Suncorp Group Limited (SUN) Earnings Call Transcript & Summary

Welcome to the 2020 Annual General Meeting of Suncorp Group Limited. My name is Belinda Speirs, and I'm Suncorp's Group General Counsel. Before I introduce your Chairman, I'd like to cover some of the aspects of the meeting that are a little different to past AGMs given the online platform we're using today. Firstly, if you are a shareholder or proxy holder and wish to vote or ask a question today, please familiarize yourself with the online platform. You may wish to refer to the guidance material, it was made available, including the online AGM guide. The guide is available via a link at the bottom of your screen and also on our Suncorp group website. This guide includes step-by-step instructions on how to vote and ask a question via the platform. To help with the smooth running of the AGM, we'd like to ask that any shareholders or proxy holders with prepared questions to submit them now. The Chairman will then address them when we come to the relevant point in the meeting. If you encounter any technical issues with any of the platform functions at any time during the AGM, please contact the link share registry online AGM support team on 1 (800) 990 363. This phone number will remain visible on your screen throughout the meeting. The online platform that we're using today has been tested and used by many other companies. In the unlikely event, the technical issues prevent the meeting from proceeding as planned, Suncorp will make announcement via the ASX and our website. I'd now like to briefly cover the meeting procedures that the Chairman will follow today. Firstly, this is a meeting of Suncorp shareholders. As set out in the notice of meeting, only shareholders or proxy holders are entitled to vote on the resolutions, to ask questions or to make comments. The Chairman will allow a reasonable opportunity for members as a whole to address the questions and comments that have been received from shareholders and proxy holders at 3 points throughout the meeting. First, for general questions and comments. Then for the two remuneration-related resolutions. And third, when the election of directors is considered. Please ensure that your question or comment is relevant to the items of business. And to shareholders as a whole. If you have a matter you'd like to raise as a customer, please contact our customer team using the contact details on the last page of the notice of meeting. Any customer-related questions specific to an individual that are submitted via the online platform today will be referred to our customer team for response and will not be addressed during the AGM. When we come to each of the 3 question and comment opportunities, the Chairman will first deal with relevant questions and comments that have been received prior to the meeting. Excluding those as the Chairman and Group CEO have already covered in the formal addresses to the meeting. The Chairman will then deal with questions received during the meeting. In the interest of all participating shareholders, lengthy questions or comments may be summarized, but without detracting from their substance. Questions or comments that are offensive in any way will be taken as being out of order and will not be acknowledged at all during or following the AGM. With your highly similar questions, the Chairman will aim to acknowledge the relevant shareholders and proxy holders who have asked the questions. However, the Chairman will provide a single response in order to streamline today's meeting proceedings. Where questions were presubmitted, in many instances, we have also already responded directly to the inquiry, or a later question is received in a theme that has already been addressed during the meeting. And again, in the interest of the members as a whole, it will not be raised again for the Chairman's response. If we receive an unexpectedly high number of questions during the AGM and we are unable in the interest of the members as a whole to address any questions that have not already been covered, a response will be provided to you as soon as possible following the meeting. As I said earlier, there is no need to wait for the relevant item of business to submit your question or comment. Questions and comments submitted before then will be addressed at the relevant point during the meeting. If you are voting today and need to leave the meeting early, you can submit your voting card before you leave. And again, if you encounter technical issues at any point throughout the meeting, please contact the Link online AGM support team on 1 (800) 990 363, which is the phone number that appears at the top of your screen. And finally, if you'd like to utilize the subtitles functionality available throughout today's meeting, please follow the instructions under your video screen to turn this on. Thank you for your attention. I'd now like to introduce your Chairman, Christine McLoughlin.

Thank you, Belinda, and welcome, everyone. As Chairman of your Board, I am informed that we have 272 shareholders and other attendees already participating in this historic first online AGM for Suncorp. As a quorum is clearly present, I declare the meeting open. We are all joining this meeting from many different locations and time zones today. In making the decision to hold this year's meeting entirely online, your Board has put the health and safety of our shareholders, employees and the community, first. Some of you have taken the time to provide positive feedback in relation to the accessibility and convenience of the online meeting format. While we continue to offer ways for shareholders to participate for future AGMs, we will also look for suitable opportunities to engage face-to-face with shareholders who wish to do so when we are able. I would like to acknowledge the [indiscernible] people of their origination and pay my respects to their elders and all elders, both past and present, and acknowledge the traditional custodians of the many lands we are meeting from virtually today. The Board and I are pleased to have a very special Welcome to Country from Yvonne Weldon, a proud Wiradjuri woman and Chair of the Metropolitan Local Aboriginal Land Council. Who joined us to record a message on behalf of the Gadigal people of the Eora Nation here in Sydney.

Thank you, Chairman, and hello, sisters and brothers. My name is Yvonne Weldon. I am a sovereign Wiradjuri woman. I come from Cara here in New South Wales. I'm the elected chairperson of the Metropolitan Local Aboriginal Land Council, who are the culture authority under the Aboriginal Land Rights Act for the land that I'm standing on. I would like to pay my respects to all elders past and present, and to our [indiscernible] and to you and the ancestors' land that you are on. Welcome to Country is an age-old tradition. It is more than just words, it is a spiritual process by honoring the ancestors' footsteps we are walking in. Continuing the practice of the many generations before us to many generations to come. Our boundaries are written into the Earth's natural landscapes. The boundaries of the Eora are the [indiscernible] in the north, then a [indiscernible] in the West, and a Georges River in the South. On behalf of the Metropolitan Local Aboriginal Land Council, the elders and the members, I welcome everyone to the land of the Gadigal, I acknowledge Gadigal people and the people of the lands that you are, whose spirits and ancestors will always remain with these lands, our Mother Earth. Across this continent, we represent hundreds of nations, tribes and clans that have existed here for over 60,000 years. My people are the oldest living culture of the world. And as we're all joined online, let us all remember and acknowledge the many warriors that created pathways for all of us, the ones recognized and the ones we've never heard of. My people have always listened and learned from each other, the environment, animals, elements and our ancestors. We don't leave in isolation of body, culture, spirit, land and water, because we are one. We need to reflect upon the footsteps we're leaving to know where we're heading, shaping a society, a country, we can be proud of. In these times of this pandemic, don't let the social distance make us socially absent. We must maintain physical distancing but not creating barriers to our social connections. All of us can make positive changes now and into the future for this country. And as we move forward, lets us all draw upon my people's spirit as we continue on our journey. May my people spirits walk with you and guide you as we strive forward for us all. Again, on behalf of the Metropolitan Local Aboriginal Land Council, welcome to Gadigal land. This always was, always will be Aboriginal land. Thank you, and have a wonderful day.

Thank you, again, Yvonne. We very much appreciate your thoughtful words and your virtual presence with us today. I would now like to introduce your Board of Directors, who are all present at today's meeting, albeit from different locations. Steve Johnston, your Group CEO and Managing Director, is here with me in Sydney. I'll invite Steve to address you later during the meeting. Ian Hammond and Sally Herman are also in Sydney today. Ian brings to Suncorp extensive knowledge of the financial services industry and the expertise in financial reporting and risk management. Ian is Chairman of the Board's Audit Committee. Sally chairs the Board Risk Committee. She brings to Suncorp strong expertise in running retail banking and insurance products, setting strategy for financial services businesses and working with customers, shareholders, regulators and government. Your other directors are joining us by teleconference today given the ongoing travel and border restrictions. Dr. Doug McTaggart is joining us from Brisbane. Doug has an extensive background in financial markets and has deep academic and commercial experience. Doug also chairs AA Insurance, which is a Suncorp joint venture with the New Zealand Automobile Association. Sylvia Falzon and Lindsay Tanner are joining us from Victoria. Sylvia brings to Suncorp valuable experience in a range of regulated and customer-facing industries, including financial services, health, aged care, retail, and more recently, e-commerce. Lindsay is the Chairman of the Board Customer Committee. Lindsay has worked at the highest levels of government and business for over 35 years and is a recognized authority on corporate governance. Moving to Elmer Funke Kupper. Elmer joined your Board in January this year and is seeking election today. Elmer is an accomplished business leader and company director. He has significant financial services experience and has served as CEO of 2 public companies. Elmer is presently in Europe for family reasons. And Simon Machell. Simon is Chairman of the Board People and Remuneration Committee and is seeking reelection today. He has deep strategic and operational knowledge of the insurance industry and brings to Suncorp an international perspective on current and emerging industry trends. Simon joins us from Singapore, where he is based. Due to the ongoing border and travel restrictions, your Board has been working this way for the last 7 months. Suncorp's executive leadership team is also with us today. Belinda Speirs, who you saw at the beginning of the meeting is our General Counsel and has been with Suncorp since 2013. Belinda will moderate the questions from shareholders and proxy holders today. Other members of the executive team are joining by teleconference today from various locations. In Sydney, we have Adam Bennett. Adam joined Suncorp in July as our Group Chief Information Officer. Adam brings more than 25 years experience leading teams, including in a major Australian Bank and in global professional services firms. Lisa Harrison, was recently appointed CEO Insurance, Product and Portfolio in July, but has been with Suncorp since 2004. Her previous responsibilities have included our customer, digital and program excellence functions. And Amanda Revis is our Group Executive People and Culture. She and her team are responsible for driving Suncorp's talent and capability that we need to deliver our strategy. Amanda joined Suncorp in 2010. Jeremy Robson was appointed Group CFO in December of last year after acting in the role for the previous 7 months. And before that, Jeremy was our Deputy CFO, and Jeremy has been with Suncorp since 2013. Fiona Thompson is our Chief Risk Officer and is responsible for leading the risk management, compliance, internal audit and group customer advocate disciplines of Suncorp. Fiona joined Suncorp in 2001. And Clive van Horen joined Suncorp in August as CEO of Banking and Wealth. Clive has held senior roles in banking, consulting and public policy in Australia and South Africa. Paul Smeaton is joining us from Brisbane. Paul has returned to Brisbane as our Chief Operating Officer in Insurance, after successfully leading our New Zealand businesses for 5 years. Paul has been part of the Suncorp team since 1994. And Jimmy Higgins joins us from New Zealand. I'd like to congratulate Jimmy on being appointed CEO of our New Zealand business last week. Jimmy has been the acting CEO in New Zealand since April. And prior to that, was the CFO of that part of our business. Jimmy joined Suncorp in 2008. I hope that helps to give you a good picture of the depth of talent in the executive leadership team and the experience they bring from their years with and external to Suncorp. I'll begin today's proceedings by making some initial comments before inviting Steve to speak to you about the past year and priorities for the year ahead. It was only a year ago that we were in Brisbane, my first AGM as your Chairman. Steve Johnston had just been appointed as your CEO, and I recognized that it was a new era of transparency and accountability for the financial services industry. Since then, Australia has experienced one of the worst seasons of natural disasters on record, 12 events, including bushfires, hailstorms and floods. Parts of Australia continue to experience terrible drought. And of course, we are now living with the devastating health, social and economic impacts of the global COVID-19 pandemic, which has presented us with some of the biggest challenges of our collective lifetimes. I have certainly never experienced a year like this, and I'm sure it's the same for many of our shareholders and customers. I'm proud of the way your management team and Board has responded to all these challenges. We managed around 80,000 claims related to natural disasters in the past financial year, mostly from New South Wales and Victoria, covering storm, hail, flood damage and, of course, bushfires. We know these events are devastating for the communities that we serve. And for Suncorp and our employees, it is at these moments that we are reminded of the importance of our purpose to build futures and protect what matters. Since the outset of the pandemic, your Board and management team have been meeting in this virtual format. Initially, these meetings were weekly, but we are now back to a regular rhythm, and this is now our normal way of working. Due to ongoing border closures and restrictions, and we expect to be working this way for some time. When COVID-19 emerged as an issue, our focus was on issues such as the health and safety of our people and customers, how to support customers in financial distress as well as ensuring our strong financial position was protected. Once it became clear that the impacts would be lasting, our attention turned to the longer-term outlook and implications. To help us navigate the changing landscape, the Board has heard from a range of experts, including leading economists, cybersecurity specialists, and professionals who work with vulnerable customers. I remain concerned about the ongoing impacts of this crisis, particularly the likely effects on mental health and well-being. We are all aware of the direct impacts of the pandemic on mental health. Weeks and, in some cases, months of social isolation from families, colleagues and community activities. But we must also recognize that during recession, mental health issues increase. For example, by reducing employment quality and choices and increasing the risks of poverty and exclusion. We know that many small business owners are struggling to kick start their businesses. Self-funded retirees are living with lower investment income, and many women are shouldering increased caring responsibilities. While young people have disproportionately suffered job losses and many face a challenging transition from education to the workforce, middle age and older workers are also at risk of long-term unemployment, as business models change as a result of COVID-19. To address these impacts, it is clear that we need to adapt and manage to a new way of living and working, becoming more adaptable and agile in our approach, so that we can live in a COVID-safe way. Governments, businesses and community must work together to enable the Australian and New Zealand economies to recover as quickly as possible in the months ahead. The reopening of borders is key to helping restart our economy. We understand that this must be done carefully and sensibly with the health and safety of the community in mind, but it will be a critical step to take us forward. Turning to our full year '20 financial performance. In August, we announced solid results that demonstrated the financial and operational strength of our business. Group net profit after tax was $913 million, while cash earnings were down 33% to $749 million, largely reflecting COVID-19 impacts, such as lower investment income, provisioning and reserves. Your Board understands that dividends are important to our retail and institutional shareholders and that you expect a predictable and sustainable return. For the full year, our fully franked dividend totaled $0.36 per share. Our final $0.10 dividend was paid to you yesterday. We felt it was important to pay our shareholders a final dividend, while at the same time, conforming to APRA's regulatory guidance. The Board also believes that in these uncertain times, it is prudent to maintain a strong and conservative capital position. And we have worked to get this balance right for you, our shareholders. While COVID-19 has challenged us in ways we never expected, it has been a catalyst to focus on new possibilities, including new ways of working, and the acceleration of our transformation through digitization and automation. Suncorp has been a leader in flexible working for many years. In fact, this has been part of our employees' lives since the Brisbane floods at 2011, when we recognized the need to enable greater levels of remote working. More hybrid working models are likely in the future. The ability to attract a wider range of talent is significant, while there are also efficiencies to be gained. However, careful consideration will need to be given to how and where work is done. There is no doubt that some work is best done in a collaborative and social setting. Bringing people together is also an important way of ensuring that purpose, culture and values are consistently embedded and understood across the company. It's not only the way we work that's transforming, it's also how we work. Digitization and automation are removing manual processes and customer pain points, which means the workforce of the future will need different skills and capabilities. Artificial intelligence and its underlying technologies are reshaping the insurance industry from distribution to underwriting and claims. For example, connected devices and sensors, including drones, can work together to speed up traditional claims assessment methods or even detect issues before they occur. There is no doubt that jobs will change with these technological advances, the workforce of the future will need to reskill and upskill; build social skills that complement technical skills; become more resilient and adaptable; and harness greater creativity. At Suncorp, our future-ready learning program is designed to support our people with this transition. These trends are at the heart of our efforts to reshape our organization and build an even stronger, more efficient and sustainable business, which Steve will cover in his presentation. One of the key roles of the Board is to set up the organization to balance the demands of today with our longer-term requirements. This means we must carefully consider the risks and opportunities we face as well as the expectations of different stakeholders, including our shareholders, customers, government and regulators, the employees and, of course, the broader community. As an insurance company and bank, the impact of climate change is one of our most material issues. Our climate change action plan, environmental performance plan and climate-related financial disclosures collectively show how we are responding to the challenges. To adapt to our changing climate, we continue to advocate and collaborate with our customers, communities, government and industry stakeholders for better awareness, protection and preparation for natural disasters. Steve will talk more about this, including his recent visit to Central Queensland. Deepening trust and strengthening transparency also remains a key focus for the Board. Our customer committee, which is chaired by Lindsay Tanner, enables the Board to ensure we are delivering good customer outcomes and acts as an early indicator of any systemic issues. The committee spends time with frontline teams from contact centers to call, sales and claims to hear firsthand the concerns and feedback of our customers. And this has been invaluable for all members of the Board. We understand that the bar is constantly rising in meeting expectations from a range of stakeholders, and we are committed to ongoing improvements to get the balance right. Finally, I would like to turn to your Board. In January 2020, the Board appointed Elmer Funke Kupper as a non-executive director. As I said earlier, Elmer brings significant experience, and he will address you shortly when we reach the resolution on his election. And just a few weeks ago, we said farewell to Audette Exel after 8 years on the Board. Audette made an extraordinary contribution that reflected her global mindset, her deep experience in banking and reinsurance and her passion for the purpose of our business. We are undertaking a search for a new director to replace Audette and with skills to complement our existing Board. I would like to thank my fellow directors for their counsel and support in a year where we have had to manage many, many firsts, both from a national and global perspective. I would also like to thank Steve Johnston. Despite the challenges of his first year as CEO, Steve is driving significant transformation across the group and is a highly respected leader. I would also like to thank all of Suncorp's people and, of course, our shareholders for your ongoing commitment and support through a particularly challenging and difficult period. I can assure you that we do not take your support for granted. I will now ask Steve to address the meeting.

Well, thank you, Chairman, and good morning. Now when I addressed you at our AGM last September, I had only recently been appointed your CEO. In addition to describing how privileged I am to serve you in this role, I talked about the resolve of our company and how we've been tested over many years of supporting our customers as they dealt with economic, weather, and other disasters. And that how on every occasion, our team had risen to the challenge and emerged stronger and with a greater sense of purpose. As our Chairman said, none of us could have anticipated the set of circumstances that we would face this year. Not long after our meeting concluded, we stared into the first fires of the summer that seemed to never let up. As we counted the physical and human losses and we celebrated the heroes, a series of destructive rain and hail events rolled through much of the East Coast, ferocious in intensity and expensive in repair. It feels such a long time ago, but it is just 9 months. It was, however, a time when we could travel, when we could meet in person and when we could offer our hand in friendship and support. And that's what I did in January, visiting a number of communities and customers that were devastated by fire. Customers who are calling on us in a moment that really mattered for support in a time of immense pain, and for us to honor what, in some cases, had been a lifetime of loyalty to our brands and to our products. It's probably unsurprising that some of those customers expected the worst when they lodged their first claim. That's what happens when financial services of days gone by may not have fully understood its purpose as clearly as it should have, culminating in a Royal Commission and months of negative headlines. So for the process to be smooth and for the products we offer to respond as they should, provided comfort when it mattered most. Sure, life was tough at that moment, but it would eventually resume. That was also when I met James, driving through the village of Balmoral outside of Sydney. I happened upon James and his family as they pick through the burnt ruins in search of anything salvageable. I stopped to sympathize and to make sure that his insurer, if it in fact, was our company, was doing its job. House proud and determined. James told me he thought he had built a home that could adequately withstand fire. That theory, he said, had been tested before. And anyway, the premium was better spent on school fees and other living expenses. He, like many others, was uninsured. Stories like those of James are why we are so passionate about resilience and mitigation. And while we've repeatedly called for a coordinated response from all levels of government to reduce risk and to create more sustainable communities. Now we recognize our role in improving our products and ensuring they deliver value for our customers. But as the climate changes and risk increases, so too does cost. Today, just $0.03 in every dollar of disaster funding is spent in preparation and adaptation with $0.97 spent mopping up and picking up the pieces. In our view, it's a ratio that just doesn't make sense. But finally, it seems like the message is getting through. The Queensland election campaign has seen a number of valuable commitments. And of course, we await the findings of the bushfire Royal Commission and the federal response that will follow. Now as the summer came to an end, the global pandemic began. There is, of course, no handbook to pull off the shelves to tell you how to deal with an event of such magnitude. So we established a 5-point framework to guide our decision-making and our response. First, we were determined to make sure that all of our people remain safe and they stayed well. That meant in the early days at least, we had to get as many of them working from home as possible. Second, we had to continue to serve our customers to answer their calls to manage their claims and to recognize their hardship. Third, we needed to communicate openly, honestly and regularly with all of our stakeholders. Fourth, we had to make sure our business remains strong with sufficient capital, funding and liquidity to address all likely scenarios. And finally and most importantly, we wanted to explore all ways of ensuring we would emerge from COVID with an even stronger, more resilient business. I'll return to this theme in a moment. But before I talk about our plans for the future, let me take a moment to recap our FY '20 financial performance for the group. We delivered net profit after tax of $913 million, which included the $285 million after-tax profit from the sale of our Capital S.M.A.R.T and ACM businesses. And an $89 million noncash impairment charge relating to the core banking platform. Insurance Australia, which is our largest division, delivered profit after tax of $384 million, a result impacted by lower reserve releases, higher reinsurance costs and, of course, the impact of low yield. We also strengthened our reserves for COVID-related business interruption claims, even though we remain confident in both the intent and the specific wording exclusions contained in those policies. Our banking and wealth business delivered profit after tax of $242 million as we established provisions for the likely impairments as a result of COVID. And in New Zealand, our business delivered another strong result with a profit after tax of $259 million. Despite the challenges, there were a number of highlights. We had positive growth in our Australian consumer insurance portfolio the first time in many years. Our customer satisfaction and our retention scores improved right across the organization. Our purchase of additional reinsurance and increases to allowances meant natural hazard costs landed in line with those allowances, again the first time in many years. Our investments in digital supported an industry-leading response to hazards and has set us up well as customer buying patterns change. Employee engagement lifted by 11 percentage points as we focused on our core businesses. And establish the flexible working practices that will be part of our future model. And our balance sheet remains strong, meaning we could meet APRA's guidance around dividend payments and pay a fully franked final ordinary dividend of $0.10 per share. But like all businesses, there are areas for improvement. Our review of pay and entitlements identified deficiencies in our rostering and pay systems, and we have needed to set aside provisions that have had a detrimental impact on the FY '20 results. We are working at pace to ensure remediation is timely and accurate and that new systems are implemented to make sure this does not happen again. As I mentioned earlier, our focus has now turned to the steps we need to take to make sure our business prospers through COVID and then emerges stronger from COVID. In the early days, like everyone, we saw COVID as a threat. We now see a clear opportunity. This is because the fundamentals of our business are strong and they're getting stronger. We have sufficient capital, funding, liquidity, provisions and reserves to support a conservative assessment of the economic outlook. With such strong foundations, we can capitalize on the opportunities that are presenting. Specifically and through the prism of COVID, our team are working differently. We're solving problems faster, implementing at pace, and we're doing things we never thought were possible. Our customers are also interacting with us in new ways with digital, the key driver. We all know as consumers, we are procuring differently and banking and insurance products are just part of that story. Our program of work to reset our business post-COVID is now well underway. We've made changes to our business model to the structure of our group and to our team. We are removing duplication. We're streamlining decision-making, and we're ensuring that everyone at Suncorp understands their role in driving improved customer and shareholder outcomes in our core insurance and banking businesses. In the insurance business, we are reinvigorating our brand portfolio, ensuring that our brands have clear value propositions and are positioned to grow. We're reviewing our marketing strategy and effectiveness. Our product set is being simplified and our coverage reassessed in light of the changing climate, affordability and more demanding community expectations. Moving forward, our distribution capability will support an optimal balance between all of our distribution channels to drive down cost to serve and to increase productivity. And of course, we are aspiring to be best-in-class in our delivery of claims. Our priorities for the bank are similar, and they're very consistent with those I outlined to you last year. We need to win in home lending, particularly in Queensland; to accelerate digital and everyday banking and to invest in open banking; optimizing our physical channels and simplifying the portfolio. All of that within the existing low-risk settings that have served us so well. In New Zealand, our transformation program is well underway. We have a well advanced business-wide program of automation, digitization and end-to-end process improvement. Now I recognize, as does the Board the change is never easy and that the tough decisions we need to take have very personal impacts on our people. Be assured that we are managing change carefully and in a considered way. We are providing significant support and assistance to our team, particularly those that will leave over coming weeks. As the Chairman mentioned in her presentation just before, I was very lucky to get out of the office and into regional Queensland last week to meet with customers, government representatives and, of course, our team. What today feels like a luxury is, in fact, an essential ingredient to an organization's future success. Complex businesses like ours cannot be run exclusively through spreadsheets, PowerPoint or Zoom. Sometimes you need to get out into the regional shopping centers, on to the farms and around the barbecues to make sure what might look good on paper can actually be applied in practice. We at Suncorp are a purpose-driven business. We do care, so we'll make sure that we get the right balance. So in concluding, I'd like to thank you, our shareholders, for your support and for the confidence and trust you have in our company. We recognize we have a lot of work ahead of us as we seek to repay that faith that you have provided in us. I'd, of course, like to thank the Board, the leadership team and the 13,000 Suncorp people who have worked diligently and differently in serving our customers in a year like no other. So with that, I'd like to now hand back to the Chair.

Thank you, Steve. I'll now move to the formal part of the meeting. And I'm advised by registry services that we now have 408 people participating online. So I'm pleased that the system is working. All resolutions for consideration today will be put to a poll, which I will now declare open. The direct and proxy votes that have been received prior to the AGM will be shown on your screen before you vote on each resolution. Your Board supports all resolutions for consideration today and recommends that shareholders vote in favor of each resolution. As also set out in the notice of meeting, I intend to vote all undirected proxies held by me as Chairman of the meeting in favor of each resolution. The first item of business today is to receive and consider the financial report, Directors' report and auditor's report for Suncorp Group Limited and its controlled entities for the year ended 30 June, 2020. At this point, I will now address questions and comments about the reports or Suncorp's performance generally. I would like to mention that David Kells and Tanya Gilerman, the lead audit partners with KPMG, Suncorp's external auditor, are joining us here today and are available to answer any questions you may have about the auditor's report or the conduct of the audit. As I mentioned earlier, Belinda Speirs, our General Counsel, will advise the questions that we've received from shareholders. Belinda, could you please read our first shareholder question?

Thank you, Chairman. We've received several general questions and comments from shareholders in advance of the meeting. We've received similar questions from [ Ms. Rosemary Spencer Lee ] and [ Mr. Peter Robertson ] on the impact of dividend cuts. We have chosen [ Spencer Lee's ] question to be read. I wish it to be noted that self-funded retirees like myself are worrying about dividends that are reduced or have been put off. Well, organizations like yours are falling over to help people who can't pay their debts. No one is worried about the honest, self-funded retirees who are doing it tough.

Thank you, Ms. [ Spencer Lee ]. As I acknowledge you might address, your Board understands that self-funded retirees are deeply impacted by current events. We know that many companies have either reduced dividends or not paid a dividend at all. And the deposit rates have continued to fall. As you know, Suncorp paid its $0.10 per share final dividend yesterday. While customers have been supported during the pandemic, this has not been at the expense of maintaining the financial and operational strength of the business. We believe supporting customers will mean their remain customers, which is also in the long-term interest of shareholders. We understand that both retail and institutional investors rely heavily on the income received from the Suncorp shares. This was a key point in discussions with our regulator, APRA, when seeking its approval to pay a full year dividend. The management team's proactive management of the balance sheet and capital position meant we were able to deliver on our stated policy of paying out 60% to 80% of cash earnings. Next question, Ms. Belinda.

[ Mr. Robertson ] and [ Easyflow Logistics PTY Limited ], are similar questions about our dividends. [ Easyflow Logistics PTY Limited ] asks, is Suncorp withholding part of shareholder dividend payments as per the major banks? If yes, will the withholding be paid to shareholders at a later date?

Thank you for the question. I confirm Suncorp is not withholding or deferring any part of the dividends declared for FY '20 financial year. And as I mentioned earlier, the payment of the final dividend of $0.10 per share was completed yesterday. Next question, please.

Chairman, the next question comes from [ Graham McMillan ] who writes, as a long-time AAMI insurance customer, I was very surprised that a recent car insurance renewal premium I received was much higher than the previous year. Despite my 2-year-old car being a year older, therefore, having a lower replacement value, the kilometers traveled being much reduced, the overall car accident -- incidences being much less due to generally reduced traffic flows because of the pandemic in Victoria, lower crush rates and safer rated cars. Is AAMI gauging car insurance premiums to subsidize other areas of their insurance business? What actuarial justification could there be for an increase of car premiums for safe drivers instead of a reduction? In a competitive environment, is such a strategy sustainable?

Thank you for your question, [ Mr. McMillan ]. You've actually highlighted one of the most important issues currently facing management and the Board. Pricing is critical and we need to get the right balance between affordability, sustainable growth and returns for shareholders. As you'll appreciate, there are many factors that drive the pricing of insurance policies. It is true that vehicles are now more technologically advanced, which has resulted in reduced accident frequency. On the other hand, more complex parts results in higher repair costs, a weaker problem. Both Steve and I spoke about the transformation underway in our business, which includes a review of the entire value chain of our insurance businesses from marketing through to distribution and claims. You've also raised the issue of people driving less in Victoria. The approach that we have taken is to provide targeted relief to customers who have been impacted by COVID and have requested support, which we believe is a fair and balanced approach. But I know this is an area that Steve thinks deeply about. So Steve, would you like to add anything?

Yes. Thank you, Chairman. I think you've covered most of the key points. We moved -- as I mentioned in my presentation, moved very quickly. As the onset of the pandemic became apparent right across the country to put in place a series of hardship mechanisms for our customers that included some premium deferrals, some discounting and support more broadly for particularly those customers that were in direct hardship. We're managing it very closely now across both Australia and New Zealand. We've been able to see very much the trends of mobility patterns and accident patents through the depths of the pandemic. And as we've gone through various stages of lockdowns, whether it be restrictive stage 4, right back through to Level 1-type restrictions, which are applying in New Zealand today, and we've watched traffic patterns. A couple of points to make in the longer term. I think in the short term, at least, we're going to see some substitution of public transport for private transport or private transport, obviously, for public transport with people wanting to be in their own vehicles. I think we can get a sense of that sometimes as we drive around in those areas that aren't more restrictive in terms of their lockdowns. And certainly, we're seeing in the short to medium term, at least, with the unavailability of airline travel globally, customers choosing to travel domestically. And certainly, last week, as I traveled through Central Queensland, driving through Central Queensland, there were a lot of vehicles on the road in those communities. So we've got a very good sense of it. We are very conscious of the issues that have been raised in the question. We have moved very quickly to get hardship programs in place. They remain in place in Victoria, and we'll continue to monitor that to make sure we're supporting our customers as best we can.

Thanks, Steve. Next question please, Belinda?

Thank you, Chairman. The next question received in advance comes from [ Mr. Haden Bull ], who writes, given the company is going through a restructure for future stability, when did the last company-wide restructure occur? Does the company have a plan for the next 20-plus years? Wouldn't a long-term plan be better than another short-term restructure plan? When was the last company restructure finalized?

Thank you for your question, [ Mr. Bull ]. I will address the restructuring and planning elements of your questions separately. First, on restructuring, I suspect you're referring to the announcement we made on the first of July about changes to our operating model, which Steve spoke about in his address, this year has shown how quickly the external environment can change, so we must become increasingly agile and adaptable to changing customer preferences and market condition. The second part of your question related to long term planning. In my address, I spoke about the need to balance the demands of today with our longer-term requirements. Your Board is acutely aware of the need to get this balance right. Our regular planning cycle considers both the short-term operating environment as well as longer-term strategic risks and opportunities. Climate change is an example of the strategic risk that we consider in both the short and long term. This year, our climate-related financial disclosure report analyzed the impact of climate change over different time periods. Your Board's objective is to balance the short and long-term to create a sustainable business that generates value for all stakeholders, including shareholders.

Chairman, we've received a number of questions about the notice of meeting and the virtual format of the meeting. [ Mr. Osmond ] asks, has the Board found that by not supplying hard copies of AGM notes, there has been a backlash from shareholders who have been discriminated against by not receiving postal communications? A related question from [ David Hensman ] asks I'll be interested to learn what provisions have been made for shareholders who lack Internet access? [ Nadia Adman ] asks, I received your notice of meeting notification, which includes AGM times. Why is there no notification of South Australia and Western Australian time? Once again, preference has been given to states in the East Coast. The final question of this nature is from [ Rad Pelgic ] who provided several comments and questions over a number of emails, which Chairman, I understand you've reviewed personally. [ Mr. Pelgic ] has question Suncorp's legal basis for e-mailing copies of the notice of meeting to shareholders and excluding shareholders without internet access from properly accessing the notice of meeting and participating in the meeting itself.

On Mr. [ Osmond's ] question about the notice of meeting, Suncorp, like many listed companies, chose to rely on the relief provided by the Federal Treasurer in response to COVID-19. A letter was posted or e-mailed to shareholders on 9th September, outlining distribution of the notice of meeting, details of today's online AGM format and how to participate and information on how to vote in advance. And as I mentioned before, I think we're now -- we've got about 408 people participating, which is a good thing. The registry received 22 inquiries from shareholders asking about the notice of meeting. All these shareholders were posted a paper copy. This is a very small percentage of our total 79,000 shareholders. Around 60% of shareholders received most or all of their communications via e-mail. In relation to Mr. [ Hensman's ] question, the letter I just mentioned included details on how to participate in the meeting and how to vote in advance. In terms of [ Adman's ] questions on meeting times in the notice of meeting, it was not our intention to exclude any state or territory. In fact, I think you would know from the introductions I made earlier today that we have people in multiple time zones participating. I understand our website did contain more detail, but we'll certainly consider listing time zones in future, and I thank you for your comment. I'll now turn to Mr. [ Pelgic's ] question about the legality of the meeting. I remember our interactions at last year's meeting, Mr. [ Pelgic's ]. So I thank you for remaining an engaged shareholder. The Board and our General Counsel are comfortable that our approach is legal and well within the parameters set by regulatory bodies. And as I mentioned at the start of my address, we have been working in this virtual way as a Board and as a leadership team for 7 months now. I'll have the next question please, Belinda.

Thank you, Chairman. The next few questions relate to Suncorp's corporate responsibility practices and policies and position on climate change matters. The first question comes from [ Dr. Richard Hughes ], who writes. Will Suncorp finance new baseload, high-efficiency, low-emissions, coal-fired power stations in Queensland? Will Suncorp. finance new nuclear power stations, we also have a wealth of uranium resources but a deficit of spine. Will Suncorp created a solid point of difference from the virtue signaling big banks in Sydney and Melbourne?

Thank you, [ Dr. Hughes ]. Suncorp does not finance major mining projects or electricity generation of any type as we do not have an institutional bank. Our insurance and investments exposure to coal mining and the oil and gas sector is minimal. Like many insurers across the world, Suncorp is taking steps to limit global warming and is taking a phased approach to move to Net-Zero Emissions economy by 2050. And we're proud of the steps we've taken, and we've published extensively about this. And again, you'll find those details on our website. Next question please, Belinda.

The next question comes from [ Kevin ] and [ Jerome Taylor ] who write, what is the Chairman's view on protecting the rights of indigenous peoples in Australia? Is the Chairman in a position to further move the Australian government to promote change to address climate change?

Thank you to the [ Taylors ] for your questions. In terms of indigenous rights, Suncorp has a long-term commitment to supporting positive social and economic outcomes for our First Nations people and communities. Every year since Suncorp embarked on its reconciliation journey, we have celebrated both National Reconciliation week and NAIDOC week. This year's NAIDOC week is in early November, and we will be launching Suncorp's innovative reconciliation action plan, our second step on the reconciliation journey. Suncorp is proud to contribute to the important national agenda of reconciliation, which is vital to building an inclusive society for all Australians. Turning to your second question on climate change. As both Steve and I noted in our addresses, Suncorp has long advocated for greater investment by all levels of government in natural hazard resilience initiatives. And this message has been echoed recently by APRA and the Insurance Council of Australia. Addressing the long-standing imbalance of government spending on disasters with 97% on recovery versus only 3% on prevention and resilience building. As Steve mentioned, will not only help protect our vulnerable communities but help strengthen our regional communities and help ensure insurance remains affordable and accessible. Is there another question, Belinda?

There is indeed, Chairman. The next climate change-related question comes from [ Michael Hopkins ] who writes, can you assure shareholders that you will not spend Suncorp marketing and advertising dollars on media outlets that promote climate change, denialism and racism, such as Sky and [indiscernible] press.

Advertising is an important way for us to communicate with our customers and the wider community, and we use a range of outlets and channels. It's been a particularly valuable means of highlighting the support available for those impacted by COVID-19 and during disasters such as the bushfires. We regularly review our advertising program to ensure it meets our standards and our customers' expectations. Next question please, Belinda.

Chairman, we have a question from [ Stuart Campbell ], which reads. Prior to the creation of the Suncorp Metway group in 1996, Suncorp and its predecessor, the state government insurance office Queensland actively employed a number of disabled and disadvantaged staff. These people came with a range of disabilities and were engaged in a wide support to support activities. These people were warmly welcomed by the Suncorp staff, absorbed into the business and performed valuable supporting roles within the organization. Suncorp never trumpeted this practice, but maintained a quiet dignity and approach as to this activity. Could you please advise Suncorp's current policy on employing disadvantaged people who may not fit into a normal Suncorp type career path? And just how many such people are engaged? And what type of disabilities they may suffer?

Thank you, [ Mr. Campbell ]. Suncorp has a large personal injury insurance business, which means we understand the opportunities that exist to provide employment for people with a disability. We also want our workforce to reflect the diversity of our customer base. Currently close to 3% of Suncorp's people identify as having a disability and our approach includes a commitment to flexible work arrangements, and we have partnerships with a number of external providers. We also have an internally run employee group called Enable, which seeks to foster an inclusive and caring environment for people with disability and accessibility requirements, their carers and those who support them. We also have mandatory disability awareness training for all employees. With respect to our customers, we have made a commitment through our financial inclusion action plan to ensure we provide accessible products and services to all customers including those with disabilities. There is always more to be done, and we will continue to look for ways to strengthen our existing support and create new opportunities.

Chairman, this is the final question received in advance for this section. We received two questions from [ David Stone ] and [ Dorothy Morrison ] on the same theme, and we have chosen [ Ms. Morrison's ] question to present to the meeting. [ Ms. Morrison ] rights, should Suncorp use the word Chairwomen in its communications rather than the word Chairman?

Thank you, [ Mr. Stone ] and [ Ms. Morrison ], for your questions. The word Chairman is using all our communications, as this is my preference. The term Chairman, I should confess, I did start my life as a lawyer, but the term Chairman relates to the legal office and position I hold rather than my gender, which is why I personally prefer this terminology. Next question, please, Belinda.

Thank you, Chairman. That concludes the general questions received in advance. I will now move to questions received via the online platform. The first live question is from [ Kenneth Mcloyd ] who writes, does Suncorp see a role for itself explaining to its customers why premiums have risen steeply in some areas and outlining the increase in costs that climate change is inflicting. To illustrate, last week, APRA's Executive Board member, Geoff Summerhayes, said that across Northern Australia average home insurance premiums have increased by 178% since 2007. Who should Suncorp customers blame for this?

Thank you for that question. I'll invite Steve to make a few comments. But firstly, your Board looks to balance the returns to shareholders with the affordability of policies. And we've called out in our speeches that this is our addresses, that this is an issue that we turn our minds to actively. Natural hazards and reinsurance costs have increased. And again, we flagged that well in our reporting. And pricing is not the only lever available. But Steve, would you like to speak a little about this as well?

Thank you, Chairman. It's a topic that's very dear to our hearts, as I mentioned in my presentation, and I'll give you one metric around what we've seen in terms of the allowance increases. So we provide an allowance every year for what we call natural hazards, which is everything from bushfires through cyclones, hail storms, flooding, et cetera. And I think when I started in the organization in 2006, the allowances were around about $67 million, $68 million. This year, we'll set aside $950 million for those types of events. We've also seen a fairly rapid increase in reinsurance costs. And of course, the vulnerability that reinsurers bake into their modeling and also that has to be reflected in our pricing is cyclone impacts in areas like North Queensland. So we've been very active in a dialogue with the government at all levels to see if there's a program that we can put in place to improve the resilience of those communities. We know that in 2006, we had Cyclone Larry go through Innisfail. We rebuilt most of that community at that time. We had Cyclone Yasi, and we've had various other cyclones, which fortuitously haven't crossed over some of the major population centers. So we believe firmly, as Geoff Summerhayes has raised in his presentation last week that there does need to be a program of resilience and mitigation that supports not only our ability to provide products that are relevant for those communities, but to also improve the ability of our customers and other members of that community to improve the resilience of their homes and whether that be incentives that are provided by state or federal governments to allow people to batten down their roofs to a level of cyclone resilience, far greater than they've got today and maybe tax incentives or something like that. So we have a role to play. So where a customer does improve the resilience of their home, we should reflect that in premium, and we do. So we, obviously, don't walk away from the need for us to be innovative around our products. But we also believe that in various communities in Australia, there is a need for a coordinated set of programs between the private sector insurance industry, governments at all levels and local council to improve the resilience of those communities because the last thing in the world we need in Australia is for a volume of people who become uninsured. The example I gave in Balmoral village in -- outside of Sydney is just one example. And in the environment where the private sector insurance industry cannot support customers more broadly, the owners falls under the taxpayer, and I think that's a bad outcome for everyone. So we are very active both in terms of what we're doing ourselves and what we're doing with government.

Thanks, Steve. Do we have any more questions coming in live, Belinda?

We do. Thank you, Chairman. We received two similar climate-related questions from Pablo Brait and [ Michael Standal ]. You might recall, Mr. Brait attended last year's AGM and has also spoken with our corporate responsibility team. We have put Mr. Brait's question to the meeting. Mr. Brait has asked, I acknowledge the leadership position shown in Suncorp's update to its sensitive sector guidelines. Our phase out of oil and gas production exposure and ban on insuring new production is on the right side of science and ethics. My question is regarding the gaps in the guidelines, i.e., they only address production not the other critical and controversial parts of the chain, pipelines and power plants. Why did Suncorp leave oil and gas pipelines and gas-fired power stations out of the guidelines? And will this policy gap be closed soon?

Thank you, Mr. Brait and Mr. [ Standal ], and I do recall meeting with you last year as well. So thank you for your interest. We have published extensively this year, the actions that we've been taking as a company around climate change and our TCFD reporting. And I have mentioned that also in both my address and Steve in his address in terms of the proactive position we're taking around risk mitigation, in particular, disasters. But in relation to your questions around oil and gas exposure, fossil fuels make up less than 0.1% of gross written premiums in our insurance book. And our total investment is less than 1.5% of the portfolio. We have no exposure to financing major fossil fuel projects as we do not have an institutional bank. We absolutely understand the need for an orderly transition, and we will phase out of oil and gas investment up to 2040. We will continue to underwrite, lend to and finance businesses consistent with transition to net zero by 2050. Next question please, Belinda.

Chairman, the next 7 questions come from Craig Caulfield. You will recall that Mr. Caulfield attended the 2019 AGM. His first question is, at the 2019 AGM, I asked the Board to consider adopting the Model Litigant Principles. I'm delighted to have read that Suncorp has both adopted and published these principles that will apply in disputes with customers. Will the Board confirm and publish that the Model Litigant Principles apply to all external lawyers? Will the Chairman confirm today the documents will be provided to customers within 7 days of request, just as Mr. Chronican committed NAB to -- at Parliament?

Belinda, I think 7 questions from 1 shareholder is quite a lot. So I'm just going to take one at a time, and Mr. Caulfield, just noting that if any of your questions have been addressed by myself or Steve previously, I won't address it again because I have now got 423 people online. In terms of your question around the Model Litigant policy, Suncorp is committed to doing the right thing by our customers. And since last year's AGM, we created and adopted a set of Model Litigant and dispute resolution principles and guidelines, and they are available on the Suncorp Group website. They cover Suncorp employees and our legal representatives. The key principles are, we will always treat people as customers. Even when there is a difference of perspective. We will listen and seek to understand our customers' perspective. We will remain respectful and act with honesty and professionalism. And evictions are truly our last resort and only occur after all other attempts to work through the issues have occurred. Mr. Caulfield's second question, Belinda?

Thank you, Chairman. Mr. Caulfield's next question is what does Suncorp see as the impacts of repealing responsible lending regarding how you will revise your approach to lending and credit risk appetite? If these changes to responsible lending laws won't affect Suncorp's credit risk appetite, won't change Suncorp's approach to lending and won't affect Suncorp. Does the Board support removing consumer rights currently available to take legal action for irresponsible lending?

Thanks, Mr. Caulfield. Suncorp's understanding is that these changes aim to support economic recovery and increase credit flow to consumers and businesses. And we are supportive of the changes. We're obviously working through the implications for our processes, but our customer-focused culture means that we will always do the right things by customers. We will continue to ensure that credit is provided in a responsible and fair manner. Mr. Caulfield had a third question, Belinda.

Indeed, Chairman, Mr. Caulfield next question is, the Royal Commission recommended national Farm Debt Mediation. Like most recommendations, little has been legislated. Farmers have been failed by lack of national FDM. Surely, COVID is not sufficient excuse to deny proper FDM to farmers. Farmers currently deal with a ragtag of different and disparate schemes across different states. Will Suncorp standby farmers in distress from floods, bushfires and mental health issues? Will Suncorp advocate, the treasurer, parliament and the ABA to roll farm -- pursuit mediation out immediately?

Thank you, Mr. Caulfield. Suncorp is a strong supporter of the Farm Debt Mediation as a framework for addressing financial difficulty. We are also compliant with the relevant clauses in the banking code of practice, and we've long advocated for a uniform national FDM. And it does align with our Model Litigant policy guidelines, which links back with your -- the answer I gave you to your first question. And we work with customers to find solutions that work for them and the bank, and you heard Steve speak earlier today about how he's been out recently visiting customers in more remote areas. Be assured, appointment of receivers is a last resort and infrequent. I think there's a fourth question from Mr. Caulfield, but are there a lot of other questions in the queue because I just want to make sure I get the balance for all shareholders.

We are mindful of that, since we have acknowledged that there are some repeat questions. This is the final question from Mr. Caulfield, and then we will move to the next order of business. Mr. Caulfield final question is, fair legislation requires Suncorp to submit a detailed map to APRA. Will Suncorp publish a very simplified BEAR map on the Suncorp website, so customers can easily see who is the responsible executive in their case or inquiry. BEAR was introduced because too many customer cases were shuffled between BEAR's employees and managers. For example, I experienced 31 case handlers at Macquarie. Can the simple map be published in 30 days?

Thank you, Mr. Caulfield. Suncorp has embraced the BEAR mapping, and we have always had a strong risk and compliance culture. And we've been compliant with the BEAR regime since it became applicable to our organization. We welcome the changes in terms of further enhancing the clarity of accountabilities. But the BEAR process is constantly moving as organizations change and adapt. So for example, the operating model changes that we made on the 1st of July, again, were consistent with the BEAR regime. And we're well prepared for the regime to extend beyond our banking operations. But I'm not sure that it would be value-adding for shareholders to have complex BEAR maps on our website.

Thank you, Chairman. The next three questions are from Sally Mellick, who is the representative from the Australian Shareholders' Association. Mr. Mellick's first question reads, a tough year for all of us, indeed, and the company has taken care on negotiating the challenges. The Board skills matrix does not really delineate any particular skills to any particular director. How does the Board go about identifying the skills and experience they are looking for in a new director?

Thank you, Ms. Mellick. And again, I'd like to thank the Australian Shareholders' Association. We had a constructive discussion a couple of weeks ago, and we always enjoy your insight value -- the insights that you give us. So -- and appreciate your support and questions for shareholders. In terms of the Board skills metrics, we actually do go through that in quite a diligent way as a Board. We each have a look at our own skills and areas of expertise. And as you'll appreciate, we're all very active in a number of different industries and sectors. And so the skills metrics, the skills we each bring evolve over time as well. And of course, we will take account of not only the metrics when we look at appointing a next director, but we will also take account of the strategy of the company because it's really important that we can point to a Board that can add value to shareholders in the governance of your company.

Thank you, Chairman. Ms. Mellick's next question is for Lindsay Tanner and reads, would Mr. Tanner in his role as leader of the Board Customer Committee, highlight some of the successes and challenges for the committee to date?

Thank you, Ms. Mellick. Now as I mentioned earlier in the meeting, my fellow Director, Lindsay Tanner, who chairs the customer committee, is actually in Victoria and has, like all other Victorians being -- religiously following the lockdown guidelines, but he is on the telephone. So if the technology works, I'll let Lindsay answer that question. Otherwise, I'll attempt to answer it for you. Are you there, Lindsay?

Thanks very much, Christine, and thanks for the question. The Board made the decision to establish a customer committee shortly before the banking Royal Commission was established. But for the first year, we set it up on an interim basis, consisting of the full Board. So the formal custom committee as a normal committee of the Board has only been in place since the commence for this year, and I'm very proud to chair it. We've commenced with some major outreach work to important and interested organizations, such as the Australian Financial Complaints Authority, AFCA, Australian Banking Association. And also, we had a meeting a couple of days ago with uniting Our Partner in dealing with hardship cases and people in difficulties, which has, of course, been particularly important in the current pandemic. We have done some significant initial work on particular issues and categories. So for example, as someone who started his professional life as [indiscernible] I'm very pleased that we have tackled the issue of return to work and personal injuries cases, and we've had a very thorough examination of our protocols and procedures and how our personal injuries insurance portfolio worked some months ago. We regularly scrutinize information, both data and individual cases of customer complaints and disputes as a way of holding management to accounts and the approach that management are taking to dealing with these issues. And of course, our customer advocate is the lead executive from management who drives the committee and informs the committee. Finally, you asked the question about challenges. There's one big challenge that we've been experiencing, which we're pushing very hard back against, which is that the vast bulk of the information we do with, can be looked at both through a customer lens or through a commercial interest of Suncorp lens. So we have to be vigilant to ensure that we don't slip back into examining information, looking at it from a profit and loss sort of interest of Suncorp lens because, of course, that's the job of the whole Board and other committees of the Board. Finally, the value to shareholders from this process, I would say, is twofold. One is that over the longer haul, happier customers, customers who are better treated, where there are fewer mistakes, better communication, will ultimately be beneficial for the commercial interest of Suncorp indirectly, and therefore, shareholders. And finally, the big lesson out of the Royal Commission was that the failure of large organizations to get on top of inevitable problems quickly enough and deal with them at great speed and great urgency was clearly a central feature of the issues that emerged out of the Royal Commission. So it's going to be, in my view, a really important early warning system for the company, so that the inevitable things that will go wrong in any large complex organization, we can get on top of very quickly.

Thanks, Lindsay. And I can assure you that for all of the Board, the value that's been delivered through having this forum of the customer committee has really been immeasurable. And Lindsay has done a fabulous job in chairing that and raising the bar in terms of the conversations we had. There was another question from the Australian Shareholders' Association, Belinda or we...

Indeed, Chairman. Ms. Mellick's final question reads. With the acceleration into digital platforms and online relationships with customers, how does the Board approach cybersecurity, particularly in relation to bank risk and customer scams?

Ms. Mellick, I can assure you that this is probably one of the topics that does keep me awake at night, and I think most of my Board colleagues as well, and I'm joined here today by Chair of our Risk Committee, Sally Herman. It's frequently on the agenda for the Risk Committee. We -- as I mentioned in my address, we, as a Board, we also do bring in external experts to give us insights on cyber-related risk. In fact, at our Board meeting yesterday, we had some thought leaders joined the Board and provoke our thinking on how we think about this. But I guess in a day-to-day sense, we have a team at Suncorp who are very alive to scams and to cyber risk and to impacts on customers. We've had our customer advocate team work very closely with The University of Queensland to develop a program to increase the awareness of customers scams and dealing with scams. And the customer advocate has, in fact, presented to the Board as well on our approach to this. So it's something that we take very, very seriously. I think everyone in the community needs to own their own security. All our employees need to own their own security. There's no one solution to this, and this is going to be part of the businesses that we all operate, the communities that we're all work in for the years to come. And so it's going to be a constantly moving piece.

Thank you, Chairman. The following two questions are from [ Michael Coven ]. [ Mr. Coven's ] first question is, last year, you suffered substantial losses on your investments. Has there been any recovery of these investment values? And what procedures have you put in place for the future to mitigate further falls? And what effect will this have on future profits?

Thank you, [ Mr. Coven ]. I'm going to invite the CEO to speak a little bit more of this, but I'll just make a couple of opening remarks. Firstly, is the Board has been very proactive in looking at our investments' governance over the last several months. Sylvia Falzon, who's one of our directors, who's also on the phone today from Victoria has been chairing a Board subcommittee to add value, if you like, to our approach, particularly in this volatile environment, we found ourselves operating in, and that's worked very well with the management team. And obviously, investment markets generally, we're experiencing a period of volatility that, again, is relatively unprecedented, but the management team have worked their way through that very, very well. And Steve, why don't you make a couple of comments on that?

Thank you, Chairman. I'll try and -- I'll try and be brief as I can in a very complex area of both general insurance accounting and investment portfolio construction. But generally, there's 2 areas where our investment market profits emerge from, certainly the technical funds, which are the assets backing the outstanding claims liability. And generally there, what we need to be doing is making sure we are managing that portfolio in as -- very conservative manner as we possibly can. So generally, that's cash, government bonds, semi government bonds, high-quality corporate paper, sort of an average credit rating of AA and a duration that matches the life of the outstanding claim, which is generally between 3 and 3.5 years. So it's a very high-quality portfolio. It doesn't mean it doesn't get mark-to-market and have some volatility in it from month-to-month under the accounting standards that has to happen. And certainly, there've been periods of time over the last 5 or 6 years where we have taken mark-to-market losses out of that portfolio and out of our shareholder funds, which is the capital back in the insurance business, where we have some within our mandate, some ability to invest in some growth assets. I think one of the things -- one of the highlights of the past 12 months, which I didn't call out materially in my presentation is that we have maintained that very conservative settings in both of our investment portfolios. And that has reduced the impact on profit of what we saw in the early part of the pandemic at least, which was a high degree of volatility, both domestically and offshore. What we also did early in the pandemic, and we don't do this for tactical reasons or to generate profit. But where we get uncomfortable with the risk settings globally, we put in place some investment hedges. Some investment hedges both across our technical reserves, primarily credit and some equity hedges as well. To make sure that until such time as things clarify themselves, we can take a low-risk position as possible. We did that early in the pandemic, and that was beneficial to us. And we unwound that as we went further through the pandemic. So a very low-risk, high-quality investment portfolio in both shareholders and technical reserves. We've obviously seen an improvement in markets in the last little while, certainly on the back of the stimulus, it's been provided globally. And I just encourage you to have a look at the performance of the ASX, the global equities performance since our last reporting date. And the other key areas of investment performance for us, our credit spreads and the performance of inflation-linked bonds. So generally, as the markets improve, we recover some of those mark-to-market losses that we generated the last reporting period. So we are very much focused on maintaining that low-risk, high-quality portfolio so to reduce that volatility as best we can.

Thanks, Steve. And I think we just have one more live question coming in, and then we'll move on with the meeting.

Thank you, Chairman. [ Mr. Coven's ] second question is, is a traditional model of general insurance broken? The idea of taking in premiums, investing them and then paying our claims must with the very low interest rates be under pressure. The low income presumably pressures you to take more risk. But if you do not do that, how can you grow your profits under this traditional model? The RBA is indicating that low interest rates such as government bonds will stay low for 3 years or more.

Thank you, [ Mr. Coven ]. Again, I'll make a couple of comments, and then I'll ask Steve to add some color. But I think at a high level, it's clear that insurance has never been more important. And if we look back at the events I referenced in my address, and we saw in the video at the start of the meeting of the intensity and frequency of natural hazards in Australia and New Zealand, the 2 countries in which we operate in insurance is a critical product that plays a critical role. I certainly hear your comments around low interest rate environment. That's something we discussed as recently this week in the board -- in the boardroom and the impact that has. But we have to be able to work through these cycles, and we have to be able to adjust. This is also why pricing of risk becomes so important and managing our reinsurance arrangements in an appropriate way is absolutely critical. So I'm not sure if you wanted to add anything, Steve?

Yes, Chair, just a couple of key points. It's a very good question. We do -- and it's important to look at our business between our short-tail portfolios, home and motor insurance and then our longer-tail portfolios, which are a personal injury portfolios and investment market returns are significantly more leveraged to those long-tail portfolios where they typically are managed by scheme regulators, and we've got exposure to Queensland, New South Wales and the ACT and South Australia now primarily. What you need there is for regulators in those schemes to be reflecting the lower returns that we're getting on those portfolios in improved pricing or increased pricing and be consistent on that approach through the cycle. And we've had an active dialogue with all scheme regulators to make sure that where yields are reduced that can be reflected in pricing, such that, as an insurer, we have a sustainable portfolio performance and all insurers in the scheme can justify continuing to underwrite those schemes. On the short-tail book, home and motor investment returns are lower, have a lower impact on overall profitability, obviously, because the claims come in and settle within a 12-month period. We drive very much to underwriting profits. We don't sort of look to investment returns to leverage up our profitability. We look at things like pricing, underwriting, be disciplined around the way our portfolio works, coverage products and claims. And that's how we generate our profits in those short-tail portfolios. And that's where a lot of our focus and the work that we're doing, and we'll do over the next 3 years, we'll be focused on improving our underwriting performance across our short-tail portfolio.

Thanks, Steve. So I understand that there are no more questions coming in from the online platform. And so having all now addressed all general questions and comments. We will move to the resolutions for the meeting. We'll start with the remuneration related items of business. First, I'd like to introduce the advisory vote on the 2019-'20 remuneration report. As outlined in the report, the Board is committed to remuneration arrangements that are strategically aligned and reinforced executive accountability responsible business practices, effective risk management and a constructive company culture. For 2019-'20, Suncorp's financial performance was adversely impacted by the factors that Steve outlined earlier in his address. However, nonfinancial performance was extremely strong. Including the proactive approach taken by Steve, his leadership team and all Suncorp employees to manage and support our business and customers in extremely challenging conditions. Taking all this into account, short-term incentive outcomes for the group CEO and members of the executive leadership team, range between 30% and 50% of target. Also taking the prevailing operating environment into account, these short-term incentive outcomes were delivered entirely in deferred shares with no cash component. In addition, there will be no increase in fixed remuneration in 2020-2021 for the group's CEO, executive leadership team and other senior management. There will also be no increase in non-executive director fees. The Board will continue to review the remuneration framework in light of the major economic restructuring that is playing out. And to ensure that it remains aligned with regulatory requirements and supports Suncorp's strategic and cultural objectives. In doing so, we will continue our program of active engagement with investors and proxy advisers. And in that context, I would like to thank the Chairman of our People and Remuneration Committee, Simon Machell, who is on the phone from Singapore today for the amount of time and effort he puts into his role of chairing that committee. The second remuneration related item of business is to seek shareholder approval for the grant of 192,098 performance rights to your group CEO and Managing Director. The granted performance rights will represent Steve's long-term incentive remuneration for the 2021 financial year. The aim of Suncorp's long-term incentive remuneration is to focus the executive leadership team on our long-term business strategy, align their interest with those of shareholders and support the creation of long-term shareholder value. The performance measures and service conditions relevant to the proposed grant are set out in the notice of meeting. While shareholder approval is not technically required, the Board has chosen to seek shareholder approval in recognition of the importance of shareholder engagement on the remuneration of the group CEO. The Board, with Steve Johnson abstaining, recommends that shareholders vote in favor of this resolution. Details of direct votes and proxies lodged prior to the AGM in relation to these resolutions are now shown on your screen, which show that both resolutions have been very well supported by shareholders. Belinda, do we have any shareholder questions or comments on either the remuneration report or the proposed grant of performance rights to the group CEO?

Chairman, we have received 3 questions in advance of the meeting relating to these items of business. The first question is from [ Kasman Pty Limited ], who writes: how can you consider granting performance rights when you're not paying dividends?

Thank you. As I mentioned in my earlier address, shareholders received our final $0.10 per share dividend yesterday. So we have paid dividends this year. The full year dividend totaled $0.36 per share, albeit at the bottom end of our range, but within our target payout range of 60% to 80%. And as I mentioned, when introducing this resolution, the purpose of Suncorp's long-term remuneration is to focus the group CEO and his executive leadership team on our long-term strategy and the creation of long-term shareholder value. These long-term incentives will only vest if relative TSR and cash ROE targets are met over the vesting period. I would also like to note that this year, all executives had short-term incentives deferred into equity. Meaning, they did not receive any cash beyond their fixed salaries. Next question please, Belinda.

Thank you, Chairman. The next question is another one from [ Easy Flow Logistics Pty Limited ], who write: why is item 1 advisory-only, please? Was this a decision made by the Board? Was is it a statutory requirement? If Item 1 is advisory and if Item 2 is voted down by the shareholders, the CEO will receive an equivalent cash payment anyway, why do you even bother with these 2 items, please? Putting them up for a vote, when the Board can go and ignore the result of the vote seems: a, to be a waste of time; and b, is condescending to the shareholders.

Thank you. To answer your first question, it's a Corporations Act that prescribes a requirement for ASX-listed companies to put the remuneration report to an advisory vote at the AGM. You are correct, Suncorp is not required to seek shareholder approval in relation to the group CEO's LTI grant. Listing rules only require approval where any vested shares are issued, and Suncorp intends to purchase any vested shares on market. As I mentioned earlier, the Board wishes to seek shareholder approval in recognition of the importance of shareholder engagement on key remuneration issues. You are also correct to point out that if shareholders do not approve the grant of these performance rights, and as we've seen from the votes received, that will not be the case today. They have been overwhelmingly approved. But the equivalent LTI award would, in those circumstances be provided in cash, subject to the same performance and service conditions. Whilst this is clearly set out in the notice of meeting, I think the voting speaks for itself.

Thank you, Chairman. The next question is another one from [ Mr. Hansman ], who writes: as the Chairman acknowledged in her report to shareholders, it's been a particularly difficult and challenging year for shareholders. Shareholders saw their annual dividend fall from $0.78 to $0.36 per share, a decrease of 53%. How can the Board justify their different view towards directors' fees, which were increased, for example, the Chairman's fees increased by 14% from $526,000 to $600,000?

Thank you for your further question, [ Mr. Hansman ]. I should start by saying that the Chairman's salary was set in 2016. So my base fee, the Chairman's base fee did not change. I think the numbers that you're looking at were -- I took on the role partway, initially partway through the year. So it's not a like-for-like comparison. And yes, we acknowledge that it has been a challenging year. And I can also assure you that all of your Board and your management team have stepped into that challenge. I'm not sure whether I mentioned earlier in the meeting, but the Board has met formally 23 times. It's certainly in our annual report this year, and there have been additional committee meetings and workshops.

Thank you, Chairman. I confirm that concludes the questions received in advance on this topic. I'll now move to questions received via the online platform during the meeting. The first live question is another from [ Mr. Corfield ], who writes: Chair, in the remuneration report under remuneration alignment with risk and conduct management, the Nonfinancial Risk Committee, which includes the group's CEO, senior executives and the group General Counsel, supports the identification, assessment, monitoring and mitigation of nonfinancial risks. Under this governance structure, how is this applied to Suncorp's long-standing aggrieved customer cases?

Yes. I'm not sure that I understand the question. So in terms of the Nonfinancial Risk Committee, and this is -- might ask the Chairman of the Risk Committee to make a comment or the Chairman of the Remuneration Committee to make a comment. We have a process, I think Simon can speak from Singapore, we have a process at the end of each year where the Chair, myself and the Chair of the People and Remuneration Committee and the Chair of the Risk Committee come together in a formal way. And we hear from the Nonfinancial Risk Committee about the factors that have been considered during the course of the year in coming to a final risk assessment. That will take account of a number of different factors, many different factors. But I'm not sure that I have any detail, actually at hand, about where in the mix your point around customer issues is dealt with. So I'm happy to take that one off-line, unless Simon, you would like to add anything from Singapore?

Hello, Christine, yes. Thank you. I can confirm that each year, we look at all of the behaviors of people within the organization. And if there have been customer detriment from poor behavior, that would have been reflected in the remuneration outcome. So I think the process works reasonably well in terms of how it is brought to our attention and we take action as appropriate, whether that be on a customer issue or any other issue.

Thanks, Simon. And because I can now say the technology is working for us, I've got the Chair of the Risk Committee in the room with me today. So Sally, do you want to add anything for the benefit of shareholders? Just about this process rather than this question because I think it's an invaluable process.

Thank you, Chair. The only thing I would add to Simon's comments is that it is a very rigorous discussion. It is not something that we go into with a foregone conclusion, and we test the members of the Nonfinancial Risk Committee quite vigorously before we reach a conclusion.

Thank you, Sally, and thank you, Simon.

Thanks, everyone. Chairman, I confirm there'll be no further questions on remuneration that have been submitted via the online platform.

Thanks, Belinda. Well, if that addresses all of the questions and comments on the remuneration report and the proposed granted performance rights to the group CEO, would you now vote using the voting card in your online portal if you have not already lodged your vote prior to the AGM? Details of direct votes and proxies lodged prior to the AGM in relation to these resolutions are again shown on your screen. [Voting]

Taking into account the direct and proxy votes shown on the screen and the total number of shares being voted today, resolutions 1 and 2 have been well passed. Thank you, shareholders. The remaining 2 items of business are to elect and reelect 2 members of your Board. Firstly, the election of Director, Elmer Funke Kupper, who was appointed to your Board with effect from January 2020. To address the ASX's updated corporate governance principles and recommendations, I can confirm that in appointing Elmer, the Board undertook our standard comprehensive selection process, including the assessment required by APRA that Elmer is of appropriate fitness and proprietary to act as a director. Elmer's background and experience are detailed in the notice of meeting. I should also add that since the notice of meeting was finalized, Elmer has been appointed as a member of the Board's Risk Committee. Elmer has been a valued director since joining earlier this year, and the Board fully supports his election today. In line with our previous practice, I'd now like to share with you Elmer's comments in support of his election. His comments were prerecorded to avoid any technical difficulties given that Elmer is joining us via phone today.

Thank you, Chairman, and good morning, fellow shareholders. Like many of you, I'm also a customer of Suncorp. I joined your Board in January this year, and I'm a member of the Audit Committee and the Risk Management Committee. I realize that you may not know me, and it would have been good to meet in person at this year's AGM. Sadly, that is not possible. I hope that we will have the opportunity next year. My background is mostly in senior management. I started my career in Europe at consulting firm, McKinsey & Company. I moved to Australia in the mid-1990s and spent 10 years at ANZ bank. My 3 senior roles at ANZ were in risk management, retail banking and the international business. Following my time at ANZ, I served as CEO of Tabcorp; and later as CEO of the ASX. My background in financial services and senior management allows me to contribute to Suncorp. I have worked in businesses that faced increased competition and disruption from technology and changing customer behavior. I've dealt extensively with financial services regulators and state and federal governments. My experience as CEO and my time at the ASX built my understanding of good corporate governance. I joined Suncorp in one of the most difficult years for natural disasters. Floods, hail and bushfires have had a devastating impact on a number of communities. They were followed almost immediately by the COVID-19 pandemic. The strength of the company and its culture tends to be visible when times are tough. I have been impressed with the way Suncorp's management and staff dealt with the crises and the thousands of customers who needed the company support. Moreover, your company is resilient with a sound financial position and a strong capital base. In times of economic uncertainty, this is particularly important. 2020 is proven to be an active year for your Board. In my first 9 months as a Director, I have found the Board and committee discussions informative and open. The diverse views and experiences are making for a rich discussion and deeper insights. Since the outbreak of COVID-19, Board meetings have been held virtually. Your Chairman and the chairs of the various Board committees are managing this process well, allowing the conversation to flow and directors to participate fully. With your support, I look forward to contributing to Suncorp over the coming years. Thank you.

And thank you, Elmer. As I mentioned, Elmer is on the phone line as well today. Our last item of business is the reelection of Director Simon Machell. Simon joined your Board in April 2017 and was elected by shareholders at the 2017 AGM. Simon's background experience are detailed in the notice of meeting. Simon has made a significant contribution to the Board, including as Chairman of the Board's People and Remuneration Committee. The Board and I are pleased that he is standing for reelection today. As I mentioned earlier, and you've heard from Simon on the phone just shortly, he also made some prerecorded comments in support of his reelection, which I will now share with you.

Good morning, everyone. I have had the privilege of serving on the Suncorp Board for the last 3 years, and I'm asking you today to allow me to serve for a further term. The world has changed to a barely believable extent since I started with Suncorp. We have seen the continuing devastating effects of natural hazards on our customers. And of course, during 2020, the unprecedented impact of COVID-19 on the way that we live our lives. I am very proud of the way that Suncorp continues to respond to the significant effects of external events on all of our stakeholders. There is a real passion for doing the best job that we can for our customers, creating a safe and challenging environment for our people and giving a good return to our shareholders. For the last 2 years, I've been the Chairman of the People and Remuneration Committee and have steered the organization to create fair and reasonable remuneration outcomes. A little about my experience. I have spent my whole career in the insurance industry. Firstly, in finance roles. I'm a chartered accountant by background, and then in operational and executive roles. I was the CEO of Norwich Union in the U.K., which at the time was the U.K.'s largest insurer, and then ran all of the Aviva's businesses across 14 countries in Asia and Eastern Europe. I retired from executive life in 2013. I have other Board roles in Australia, Singapore and the U.K., I'm the Chairman of Tesco's insurance company in the U.K. and sit on the Board of Tesco's Bank. This helps me to bring a global perspective to Suncorp on progress and innovations in other markets. If I'm elected today, I will continue to challenge and support the CEO and his team to make Suncorp the best organization that it can be for our people, customers and shareholders. Thank you.

Thank you, Simon, and thank you, Elmer. Obviously, we're reaching the high point of the meeting because we now have 474 people online joining us. So the numbers are going up, not down. So we appreciated hearing from your addresses. So the details of direct votes and proxies lodged prior to the AGM in relation to these resolutions are now shown on your screen, which show that both resolutions have also been very well supported by shareholders. Belinda, do we have any shareholder questions or comments about Elmer's election or Simon's reelection?

Chairman, we did not receive any questions in advance relating to these items of business. So I will now move to the questions received via the online AGM platform during the course of the meeting. The first live question is another from [ Ms. Malik ], who writes: Simon Machell, are you still Singapore-based? What aspects from your past experience have been brought to bear in your role with Suncorp?

Simon, did you hear that question? Would you like us to repeat it?

No. Thank you, Chairman. I heard the question, and thank you, [ Ms. Malik ], for the question. I think I addressed some of the points you raised in my video. But I can answer, yes, I am in Singapore. I've been in Singapore since March this year. And as the Chairman said, I've joined all the meetings that we've had by video conference. So that's included a number of Board meetings and also the year-end remuneration committee to land the remuneration report. Just a little bit about my background. I think I won't repeat what I said earlier. But I think the perspective I bring to Suncorp is having worked in the insurance industry for over 35 years. I have an in-depth knowledge of things like regulation, technology, reinsurance, remuneration practice coming from other markets, which helps me fulfill my role with Suncorp and bringing a different perspective, I guess, from outside of Australia.

Thanks. Thank you, Simon. And I should also say that Simon is very generous in the -- with the time difference with Singapore, we quite often have him starting meetings at 5 am in the morning to sit in with our -- fit in with our East Coast Sydney time zone. So -- which he does religiously. So thank you, Simon. Belinda, are there any more questions?

Chairman, I confirm there have been no further new questions on director election or reelections submitted via the online platform. However, I would like to take this opportunity to acknowledge that [ Mr. Corfield ] has submitted further questions. To the extent that these have not already been addressed elsewhere in the meeting, we'll be following up with him directly afterwards. Thank you for your contribution, [ Mr. Corfield ]. Chairman, there are no further questions on any other items of business.

As that addresses all of the questions and comments on Elmer's reelection and -- Elmer's election Simon's reelection, thank you, Belinda. Would shareholders please now vote using the voting card in the online portal? [Voting]

Details of direct votes and proxies lodged prior to the AGM in relation to these resolutions are again shown on your screen. And taking into account the direct and property votes shown on the screen and the total number of shares being voted today, it appears that both resolution 3A and 3B will be passed. So congratulations, Elmer and Simon. We do have a tradition here historically that the person with the most votes has to buy the rest of us lunch. But given you're both remote, I guess, we have to buy our own lunch, but we might be able to reactivate that next year. So I think that now concludes -- I believe that does now conclude the business of the meeting. The poll will remain open for a further 10 minutes to enable you to complete and submit your voting cards online. And again, if you need assistance, please contact the link share registry team on 1 (800) 990-363. Once the share registry has counted the votes during the meeting today, the results of the poll will be advised to the ASX later today and will also be available on our Suncorp group website. A replay of today's AGM webcast will also be available on the Suncorp group website. I'm not sure we'll get the same number of hits on the replay as we did on the live. That does now conclude the business of the meeting, and I do declare the meeting closed. Thank you for being a part of Suncorp's first entirely online AGM, particularly for those shareholders who were able to join us for the first time. We hope that you and your loved ones keep safe and well in these uncertain times, and we'll continue to work as a Board in this virtual format providing the stewardship that you expect of us at Suncorp for so long as that is necessary. Thank you very much.