving consistency across classes of business where we have a global footprint. We continue to make progress to modernize our business. There is ongoing focus on core platforms and further IT estate simplification, all centered around making QBE an easier partner to deal with and work for, ensuring we fully leverage our global scale. Against our people priority, we've made good progress in the key areas of reward and performance, leadership and capability, and workforce planning. Through our culture priority, we've seen greater alignment in connection to our purpose and have launched a new enterprise recognition program and programs aimed at improving meeting effectiveness. We're seeing the output of all of our strategic priorities manifest through better outcomes in our voice people surveys. We've seen steady improvements in results across employee well-being, sense of belonging and employee engagement. Leadership stability has also improved with very limited change on the GEC and in our leadership cohorts. I believe we have strong enterprise-wide engagement to consistently deliver on our strategic priorities. Our teams have continued to respond to extreme weather events, expanding and scaling up to be there for our customers, paying claims efficiently, and working with partners and suppliers to get people and businesses back on their feet as quickly as possible. In Australia, to manage the volume of claims as a result of the East Coast Australian floods, we committed significant additional resources to help our customers. We established a dedicated team of 60 people and increased our capacity in call centers and claims handling as well as streamlining processes for faster decisions and payments. In October last year, we were proud to announce we've renewed our global disaster relief and resilience partnership between QBE, Red Cross and Save the Children for a further 3 years, and we're now actually supporting this in 19 of our countries of operation. A demonstration of the support recently included helping communities following Cyclone Gabrielle in New Zealand, and funding to the American Red Cross following a series of tornadoes and storms, which impacted the United States, particularly communities across Mississippi, Arkansas and Tennessee. I'm incredibly proud of what we do at QBE and the role insurance plays in the lives of our customers around the world. We remain focused on delivering our strategic priorities and consistently supporting our customers, partners and communities. I extend my sincere thanks to my GEC colleagues and everyone at QBE for their efforts and passion for our company. I thank you, our shareholders, for your ongoing support of QBE. And I will now hand back to Mike.

Thanks, Andrew. Ladies and gentlemen, I'm now opening the meeting up to questions from all shareholders. I refer you again to the instructional slides on how to ask questions on your screen and behind me. We'll first take questions from those who are present here with us in the auditorium today. For those who wish to ask a question, can I ask you please to go to one of the microphones and to introduce yourself when I call upon you.

Chairman, may I introduce [ Hugh Vaughan], proxy holder.

Last year, our company suggested that we will start seeing clear net zero targets and actions within 12 months of becoming a member of the Net Zero Insurance Alliance. So I noted the 2023 targets in the environmental and social risk framework, but was somewhat dismayed to note that they remain inconsistent with our stated support for the goals of the Paris Agreement. I reiterate my question from the previous year. Every plausible science-based scenario for keeping global warming below 1.5 degrees as well as the International Energy Agency's net zero by 2050 scenario requires no new oil or gas production projects to go ahead. Yet QBE's targets include allowing continued oil and gas out to at least 2030, amongst other things. As of today, QBE's targets seem to be inconsistent with our company's stated support for the goals of the Paris Agreement and the net zero scenario. Do you think that's a fair statement to say about the position of the company?

Mr. Vaughan, I disagree with that position. I think QBE is on a path to net zero. We've reiterated, and I did in my speech earlier today, our path to getting to net zero for our underwritten portfolio by 2050. And we think that we're on that path now. To perhaps preface your next question, we continue to believe that going cold turkey and eliminating all oil and gas at this stage would be irresponsible of us as an underwriter because our economies actually need to have that transition capacity and QBE is working with its customers to actually get to that. So we believe that we are well on our path and we are being consistent with the net zero targets and with the Paris Agreement. Okay. So thank you for those remarks. I have a further question. I'll just preface them by saying, I note your comments about oil and gas. Nobody suggested that the world goes cold turkey, but the science very, very clearly states, there must be no new oil and gas production projects proceeding right now. So in the light of that, can I ask, has the Board assessed the risk of greenwashing with regards to its reporting and public statements. It's clear that corporate regulators like ASIC and ACCC are ramping up actions against companies that claim a rhetoric which is not backed by clear evidence of action or definition policy. Should shareholders be worried about fines and reputational damage as a result of this. The Board certainly has considered our statements. We remain comfortable with those statements. And as I said earlier, we believe that we are on that path to a net zero underwritten portfolio by 2050.

Chairman, I'd like to introduce Stephen Mayne.

I'd just like to open up on AGM procedure, and thank you for offering a hybrid AGM. The most important aspect of hybrids is the online live written questions. So feel free to reach the telephone going forward. I was very disappointed that you and your fellow directors at Scentre Group removed the hybrid component this year at your recent AGM. So those of us who weren't in Sydney just couldn't participate. So we couldn't vote online. We couldn't ask questions online. So that is an element of voter suppression when you do that, because it's a deliberate policy to ban interstate live voting. So you haven't done it here, so thank you for that. Yasmin and her fellow directors at Santos withdrew the hybrid ability this year. I understand there was climate abuse on the phone or whatever it was. But the most important element is for shareholders to be able to vote live online and to ask written questions online. You'll get more participation with that. So thank you for doing that today. But in all of your other Boards, just please stick with that. Ban the telephone, but do go for the genuine hybrid. I'm a little disappointed that you've gone for the job lot of questions today. This is very unusual. I know you're calling it the Macquarie model, but the ASA doesn't support it, I don't support it. You don't go into a Boardroom and say in a Board meeting, we've got 6 items on the agenda. Has anyone got a question on anything today. You follow the agenda. So please show respect to the shareholders and just have an AGM where you follow the agenda. So you've done 6 pages of written formal addresses, no slides. CEO has done 5 minutes, no slides. And then you've gone all in questions. So you're not running a professional, respectful AGM. You're trying to minimize debate and get this over as quickly as possible. So that's disappointing. And I just ask for future AGMs that you do follow the agenda. So my first question -- I mean, there's no agenda. So a question on your election, chair. Is it your intention to serve a full term? And is this going to be your last term seeing as you've been on the Board since, I think, 2016, and you'll be up to 10 years at the end of your term if you're elected today.

Mr. Mayne, yes, it is my intention to serve a full term, and during that term, I'll confer with my fellow directors as to any continuation, but QBE does have a policy of 3 terms. But my current intention is to serve the full term.

All right. So is that policy a hard policy? So this will definitely be your last term.

No, it's not a hard policy. I think circumstances always have to be taken into account at the time that you're considering that, but we have tended to follow that as a broad policy, not a hard policy.

Okay. All right. So one of the sort of unacknowledged conflicts of interest in leadership and governance is the innate incentive sometimes for a Chair and a CEO to want to stay in the job for a long time. It's a great job. So you see it with dictatorship around the world. Once someone gets a taste of it, they love it. So the way that you manage that conflict of interest is that the Chair requires the CEO, as his KPIs, to develop multiple viable internal successors. So that if he falls under a bus, there's multiple internal successors to be developed. So the companies that go outside, they fail with that, because the CEO hasn't developed the internal successors. And so for the Chair, the thing you've got to watch out for is the Chair who controls denominations process and discourages potential future Chairs to come on, so there's no internal successor and they can stay forever. So in terms of managing your conflict, I need the rest of the Board to be making sure there are multiple viable internal successors to replace you in 3 years' time. And we don't want to see the old sort of 3 years' time. We looked around, there was no one on the Board, so we've asked the Chair to continue, and that's the classic, "I love this job, and I'm not going to hand over." So you're a great Chair. No one has done as many insurance gigs as you from TAL to Promina to IAG to QBE to Medibank to AMP. I mean it's extraordinary. And I just had a question for you. As the #1 insurance person in the country and someone who should be supported as an industry expert on this Board, I was disappointed that you walked away from AMP, which was the biggest disaster in your portfolio. So you want a Chair who'll roll up the sleeves for the hard gigs and not just take the ones that are going well. So of all those insurance gigs you had, why did you prematurely walk away from AMP rather than staying on as the Chairman there.

Well, when I stepped down, I wasn't the Chairman at AMP.

You were acting Chairman.

No, I wasn't the Chairman. We had a separate Chairman. However, this is a meeting about QBE, so could we actually keep the topic to QBE. I understand your point about Board succession and it's something that is actively discussed as a Board so that we certainly don't have the situation where we don't continue to have fresh ideas and fresh eyes around the Board table, and we'll continue to have those discussions.

Okay. Now I want to get someone else to go. This is my last go and then I'll sit down and give someone else a go. With the proxy disclosure, so what you've done -- so firstly, well done on getting more than 94% in favor on all resolutions. And the biggest protest surprisingly was against you Chair at 6%. Are you aware -- so well done on your rem vote, excellent contract with Andrew, shareholders obviously very happy. Are you aware of what the disquiet is about you, because obviously 6% is obviously -- a couple of institutions may be proxy adviser. Has that been articulated to you as to why people have voted against you? Is it climate, that we're not going fast enough on climate and there's some climate-focused institutions?

Mr. Mayne, I have no idea. Shareholders, as I said, are entitled to 1 vote per share. Some have voted for my election, some have voted against. I'm grateful for those shareholders who have supported me, and at whatever the percentage it is, I still think that that's an endorsement of my chairmanship.

Normally, you would have a clue as to what's happened here. It's not a secret ballot. You can see every vote that comes in. Someone just voted 5% against the Chairman. You know who it is. It's not secret. I'm surprised you haven't actually inquired into that. Just another process question. So best practice now with proxies is to disclose them with the formal addresses to the ASX, so that the institutions or proxy advisers, everyone is fully informed going into the meeting. So there's been a rem strike or 49% against the Woodside Climate Report, the market knows that at the same time as the formal addresses. So could you please do that next year, particularly given that you flash the proxies up for all resolutions at the start of the meeting. And even yesterday, MA Financial, they were saying, "Oh, we don't want to disclose the proxies because it might intimidate the debate and people might feel that the vote is useless because it's already decided." So you've done that today. You flashed up the proxies, you've shown massive mandates. In my view, that's the old sort of take the wind out of the AGM and make this a Davis Cup dead rubber, whereas best practice is to follow the agenda, to display the proxies on the individual item at the commencement of the debate on that item, so we can then say, if there has been a protests vote, what happened, what was the 6% against you Chair, et cetera, et cetera. So I guess my proxies question is, next year, will you follow best practice, which is releasing the proxies to the ASX with the formal addresses. Not doing all of them on the screen at the start of the meeting for those of us in the room, but just putting them up one at a time at the beginning of the debate on each item when you agree to run a proper AGM where you follow the agenda. So could you ideally commit to doing that next year? And also final question on AGM process, also commit to provide an archive of the webcast and ideally, a full transcript of last year before for AGM transcripts. I know in the insurance industry, there's a culture of saying no, claims management, all sort of stuff, but it'd be great if you could say, yes, on all the sort of AGM best practice transparency and disclosure questions that I've raised today.

Thank you for your comments. We'll take those on notice. Although I do have to say I disagree with you about us not running a professional and compliant AGM. On a number of the other matters, I think you and I will continue to agree to disagree on those, but I do acknowledge that you have raised those matters previously.

Chairman, may I introduce Amanda Richman, proxy holder.

Amanda Richman from Australian Ethical Investment. As QBE acknowledges climate change is a business risk for QBE, putting pressure on pricing, impacting top line growth as insurance becomes unaffordable. So these are medium to long term risks for the business. With respect to the remuneration, the STI and LTI for the CEO and other KMP are heavily weighted towards short-term, so 1- to 3-year financial performance metrics. The latest testing and vesting date is 2027. This does not seem to be aligning executive pay with the long-term interest of the company or its shareholders. We're concerned that the short-term financial focus of the STI and LTI plans encourage the senior executive team to focus on near-term underwriting revenue that locks in medium- and long-term risks post QBE's business by higher levels of global warming. And our concern seems justified when we look at QBE's climate criteria, which pushes out any restrictions by underwriting oil and gas companies out to 2030, by which time, if we want a more resilient future for everyone, as QBE claims in its promotional video, global emissions need to have halved. The World Benchmarking Alliance observed that financial institutions that tie executive pay to sustainability targets perform better on climate indicators. Would QBE consider explicitly and meaningfully linking remuneration to sustainability performance criteria.

Thank you for your question. There's a few parts to that. We continue to assess the criteria, both financial and nonfinancial, that is applied to our short-term and to our long-term incentive schemes. You talked about STIs not being long enough. By definition, I think an STI relates to the performance for 1 year. However, we do defer a considerable portion of that STI payment into shares to vest over a period of years. For the longer term, for the LTI, our regulator is actually looking at an increased deferral period, and QBE will comply with that deferral period. However, it hasn't applied at this stage, and we need to also remember that we have to remain internationally competitive to make sure that we've got the best executive talent that we can have.

I did notice that the World Benchmarking Alliance observed that there are some leading insurance companies globally, I don't have the names on me, unfortunately, that do link remuneration to sustainability performance criteria. So is that something that QBE will consider?

Well, QBE considers that, and we look at sustainability in the broader sense, as we consider all matters around ESG, but also we need to actually have that vesting period somewhat competitive relative to the international market for talent that we have.

May I ask another. I've got 2 more questions. As Chair of QBE and member of the Risk and Capital committees, we are interested in your thoughts on the greenwashing risk faced by QBE in this context of particularly higher regulatory scrutiny. So QBE has made various statements claiming commitment to net zero, including "At QBE, we believe we must take action to make change and transition to a net zero economy. We support the Paris Agreement and its objectives to limit global temperature rises to well below 2 degrees. We seek to measure insured emissions and set science-based targets that are consistent with a 1.5-degree net zero transition pathway by 2050." The UN high-level expert group on the net zero emission commitments of nonstate entity states the alignment with net zero transition pathway means that financial institutions must achieve at least a 45% reduction in financed emissions by 2030 relative to a 2010 baseline year. And this is because to have a 50% chance of limiting global warming to 1.5 degrees, we need to have emissions this decade. That means QBE's high-emission oil and gas clients need to be radically reducing their emissions this decade. But QBE isn't expecting its oil and gas clients to have a transition plan until 2030. So we're curious about how QBE can credibly make the climate alignment claims it is making given its environmental and social risk framework if the QBE will continue to underwrite expansion of the oil and gas sector out to 2030 with no requirement for these companies to take steps to align with the transition before then and no requirement on QBE to assess whether new projects are aligned with the transition before underwriting them. So given the greenwashing risk this poses, is it QBE's plan to time this underwriting restrictions or to walk away from its public climate commitments?

Neither. I think I've already answered the question on greenwashing, so I would reiterate the comments that I made there. Your question implies that QBE is doing nothing with our oil and gas clients before 2030. What we have said is that 2030 is a measurement date, but I think it's safe to say that QBE is working currently with our oil and gas and other energy clients to look at their progress. And we look at in how they underwrite -- how they're undertaking their own governance, the metrics that they currently have in place, the strategy that they are following, and particularly the strategy to transition to a greener future, how they're reporting, and the carbon commitments that they are making. So all of those are taken into consideration, and they are discussed with our oil and gas clients and our energy clients more generally. On the other side of the equation, QBE has also ramped up its sustainable energies unit because not only do we need to look at risks, we need to look at opportunities as well. And in those areas, we continue to support clients in the areas of hydrogen, ammonia, hydro, solar, fixed and floating wind power, and carbon capture and sequestration. So I think QBE is doing its bit and we are backing our rhetoric with action.

And just with respect to the engagement side with your clients, which I appreciate is very important and critical, and thank you for doing that work, it would be helpful to know are you looking at the extent to which those clients are aligning then new capital expenditure with the transition. Is that a metric that you're engaging with them on?

I think by definition, you could assume that we're discussing a number of factors in those metrics with them. What we want to see, and I think what all of us want to see is an orderly transition, and we're working with our clients towards those orderly transitions.

Would QBE consider providing more transparency around this engagement with its oil and gas clients, which I think is a recommendation made by the World Benchmarking Alliance.

QBE has a policy of not actually disclosing matters related to specific customers. And that will be our position going forward. But I have given you an outline of the broad discussions that we're having with that broad group of clients.

Okay. Just one last question. Just with respect to the skills and experience on the Board and within the KMP, do you feel comfortable that the Board and KMP have the sales experience and are incentivized to ensure that short-term underwriting revenue does not lock in climate risk that is typical to QBEs and its shareholders' medium- and long-term interest.

I think that the skill set that we have on the Board as well as around the executive table is appropriate for QBE for today and for the future. With respect to our incentive plans for our executive team, my observation of that team is that they are highly professional and certainly motivated more around the performance of QBE in the broader sense rather than trying to maximize any 1-year performance for themselves or for the organization more generally. So I'm comfortable with the approach that we take, and I'm certainly comfortable with the professionalism and the longer-term view of our executive team.

Chairman, may I introduce Eric Winter, shareholder.

Mr. Chairman, my question is actually without agenda, not particularly on an issue as such as the others. And allow me to say as an individual investor, I'm more than comfortable with your positions on oil and gas, et cetera. I'm interested just in your comments maybe briefly on business environment. I noted your -- the company's release this morning. Q1 forward-looking confirmation as it were for the next 6 to 12 months, et cetera, in the broad brush. But with the -- in Australia, United States, Europe, et cetera, increasingly, the inflationary environment is continuing and will continue. And asset values in the last 12 months and probably in the next 12 months will significantly change in some sectors. How do you guys see those facts impacting on the business in the next 6 to 18 months, if I can put it in that context, please?

Thank you, and thank you for your comments in that. It's a difficult economic time. I talked about that during my presentation. And for an insurance company such as QBE, inflation is a key consideration. We have an executive inflation committee, which does consider our outlook on inflation across the various economies in which we're involved and then looks at how we're pricing for those products because we need to anticipate the inflation rather than dealing with it after the event. So thus far, and we talked about what we see as our gross written premium for 2023 this morning, and we lifted that. Part of that would be driven by our view of inflation and the need to continue to try to stay ahead of that, but it's something that we have to monitor on a very regular basis because I can't see that we are going to get to a low inflation environment over the course of the next 12 to 18 months. We have another question from microphone 2, and then perhaps after that we will go to some of the online questions. We will come back to questions from those in the auditorium.