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

Good morning, ladies and gentlemen and welcome to the 2024 Annual General Meeting of QBE Insurance Group Limited. For those of you that I haven't met, my name is Mike Wilkins. I'm the Chair of QBE Insurance Group. And on behalf of your Board, it's my pleasure to welcome you to this hybrid AGM. I also welcome those joining us via the web and via teleconference. As 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. And I pay my respects to elders past and present and to any First Nations people who are joining us here today. There being a quorum present, I declare the meeting open. The notice of meeting, which was made available to shareholders on the 2nd of April of this year will be taken as read. The minutes of the 2023 Annual General Meeting, being in order, was signed and a copy is available for shareholders, upon request, via Computershare. Today, 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 of 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 via 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 mobile 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 the Chairman declares voting is closed. For those shareholders without a mobile device, you may complete and sign the back of the blue attendance card. A Computershare representative will collect your voting card at the end of the meeting. Nonvoting 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 one of the options. Once again, there is 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 voting closed. Consistent with how we've conducted our meetings in recent years, I'll open the poll for all resolutions requiring a vote at the same time. And 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. 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 who are entitled to vote and to ask questions. Questions relating to a shareholder's personal or business affairs, including as a customer, aren't appropriate for the AGM but can be addressed by QBE staff outside of this meeting. Arrangements have been made for shareholders to ask questions online or over the phone and we'll open the lines later in the meeting. We'll take questions on all items of business at the same time. Shareholders who are participating online may submit a question at any time. You may start to lodge your questions now. They'll be answered at the appropriate time of the meeting. I refer you to the instructional slide now on your screen. [Operator Instructions] 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 reached that relevant part of the meeting. We'd ask shareholders in the room here to use the microphones that are placed throughout the auditorium so that we can all hear you clearly. Please show your voting attendance card to the microphone attendant. 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. For those who would like to ask a question by telephone, you may do so by calling the telephone numbers set out on Page 1 of your notice of meeting and quoting QBE. [Operator Instructions] All questions should be addressed to me as Chair 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 1 topic, they may be amalgamated together. We also ask that you choose 1 platform to ask a question rather than submitting the same question through multiple platforms. Having now outlined the procedural requirements of the meeting, we'd like to play a short video which highlights why QBE. [Presentation]

Every time I see that video, I'm really encouraged by the people that we have at QBE and it reflects the work that our executive team have done on the continued promotion of our people but also on the culture of the organization. Today, joining me in the room in Sydney is our Group CEO, Andrew Horton, together with my fellow directors, Jann Skinner, Yasmin Allen and Steve Ferguson. Our other directors are joining via teleconference. They are Penny James, Tan Le, Kathy Lisson, Sir Brian Pomeroy, Rolf Tolle and Peter Wilson. Our Group General Counsel and Company Secretary, Carolyn Scobie, is also here with me today. [indiscernible] of Computershare Investor Services will act as returning officer for the purposes of conducting and determining the results of the poll. Partners from our external auditors, PricewaterhouseCoopers, Voula Papageorgiou and Scott Hadfield, are also here and they'll be 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 that require a vote. The items of business to be considered at today's meeting are showing on the screen now and are set out on the notice of meeting. I now put each resolution to the meeting and declare voting 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. Please submit your votes at any time whilst voting is open. I'll give you a warning before I move to close the voting at the end of the meeting. [Voting]

[indiscernible] As set out in the notice of meeting, as the Chair of this meeting, I'll be directing all undirected proxies in favor of each item 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 the questions as we greatly value your views. I now will make a short address about 2023 and 2024 for QBE. QBE performed well during 2023. And I'm very pleased with the progress that we're making against our strategic priorities as well as the improved stability and consistency that we're demonstrating across the business. We remain guided by our purpose of enabling a more resilient future, particularly as communities around the world face an increase in the severity and frequency of natural catastrophes and heightened levels of geopolitical instability. Throughout 2023, there were a number of natural catastrophe events globally, including the flooding and cyclone events in New Zealand, earthquakes in Turkey and Syria and a series of powerful convective storms across the United States and Europe. Already this year, we've experienced destruction and losses from cyclones, storms and bushfires and insurance will be a critical factor in the recovery for these communities. In Australia, our recent summer saw a number of extreme weather events across the East Coast with 2 declared catastrophes being ex-tropical cyclone Jasper and the Christmas Day storms. More recently, we've experienced bushfires in Western Australia and severe storms in New South Wales last month, whilst 2024 has also included a long list of winter storms and convective storms in North America. QBE was there for families, businesses and communities who were impacted by these events. And I'm very proud of our people who genuinely care and support our customers around the world. Climate change will continue to challenge us all and our ability to prepare, protect and rebuild from -- will be more important than ever. We appreciate and acknowledge the cost of living pressures facing customers, particularly in Australia and as global inflationary pressures remain an issue. The persistency of catastrophes, the rising costs of material and labor and higher reinsurance costs are all contributing to the cost of premiums. QBE and the insurance industry have been advocating for measures that reduce natural peril risk and increase mitigation and community resilience as this is critical to address insurance affordability and accessibility. Premiums reflect the risk and to sustainably reduce insurance premiums, the underlying risk needs to be reduced. Solutions for risk reduction and mitigation require collaboration between insurers, communities and governments. And in Australia, we support the Insurance Council's policy recommendations regarding investment in public mitigation infrastructure, land use planning changes and strengthening building codes to create more resilient homes. We're also pleased to be a participant in the Hazard Insurance Partnership that's been established by the federal government and we appreciate the Australian government's focus on these matters. There's further opportunity to better inform and engage communities to understand their risk and support risk reduction where possible. In Australia, QBE offers a discount to owner-occupied homes in Queensland that have certified cyclone mitigation upgrades under the Household Resilience Program and we offer lower premiums for households in flood-prone areas that raise their floors. Globally, the geopolitical environment is deeply concerning and the enduring conflicts between Russia and Ukraine as well as the Israeli-Palestinian conflict in Gaza are devastating for millions of people. Regrettably, viable solutions to these conflicts appear remote in the short term, posing ongoing threats to global stability. Against that backdrop, in 2023, QBE made very good progress against its strategic priorities and our performance reflects the shifts QBE is making to be a more consistent organization. We delivered a statutory net profit after tax of $1.355 billion in 2023, following a continuation of very strong premium growth of 10% and supporting our commitment to deliver improved profitability. Our capital position and balance sheet remains strong and our regulatory minimum requirements prudentially -- are prudently positioned. QBE's PCA multiple, which is the measure of capital that we hold relative to that we are required to hold by our regulators, increased from 1.79x to 1.82x and at the 31st of December of last year, this was marginally above the top end of our 1.6x to 1.8x target range. Given the ongoing global economic uncertainties across our operations and to ensure that we can execute on opportunities as they present themselves, we will continue to maintain a strong capital position. Reflecting the company's performance in 2023 and our confidence in the future, the Board declared a final dividend of AUD 0.48 per share, bringing the total dividend paid in respect to the 2023 year to AUD 0.62 per share. This compares with dividends of AUD 0.39 per share for 2022 and it's the highest total dividend paid by QBE for a number of years. Sustainability is a key focus for our business and for the Board and we're pleased with the progress that we made during 2023 and into 2024 against our longer-term commitments. Our Group Executive Committee oversees execution of our sustainability strategy and progress is reported to the Group Board on quarterly basis, ensuring transparency, accountability and alignment with our sustainability focus areas. I'm encouraged by the progress that we're making on our sustainability strategy and specifically, the 3 focus areas we identified in our refreshed plan, which was released in February of 2022. Our focus areas are, firstly, to foster an orderly and inclusive transition to a net zero economy; secondly, to enable a sustainable and resilient workforce; and thirdly, to partner for growth through innovative, sustainable and impactful solutions. In 2023, we continued to progress our scorecard goals aligned to these focus areas. We also conducted a deep dive materiality assessment, which validated our approach and strategy. As part of our focus area 1, to foster an orderly and inclusive transition to a net zero economy, we made good progress in 2023 to better understand how our customers, strategic suppliers and investees are transitioning. We released a formal engagement target for underwriting to engage some priority customers on a regular basis through to 2030. We commenced engagement with strategic suppliers to our business and we continue to strengthen our engagement with all of our external fund managers. We also progressed our targeted engagement with the top 20 highest emitters in our investment-grade corporate credit portfolio. Our people remain at the heart of QBE and you've seen the video that we showed prior to the commencement of our formal proceedings today. Last year, we launched our refreshed employee value proposition to help us attract the best people and inspire them to work at QBE. We launched the Why QBE campaign to bring to life the experience of working at QBE and to highlight what makes us unique as an employer. To support a sustainable and resilient workforce, in March of 2023, we created new belonging targets and measurements across multiple dimensions of the diversity of our people. We are externally recognized for this market-leading work, winning the Most Inclusive Workplace in the Australian HR Institute Awards. We've made good progress on our gender equality journey. And in 2023, we achieved our target of 40% women in leadership earlier than our previously projected timing of 2025. We continue to focus on women in leadership to maintain this result. QBE also continued to meet our 2025 goal of 40% women on the group Board. In 2022, we pledged support for the industry-led 40:40 Vision with a goal of meeting -- to meet the principle of 40% women, 40% men and 20% any gender on the Group Executive Committee by 2025, a target we currently meet with 55% women on our Group Executive Committee. QBE has again been listed as one of the top 100 companies globally for gender equality by Equileap in its seventh annual gender equality global report and ranking. This is the second year in a row QBE has been listed in the top 100 and the third time since the benchmark began 7 years ago. The report provides a status update on gender equality in the corporate world globally. QBE's overall score was 68% for gender equality, maintaining our score from 2023 and well above the overall average of 44%. In October of last year, the QBE Foundation was recognized at the Australian Workplace Giving Awards and received 3 runners-up awards for Best Corporate and Charity Partnership for our global disaster relief and resilience partnership; Best Grants Program and Best Innovation for QGiving, which is our employee fundraising and volunteering platform. We've made significant strides forward on our cultural journey and I'm very proud of the progress the organization has made in recent years. The Board remains committed to continually investing in this important pillar of the organization and I thank all of our people for leaning in to create the QBE culture that we have today. Andrew will speak to the good results related to employee engagement that we continue to see in our regular employee survey. I'm also proud of the initiatives we're taking to support a sustainable business. And in February, we released our 2023 sustainability report and I recommend that report to you as a clear and comprehensive update on our sustainability agenda. Today, nonexecutive directors, Jann Skinner and Sir Brian Pomeroy will retire from the QBE Board effective at the conclusion of this meeting. The Board is very grateful to Jann and Brian for their many years of service and commitment to QBE. Their support and advice have been invaluable to both the Board and senior management and their stewardship as Chairs and members of their respective committees have been critically important. And on behalf of you, our shareholders and all of QBE, I thank Jann and Brian for their valuable contribution and we wish them good health, happiness and continued success in the future. I'd also like to welcome our new nonexecutive directors, Penny James, Steve Ferguson and Peter Wilson to the Group Board. You'll hear directly from each of them later in the meeting. These changes are part of our ongoing Board renewal process and to ensure the Board continues to have the required diversity of skills and background to effectively guide our organization now and into the future. So in conclusion, in 2023, QBE demonstrated its commitment to improved profitability and consistency and our company is well positioned for the future. We have a strong history of supporting customers for over 138 years. And in 2023, we were proud to celebrate 50 years of continuous trading on the Australian Securities Exchange. Under the leadership of Andrew Horton and the Group Executive Committee, QBE executed strongly against our strategic priorities and with a global team of over 13,000 people who are united behind our purpose and our vision. I extend my sincere thanks for their continued dedication to all of our customers. And on behalf of the Board, I also thank you, our shareholders, for your continuing support. QBE is a strong and resilient organization and I'm confident that we'll continue to deliver for you into the future. 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. It's a privilege to be here today to provide an update on QBE. I'm very proud of our QBE teams around the world who support our customers and demonstrate their commitment to our purpose of enabling a more resilient future. In early 2022, we launched a purpose and vision to guide our organization for the long term. At the same time, we launched 6 strategic priorities. And while we expect these to remain broadly consistent for the medium term, we continue to review them to ensure they're fit for purpose. Since launching our purpose, vision and strategic priorities, our people have supported with enthusiasm and executed diligently: working together as a global team with over 13,000 people in 27 countries. Over the last year, we've made good progress on building greater consistency and improved resilience into our business. Our efforts over the near term will continue to focus on reducing volatility, which we expect will further support consistent outcomes for our customers, shareholders and people. While I'm pleased with the progress we're making, I believe we can continue to improve our underwriting performance and this remains a priority. We remain focused on delivering better performance in North America. And despite an unsatisfactory result for 2023, we have made the business simpler, exited a number of underperforming property portfolios and we expect performance to improve with the runoff of noncore lines. Our leadership has remained strong and I'm pleased with our internal appointments to the group Executive Committee last year. In September 2023, Peter Burton, who has over 15 years with QBE in underwriting and management, was appointed as Group Chief Underwriting Officer; and Julie Wood was appointed Chief Executive Officer, North America. Equally important, our broader leadership cohort has remained stable and this culture is helping deliver a consistent organization more broadly. We're making meaningful progress with our sustainability strategy and we're on the journey of embedding sustainability into our business. Today, we released an update on our performance through the first quarter and also confirmed our outlook for 2024. In summary, we had a good start to the year. Markets remain supportive with continued momentum in gross written premium, while underwriting performance is tracking to plan. We continue to expect constant currency gross written premium growth in the mid-single digits this year. Through the first quarter, gross written premium growth was 2% on both a reported and constant currency basis. This was supported by group-wide renewal rate increases of 7.3%, which are tracking in line with expectations. Excluding rate increases, premiums declined by 2% in constant currency due to lower crop premium and property portfolio exits in North America and Australia. Excluding crop, group gross written premium and ex-rate growth was 9% and 3%, respectively. Our underwriting performance remains encouraging. Group claims experience through the year-to-date is tracking broadly in line with plan assumptions. The net cost of catastrophe claims for the 4 months to April 2024 was around $300 million and underscored by a number of storm events in Australia and North America. Today, we've confirmed our group combined operating ratio outlook for 2024 and continue to expect a result of around 93.5%. Finally, to investment performance. We achieved excellent investment returns for the quarter, underscored by supportive interest rates alongside favorable returns in our risk asset portfolio. We delivered total investment income of just over $400 million for the period. In all, we're making good progress against both our financial plan for the year and our strategic agenda. We look forward to sharing more detail with you at our first half '24 results on August 9. Our strategic priorities continue to provide direction for the medium to long term and we're focused on having the right capabilities, people and technology to deliver these strategic priorities and support our customers. I'm pleased with the progress we're making against all 6 priorities of portfolio optimization, sustainable growth, bring the enterprise together, modernize our business and our people and culture. The portfolio optimization and sustainable growth priorities play a critical role in our ambition to deliver a consistent group combined operating ratio in the low to mid-90s. Our portfolio optimization initiatives in 2023 focused on our property portfolio, where we have improved balance across the group and reduced potential earnings volatility. We want to accelerate QBE's data-centric capabilities and expand our ability to support customer resilience through new technologies such as AI. Further progressing our acceleration of AI integration is a key priority for 2024. More broadly, we'll continue to leverage technology to deliver better outcomes for customers through our modernization strategic priority and QBE Ventures initiatives. Continuing to deliver against the strategic priorities outlined at the beginning of 2022 is uniting our enterprise and we've made good progress. In 2023, our more connected enterprise supported a number of initiatives including a global approach to new growth opportunities. And this year, we will continue to identify enterprise opportunities through improved knowledge sharing and relationships. Our people and culture priorities are foundational for our success. During 2023, we launched QShare, QBE's new employee share plan with 27% of eligible employees enrolling; and QGiving, QBE's employee fundraising and volunteering platform that brings our platform -- our people together with our community partners. This year, we will continue to embed our purpose through decision-making and further embed our safe to speak up practices and how work gets done at QBE. I'm proud of the culture we have at QBE. Through our regular employee surveys, I'm heartened to see that our engagement remains consistent at 66%, which remains above the global benchmark for financial services at 49.5% of organizations using the same employee survey tool and methodology. For more information on our progress against our strategic priorities, our 2023 annual report outlines each of our 6 priorities and details our progress. People are at the heart of our business and I'm proud of our people from all around the world who support our customers, communities and each other. QBE is a global insurer and our portfolio is broad and diverse and we help customers recover from a range of unexpected events. QBE has been there for families, businesses and communities who've been impacted by extreme weather events. In Australia, our claims team are focused on enhancing the consistency and quality of customer experiences and outcomes. The team have established a property health check program to better understand the most complex claims and identify any potential obstacles. They've implemented a management system to identify, monitor and spot check claims, prioritizing them based on vulnerability, temporary accommodation needs, significant losses and mold remediation. These on-site visits help give customers confidence in the claims process, while giving our employees valuable experience in complex claims. In the U.K. last year, we launched QBE Minds in Business to help our customers improve mental health in the workplace, particularly in sectors that are impacted by higher rates of mental health issues. The program uses a mental health assessment tool to better understand the customers' business and its people and provide a risk improvement plan to help support happier employees, fewer workplace incidents and improved claims experience. In North America, QBE was proud to announce the launch of the QBE Possibilities Fund in January this year, an innovative initiative dedicated to supporting and fostering collaborative early-stage climate solutions that are seeking to contribute to a more resilient and sustainable future. Through the QBE Foundation, we want to help improve the resilience of communities through our long-term partnerships. The QBE Foundation's focus is on creating strong, resilient and inclusive communities. In March this year, QBE Foundation, Australian -- QBE Foundation, Australian Red Cross and Leading Cities were proud to announce a new global partnership to harness innovation and scale data-driven technology solutions to empower community climate resilience. The partnership's mission is to address some of the world's biggest humanitarian challenges and aims to leverage innovative technology through the QBE AcceliCITY Resilience Challenge, to accelerate and enable resilience for global communities. 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 supporting our customers and partners, continuing to invest in our communities and delivering consistently for our shareholders. 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. I will now hand back to Mike.

Thanks, Andrew. Before we open the meeting to questions, I'd like to present a video of your directors speaking to their elections and reelections as outlined in resolution 4 of the notice of meeting. These have been prerecorded due to the time zone differences for those directors who are currently overseas. We'll now show these now.

I'm very pleased to submit myself for reelection to the Board of QBE. I joined your Board in September 2020 and I'm based in the United States. I am the Chair of the People and Remuneration Committee and I also serve as a member of the Governance and Nomination Committee. I am the Founder and CEO of EMOTIV, a neuroinformatics company advancing the understanding of the human brain. I have also been a contributor at the World Economic Forum and previously served on the Forum's Global Future Council and on the Forum's Board of Stewards on shaping the future of information and entertainment. I am honored to have the opportunity to continue to serve on your Board and I look forward to working with our Chairman, Mike Wilkins, my colleagues on the Board; our CEO, Andrew Horton; and the wider management team to assist QBE to maximize its potential and serve the interests of our customers, our shareholders, our people and the community. I would greatly appreciate your support for me to serve on your Board.

Hello. My name is Penny James and I'm delighted to submit myself for election to the QBE Board. I joined the Board in January of this year and I sit on the Risk and Capital Committee and on the People and Remuneration Committee. I have over 30 years' experience across financial services, having worked in general insurance, life assurance, asset management and wealth in that time. My previous positions include as Chief Executive Officer and previously Chief Financial Officer for Direct Line Group in the U.K.; as Chief Risk Officer and previously Director of Group Finance of Prudential plc; and as Chief Financial Officer for Omega Insurance Holdings. I've been a Board member for the Association of British Insurers and I have chaired the Financial Conduct Authority's Practitioner Panel. Currently, I'm the Senior Independent Director at Hargreaves Lansdown, the largest wealth manager in the U.K. And I'm on the Board of Mitie, who specialize in facilities management and engineering works on major properties, including their conversion to Net Zero. I'm Co-Chair of FTSE Women Leaders, a joint government and business initiative to drive forward the cause of gender parity at the top of British business and to monitor and publish its progress. It will be an honor to serve on the QBE Board. And I look forward to working with our Chair, Mike Wilkins, my Board colleagues; with Andrew Horton, our CEO; and the wider management team to maximize our potential for our customers, our shareholders, our people and for the wider community. So I would very much appreciate your support to serve on the QBE Board. Thank you.

Hello. This is Peter Wilson. Thank you for allowing me to join this meeting via video. As I'm based in the United States, it's a very effective and practical way for me to do so. In September of last year, I joined the QBE Board and I'm currently a member of both the Audit and Risk Committees. Prior to joining the QBE Board, my insurance career spanned nearly 40 years. the last 10 years of which I worked for Access Capital; and at Access Capital, was the CEO of their specialty insurance operation and I was based out of the New York office. Prior to joining Access Capital, I worked at CNA Insurance company, a Chicago headquartered and based company and I was the President of their specialty operations. And then prior to joining CNA, I worked nearly 10 years at AIG and was an Executive Vice President in charge of their professional liability practice insuring public directors and officers. For me, it is an absolute privilege and honor to serve on your Board and to work with our Chairman, Mike Wilkins; our CEO, Andrew Horton; my other Board members; and certainly, the broader management team at QBE. And my role and focus is really helping this company maximize its potential in terms of delivering capabilities, resources, et cetera, returns to our shareholders, to our customers, to our employees and to the communities in which we serve. With that, I would certainly appreciate your support to continue to serve on the QBE Board. Thank you.

And I'll now ask Steve Ferguson to speak to his election in person, given he's here with us today.

Thank you, Mike. I'm very happy to submit myself for election to the Board of QBE. I joined your Board in November 2023 last year and I'm a member of the Audit and the Risk and Capital Committees. I'm a senior executive and business leader with over 30 years' experience in the financial services industry, including serving as a financial services leadership partner with Ernst & Young for over 15 years, where I was also the signing audit partner for numerous top 50 ASX-listed companies. More recently, I've held Board-level positions in the commercial, government and not-for-profit sectors for the last 6 years. I'm currently serving as the Chair and Nonexecutive Director for Bank of Australia and I'm a Nonexecutive Director for Gen Re Australia Limited, Gen Re Australia Life Limited, BackTrack Youth Works and Parkinson's Australia Limited. I'm also an external member of the UNSW Audit and Risk Committees. I'm excited to have the opportunity to serve your Board. And I look forward to working with Mike and my Board colleagues, Andrew and his wider management team, to assist QBE to maximize its potential and serve the interest of our customers, shareholders, our people and the broader community. I would greatly appreciate your support for me to serve on your Board. Thank you.

Thanks, Steve. 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. So I now call for questions. And perhaps we'll start with any questions that people have from those who are with us here in the room today before we go to online and then telephone questions. So questions from those in the room, please.

Thank you, Mr. Chair, Natasha Lee, shareholder. I've got a couple of questions. You mentioned artificial intelligence for risk. I sort of get a bit nervous when I hear that because half the time it's not really artificial intelligence and as well as the risk of biases creeping into the algorithms. Maybe tied up with that is, you talk about partnership for catastrophe modeling and analyzing scientific literature, given that scientific literature is always a couple of years behind before it gets published, issues such as the climate impacts are in a very fast-moving environment. I was just wondering, can you explain how your artificial intelligence risk assessments ensure that there isn't bias and managing those sorts of unintended consequences.

Well, Ms. Lee, thank you for your question on that. Artificial intelligence is obviously the topic that most organizations and a lot of people are speaking about just at the moment. One of the important things that we have done at QBE is, we have tried to actually put some guardrails around the use of artificial intelligence to make sure that we are trying to protect our customers but also to protect the organization as well. The potential for bias is clearly there but it is one that we do test against to make sure that what we are using is something that we can actually say make some sense to us as well. So we're applying, what I'd hope is, a little bit of common sense with all of that. Where we are using it mainly is to help us in terms of our internal efficiency, particularly from a processing point of view. And going to your comments around the use of AI and data being a little bit out of date, I mentioned and Andrew also spoke to the fact that we've got some real-time information about what's happening from a claims perspective as well. So we try to factor that in. Is it foolproof? I can't say to you that it is but we've tried to put as many protections around it as we can. But Andrew, I don't know whether you want to comment on any specifics, for instance, about our use of AI.

No, I just -- I echo your point, Mike, that we've been very, very cautious and careful about it, focused on the risk of using AI and at the moment, using it in a very limited way and it's only interrogating information as it comes in. It's not allowed to go out there and use broader information. So it's only interrogating information that's been submitted to us. So it's a limited use but can still be very useful in our processing.

No, that's great. Yes, I agree. Artificial intelligence does have uses but it can easily be abused in that sense. I was interested in your carbon price or your internal carbon price of $65 a tonne. How often is that reviewed? And I note that globally, there's a shadow carbon price of $70, which may or may not be significant. And the variation as far as the application and what are your comments?

Yes. Thank you. So from -- as you said, we use an internal carbon price of $65 a tonne. It really is to actually focus our attention and the attention of our people around what they are doing and particularly the footprint that they are giving. So in making decisions to travel and to do other things, we want people to actually understand that. We're happy with the $65. It's more around just trying to get people to understand where the difference is. But as you said, if international pricing is looking at $70 a tonne, I don't think we're a long way away from that. The use of it is more to actually make our people aware of the decisions that they're making and to think about what they're doing rather than just reacting.

Okay. No, that's all right. I note that -- what I suppose I should say that shareholders expect directors to have skin in the game and you do have a requirement for directors to acquire shares within 5 years. Given that the -- most directors are only on the Board for about 10 years, 5 years does seem a little bit long to acquire shares and I was wondering whether you could review that and shorten that period. I understand that there are restrictions on times when you can't actually buy shares. It's not like people like me, you can buy at any time. But 5 years does seem a bit too long and generous in that respect.

Thank you for that comment. We think 5 years is about right. Most directors serve for a tenure of 9 or 10 years and to build to it, given that we require significant holdings for our directors, we think is sensible. As you mentioned, we're not able to buy all that often because of the information that we have available to us. So there's very few windows that we can do. So we think, on balance, the 5 years is about right. But I take your point and it's a question that we will ask ourselves over the course of the next year.

Thank you. And just a final one. On your accounts, the insurance finance income in this year was an expense of about $1 billion. You moved from $1.1 billion positive to a negative. I was just trying to understand what's caused this? I had -- it said refer to note 2.21 but I couldn't discern what's on -- with the accounts from Page 68 and then a bit further on 2.21, I couldn't actually work out why this has happened. And there didn't seem to be an adequate explanation.

If you will bear with me for a moment, I will have a look at 2.21. Yes. Well, given that our accounts run for 143 pages, sorry, I just missed the last 50 or so. So you're referring here to the movement in our restated position relative to 2023.

Yes. It's about halfway down.

Sorry. It's a statement of comprehensive income, a negative of $1.7 billion versus $1.5 billion. Is that -- sorry, it's $1.2 billion versus $4 billion in total.

No, no. Hold it. It's under insurance operating result and the line under that says, insurance finance, in brackets, expense income. So yes, for the 2023 result, it's negative just over $1 billion, $1.039 billion. And the restated 2022 result was positive $1.157 billion. So I was just trying to find an explanation of why there's such a wide movement and the reason for that.

Okay. Thank you. The Chair of our Audit Committee tells me that it's to do with the unwind of the claims discount that we have and the movement in interest rates with that. So they can go both ways. As you're aware, we now account under AASB 17, which does reclassify some of the information that previously went through our underwriting line into different lines. But that's the -- what the differential relates to. If you want some more information about that, I'm sure that some of our people would be happy to take you through that in greater detail outside the meeting.

Okay. Thank you.