Sabre Insurance Group plc (SBRE) Earnings Call Transcript & Summary

Good morning, everyone. I think we are good to go. I think everyone is in the meeting. A very warm welcome to our half year results. You'll be pleased to hear this year we found someone who can use PowerPoint better than me and Adam. So you'll see some improvement in the slides this year. Sadly, I'm still in-charge of the tech. So fingers crossed the next 30 minutes. For those of you who would further follow the pack online, it's now on our website, if you want to find it there. We're going to have our usual answer of the results and how we see the market. We're also going to spend a little more time on our strategy now we're in slightly calmer waters after the last couple of years. We'll have plenty of time for Q&A at the end. Do feel free to put Q&A in the Q&A box at the top of the team screen. Alternatively, at the end, we'll do a sort of hand raise and will come to you individually. So on to the highlights. I think what we are seeing this year is the benefits of having moved early and assertively to cover claims inflation. We've got a very strong capital position, and we, therefore, are confident of giving good returns to our investors at the end of this year. Strong financial result, obviously, a huge increase in profit exactly as we expected. Big improvements on the combined operating ratio, really pleased in loss ratio on car. And within that, also good underlying loss ratios on bike and taxi. We're now very happy with the underlying profitability of those products. Also, great improvement in the expense ratio, very healthy growth, 26% up overall, 35% on motor. I think importantly, we also expect to grow further in the second half of this year. We'll talk more about the market dynamics later and how we intend to play our way through that. Also, very good progress on our key initiatives. The price of the infrastructure, I know I've both bored and confused people with over the last year or 2, what we'll talk about today is really how we intend to use that in a little more detail. Motorcycle distribution, we are well on track to expand that in the early part of next year and direct-to-customer efficiencies for our direct products also going very well. I guess the key thing is we've delivered these, I think, very strong financial results while we're also fully and perhaps slightly ahead of track to cover claims inflation at 10%, one of our key priorities is always to cover claims inflation first, profitability is our target and volume continues to be the output. So we're in a very strong position at the half year stage with a very firm platform, which gives us options going forward. We've also got very low exposure to regulatory and political focus, and we'll talk more about that as we go through this presentation. So very strong position at the half year, and we anticipate much more to come in the second half of the year. I will then pause for a few minutes, and Adam will take you through the highlight numbers.

Thanks, Geoff. Hi, everyone. So I'll take you through our financial performance for the first half of 2024. Overall, our results are significantly ahead of the comparative period in 2023 and continue the momentum gained during last year. Premium is up around 26% versus H1 2023 and at a similar level to the second half of last year. That's despite evidence of market price increases slowing in the second quarter of this year, whilst we've continued to price in claims inflation infill. Insurance revenue shows how the gross written premium is earned through, and that's increased by 41% since H1 2023. Loss ratio has improved by 4.7 percentage points since the first half last year and is similar to the full year 2023, and I'll dig into that in my next slide. Another significant improvement has come through in our expense ratio, which is down to 26.3% for the first half of the year, from 31.8% in the first half of last year. That's primarily due to operating leverage working in our favor, having grown considerably in the previous 18 months and our continued tight control of costs across the business. Overall, that adds up to a combined operating ratio of 10.2 percentage points versus H1 2023 improvement and a net profit margin of 18%. That means that our rate of profit generation has improved considerably with a profit before tax of just over GBP 20 million, more than 4x that earned in the first half last year. Because of that, we're comfortable playing an ordinary dividend at the interim stage of 1.7p, in line with our dividend policy. Our post-dividend solvency coverage ratio since very comfortable 185.2%. Geoff, we can pick on to the next slide, please. So I've broken down some of the moving parts in our loss ratio to help show how it's evolved from the full year 2023. This waterfall shows the loss ratio across all of our products together. The reported net loss ratio for the full year 2023 was 56.3%. Due to the pricing and underwriting actions taken over the past 18 months, our current year loss ratio has improved by 5 percentage points. It's worth noting that loss ratio being equal in the first half of the year, the current year loss ratio is expected to be less than the full year due to having a higher proportion of open and undeveloped claims. We've seen a lower impact from discounting in H1 2024, which is down to a combination of lower average discount rates in the period and a normal variation in the cash flows associated with claims. Overall, the impact of discounting on the profit and loss account, which is the discount in credit less the real expense is very small at GBP 0.2 million as expected. Prior year development has been less favorable than 2023, back to the previous slide, please which has partially offset the significant improvement in the current year loss ratio. That's mainly down to large movements on a small number of claims rather than any correction made across the reserves, the impact which is far greater from a 6-month period that would be on the full year. Now to the next slide, please. So this gives a feel for how the different products have developed over the past year. With the core motor vehicle product having returned to significant growth, the relative impact of the less mature products, which naturally have more volatile loss ratio is reduced, leading to a more stable overall loss ratio and rebalancing the business towards the core product is intended from the outset. It is pleasing to see that together; motorcycle and taxi products have generated a profitable return. And we think that on an underlying basis, these are both profitable lines of business, which provide useful resilience to the portfolio as a whole. On to the next one please, Geoff. So this waterfall shows how capital is built up organically over time and how it's been distributed by the way of dividends. There are a few key points to note here. Our interim dividend policy remains to pay out 1/3 of the previous year's ordinary dividend, which allows for a predictable interim dividend, which should be well covered under most scenarios. For the full year, we assess whether additional capital is available to distribute. This would usually approximate to anything over an appropriate point within our preferred solvency coverage range of 140% to 160%. Our primary means of distribution remains an ordinary and special dividend at year-end, and we consider whether any further capital return is appropriate at that point. And now back to you, please, Geoff.

Thank you, Adam. Didn't take me too long to mess up on the tech. So I know you're disappointed we didn't spend some time talking about the market and our view of claims inflation. So that is exactly what we're doing next. As you'd expect, we remain fully focused on market developments. We think claims inflation will remain high for 2024 and will also be elevated going into '25, maybe slightly softened, but still very high compared to historic levels. The market continues to be very dynamic, and we'll talk about our view of how the market may be moving in a moment. Above average or above inflation GWP increases last year, corrected to a very extended period of our view irrational and unprofitable pricing. Given that there was always going to be a slowing of price increase this year, I think the market was probably around 35% to 40% last year. Clearly, that's not going to happen again this year, but nor do we expect it to. However, we do think market price increases are needed to fund forward-looking claims inflation as well. Regulatory focus stays on to that value and putting renewed focus on things like total loss as well. And as you'll be aware, the labor manifest pre-election definitely indicate political focus on premium. I think our view as a team is we haven't seen the ABI stats for half 1, yes. I think they may be June next week. I would suspect they're going to show a very low level of increase across the market for the first half year. To reiterate, we have put through quite a lot of prices to make sure we are covering that forward-looking cancelation. So let's go on the market. We think there's some positive factors to come through this year. We would hope rational market price increases come through in the second half of the year, some stabilization of used car prices and hopefully continued improvements in car supply which would knock through to credit hire or to delay in the and credit hire costs. The flip side of that, because is there could be to not be rational pricing behavior. Underlying classification will continue in our view. Global politics have a factor that will include impacts on the supply chain and supply chain costs. Cost of living challenges may increase claims frequency and ongoing uncertainty of claim segment driven by some of the delays in settled in a specially small personal injury claims. There are some general uncertainties, which is the FCA and government motor market focus and gen discount rates, which you'll be aware, has to be announced by on the 11th of January next year. So pricing of claims inflation, all signs are that claims inflation, as I mentioned, will continue at high levels. Some of you may have seen the recent market seminar by EY, which lag on exactly the same numbers up at about 10%. Other big 4 consultancy feedback suggests very high single digit or up and around a 10% level. So we don't believe our views here are out of line at all. What's driving this? Overall inflation is due to fall. Many of the factors that impact claims inflation are quite specific to the industry or to claims, particularly. If we look at the cost of fixing cars, high energy costs, continued labor rate pressure, ongoing high theft rates, actually interestingly moving around between different vehicle types now. Cost and frequency of windscreen claims. The continued rise of more complex and electric vehicles. And there are some very aggressive credit repair and credit hire models in the market, which do drive up cost as well. Hope the voice of doing all the time, so there are some positives as well, which we just say used car values and credit hire softened. If we then think about sort of the cost of fixing people and personal injury claims, public sector minimum wage increases will drive further cost pressure in the care industry. I think we saw proposed payable for junior doctors yesterday of 20-odd percent over the next 2 years. That's undoubtedly going to knock through into further wage inflation in the private sector and by guests more widely in the NHS as well. That's on top of an ongoing scarcity is also in those care industries. Whiplash tariff hasn't yet come out. That could well be at around a 20% increase, but we'll see. Combined with that is the small claims track limit, which is still at GBP 5,000. If that doesn't increase given the JCG increases and the Whiplash tariff, we could see more claims exceeding that GBP 5,000 limit, which could obviously inflate the claims, but might also make it more attractive for legal firms to pursue those claims. So overall, we are pretty confident in our call at 10% claims inflation. What's going on in the market? We think it's probably not right to say that it is a market at the moment. We think there's very differentiated strategies within the market. This is how we've been thinking about it for this year. On the Y-axis here, we have a sort of scale of companies who are rational, well-funded or profitable or some combination of others. And then some companies that are not any of those things, so irrational partly funded or loss-making. We don't have companies that are growth orientated or margin orientated. And that then, we think, leads to sort of 4 sectors of the market. We think there are some good well-funded profitable companies who are growth orientated. They may have taken a calculated risk on claims inflation, put through low price increases for the first half of this year and maybe a controlled sacrifice of the margin for volume. There may have been some tailwinds coming through from last year in terms of the amount and price put on them maybe very reinsurance cost benefit as well. You then have-- and this is unashamedly green because it's where we plan [indiscernible], companies that are cautious on claims inflation, we always make sure we cover that first, looking to maintain margins, we'll sacrifice volume, if necessary, but very happy to take more volume, where we think the margin supports it. You have some big companies who want to do the right thing. Aiming to meet inflation that maybe weekly capitalize. They may be MGAs and losing capacity. These are companies that will have a tough time in a claims inflation environment. And then you have the box, which are growth-orientated and irrational party funded or loss making. It could be very low-price increases, be that over-optimism on their claims inflation may go on list for ignorance, potentially companies that are looking to grow potentially for M&A or for other purposes. We think this is the box that can cause problems in the market. And that is what drives a corridor of uncertainty where people aren't quite sure what to do. I think the really interesting bit for the second half is what perhaps some of those companies in the top left box do. There's a risk that companies chase right down to maintain volume or perhaps they move to the green box where we are slightly and are prepared to sacrifice volume for margin. So I think probably difficult to say there is a market approach for the second half of this year. And it will be really interesting to see where different competitors move in the next few months. On the legislative and regulatory focus, as we mentioned, there were clearly comments pre-election from labor about the cost of insurance. I guess our view overall is that premiums reflect the underlying cost of claims. I don't want to spend too much time on these slides. I think the key thing for us is that the market to us feels like it delivers well for consumers through price transparency, it's highly competitive. There's lots of product choice, and it does reflect the underlying cost of claims that we've outlined in our claims inflation slide. In any event, we think we are well positioned. All our products go through a robust fair value assessment, and we've taken action where we think that's been necessary. We have a very transparent fair valuation of claims on things like total loss, consistent target margin across our product and market segments, [Technical Difficulty] insurance for the widest possible market. We've got no appetite to generate income from claims activities and a low reliance on non-premium things like add-on products and premium finance. So I'm going to spend a few minutes on our wider strategy. Now we are in sort of slightly calmer waters over after a very lively few years. There's also going to be an investment pack published on our website later this year, which we'll give a few more details on the things we're talking about here. I'll also talk more about customers and staff issues, for example. So just to reiterate our core strengths. And this is a thing we spend a lot of time making sure we don't lose sight of. We have highly integrated teams and business processes, very short and effective feedback leads between claims and pricing, which we consider vital for sale on top of claims inflation and maximizing volume opportunities when they arise. Very large and consistent data set for nonstandard private car business, the sort of that data like that we described in the past, a very efficient operating structure. Hopefully, we've demonstrated over the last few years, a keen insight into market developments. And I think a unique culture focused on profitable growth, both direct and through our partner brokers. Where are we now? I think we have reestablished our long-standing successful strategy. I take no shame in restated that we see profitability as a target and volume is the outcome. I think we've shown very strong resilience across the market cycle, probably under the most [indiscernible] we could think of having COVID bounced into the high inflation environment. We've generated our highest ever level of premium, and we expect this year to be higher again. We're underwriting market-leading margins. We've established 2 new product lines during that period that we think will support profitable growth in future periods. And we've maintained our focus on our expertise and widening our competitive mode in our typical competitive market segments. So short term, what are we doing? Enhancing the efficiency of our direct operations, we want to see customers able to deal with us online, if that's what they prefer to do. That's much more cost effective and I think a better customer experience all around. Really the key one for us is completing the build of the infrastructure through our pricing. We think that will allow us to expand rather our competitiveness profitably over time and enhanced motorcycle product distribution. As I mentioned, we're very happy with the underlying profitability. What we want to do now is both a bigger portfolio, and we are well set to do that as we go into the early part of next year. Longer term, we have to let shorter growth opportunities where less than 1.5% of the market buy a premium and probably less than 1% buy product share. That's a very long runway ahead of us in terms of being able to expand from our current base. The infrastructure for that is what we put in place this year through the enhanced pricing sophistication and technology. But there's a wealth of engines on these products that we could look to underwrite in future years, not in the short term, but in future periods. Anything we do we'll stay true to our principles. We've been in the broadly nonstandard higher-margin part of the market where we can leverage our core strengths. Just one slide we would like to put up, hopefully. Just because this slide always gives us a warm globe. And this is probably the #1 priority for us is to maintain our position amongst the very best combined ratios in the market. This is courtesy for [Technical Difficulty] from their seminar. You will see us in the bottom left-hand corner, substantially better than rest of the market in terms of combined operating ratio. So on to the outlook and the summary. We're in a very strong position at half 2. We've established a very strong platform as we go to the second half of the year. We've more than covered the amount of rope we need to put the safe or to cover claims inflation. We're confident we're going to align within our combined operating ratio range of 75% to 80%. We're very vigilant on identifying claims trend and think we're pricing correctly for that. And importantly, we expect further growth to come through on a monthly basis through this year. So overall, we would see it as a pretty strong return to fall. Strong performance continues. Gross written premium for this year should be our highest ever, and we'll be delivering that having covered claims inflation and delivering a combined operating ratio amongst the very best in the market and heading back towards where we want to be on a long-term basis. At that point, I am going to pause, and we will open up the floor to Q&A. If you raise your hands Hanro van will then to give you access to the mic. Hanro van can introduce people as we go?

Yes, we can. The first question is from James Pearse from Jefferies.

So 2 questions from me. So first one is on claims inflation. Just wondered if that 10% claims inflation number that you've given, is that what you're actually currently seeing? Or is there some margin in there to account for the uncertainties that you listed out in the presentation. So that's the first question. Second question is on your guidance. So you've reiterated that discounted combined ratio guidance for 75% to 80% this year. You have also said it's dependent on the level of discounting credit recorded for the year. So just wondering how we should think about the combined ratio range, I guess, on an undiscounted basis. And when you talk about writing at target margins, do you think about that on an undiscounted basis or a discounted basis.

Adam, perhaps you can take the 2 first on the combined operation ratio guidance. Then Matt and Trevor, you can talk about where we are on class inflation. So Adam you can go first.

Sure. So on the guidance, absolutely, that's on a discounted basis. The discounting credit being the sort of slightly unknown factor within there. I think we're quite open that by that I mean that the undiscounted combined ratio came in above 80% for the 2024 and we're pretty comfortable with that being the case, if that's right. We're still in a situation where our expense ratio while significantly improved from where it was last year, is higher than it would have been sort of 4 or 5 years ago. So if we have a similar loss experience, that still on to put a combined ratio sort of outside of the undiscounted 75% to 80% range. And that's as I say, perfectly within our sort of strategic ambitions at this point. So that's fine with us. Discounted credit, as I mentioned, has been slightly lower in the first half of this year than it was throughout last year. I suppose it remains to be seen exactly what credit we get from that throughout the full year, although I think the important thing to note for us is that we always expected to have at a pressure on the P&L as a whole, and that's certainly what happened in the first half of this year when you take into account the runoff cost.

Thanks, Adam. Matt, do you want to talk about claims inflation. The question is that what we see now? Or is that sort of allowing for more in the future?

So 10% is our best view on what we think the claims inflation will run at going forward. So that accounts for both what we're seeing and what we expect to see.

Thank you, Matt.

I was going to make exactly the same point in terms of the 10% is our look forward. In terms of prior years, the points that we've made around uncertainties, for example, in terms of the tariff, whether that will apply to outstanding claims or just new claims, but we've reflected all of those into our reserves.

Thank you, Trevor. Thanks, Matt. Hope that answered your question, James.

Next question is from Abid Hussain from Panmure.

I've got 3 questions. First one, if I can just go back to the previous question on target margins. So when you're thinking of writing that target margin, did you say that you are focused on the undiscounted combined ratio? And if that is the case, do you think at some point you can share what your guidance or what your target is on that basis going forward? I appreciate the guidance on the discounted combined ratio. But it's just-- there's a bit of noise there on the discounting, which is obviously outside of your older just bond yield movements. And so just a question and a request there on the first question. And then the second question is on the regulatory environment you touched upon in your presentation, which areas do you think the regulator might get involved with in terms of another review, if there is another review across the merchant insurance industry? And then how exposed do you think Sabre is to such a review? That's the second question. And then the final question is on your excess capital, strong capital coverage ratio sort of the [indiscernible] ratio. How quickly are you thinking of trying to get back towards 160% through additional capital distribution, whether it's special or something else? How quickly do you want to get back to 160? Thank you.

Okay. [indiscernible] go in reverse order and Adam, you can pick up the target question at the end. I think excess capital, we've always been very clear. We don't want to hang on to excess capital. People are going to invest it better than we can. We'll take a view on what our capital requirement looks like in terms of growth and capital loaded support growth as we get towards the end of this year, then I think we'll be taking a pretty sensible view on how quickly we can get that back. I'm not going to pin myself down to anything now it, but we're a very clear, we don't want to hang onto excess for no reason. On the regulatory environment, I think there's a few bits here. Clearly, we know the FCA have been looking at things like ancillaries. So that's the product sold alongside the core product. The fair value assessments are now fairly rigorous. So I wouldn't be surprised to see more focus put on ancillary products. We've now been in finance has been in the focus. We consider we're very well placed on both of those. We're not dependent on them anyway. And we think our ABI and our prices for ancillaries are amongst the best in the market. So we don't consider ourselves exposed now. I think the government is also going to be concerned about what's been called a poverty premium. So that is where the least affluent in society potentially faced the highest premiums because of where they live or they're also in their jobs. We apply exactly the same target margin to all of our customer segments. We don't look to load any particular segment groups. So we think we're pretty well positioned on that one. We're clearly working closely with the ABI who have engaged with government in terms of what the government thinking about what solutions might look like. So we're very closely plugged into that process. Adam, there was a question about-- can we give undiscounted guidance, I think.

Yes. So on the guidance point, I mean we always try and be transparent and comparable as far as we can and sort of move with the market expectations as to how we'll form that guidance. IFRS 17 has been in for a little a while now, and we're all learning how best to deal with that. And I think there is a bit of a steer for the market that people like now sort of undiscounted numbers, so we can start to guide on that basis potentially. It is probably a time to reflect on what the right kind of guidance is, bear in mind that doesn't change our overall focus, which is to write the most profitable margins that we can achieve regardless of sort of discounted versus undiscounted. So I suppose, on that one point taken and it's sort of worth considering as we go through the rest of this year as to how we guide going forward.

Next question is from Nick Johnson from Deutsche Bank.

Just one question on growth. You expect further growth in the second half. Just wondering how dependent that is on market prices increasing. I guess market pricing feels pretty unpredictable. Just wondering what gives you the confidence you can deliver further growth in the second half given that there wasn't much growth in premium income in May and June.

Yes, sure. I mean I guess the key thing here is the most important thing for us was to make sure we've covered claims inflation first. Now we're well on track to doing that. We're sort of ahead of where we might expect to be at this point. Given that we've got a very strong platform. And we now consider we have options, that means we can either optimize margin or we can optimize volume or I guess a multiple point between the 2 of them. We always have price assumptions at the start of the year. It may be-- we have some headwind in some of those assumptions that we can [indiscernible]. We generally think we have options within our control. If the market goes up, that's going to be a great thing because we can then take margin and accept growth. If the margin doesn't move up, I think we have other levers we can pull to ensure we do carry on growing, if that's the optimal point to be. Matt, do you want to say anything else you remember?

I think for us, it's going to be continue to make sure we optimize that profitability. So our key focus will be to make sure we make the optimal profits for premium item.

Yes, absolutely. Nick, did that answer the question? So I guess, overall, yes, we can grow more of the market supportive, but we can also grow-- should we think that's the optimal place to be through our own activities as well.

Next question is from Ivan Bokhmat from Barclays.

I've got 3 questions. First one, perhaps just following up on the question Nick just asked. I think on the policy count, we've seen a bit of a drop since end of April, May and June. Just wondering if you could share a little bit more color whether that's coming in the-- your core nonstandard segment or it's just the general market competition picking up, perhaps those irrational players? Second question. You have a [Technical Difficulty] to Ogden rate and your market outlook slide. Maybe you could share what your reasonable expectation might be? And how do you think the market is reflecting that in the pricing? And the third question, perhaps now as the time is passing, could you share a little bit more on the insurer-hosted pricing, what the benefits of that might be for growth for the loss ratio? Or maybe what the costs associated with that could filter through in 2025?

Sure. Okay. I'll start, and Matt maybe you can pick up on some of the bits around insurer-hosted pricing in a second. On the policy count, I would say we're losing that from the fringe of the mass market. We're still very and very secure within our competitive mode in terms of the nonstandard business. So we don't really feel undermined in that part of the market that's all. Ogden discount interesting one, I guess. Trevor, maybe you can comment here on what some of the things we're seeing from some of the legal companies we work with. You can find your unmute button somewhere.

Right. There we go. I think it's fair to say that there's a range of views in terms of where we're going to end up with the discount rate. And of course, we've got budgets that are going to happen in October, which may also have some sort of bearing. I guess our view is in England and Wales, which, of course, is where the majority of the claims will arise is that we will see a small improvement, but we're not expecting anything significant. Importantly, however, we continue to reserve on the basis of the current discount rate. So we're not taking any benefit for potential improvements. We believe, and I think Ivan you sort of extended your question to what competition is doing. We believe that the competition has been taking some benefit and those numbers may well have been recorded in 2023.

We had things like thoughtful around investment advice, for example, which is a factor on top of the underlying discount rate.

Yes. So the constituent parts, whilst the returns are likely to improve, we're nervous that there may well be some add on layers of cost in terms of investment advice and certainly the sort of the 0.5% margin that's currently in there. We're going to see Scotland and Northern Island rates come out possibly earlier. And that may give some indication. However, the methodology in those jurisdictions is wholly different. Of course, the other question that we're waiting to be answered is will we remain on the current basis of a single rate or will we end up with a dual rate. The current view is very much that we'll end up with a single rate, but a dual rate applying to different periods or different heads of damage is a possibility.

It's fair to say the-- it's an unhelpful a bit of time, and you and Matt already got your head in your hands about the thought we're doing this in the first couple of weeks of next year anyway.

Less than optimum.

Yes. On insurer-hosted pricing, I don't think you'll see the cost, Ivan come through any significant way. It's a small software house development. Really, the great work has gone here by our own internal teams. So that's an internal prioritization process, I guess, there is a small capital look especially but nothing that you'll really see make any difference. You won't be surprised, hear us out I'm not going to tell you what we're going to do in terms of how we're going to deploy this until after we've done it. Matt, anything you want to say around that?

I guess the high-level things are. I think we talked about before, it allows additional sophistication in what we're doing and improve the speed to market of any incremental improvements you want to make. So overall, we think it will be a great benefit to the company.

Yes. We think that's going to be a big driver of how we can gradually expand our competitive footprint over time.

And then Geoff, the last question is from Andreas van Embden from Peel Hunt.

Just 2 questions from me. Just on the pricing dynamics, which you described in your presentation. I just wondered whether what we're seeing in the mass market and the numbers coming out of ABI and I'm confused with comp, whether you're seeing that spilling over into the nonstandard market? Are these 2 markets behaving in the same way? Or are there any differences that you're seeing in terms of how pricing is moving in nonstandard? And could you maybe also comment on the competitiveness of the nonstandard market today? Are you still seeing some players exiting? Or do you think it's going to become more competitive in the second half of the year? My second question is actually on your reinsurance program. Just a numbers question for you, Adam. I think your reinsurance P&L was quite positive in the first half of the year. I think you made a $8 million gain on it. I just wonder whether this is just your reinsurance program helping you out with that sort of additional reserving and that additional prudence you're putting on your reserves in the first half of the year? Or does it just reflect the growth of your book?

I mean, actually I might take the first bit on reinsurance on the second. If we talk about the pricing dynamics, it's certainly impacting the nonstandard market, much less than the mass market to us, given that we've got on quite a lot of the rate and we don't think the market is put on much at all with any pricing elasticity, if it was as impactful for us, we won't move it in any business at all. And that's clearly not the case. We've driven very healthy levels of business. So I think there's definitely less impact in the nonstandard area. We haven't really seen any one new join, and we continue to see some MGA struggle for capacity. So I don't think much of an update really on the full year, pitch we've outlined, we're certainly not complacent in this area. But at the moment, we feel we're very happy we've been in our part of the bond in terms of the market. [Technical Difficulty] how the reinsurance is impacted. And I think it's worked pretty effectively.

Yes. So the first half of the year, the reinsurance in the Board the same as second half last year. The performance has been not expected. So sometimes it'll be good result and sometimes we make sure the idea that reinsurance is to smooth through that volatility on the larger more losses. So happy with how I think performing.

Yes. So the XOL programs worked exactly as we would hope it would work to smoothly result. Adam, anything you want to add on that?

No, that's absolutely right. I mean the gross reserves by definition, is subject to more volatility, gross reserves, carry a decent risk adjustment and also obviously, the movements generally on larger claims not significant the reinsurance program is there to absorb those large movements and make the impact on our P&L relatively small. And in this case, that's worked to reduce the impact on the P&L of those large group movements.

Hanro van, is there anything else?

Just a quick follow-up on the reinsurance side of things. Can you say anything about how your reinsurance program and cost has changed for the year ahead. Am I right to think you may have just renewed that. Just wondering if that would be a positive or a negative to net premium growth and premium growth for the year ahead?

We're not going to give full detail I think I think what we can say is we've got a pretty decent discount, but that discount was also in line with our expectations. And therefore, it's inside. It's all within our assumptions. So there was a decent discount. We're very pleased with the result very good relationships that insurers, but we'd anticipated that result as well.

No remain questions, Geoff.

Thank you, Hanro van. In that case, just a final couple of words, and thank you all very much for your time. Just to reiterate, we're very happy with where we are at the half year point. We think we've built a really strong platform, really good foundations. And now we've got some pretty exciting options ahead of us for the second half year. So thank you. We look forward to talking more about that for the full year, I guess. Thanks a lot. See you later.