Suncorp Group Limited (SUN) Earnings Call Transcript & Summary

Good morning, everybody. Thank you for being here. I'm very pleased to welcome you all to our investor update. Today, I'm joined in Sydney by our executive leadership team. I'm Neil Wesley, the EGM of Investor Relations at Suncorp. I'd like to begin by acknowledging the traditional owners of the land on which we are meeting today, the Gadigal people of the Eora Nation and pay my respects to elders past, present and emerging. For those of you in the room today, in the event of an emergency, please follow the instructions of your Suncorp host, the events team. Today's schedule is pretty tight. We're going to stick to the allocated time for Q&A and breaks. For the breakout sessions, please check your group allocated, which is just behind your name tag and follow the instructions just on call post. At the conclusion of the event, please join us upstairs for some lunch on our roof terrace. And now if I could ask you all to please turn your various mobile devices to silent. And with that, let me hand over to Steve, our CEO.

Thank you, Neil, and good morning, everyone. And alongside Neil, I'd like to pay my acknowledgment to the traditional owners of the lands on which we meet and to pay respects to all elders past, present and emerging. Now I hope as you came in, you received, we see we're all wearing our poppies today, which is recognizing Remembrance Day tomorrow at Suncorp. At Suncorp, we're proud to support those who serve our community and tomorrow in all of our workplaces and all of our branches across Australia and New Zealand, we will remember to remember. So welcome. Welcome to our investor update. It's great to be able to do it in person on a hybrid environment and to get people back together again, something we've really looked forward to for some period of time. The agenda today we'll split it into 2 distinct sections. The first, we'll provide an opportunity for Clive, Belinda, Jeremy and myself to update you on a couple of things relative to the bank. Firstly, the Q1 performance. We'll go through the time lines, the processes, the activities that are undertaken to achieve the necessary approvals and complete the sale of the bank to ANZ. I know that's on top of everyone's mind. We'll go through our plans for the separation of the bank from the group and we'll provide a little bit more detail and a little bit more color around the costs that we've assumed for separation and other transaction costs and the appropriate capital return thereafter. Then we'll break -- We'll have a Q&A session after that, and then we'll have a short break. And after the break, we'll switch gears and focus on the go-forward General Insurance business for Suncorp. I'll get Adam to provide you with some further detail around the strategy for the business and the program of work that is underway at the moment to set that business up for success, both operationally and obviously, financially as we move forward. Be the first of a number of updates that we intend to provide, which will occur alongside our usual disclosures and obviously, the key milestones in the bank separation process. So not all the answers today, but certainly, good insight into the direction that we're heading. Lisa, Jeremy and Fiona will then take you through a session focusing on how we're managing resilience, and it's the topic of immense interest for everyone, including our pricing, underwriting, risk selection, natural hazard allowance. And of course, very important dear to our heart is the advocacy agenda that we have been running across Australia and New Zealand recently and that we're starting to get some traction on and then we'll sum up and obviously have another opportunity to talk to you and answer your questions. The breakout sessions work groups that we're looking to do will give you an opportunity in a smaller group environment to do a deeper dive into some of our climate modeling, some of the interesting work we're doing in climate modeling, the events, response processes that we've got, some of the geospatial mapping and otherwise. And as a deep dive on the arcane world of investments. So Jill and Jeremy will take you through that topic. So with that, let me hand over to Clive to kick off the day.

Thanks, Steve. It's good to be here with you all. And for those of you that don't know me, my name is Clive van Horen. I've been with Suncorp since the middle of 2010, leading the bank. So what I'd like to do is just start with a quick recap of the bank strategy, which you can see on the slide in front of you. We have stayed consistent with the strategy. We're continuing to execute on it. And as we lead into the ANZ transition, it will remain our focus to execute on the strategy. I spent a huge amount of time with customers and staff since the announcement of the ANZ deal. So I feel I've got a very good view on sentiment, both with customers and our own people. And I'm very pleased to say that our ambition around creating a brighter future still resonates very well with both customers and staff. That ambition, creating a brighter future has got 2 pillars to sustainability and well-being. And on the sustainability, I'm very pleased that we've been able to launch a number of customer-oriented proof points. This is not only at a corporate level, but also at the customer level that we're focusing on sustainability. Recent of which is an Australian first, we call it the Carbon Insights account, it launched a week ago. And it's the first time that we've got a product that is certified as carbon neutral. So very pleased with that. We're not the first bank to be certified carbon neutral, but that product is. And it's something that's targeting customers who do care about sustainability. So early days, but we're very excited about what that will mean for our growth. Our 5 strategic priorities, which you can see in front of you, they remain. I'll touch on some of those in a moment. I want to just quickly talk about some of those key outcomes and metrics, which you can see at the bottom of this slide. And Net Promoter Score, something you're all very familiar with. One of the NPS scores we track is broker NPS. In other words, how happy our brokers with Suncorp Bank, how likely are brokers to recommend us to friends, families and customers. Back in January 2020, that broker NPS was at minus 50, nothing to be proud. As we stand here, it's a 6-month rolling average. It's plus 13. So it's gone from minus 50 to plus 13. And the spot stores are well above that level. So a very, very significant transformation in the broker experience dealing with Suncorp Bank and some of that has played out in the results I'll share in a second. Lending market share also very important to us and I'm also pleased that we've been able to turn the balance sheet around from shrinking to growing faster than market. And so for the last 8 months in a row, we've been gaining market share, small amounts, but consistently gaining market share in home loans, we are up 12 basis points in the last 8 months after many years of decline. And then finally, on the slide, I'll just talk to people engagement briefly. So people engagement is good. It's strong and it's holding up very, very well in the face of the ANZ announcement. In fact, it's continuing to rise. We measure our employee NPS. In other words, how likely are you to recommend Suncorp as place to work and that's up from 22 to 55. So a very strong trend in our engagement, which I think talks to the connection people have with our strategy and our ambition. So moving on then to some of the key drivers of our growth. And this is based on APS 330, which was published this morning, so a little bit more than was published is what I'll share with you now. And if you look at the top left, you can see home loan growth for our balance sheet. So pretty healthy growth for the last 2 quarters, quarter 1 of '23 has dropped off slightly. But if you look at our multiple of a system, up from 2.4x system in quarter 4 of last year to 3.1x system in quarter 1 of this year. So very healthy growth relative to the system, albeit a slightly slowing market. One of the drivers of that and perhaps a little less important going forward, but very, very important in the last couple of years is turnaround times, and you can see that in the top right. So the yellow line is the application volume. And you can see that's come off a little bit. So a slight drop in application volumes for us and the system in the last few months. But the important one is the green line, which is our turnaround times. And that is the time from submitting an application to an unconditional approval. And you can see it's sub 5 days, in fact, it's around 3 days. That puts us best in market or amongst the top 3 end markets. So a huge amount of work has gone into that over time, not investing massive dollars in technology, but a lot of small changes that have driven that sustained improvement in turnaround times, which we're very pleased with. Moving to deposits, you can see healthy growth in the deposit portfolio as well. Interesting, if you look at the mix, if you look at the different colors of the bar chart, the mix has shifted in the last quarter, perhaps not surprising given the changing rate environment. So note this transaction accounts, which is the dark bar at the very bottom of the chart has dropped off a bit as a proportion of the total portfolio. Customers clearly looking for yield as rates are going up and conversely the term deposit mix going up even so slightly. We are very well funded, conservatively funded. We successfully raised $750 million in the recent issuance. That went extremely well. So overall, we maintain a very conservative and strong funding position on the balance sheet. Our margins, obviously, are a very key point of interest in the market at the moment. And we are reporting our quarter 1 margin, which was at 1.99%. As you know, if you've been tracking us, our target range is 1.85% to 1.95%. So we're tracking above our target range. That boost we've seen as a function primarily of the increase in the cash rates and that has helped our deposit margins in particular. Looking forward, we think we'll probably stay above that target range for the remainder of FY '23, but in the medium term, we do expect to revert back into the target range. And then cost-to-income ratio, it's always been a big focus for us and our investors. And again, we're disclosing that for this quarter. Our cost-to-income ratio is just under 52% for quarter 1. And that's been a long-standing commitment we've made to the market that we'll get to 50% CTI, around 50 by the end of FY '23. So good to see that the momentum is very strong, and we remain confident we'll get to around 50% by the end of FY '23. So the obvious question when you see the balance sheet growing strongly, is has this come at the expense of credit quality. And if you look on the next slide, the answer to that is definitively no. If you look at a few key metrics, loan-to-value ratio above 80%, I'll remind you, we do ensure all of our above 80% with LMI. But that mix of higher LVR lending has been coming down. So the first chart is the portfolio level, 13% of the portfolio is high LVR and the second chart is originations. So that's at 9%, which is dragging down the overall portfolio mix down to that 13%. Another important metric, which APRA is also very focused on is loans with a debt-to-income ratio, DTI of greater than 6x. And you can see the yellow bar is us and the green bar is the rest of the industry. So our mix of high DTI lending is well below the industry, and it is stable or, in fact, trending slightly down. So that gives us confidence that we're writing good quality loans at a solid LVR and with a solid repayment capability. The proportion of loans in fixed rate has also been a source of great interest in the market in the last while because the margins on fixed rates have typically been a little lower. And you can see the very significant shift we've achieved in the last while, very deliberate actions we've taken around our pricing as swap rates end up. We moved pretty quickly, in fact, ahead of the market in many cases to increase our fixed rates. And you can see what that did to our mix of originations. So whilst the portfolio is sitting at 28% of the portfolios on fixed rates, for originations in the last quarter was only 3%. So we've been very active in trying to manage the margin impact of all of that. Obviously, like many others, we also focused on those maturities as and when those fixed rates are maturing. And then lastly, the arrears or the lag metric of arrears which is on the bottom right of this chart, you can see the trends are very positive. So arrears are multi, multiyear lows. We do expect those to come under some pressure into the new year, but that pressure will probably emerge fairly gradually given the strength of our customers' balance sheets. Taking all that into account, strong portfolio metrics, coupled with some future uncertainty, we've taken the position that in this quarter, we have not adjusted our expected credit loss provisions. We'll obviously keep those under review and relook at that as we get to our full year -- our half year reporting. So I'll finish there. Just wrapping up to say the bank, we believe, is performing well. We believe that whatever lies ahead of us, ANZ transition, economic uncertainty, we were very well positioned to tackle all of those changes that may come our way. With that, I will hand over to Belinda to talk about transition.

Good morning. Thank you, Clive. For I suspect many of you who don't know who I am, I'm Belinda Speirs, I joined Suncorp in 2013, originally in the claims team before returning to my legal routes. I've been the Group General Counsel for several years and was actually closely involved in negotiating the bank transaction. In my current role as Group Executive completion and transition, I'm responsible for enabling completion and ensuring that we plan for the separation. So today, I thought I'd actually just talk you through some of the main streams of work we have in this regard. Starting with the regulatory and government processes. We've got to obtain 3 approvals. Firstly, ACCC approval, Federal Treasurer approval and then amendment to repeal of the state financial institutions and Metway Merger Act which is a bit of a mouthful. So from going forward, I'm going to refer to as the Metway Merger Act. In terms of the ACCC, the parties are seeking merger authorization. This is a public and transparent process, which involves active engagement with the commission and enables them to consider comprehensively the very detailed submission that will be made that will set out the terms, rationale for the transaction, the positive outcomes for Suncorp Bank customers and the benefits of Suncorp Group that will come from a singular focus on its growth strategies and investment requirements. The parties are currently engaging with ACCC and anticipate that the application will be published in the coming weeks. It will be published together with the schedule, the timetable that sets out the considerations, the period of public consultation and determination date. We anticipate that it will be a process that's similar to the other merger authorization applications that the commission is currently considering. As such, we anticipate that public consultation will commence on publication. The ACCC also probably -- published a statement of preliminary views prior to making any decision. The parties will have an opportunity to respond to that, and then they will make a decision on the stipulated date. The authorization process proceeds within statutorily defined time frames. So the ACCC normally has 90 days from the publication of the application to make their decision. However, they can extend that for a few months with the agreement of the parties, and that's what we are seeing in the current applications that are before them. If the commission is averse to the transaction, the parties able to refer the matter to the Competition Tribunal, which would add approximately 7 months to the process. Before entering the transaction, we considered in depth the competition matters and are confident that the commission will thoroughly consider the detailed data provided and the positive benefits for customers contained in that material. In terms of FSSA approval, ANZ is also required to seek approval from the Federal Treasurer and to the financial sector Shareholding Act. The Treasurer will seek input from APRA and ACCC and will be guided with what is in the national interest. In terms of Queensland and the amendment or appeal of the Metway Merger Act, we are engaging constructively with the Queensland government, and this will reflect our continued commitment to Queensland through it remaining as the location of our headquarters. We're also working through other aspects, including a potential disaster event response center. Assuming authorization is obtained from the ACCC and other regulatory approvals are obtained shortly thereafter, we currently anticipate completion occurring in the second half of calendar year 2023. Turning now to separation. As we've simplified our business, including through successfully divesting our life and wealth businesses, we have built up significant breadth and depth of expertise across the various domains of planning and executing complex business separations. Leveraging that expertise and without preempting any of the regulatory approvals, Suncorp is planning and preparing now for the separation of its banking business post completion. Although substantially larger in scale, we are following a similar and proven approach. We are working diligently and obviously, within the bounds of competition law with ANZ and have already developed a joint transition plan. This has been structured to minimize business disruption and enable a smooth transition for our customers. The separation strategy is to transition all of the dedicated and core Suncorp bank capabilities required to operate the bank on day 1 to ANZ. This includes all relevant employees supporting the bank, dedicated technologies such as Hogan and Oracle, various contracts and dedicated premises. Post completion, Suncorp Bank will continue to be supported by a range of transitional activities in respect of shared systems such as telephony support and some of the corporate premises. This will be under transitional services agreement and will run for a period of 2 years with the potential to be extended for 1 year. During this transitional period, integrated sets of capability will progressively transition across to ANZ and will gradually step down. In addition, ANZ will also be entitled to use the Suncorp Bank trademark for a period of 5 years with the potential for a further 2-year extension under a trademark license agreement. Thank you. And with that, I'll hand to Jeremy.

All right. Thanks very much, Belinda, and good morning, everyone. And as Steve said, it's fantastic to get back to seeing people in the room with us. It's been a long, long time. So great to see those in the room, and welcome to those who are joining us online as well. I'd like to give you a quick update then on the divestment related costs and stranded costs in connection with the sale of the bank that we flagged at the sale announcement earlier in the year. I do note that we've still got some work to do to firm up elements of these cost estimates, and we'll do that as we progress the detailed work planning that Belinda just taken you through. So our best estimate of -- to use an actuarial term, our best estimate of the cost remains to be about $500 million. And we've categorized them into 3 components to help explain them. Firstly then, around half are expected to be made up of separation and related costs. So this category includes separating out our technology stacks and readiness to transition over to ANZ. Bank rebranding prior to completion, so we need to rebrand the bank from Suncorp to Suncorp Bank and then costs to run the end-to-end separation and completion process. The second category is transaction and related costs, and these include various professional services fees and advisory fees as well as a prudent estimate of sale-related provisioning and contingencies. And then thirdly, we've got an estimate for projects and various restructuring costs that we expect to incur in dealing with the stranded costs. Now whilst we'll manage these costs prudently in the context of the sale approval process, we expect to incur about 20% of them in FY '23 as we get ready for the day 1 transition and completion. Moving then to stranded costs, and the majority of them will be provided -- continue to be provided to the bank under the terms of the TSA, leaving net stranded costs, that's net of the TSA revenues of about $40 million per annum. So these stranded costs comprise. There will be a small element that are expected to be removed on immediately following completion. The majority of the costs are going to be related to bank-specific activity, and they'll be progressively removed as the TSA services are no longer provided. And then we do expect a residual component relating to group allocations, which we expect to then remove through a program of efficiency savings. The timing of the removal of the stranded costs is largely dependent on the timing of the TSAs, and we expect to exit all stranded costs within 3 years post completion. There will also be a small amount of stranded capital funding costs, particularly in FY '24. And we then expect those to become immaterial thereafter. And of course, we'll continue to update on these costs as we progress our planning and refine the estimates. Turning to the next slide. I'd like to give you a quick update on the expected timing and form of the return of capital. So I'd first like to start just by reiterating that it remains our absolute intent to return the majority of net proceeds to shareholders. The net return then is expected to comprise 2 components: firstly, a franked special dividend, which is expected to be paid within 2 months following finalization of the completion accounts. And then secondly and the majority is a pro rata return of capital and in the associated share consolidation. So as is usual, with that process, the amount and timing of the special dividend and return of capital will be dependent upon the required ATO rulings as well as a shareholder vote. And we're already engaging early with the ATO so that we can run as an efficient as possible process to get that finalized post finalization of the completion accounts. So whilst those are the 2 expected return mechanisms, it's possible that there are some residual net proceeds. And if that's the case, we'd expect to return that through on market buybacks. And again, we'll update on the timing and form of the return of capital as the completion progresses. So at this point, I'd like to hand back to Neil to facilitate questions on the bank before we move to the insurance part of today's agenda.

Thank you, Jeremy. We'll take questions in the room first, and then we'll go to the phones and then we'll go to the webcast. So questions in the room first, Dougal.

Dougal Maple-Brown. Belinda, first, I thought there was an ability to short circuit ACCC by going straight to the tribunal and saving some legal fees and several months. Is that not going to happen?

No, the process is to go to the ACCC first. If the commission decides that they are averse to the transaction, then we can go to Tribunal. The Tribunal consists of a judge, an industry expert, an economist, and it is a rehearing. It is a review of the original hearing, but we cannot go directly to the Tribunal.

Okay. And then, Jeremy, sorry, update on the tax payable and transaction, I didn't see a slide on the tax.

Yes. Thanks, Dougal. We're still at the same estimate, which was about $330 million. We haven't changed that estimate. But obviously, that component needs to be worked through in conjunction with the various ATO rulings we need to get around the treatment of the gains.

More questions in the room. Brett Betchell?

You said the majority of the proceeds would be returned. Why not all?

Maybe I'll kick off. I think, Brett, the best way to think about our intent here is to look at our track record, and we've divested a number of businesses already, a wealth business here, life business and capital smart. And in every case, we've provided the proceeds of those back to shareholders. I mean that is our intent. I don't think it's in anyone's interest to make absolute statements at this point in time. Our intent will be to do what we have done historically, and we will keep that under review as we go through and complete the transaction. Obviously, investors would expect us to have some flexibility to make sure that ultimately, the operational needs of the business are met and in place. We're not trying to be cute in anything around those pet wording. It's just to avoid absolute statements at this point in time.

Sid from JPMorgan?

Just a couple of questions on the bank. Just the cost-to-income ratio dropping so sharply. Could you just give us an idea of what happened to expenses in the period?

Yes, sure. So we've often said people often asked us what drives the CETR reduction. Obviously, it's a combination of revenue and cost, and that remains the case for quarter 1, Sid, because you've obviously seen healthy balance sheet growth, so that's driven revenue growth. You've seen the margin uplift from the deposit side of the balance sheet as cash rates have gone up, and we've got quite a big transaction portfolio, as I've said. . And then on the expense side, more to your question, we also flagged quite clearly that in FY '22 last year, we had a step-up, and this is common right across the Suncorp Group, not just in the bank, a step up in our strategic investment and if that would normalize in FY '23, which it has. So that's one of the things that's normalized to a more sustainable level. We've also had a number of cost initiatives, cost focused initiatives that have played out and we are now seeing the benefit of those. The branch closure program that we've been busy with. We've closed a number of branches over number of years, but also about 20 branches last financial year. We get the full year run rate benefit of that this year. And then few other key cost-focus initiatives, in particular, digitization and automation, which are having an impact, taking calls out of the call center as an example, creating more self-service options for customers to do things that they would otherwise do in a branch or talking to our people.

Just maybe a question just for Jeremy as well. Just -- Jeremy, I think at the half year results, you had mentioned that you would look at volatility implications for the group without the bank. Just wondering if you have any update on that?

Yes. I mean we're certainly doing a lot of work on that, Sid. We're probably not at a point where we're sharing all the details of that work yet but we will in due course. But I mean, as a teaser, one of the interesting things that we have seen with Suncorp over the last decade is that our volatility is actually probably more measured than our insurance peers over that period. And actually, in terms of the variability over returns, which surprised me, I have to say is that our variability in returns over the decade is probably at the lower end of the ASX 200 as well. So we're doing quite a lot of work around how we think about volatility, how we think about the diversification component of the bank, including thinking about things about reinsurance, but we will update the market on that as we sort of bring that to...

And certainly, we'll pick a bit of that up in the second session today.

Next question, Michelle.

I was just wondering if there are any conditions on the shape of the bank when you hand it over in 2023, because 2023, there's the fixed rates coming off and potential refinancing. So if you lost half year customers or whatever in the worst-case scenario, are there any conditions around customer retention or so forth that could derail the transaction?

I'm happy to start. You guys -- the short answer is there are no such conditions attached to customer retention or fixed rate maturities. But I think the overarching point, Michelle, is as I try to talk to [ seeking guys ], we're continuing to deliver on the strategy. We're performing well. The key message I have back into the business is the best thing we can do is to keep performing well as we head into the transition, if in doubt, go faster, don't put your hands in the air and wonder. And I think that will stand us in the best possible stead as we head into the ANZ world. So no specific conditions.

Talk about the completion.

Yes. And the proceed process, the completion process is pretty vanilla. It's a simple net asset completion reconciliation just rolling forward the December net tangible assets with a fixed amount of goodwill that we've already disclosed around the $1.3 billion mark. So that's a pretty vanilla simple completion account process, roll forward net assets.

And just philosophically, just to fill out that commentary, I mean, our intent here, as Clive mentioned, is to run the bank as we have run the bank with the same focus that we've had executing to the same strategy, and we'll do that, and we have to do that, obviously, that not only do we want to do it, but we have to do it, keep supporting our customers all the way through to completion. That puts us in the best position under any set of circumstances we may be dealing with at the time.

More questions in the room. Kieren?

Kieren Chidgey, Jarden. Just a follow-up question, Clive, on the bank, on the NIM, which I think you said was 1.99% in the quarter. Just wondering if you can give any thoughts as to the outlook.

Yes. So the outlook, as I said briefly, is that we expect to remain above our target operating range, 1.85% to 1.95%. So with 1.99%, we expect to stay in that range for the rest of FY '23. Obviously, the big drivers of that are what happens to further cash rate increases, what happens to competition, refinancing activity on the back book. So there's a few wholesale funding costs. There's a few competing forces positive and negatives. But overall, we believe that for the rest of FY '23, we'll likely be above the target operating range. But that will moderate and come back into range beyond that.

Okay. And just a second question, a follow-up to Sid's question on the cost to income within the bank. You've reiterated sort of the full year target of 50%, which I think was always an exit rate. So given we're at 52% now as you're suggesting it just hovers roughly around where it is for the remainder of the period. The cost growth is...

Yes, we're not going to sit back and let it happen by itself. -- there's work to be done to get to that 50% and the 50% to be clear is the half 2, the end point for -- not for the full year necessarily, but for the endpoint, we expect to be around the 50% level in half 2 of FY '23. We've also got inflationary pressures like everybody else in the economy. So there's forces that we got to deal with that are going to make that a little bit tougher. But overall, the combination of these revenue and those cost measures we do maintain that we'll get to the 50% by the end of '23. Does that answer your question, Kieren?

Kind of I mean maybe.

We'll try and do better than the guidance that we've had in the...

We're talking sort of 50% second half or more...

Going to be precise around it. We'll do our best to do better than what we've got in our guidance at the moment. All right.

There's another question from Brett.

Just following up on NIM. Presumably, it was increasing during the first quarter and is continuing to increase. Is that the case?

Yes, look, we probably won't get into the month-by-month movements because these things can be a little bit volatile. But clearly, if you just draw a line from where it was in the last reported disclosure to where it is now, that is an increasing trend to get to the 1.99% for quarter 1.

And continuing NIM growth?

Yes, I'm not going to get into month by month, but it is still healthy, and we expect it to be healthy for the next quarter at least.

I'm just going to go to -- there's a question online. It's from Andrei Stadnik. It's sort of been covered but I'll ask it, given the better profitability in the bank, did Suncorp sell the bank too early? Or is there a price adjustment mechanism to extract a higher price for the bank?

You want to get through the completion again?

Yes. I mean the -- no, I mean the completion, as I said, is a pretty vanilla net asset completion process. But just to remind people of the metrics at the sale of the bank, we sold it at a [ 1.35 ]. If you include the brand fees 4x NTA, which is trading pretty attractively relative to where the other original banks are trading today.

I might just ask the operator if there are any questions on the phones?

Neil, there are no questions from phone participants at this time.

Any other in the room? All right. Thank you. We'll have a short break. See you back soon. Thanks. [Break]

Okay. If you are able to grab a cup of coffee and the like. So to the second half of the presentation now. And in this section, our aim is to a little bit more detail around the go-forward insurance businesses both here in Australia and obviously, in New Zealand and provide a deeper dive into a number of really interesting topics. But first, I just want to do a brief recap of the Suncorp simplification story and replay the rationale for the sale of the bank. From day 1, as a team, our overarching objective has been to align everyone at Suncorp around our purpose, which is to build futures and protect what matters. I talked about the purpose in our forums. You've heard me talk about the importance of purpose and how that leads to improved shareholder outcomes, which we achieve through connecting our people and ultimately through to our customers. And this is the inverted pyramid that we use not only externally but internally describe how all of these things are connected up. Now to achieve full alignment around our purpose, our priority, therefore, has been to simplify our business. This means that every moment of our time as a team is directed to improving the way that we deliver to our insurance and banking customers. Now that applies equally to me, to the Board, to our leadership team and to every single individual that's operating within Suncorp. Now I've had the privilege of observing Suncorp over 17 years now, and I know and I'm firmly committed to the fact that it performs best when it's investing in and delivering to its core propositions. Now this slide is one that's very familiar to you and underpins the key milestones of our simplification journey. The bank sale is the latest chapter in that ongoing simplification agenda. And we previously talked about the compelling nature of the ANZ offer, the strategic alignment between the 2 businesses, us and ANZ, the positive outcomes for customers and for our people from the transaction and the substantial Queensland package that accompanies the deal. Now today, what we want to do is give you an early insight into the program of work that's underway to build to our ambition of becoming the leading Trans-Tasman insurer and the cornerstone, importantly, the cornerstone of a vibrant and an effective insurance industry, both here in Australia and across in New Zealand. And we continue to see our portfolio through those -- see our business through those 5 key portfolios: motor, home, commercial, personal injury and New Zealand. And while we've got substantial positions in each of those portfolios, the competitive operational and the external dynamics do differ between the portfolios, and they've all got opportunities that are embedded within each of them. Now of course, our strategy will continue to be enabled by our people. And the established digitization, automation, partnering and platform modernization work that we've talked through over the last couple of years. I'll ask Adam in a minute to discuss this in more detail. And obviously, we want to keep you updated on our strategies for each of these portfolios and for the overall group as we move through to the completion of the bank sale. We do recognize that the bank sale brings about a substantial change to the structure of the group. In addition to addressing the stranded costs, we'll be looking to build further financial and operational resilience. We'll be able to and focus on sharpening our shareholder focus, and we will review our reinsurance and investment strategies, all through the prism of a pure-play monoline insurance company. Before I go to Adam, I just want to quickly just recap our FY '23 strategy, and it's captured on this slide, and you've seen this a number of times previously. To recap, the program is built around 12 priorities, 5 of which relate to the bank and Clive went through them earlier. The 7 insurance priorities have underpinned the significant improvement in our underlying performance during what has been an incredibly challenging time, challenging period for general insurance companies around the world. Therefore, as we enter a new era of Suncorp, we do so with our brands in good shape, a substantially digitized business, contemporary underwriting tools, a best-in-class claims capability. And through our advocacy, we have a respected voice in the debates that matter for our customers and for the community. We look forward to demonstrating some of this to you over the next couple of hours. And so with that, let me hand over to Adam to start to fill in some of the blanks.

Thanks so much, Steve, and good morning to you all. So by way of background, I joined Suncorp in mid-2020, similar time to Clive, who might have added a decade to his years of service in an attempt to bring forward his long service leave. But in addition to my technology accountability, I also lead our group strategy and transformation team. And it's in this capacity that I've been working very closely with the executive team, our senior leadership group, of course, the Board to help shape our go-forward strategy as a simplified insurance business in Australia and New Zealand. And as Steve said, this is what I'll cover in the remainder of this section of the presentation. On the slide that you can see in front of you, we've highlighted the 3 core factors that we believe make Suncorp insurance an attractive investment opportunity for the future. Firstly, we participate in very attractive markets, which are well regulated, of significant size and provide us with healthy growth trajectories. Secondly, within these markets, we continue to have strong market shares enabled by our strong portfolio of brands and leading core insurance capabilities that we've been investing and building on, as Steve highlighted, and particular respect to digital, underwriting, pricing and claims management. We also have a clear position on resilience and advocacy. We're equally very proud of our culture and employee value proposition, which sets us up for success in the future. Our organization is purpose-led and we have a diverse and highly engaged workforce. And then finally, our long-term strategy focuses on delivering value for our customers, investors, our people and the broader community. We intend to strengthen our leading position in motor and stack classes develop a more sustainable and resilient home portfolio, focus on accelerating our growth in the commercial portfolio growing above market in New Zealand and at the same time, creating a leaner and more efficient and a highly digitized and automated business. So I'll drill down on each of these core factors in turn. So let me start on the next slide by sitting at our view of the addressable general insurance market in Australia and New Zealand. This chart shows forecast GWP growth in both markets over the next decade. Both Australia and New Zealand GI;; markets are expected to grow at around 5.5% until 2030 to reach a market size of $72 billion in Australia and $11 billion in New Zealand. Growth in Australia will be mainly driven by Home and Commercial expected to grow at 7% and 5% per annum, respectively. Within New Zealand commercial will drive a lot of that growth also at around 7%. On the next slide, we see that our leading customer and brand positions in both markets sets us up well to participate in the future growth. In Australia, our flagship national consumer brand, AAMI, is 25 percentage points ahead of the next best competitor in terms of brand awareness. And AAMI is very well positioned alongside our regional champion brands, Suncorp in New Zealand and GIO in New South Wales as well as our high-performing niche brands, Apia, Shannons, Terry Scheer, CIL and Bingle. In commercial, we've also got a strong starting position. You can see there the Net Promoter Score of Vero within business insurance customers, which is at 18 against the industry average of plus 10 and then over in New Zealand, in addition to our strong position through Vero and all of our intermediated and corporate partnerships, we also have our joint venture, AA Insurance in partnership with the New Zealand Automobile Association. And AA Insurance has been the most trusted general insurer in New Zealand since 2011 and won multiple New Zealand Consumer People Choice awards for motor, home and contents insurance. On this next slide, you'll see that our starting position is strong market shares across these portfolios. And this provides us with important economies of scale but also positions those businesses to continue to drive strong financial performance and returns and touch on a few of these. In motor insurance in Australia, we remain the clear market leader. In Commercial Insurance, while we're currently #4 in terms of market share, we see this as a real opportunity to drive organic growth and take share. And then in New Zealand, we're positioned very well across the overall market between both AA Insurance and our Vero business that gives us a #2 market share position overall. And we see the strong starting positions as a direct result of our leading core insurance capabilities. And if we start, you can see on this slide with our digital capability, we've talked a lot about this, and we've been investing very significantly in this in recent years. You can see a few stats. We talked about some of these in the recent full year results announcement. So we've seen in our Australian insurance business across our mass brands that our sales and service adoption by customers of our digital assets continues to grow. And this is a direct result of the capabilities that we're putting into our digital tools. So in FY '22, we increased the adoption of digital for sales to 61% and service transactions to 37%, which were up 7% and 6%, respectively, on the prior year. And this means that we're well on our way to the medium-term target that Steve shared previously to get to 70% of all of our customer interactions for sales and service through our digital channels. Secondly, through our best-in-class claims program, which Steve touched on, and you'll hear more about from Paul and the team in one of the breakout groups. We continue to deliver both better customer outcomes, but also greater efficiencies across the end-to-end claims supply chain. Similarly, around digital, we've seen digital lodgment of motor and home claims more than doubled over the last financial year. And we saw during the East Coast floods digital lodgements close to 70% of all claims that were lodged as a result of that unfortunate event. We've also been able to use geospatial data and AI capabilities to create our event control center to better plan, prepare and respond to events. And again, we'll have a showcase on that for those here in person. Thirdly, our underwriting and pricing capabilities, which are clearly at the heart of any successful insurance company and fundamental to improving our loss ratios. We continually enhance our underwriting capabilities and are making targeted investments in pricing analytics and tools like CaPE, which Lisa will provide some more detail on in her presentation. This has helped unlock strong growth across our portfolio. As you can see on that chart, our growth in Australia over FY '22, plus 9% in motor, 10% in home, over 7% in commercial. And at the same time, improving our net loss ratio, which improved from just under 75% to just over 73% over FY '22 in Australia. And then finally and very importantly, we continually address all ESG considerations through, amongst other things, a very strong advocacy program, which Fiona will talk to and impactful partnerships. And this is translating into our leading position on natural hazard and community resilience. And we've also, since 2018 reduced our Scope 1 and 2 emissions by 76%. On top of these leading capabilities, we are immensely proud of our strong, purpose-led culture and the incredible dedication of our people right across the organization. Clive touched on this, but we see this across the entire organization that our employee engagement remains very strong and benchmarks very well compared to the broader market. Our employee engagement sits at 8.4% in Australia, 8.1% -- sorry, 8.1 out of 10 in New Zealand. And this puts us in the top 10 -- so the top quartile category. Suncorp also aims to be one of the most inclusive places to work in Australia and New Zealand by providing an open, inclusive and accessible work environment in which all of our people can thrive. We're making important progress towards this ambition. 46% of our senior leadership are women. We've reduced our gender pay gap by 2.1 percentage points over the past 2 years, in line with our longer-range target to reduce by 5 points over 5 years. And finally, we are building a workforce of the future, responding to some of the fundamental shifts that we've seen over the last 2 years through the pandemic by leveraging more modern ways of working and fostering innovation, culture and capabilities. For example, 95% of our workforce now exercise flexibility with where and how they work. And this has allowed us to reduce our commercial property footprint by 12% over FY '22. We've also successfully implemented new ways of working, a scaled agile delivery model for all of our change activities, and this has brought together our business and technology teams and allowing us to deliver change with greater velocity and more efficiency. And we genuinely see our culture and our people as key enablers and differentiators of our business that will help underpin and drive our go-forward strategy. Then before I get to the strategy, one of the other important things is that we continually stay ahead of the curve and pay close attention to how external trends are evolving. And there are, of course, several external trends that we continue to monitor closely to identify implications for our business as well as the industry, customers and community more broadly. And it's very easy to look at these trends through the lens of the strategic risks that they create, but we also see the opportunities that they provide over the short, medium and long term. So to touch on a few of these external trends, starting with future mobility, including the increased acceleration of adoption of electric vehicles and connected cars in Australia and New Zealand, which has certainly risen quite markedly over the past year or so. New business models and competition, including the advent of embedded insurance and other forms of commercial and distribution partnerships, new risk pools, including the acceleration of green infrastructure. Of course, we talk a lot about natural hazard and climate change impacting the frequency and impact of natural hazard events, the role of data and artificial intelligence, which we see being applied at scale across the interval value chain of all industries and of course, including insurance and banking. And we see, particularly in insurance, the adoption of sensor technology and creating smart homes, which gives us opportunities to evolve our proposition into the future. We see customer expectations evolve, and we've certainly seen this accelerate through the last couple of years for the pandemic. And they're now demanding more seamless and personalized digital experiences. I don't need to talk to this audience around macroeconomic and geopolitical instability, in turn, creating inflation and supply chain disruption. The future of workforce and the evolving expectation of employees and finally, regulation, and we've seen more recently the role of regulators and government looking at the importance of digital privacy. So it's against the backdrop of these trends that we've thought deeply about our medium- to long-term strategy for the insurance business. At the heart of that remains our purpose, building futures and protecting what matters, and this really defines what we do and why we exist. And furthermore, and I think to some of the questions and Jeremy touched on, we're continuing to look at our risk appetite, financial settings, our reinsurance strategies and how we continue to address ESG matters in order to deliver value to all of our stakeholders. So we have defined a strategy for each of the 5 portfolios, supported by 3 key enablers, which I'll touch on. So we think of our business across 5 portfolios, motor, home, commercial, statutory classes in New Zealand. And of course, in New Zealand, we have motor, home commercial and our life insurance business. So in motor and statutory classes, our ambition is to strengthen our already leading positions in Australia. In commercial, as I mentioned, we're actively pursuing growth and diversification opportunities. In home, we aim to further restore margins and develop a more sustainable and resilient portfolio. And in New Zealand, our ambition is to continue to grow market share by building resilience but also looking at the opportunity to establish new partnerships. So I'll just provide a couple of examples in 2 of these portfolios. To start, in motor, where we're at the forefront of defining the future of mobility. As customer expectations increase for more personalized propositions but also change driving patterns, our motor insurance products and services need to continue to evolve to meet the needs of our customers. We're recently very proud to have launched one of the first milestones in our future mobility road map, which is called AAMI driver rewards. This is available through our AAMI app, and it gives our customers an opportunity to earn rewards based on effectively how well they drive. So every time they make a trip, smartphone sensors in the phone track their driving patterns and score customers on things like their acceleration, braking, cornering, speeding and phone usage and you can tell the app, whether you are the driver or the passenger, it notices whether you're on a train or writing a bike or you're driving the car and the AI algorithms over time learn to adapt the solution to your individual driving habits. We launched this in August. We haven't yet marketed it, but we've already collected 4 million kilometers of trip data and more than 25,000 customers have registered and we'll certainly market this as we build out the next set of integrations. And we see this clearly as just the start, our intention over time is to leverage telematics to start to shift into more usage-based insurance propositions, but also look right across the claims experience at where we can deliver value to our customers and also drive further efficiencies. And then on to commercial, where in addition to building our people capability, we're also leveraging technology to support our growth strategy. So Vero Edge is our recently launched uplifted digital platform. It delivers an enhanced broker experience and ultimately, an end customer experience, faster response times through more automated underwriting, more immediate decisions and more sophisticated pricing and risk selection. So again, this was launched in August, initially to support new business for our small and medium enterprise packages proposition, and then we'll continue to extend that through renewals and more seamless integration in some of the leading broker platforms in the market. And then more broadly, across our commercial business, our growth strategy has been focused on further enhancements to our people and technology capability, managing profitability and performance outcome through improved pricing, risk selection, disciplined portfolio management and claims, growing our strong core portfolios that we've done a lot of work to improve and get our returns and performance levels up through continuing to optimize risk appetite, strike rate and greater penetration into attractive markets and then also exploring growth in potential new emerging premium pools. And then before I wrap, just touch a little bit on those 3 critical enablers that Steve also touched on. Starting with our people, our winning culture, our ways of working, which I referenced earlier that we see as critically important now and into the future. Secondly, our operational transformation agenda, which is focused on continued digitization right across our business, automation, it's scale and using AI and machine learning to underpin our automation agenda, targeted use of partnering and also looking at where we can further simplify, rationalize, and streamline our products and processes. And as Jeremy touched on, we see this program of work as absolutely critical to continuing to drive efficiencies in the core business but also address some of the residual stranded costs as a result of the bank sale. And then finally, when we look at our broader technology strategy, clearly near and dear to my broader role. Here, we are implementing a broad range of next-generation technology platform scape we've talked a lot about but also new platforms around our customer, marketing, identity, data warehousing and analytics platforms. We're also stepping up our cloud strategy, and we're, in fact, a very early adopter of cloud in financial services in Australia going right back to 2013, 2014. Today, we have about 65% of all of our technology systems that are hosted with leading cloud providers, and we've now got a very clear plan to get to around 90% by the end of next calendar year. And that will actually allow us to completely exit our owned and leased data centers in Australia. The residual 10% of hosting will be through hybrid cloud co-location facilities. And we see this as delivering not just efficiencies but greater security and controls, more efficiency and greater agility for all of our technology teams. And then finally, on the same theme of talent and capability, we're continuing to invest in our core technology talent. We've developed through our momentum ways of working, real centers of excellence around engineering, architecture, automation, data and analytics and scaled agile delivery. And so we see that continued investment in our core technology assets whilst also driving that digitization and automation agenda has been really key to underpin the strategy for the insurance business looking into the future. So with that, I'll hand over to Lisa to talk about our approach to managing resilience. So thank you, and over to you, Lisa.

Thank you, Adam, and good morning, everyone. As Steve and Jeremy said earlier, it is really fantastic to be able to host you all again back in one of Suncorp's offices. So let's talk resilience. And resilience is a term we have used commonly in recent years. In 2019 and 2020, we reflected on the nation's resilience to the black summer bushfires. And in 2021 and 2022, we yet again reflected on the nation's resilience to floods. Jeremy, Fiona and I are going to walk you through how we are managing resilience within insurance at Suncorp as we have made significant progress as we have implemented our strategy. We have significantly enhanced our capability in pricing, risk selection and portfolio management, allowing us to more effectively and accurately price for risk through the cycle. We have reset our natural hazard allowance to a level that we have good confidence in. And Suncorp has a more persuasive voice, and our advocacy is leading to meaningful shifts in funding for mitigation. As the CEO for Insurance Products and Portfolio, I'm responsible for pricing underwriting and portfolio management across our consumer, commercial and statutory classes. And recent strategic investment has positioned us well. At its core, pricing reselection is being able to understand, quantify and price for risk. And for homeowners, as you'll see on the screen, we break these risks into 2 groups: natural and working perils. And of the perils homeowners can face, 2/3 occur in nature. At Suncorp, we have deep scientific expertise and sophisticated data modeling that allows us to understand, quantify and price for risk across the 8 natural perils. Importantly, we not only understand each natural peril, but how they interact and how each will behave in a changing climate. What we know about today's perils is included in our technical price. For those who are here for the breakout session, later will showcase one of our tools around climate. This is very important for us as it allows us to understand the climate outlook. We use this to influence decisions around strategy, underwriting appetite and advocacy. On the slide, we have highlighted a few trends that our team are focused on. In summary, we have a granular view of risk. We have that at an address level and we have a clear view across the 8 natural perils backed by sophisticated modeling, and we continue to invest to better understand and price for risk with the changing outlook. So for several years, we've delivered on our optimized pricing and reselection pillar in our strategy. We are focused across 4 key areas: capability, technology and tools, our pricing models and our pricing philosophy. So let me go into each of those. Over the last couple of years, we've continued to build deep expertise and capability in pricing risk. Our team is comprised of data scientists, climate scientists and actuaries and there are over 150 people in the team. Importantly, this team operates across both consumer and commercial and work with our brand and portfolio managers to ensure we deliver both growth and profitability. And also in order to understand climate and weather extremes, our team engages directly with the scientific community. This is important as they transform this scientific knowledge and what it means to us as an insurer. If I give you an example, over the last 4 years, we've been collaborating with the Bureau to better understand the risk of severe hail. The outcomes of this study will be incorporated as we move forward into pricing, underwriting and risk selection strategies, product design and advocacy. We've also made great progress around technology and tools that the pricing teams use. This investment means we're now able to use a wide range of statistical tools, including machine learning and artificial intelligence. And these tools work best when they draw on meaningful data. We buy lots of climate data sets and combine these with Suncorp's rich data and history. And consequently, we have developed the ability to ingest large volumes of data. Cloud-based technologies now mean we're able to absorb terabyte scale of data and drawing meaningful insights from this is what sets Suncorp apart in managing resilience. So 2 of our newer tools in this ecosystem are CaPE and geospatial. Now many of you have heard me talk a lot about CaPE. But CaPE is best-in-class pricing software, is cloud-based and it has helped us replace GIPE, which we implemented in 2004. Now there are many reasons I'm excited and we have implemented CaPE. One, it enables machine learning algorithms. It has a superior new business customer functionality. For the team, it enables them to run scenarios with results returned in minutes, not days or weeks. And it has the ability to introduce new perils and change the structure of pricing algorithm without major technology rework. So we launched it in October 2021 for home and already, we're seeing improved renewal performance. It has enabled speed to market and agility. When we first implemented CaPE, we updated all 8 peril models, and we have already implemented a full rate review in October 2022. And we've been able to introduce new big data sets such as soil types for individual properties. I'm pleased to say that the team is also making good progress on implementing CaPE for our mass motor brands. So I'll touch on Geospatial as well. And earlier this year, we implemented Geospatial into the home insurance quoting process. So now approximately 50% of the homebuilding attribute questions have been replaced by Geospatial data. Now this is great because it's good for customers. And why it's good for customers, it's less questions. Online, this saves some time in the purchase price in the purchase process. And also, it's reduced the fallout rate for our customers. And in the contact center, it saves us about and the customer about 10% of the talk time. It's also great for us. We see this enabling greater data accuracy and pricing improvements. So customers often answer questions incorrectly. They don't intend to. They just don't quite know the answer in terms of roof type might be an example. And testing has shown that AI more accurately predicts these risk factors. Also for us, more frequently updated building attributes results in an improved understanding of the risk profile at any given time. And also importantly, imagery and AI have identified attributes that we do not currently ask our customers providing new data points for risk models. And many of these attributes have been found to be very significant in predicting insurance risk for both building and content, particularly for weather-related damage. As I touched on earlier, we have made significant investment and resource is dedicated to our pricing models. Natural perils are modeled by individual peril risk and a risk address for each property in Australia. And each natural peril is modeled by understanding the underlying hazard and the likelihood of insurance loss when exposed to it. Inputs to our pricing model include best-in-class external models and data, our own data, which we blend and calibrate to historical claims. Now lastly, I want to make this point that without disciplined pricing and portfolio management, we would not be able to extract the full value from our investment in technology and models. The discipline is evidenced by the portfolios we've exited in recent years, where the return or business value didn't meet with our expectations. And you would have seen this also recently in the home portfolio where we have responded to inflationary trends as well as the reset of the natural haz allowance. Just as a reminder, in the second half of FY '22, this resulted in normalized AWP growth of around 10%. Now not only do we think of resilience within each portfolio, we are also conscious of having diversification across the portfolios. We are also focused, as Adam said, on growing all of our portfolios, including outside our core consumer business. Similarly, we've invested in growth in states where we've traditionally held less market share. An example of this is where we have significantly increased our brand exposure in South Australia through the recent commercialization of the state CTP scheme. We will -- over the coming years, we will look to build on that presence. Now lastly, before I leave this slide, there has long been commentary that we are overexposed to the Queensland home insurance market. Whilst we estimate our market share at 27% in the state in home, after the quota share is taken into account the effective share falls below the national average. Our response to managing resilience also manifesting claims, and those in the room will hear more about this in the event control center breakout session that Paul will lead. Also in recent years, we've been at the forefront in responding to product through product design and marketing. We were the first to market with the cyclone resilience benefit undertaking research and building into the product steps customers could take to reduce their insurance premiums. The success of this initiative led us to create the build better product feature. Our teams also work in partnership with key experts to research ways to make Australia more resilient. Our One House initiative was built in conjunction with the CSIRO, James Cook University and Room 11 architects. And we subsequently brought this to life through Resilience Road, where we uplifted the resilience of homes in Bowen Street in Rockhampton, which is now known as Resilience Road. Over the year ahead, our teams will continue to work on product innovation, leading research and collaboration and amplify resilience through our retail brands to build a more resilient Australia. I'll now hand you across to Jeremy.

All right. Thanks very much, Lisa. I'd like to now give you a little bit more color on the natural hazard allowance. And I'd like to make a couple of key points in that regard. So firstly, some comments on the modeling itself. A natural hazard allowance is called using a range of internal and external data sets for each of the model perils that Lisa spoke to earlier on. And in each of those perils is end modeled separately for what we call attritional losses, which is less than $5 million. For medium events, that's $5 million to $100 million and in large events, which are is over $100 million. We generally use the external models for the lower frequency, high severity type events like earthquake and large floods. And then we use our internal data sets for the higher frequency, lower severity events as well as the attritional losses. The model is all taken into account a range of other factors as well, including changes to the built environment, inflation and then changes to our reinsurance program. Now I'd like to emphasize that with the natural hazard allowance, we set it on a through-the-cycle view of events using an expected loss basis. So what this approach means is that we do expect to cover natural hazard losses over a cycle, but there are likely to be some variances across years, and I'll cover that in a little bit more detail on the next slide. The allowance -- the natural hazard allowance that is extensively reconciled to the aggregate of the natural hazard costs that we see in the granular pricing engine that Lisa has just taken you through. And as with Lisa's pricing teams approach the wisdom of the crowds approach to modeling, that reconciliation of the 2 models also gives us a good layer of comfort over the overall natural hazard modeling. The second key point I'd like to make is that we regularly review, update and improve our models. And one good way of looking at that and thinking about it is that the average look back period for our events for a natural hazard allowance has reduced significantly over the past few years. So the allowance for attritional and medium events is now in line with 5 years of -- on average, and that's opposed to 10 to 15 years previously. So what this means is that we're effectively recognizing any trends and events more rapidly, and we reduced the risk that any changes to the trends are not captured in our models. So the net impact of the various improvements in modeling that we've made and the more conservative approach to the allowance setting have all contributed to the near doubling in the natural hazard allowance from around $600 million in FY '17 to $1.16 billion in FY '23, and that's a level of allowance that we're now a lot more confident in. So moving to the next slide. And I'd like to start by acknowledging that our actual natural hazard experience has often been greater than our allowance over a long period of time. I think we're all aware of that. Now we've certainly acknowledged this as a management team. And we've taken extensive steps over the -- to effectively reset the natural hazard allowance over the past 4 years in particular. So what I've shown on the slide here is what the past 9 years of event losses would have looked like if we had the current natural hazard allowance in place with the current reinsurance program, we've also adjusted for inflation and changes to the portfolio. What it shows importantly is that over the period, the allowance would have been sufficient for 5 out of the 9 years, but with the allowance exceeding the actual costs by greater than $600 million over that period in aggregate, or about $70 million per annum on average. Now that's not always been the case for our previous levels of allowance, but as a good example, we feel of why we're more confident around the current level of natural hazard allowance. I'd like to point out, and you can see on the chart that the bushfires in FY '20 and the flooding in FY '22 are examples of more severe but lower frequency events that we would expect over a normal longer-term cycle. And the list more floods in March '22 are a really good example of that. I think what the chart also serves to highlight is that our natural hazard events are driven by a number of factors, a range of factors, not solely the ENSO cycle, which we've all become intimately familiar with over the last few years, although, we have to acknowledge that the ENSO cycle is a really critical factor. And so for example, if you look at FY '22 and FY '21, both with strong La Niña weather cycles but they gave quite different natural hazard cost outcomes for us. So the drivers of our regional climates and climate-driven natural hazard events are obviously both complex and numerous. And on that, I'd now like to hand back -- hand across to Fiona to update on our advocacy plan.

Thanks, Jeremy. Good morning, everyone. It's great to be here today. My name is Fiona Thompson, and I lead Suncorp's people culture and advocacy team. I'd like to build on the comments that Lisa and Jeremy have made about pricing and natural hazard allowance to talk about how we advocate with governments, industry and the broader community from that greater natural hazard resilience. Well, it come as no surprise that in our latest stakeholder materiality assessment, the 2 most material issues for Suncorp are natural hazard resilience and our response to climate change. And our third most material issue, accessibility and affordability is directly linked to climate change and resilience. You'll be familiar with the 4-point plan on this slide, which is underpinned by the belief that disaster mitigation rather than disaster cleanup is where Australia needs to focus. The recent floods have once again brought into sharp focus, the need to better protect households and communities from the impact of extreme weather. And this will, in turn, enable downward pressure on premiums. The first element of our plan is greater investment in community infrastructure like flood levies. If we aren't addressing today's risks, how can we start preparing for the risks of the future? Second is building codes and planning. Today, our homes are built to a minimum standard that ensures preservation of life in the event of a natural disaster, but there is no consideration of keeping that home standing. The third point is around the remove inefficient taxes and charges. Australia's tax system as it applies to insurance is in urgent need of reform. At a time of increased risk and a changing climate, we should not be adding 20% to 40% to a home insurance premium in taxes and charges. And because of the way in which the taxes are applied, the higher person's risk, the higher the premium and the more tax they pay. And we know there is a direct correlation between a higher risk and a lower socioeconomic status. So when we talk about addressing insurance affordability and climate change, the tax system should enable not hinder insurance coverage. The final point of our 4-point plan is to improve the resilience of private dwellings and I'll touch on this in a little bit more detail shortly. Advocacy for policy change is difficult and it takes time. But for Suncorp, this work sits at the heart of our purpose and underpins our social license to operate. Pleasingly, we are starting to see real progress. In the budget in late October, the federal government committed $1 billion over 5 years to the disaster ready fund. This will be used for projects such as flood levies and cyclone shelters to help improve public infrastructure. We also support that the intent of this fund is that it be matched by states and territories to be and to be allocated in the areas of most need. The Insurance Council of Australia estimated earlier this year that if the federal government's $1 billion was matched by states and territories, meaning a $2 billion investment in total. This would reduce the financial health and social cost to the government and households by at least $19 billion by 2050. We are also pleased to see that the federal budget provided funding to the new National Emergency Management Agency for initiatives to improve insurance affordability and availability. Plans include establishing new private sector partnerships and the development of a national knowledge base of mitigation solutions to reduce community vulnerability to natural disasters. In time, this will assess the prioritization of infrastructure investment. In terms of future opportunities, the national construction code is due for its next update in 2025. We'll be advocating for the learnings from Suncorp's One House project, which Lisa mentioned earlier, to be reflected in those new national building codes to help create housing that is more resilient to extreme weather. But I'd like to spend my last few minutes on the final element of our 4-point plan, which is to provide subsidies to improve the resilience of private dwellings. Significant advancement has been made with the introduction earlier this year of the Queensland government's Resilient Homes Fund. As we have frequently said, if you can get a subsidy to put a solar panel on your roof, you should be able to get a subsidy to improve the resilience of your home. And that's something Suncorp has long advocated for. We've worked closely with the Queensland government to design. And in coming months, we will be on the front line to deliver. The Resilient Homes Fund applies to flight affected residential properties within 39 local government areas in Queensland, stretching from the Southern border up to Gimi. The program provides $741 million in investment in increasing home resilience co-funded by the Queensland and Federal governments through 3 measures: retrofit, raising and voluntary buyback. Of the more than 5,000 homeowners who have registered with the government for the fund, Suncorp customers make up to close to 25%. We will be directly involved in the retrofit component of the program, where grants of up to $50,000 are available. Now retrofitting is not about stopping floodwaters. You can't flood proof a home but it can certainly help to minimize the chance of flood damage, minimize the cost and inconvenience of getting back to normal after a flood and provide savings from avoiding repairs to the home after repeated flood events. Our customers will be eligible for a range of works from things such as raising electrical fittings through to swapping out existing building materials with those that are water resistant. Those retrofitting works will be delivered in parallel with our customers' insurance claim via our building panel. Thus, providing confidence and allowing the customer to face into the next event with improved degree of confidence. So for Suncorp, we expect of this type to ultimately improve our risk selection, to reduce the cost of rebuilds and ease affordability pressures via lower premiums. As the first resilience program of this size in Australia, getting the policy design right has been crucial to establishing a blueprint, which other governments can follow. Off the back of the Queensland program, we've also recently seen the Commonwealth and New South Wales governments commit $800 million to establish a similar resilience fund for flood-prone communities in the Northern Rivers of New South Wales. Again, the New South Wales program will include a voluntary buyback scheme in the most vulnerable areas, funding for home raising and funding for retrofits to lessen the impact of future funds -- floods. There is no doubt that we seeing progress after many years, but we recognize there is still more work to do. And that's why you'll continue to hear us strongly advocate for ongoing reform for some time yet. And with that, I'll hand back to Steve.

Thank you, Fiona, and thank you to the team for stepping us through that resilience showcase, but also Adam to have given you a rundown of the strategy and the direction that we're heading. So before we go to Q&A, I'll make a couple of closing comments and then some outlook commentary as well. I hope you've heard today that our degree of comfort around the bank sale process, which we believe to be remaining well and truly on track. And we've made good progress with ANZ. I commend them for the way they've engaged with us on the completion of the separation activities. And we've had very constructive dialogue thus far with regulators and the government agencies that have been involved in securing the necessary approvals for the transaction. We will, of course, remain very respectful to their role and the continued role on behalf of customers and the community and the public policy outcomes for Australia in their respectful role in assessing these proposals thoroughly. The strategic direction and rationale for the transaction with ANZ is very clear in our mind. A simplified Suncorp will be a market-leading Trans-Tasman insurer, but importantly will be the cornerstone of a viable insurance industry both here and in New Zealand. And the bank under ANZ's ownership will continue to grow and will continue to provide a broader range of products and services to its customers. And when the workshops that follow, I hope you get a deeper understanding of some of the things that we've talked about today, and we'll provide exposure to a number of members of our team who are subject matter experts in their various areas of expertise. You'll also hear of our conservatively managed investment portfolio and the fact that running yields are now ahead of 4% across our portfolio. That's a material differentiator for our business relative to prior years where those running yields have been running at below 1%, makes a huge change to many of the things that we've been talking about over many years. You'll hear of our deep expertise in climate modeling, how this informs policy and portfolio composition, how it informs risk selection, how it informs pricing, and you'll hear about our market-leading event claims response activity. Fiona has already talked about our advocacy agenda taking shape. I felt like for the last 3 or 4 years, we've been talking to ourselves, but all of a sudden, the light bulbs gone off. We are getting really good engagement federally. We're getting good engagement at the state level. We're starting to turn the dial -- and in our focus now as a monoline pure-play insurance company, we'll train all of our efforts on not only creating better outcomes for our shareholders, which is very important to everyone in the room today, but to our customers and to the communities, making a big, big difference to public policy here in Australia and across in New Zealand. Now we know we've got a lot more work to do to fill out our go-forward strategy. A lot of questions I know that you'll have that we're not in a position to answer today. But I'll give you a couple of commitments. The firm commitment is that what we do going forward will be evolutionary. It will build on the strong foundations that we have in place. The strategy that we've already got in the market, which is incremental, it's around digitization, automation and the investments that we've made in our brands, in our systems to date and importantly, our people will serve us well. So briefly to a couple of outlook comments, which are appropriate at this time of year and just make the overarching point that each of our 3 businesses continue to perform well in incredibly challenging times for our industry, for the economy more broadly and for the countries that we operate in. We've already updated you on our intentions with the BI provisioning reversal. And earlier this week, we gave you our up-to-date natural hazard actuals for the year to date. Financial year-to-date premium growth across consumer, commercial and New Zealand remains strong and very much in line with our expectations from both a volume and an average written premium perspective. Our best-in-class claims program that we've talked at length about, both in our forums and with you individually continues to be our best defense against the inflationary forces that are currently at play across the economy. We've talked about our ability over the last couple of years to stand apart from some of the broader inflationary pressures, and that is continuing. For example, we're well advanced in the renewal of our homebuilding panel, which is a big annual renewal process as part of Paul's best-in-claim -- best in-class claims activity. And thus far, we're not complete yet. But thus far, we're very pleased with the results that we're achieving and they're very much in line with our expectation. Accordingly, we reaffirm our commitment to deliver an underlying ITR in the 10% to 12% range for FY '23. And that's despite the material increases in reinsurance costs, hazard allowances and inflation that we've experienced and we have absorbed through the period of time that's passed since we first set that target. And Clive in his presentation already confirmed the positive trajectory in the bank, both from a margin and a cost-to-income perspective. And I'd also make the point that cost-to-income target, which we've had in play for a long period of time, we're now within sight of reaching. It's a combination not only of the tailwinds of cash rate movements that have been favorable for the whole industry. But I'd make the point that the revenue performance is also very much leveraged the balance sheet growth that we've been able to achieve. The balance sheet growth we've been able to achieve is because the focus that we've had on improving the way we deliver particularly for our that NPS metric that Clive talked about earlier is probably the most important one that demonstrates the turnaround that's underpinned the performance of the bank over the last little while. So with that, why don't we now ask Neil to come up, I think, and moderate questions, both in the room here and also in the online and telephone environments.

Thanks, Steve. So because -- 3 questions in the room first. We've got plenty of time. So you can be as greedy as you like. Kieren Chidgey from Jarden first.

A couple of questions, if I can, on the general insurance presentation we just had maybe going back to Slide 35, I think where you showed sort of the cat claims over the past 9 years. I just want to be clear what you're saying, Jeremy, that the cat budget is now set on a rolling 5-year basis. Is that correct?

It's set on a -- it's not set that way, but that's the -- when you do the retro look back for attritional losses, so small and medium losses, it works out to be in line with the 5-year average. But for losses over $100 million, it's a little bit longer because, obviously, the -- those more severe, lower frequency ones need to have a longer payment [indiscernible] attached to them, which is why when you look at that chart, you don't get an average of 5 years in there because obviously, across that more recent 5 years, there are some larger events sitting in there.

Okay. So we don't run a risk of the third [indiscernible] this year and sort of having at or above budget and we're dropping out that [ 28, 10 ] year that's lower next year that we see another step up of magnitude next year.

We're not expecting that because of that -- because a lot of those losses sit in that, in that sort of lower frequency, high severity category.

Okay. Second question just on the underlying yield composition sort of in second half '22, you had an underlying underwriting margin of 7.5%. And Steve has just talked about the inflation reinsurance cat, which obviously all bites the period we're in currently. But is your expectation that current pricing moving through the business will get those underlying underwriting margins back to where they were sitting last half, say, over the next 12 months?

Yes. So I mean, there's -- as we've said at the full year is a combination of headwinds and tailwinds and some of the operate over a different time frame. So obviously, we get the natural hazard reinsurance impact upfront. The yield improvement is largely front ended. All that does come a little bit over the course of the year. And then the other big one is the pricing response. And we are confident that the pricing response we're putting through is addressing underlying inflation in the portfolios as well as the step-up in natural hazard reinsurance costs. On the reinsurance natural hazard cost, it might take a couple of cycles to address that sort of level of increase that we saw. But in terms of the underlying working claims inflation, we're confident the pricing we're putting through is addressing that. But we'll look -- there's always, of course, the time lag between the inflation and on the premium coming through. But we're confident the price we're putting through is addressing the inflation.

Okay. I guess -- so the question is sort of aimed at if the pricing is offsetting those headwinds and you're talking about a 4% plus yield currently, those 2 factors suggest we should be up at 11.5% Underlying ITR sort of maybe moving into 24%. Do you have confidence that sort of you're on that trajectory towards the top end of your range for the next year?

So I think what we'll see is relative to the step-off point in the second half last year. We'll see a little bit of pressure against that because of those -- the dynamics of the timing to the headwinds, tailwinds. We should see a relatively strong second half as we get the earnings coming through, the oil picks up, et cetera. So you're right in that respect. And then in terms of how we go into 2024, I think we still expect to be in that 10% to 12% range. I'd suggest it's probably more at the midpoint. Yes, we get some tailwinds from the yield and the earn through. We'll need to see where reinsurance takes us into FY '24. So we're still sort of flagging 10% to 12% range, probably around the midpoint.

[indiscernible]

Just one question from me on the reinsurance program, but it interacts with the hazards discussion. I'm just interested in how much of the aggregate cover that you bought this year is actually on a multiyear basis.

Yes. All of the -- thanks, Andrew. All of the cover we buy on the main cat program is all single year cover. Some of the quota share we have, some of the quota shares the Queensland one is on multiyear, although much of that is renewing over the next 12 months as well. So it's all on a single year basis. Now I would remind that in terms of the narrative that's in reinsurance markets at the moment that we had a reasonably fundamental reset for our 1 July renewal. No doubt, a lot of the narrative at the moment is around 1 January renewals, which, to some extent, will be catching up to where we were with 1 July.

Any other questions. Andrei Stadnik from Morgan Stanley.

Just if I can ask 2 questions. Firstly, just on the resilience investments that we've seen from Queensland and as was governments, like approximately what portion of the problem does it addresses? Does that address 10% of the problem or 50% of the problem, like in terms of how much is that starting to make an impact?

Yes. Thanks, Andrei. I mean it's a step in the right direction. It's an incremental step in the right direction. But it doesn't go -- I think, I'm not going to put percentages around it because I do acknowledge that the governments are starting to recognize this issue, but we're dealing with over 100 years of bad planning, and you can't solve that with the numbers that have been put in place. What we're looking for from government are multiyear programs, led obviously by the federal government and the power of the federal budget that, that brings to the table supported by the states. And then ultimately, as we move down into the councils to understand what planning decisions need to be made differently and how these programs at the state and federal level interact with on the ground planning decisions. So I don't want to sort of leave anyone with the impression that we're not supportive of the direction here, but this is a multiyear. I think, ultimately, multibillion-dollar program that needs to be implemented at all levels of government to really make a material difference to more than 100 years of potentially bad planning decisions that have been taken probably in good faith at the time, but ultimately in a changing climate environment with intensity and severity changing don't stack up as well. So step in the right direction, but a lot more to do.

My second question looks slightly longer, but I appreciate a lot of work on -- with the hardest budget to stabilize earnings. But 2 key factors that have actually supported Suncorp's earnings and dividend stability [indiscernible] 2 key factors seem to be falling away and that is the bank is exiting, and also the reserve in cushion doesn't sound quite as strong as it used to be. So what other factors can you point to in a 3-year view to give investors' confidence that you can stabilize your earnings profile?

Well, I might kick off and then ask Jeremy to step in. And I guess it has been the case in an academic sense, on a spreadsheet, you can look at insurance risk and credit risk being offsetting and providing some sort of hedge across the business. That's academic. That's an academic argument Obviously, we've seen changes in reinsurance programs most recently. We've seen the onset of climate change. I make the point that climate change doesn't only impact on our insurance business. It does impact on a bank. And you can have environments, and we have seen them previously where the cycles align and that hedge offset that often is implied in credit versus insurance risk doesn't work. And so potentially, that could be the case into the future as many people are suggesting that the banking industry at some point down the track will go into it, move into a credit cycle at the time that we're looking to address inflation and increased hazard costs in the insurance business. So yes, in an academic sense on a textbook, it might look that way, but doesn't always play out that way. I think what we're trying to do today is deal with resilience through many means. Historically, when we talk about resilience and protecting volatility on a P&L of an insurance company and the balance sheet, we go straight to the reinsurance program. And that has served us well over a decade. If you look at the loss ratios that some of the reinsurers have reported and the benefit that we've been able to get a reinsurance over that period of time is it has worked well and it's built a buffer around our earnings volatility. That's going to be less so going forward, given the way that reinsurance markets are our pricing risk. So we have to focus in on underwriting. And the first thing we did when we set this plan up in 2020 was really focusing on improving our underwriting capability. And underwriting capability improvements is everything from the things we've talked about today. So being able to understand the climate and the changes that are going on in the climate. How you take that through your underwriting and your modeling and your pricing and the discipline that Lisa and the team have applied to the modeling capability that we've built, being able to risk select and price risk accordingly and then ultimately have the tools in place to be able to price and implement. The big variable, big difference between CaPE as a pricing tool versus GIPI is that we can look at this portfolio on an individual risk basis as opposed to a group of risks. Under GIPI, if we wanted to put a -- and we needed to put through a 5% or 10% increase through our portfolio would universally go through the portfolio in aggregate. And that would mean lower risk properties would get the same increase as high risk properties. CaPE allows us to differentiate between that and apply increases in premium that are associated with risk in the right place, in the right geography, to the right individual risk address, and that's the big differential. So it's not one answer to improving the resilience of the insurance business. It's about reinsurance about having the right allowances in place around having the right pricing, having the right underwriting and it's having the right brands pointed against the right product sets and portfolios. And that's what we're all about. That's what we've been about since 2020 in terms of the plan that we put in place. And we are just going to double down on that as we come into a period of time, hopefully as we emerge as a pure-play monoline insurer. Jeremy, do you want to add or Lisa? We can really add to that answer, but it's a multiyear, multidimensional program will work.

Okay. A question from Scott, UBS.

Just changing gears a little bit to focus in on innovation in a market that's not globally recognized for insurance innovation. Adam, you referred to -- let's start with claims, and you referred to the doubling of lodgments in FY '22. The dim view is that that's just a communication tool really in the back end is still as cumbersome as it once was. I'd be interested in your views on how far away we are from a straight through handling claims?

I think thanks a good point to make. And we're not pretending that we've sold at entering across the entire customer experience. But we have a pretty good view of what the target state would be for end-to-end digitization and straight-through processing, as you described, from a claims perspective, that's a multiyear journey. But the strategy will continue to invest in that. And there are some aspects, particularly in our motor portfolio, where we absolutely achieved that today. So the point that the customer lodges the claim, they get allocated to a repair. It's assessed automatically and the other -- the cars kind of taken to the repair shop, and that's the end-to-end process. So I think there are pockets where we can see that today. And just to give you confidence, it's not just the upfront digital lodgment, it's right tracking and communication through the process and a lot of the automation and AI that we're introducing across the back end of the process is streamlining and improving efficiencies end to end. So I think you're right. We're still early is in that journey, but I think a lot of progress and some of our commitment to look at that end to end.

So a claim that's lodged online relative to a claim that's large off-line, how much faster is it ultimately handled and settled for the customer?

Well, I couldn't give you kind of an analytical answer to that. But certainly, we saw through the recent flood events, and you'll see some of the examples when you look at the event control. The combination of a lot of these tools means that we can get the claims lodge, get assessment done more quickly and sell the claims faster. So I can't give you an exact answer. But Paul can kind of add to it. But certainly, the combination of all of those things gets to the end-to-end process accelerated.

Yes, why don't you come up, Paul. Just while Paul is coming up, I say over there. I think it is true that the industry has lacked innovation. I might have discouragingly called it a bit more abundantly, unless it picks me up on she doesn't like me saying it, but -- we thought we could stand apart from this digitization piece because insurance was somehow different that people wanted to deal with insurance companies in an analog way or in voice-type environment because it was too complex, et cetera, et cetera. Well, the pandemic blew that all out of the water. People want to interact with us digitally, and actually get a bit frustrated when we start the process through lodgment of getting them in the digital channel. And because we haven't yet filled out all of those gaps to get the straight through processing, we push them out into a voice-type interaction. They don't like that. And when they judge us on the digital experience, it's not judging us versus IAG or QBE or Allianz or one of the other insurance companies, they're judging us against the best in market because that's what their experience is. So that's why digitization is core to what we do, back end of our business, but at the front end because the more that we can drive through that environment, the more we're satisfying the customer need, but at the same time, we bring down the cost to serve. And when a business has got, I don't know, many thousands of people directed in contact centers, if we can move from an environment where we're 20% or 30% digitized to 70% to 80%, you can see how that makes a huge difference to the environment.

I'll just give a real simple example in terms of event response. If you lodge online and your property requires and make so if that gets allocated to a builder away and they're there within hours to actually make a -- and what we've also done is we've provided the functionality for online. We've given it to our call center consultants. So they use that exact same function, and that takes time of the call, court made times and calls. So it's just driving efficiency allocating quickly. But yes, the supply chain that can become bottler because of the quantity of claims, and we're working to resolve that through digitalization. So yes. Just an example.

Maybe I'll just pick up on another example in the Motor book, the AAMI Driver Rewards. I'm interested in your thoughts on how that improves underwriting in the long run? I mean we've always had these crude no claims discounts, which is never clear to the customer, how they're applied it sounds like it's far more granular. I'd be interested to understand whether that's aligning, the Driver Reward aligning with no claims discount schemes or designed to replace it.

Lisa?

Yes. So as Adam touched on, it is quite new, and -- but we have done sort of offerings like this in the past. One thing I would say is it gives us really great data and insights. And what we know from where scheme flight this have been implemented globally is if you can get the driver to interact on a frequent basis, and the -- I would encourage anyone who is an AAMI customer to use it. It's a great little tool, gives me good tips. But it gives you feedback in terms of are you accelerating to March, you breaking speed limit, not that I do that, are cutting corners too sharply. And what we do know is if you do that, you become a better driver and take that feedback on board. You interact frequently. So obviously, if we can get more customers to do that with us, then it will improve the risk [indiscernible] or improve the underlying risk, which is important. As you know, we understand, quantify and price to that risk. So we are quite hopeful it's early days in that regard. And again, we're looking at ways how do we incentivize customers if they are good drivers to encourage repeat behavior.

So Lisa is a Volvo driver so she's not at risk of accelerating too fast, but the gentleman here with his Tesla is very much in the line of sight for this product. .

And just to be clear, there will be premium reductions in future from -- for customers arising from this.

We will look at ways to reward customers. And we're just testing a couple of options as to what works best.

All right. Next question is from Doron, Credit Suisse. All right. Julian Scott -- Julian from Goldman Sachs.

So just on commercial, can you just briefly talk about just the initiatives and the strategy you're going to implement just to drive increased market share in that line.

Yes, I might take that one. So from a commercial perspective, if we go -- we're building on really good foundations. So we have a very good brand in Vero. It's well liked in the intermediated market. We have a very good team. We have a good experienced team that have very good relationships in that intermediated segment. And also, you would see that over the many years, we have generated consistently good returns from our commercial insurance business. As Adam touched on, we are #4 in terms of that market. And also, we've recently updated our technology in commercial. Earlier this year, we updated the systems that our underwriters are using from a property, and that has been helping us to improve both rate and exposure growth in that line of business. And as Adam touched on, we implemented the first iteration of our technology platform in packages and our packages numbers have been a little bit softer than what we've liked in recent years. So it's early days, it got launched in August. We're tuning that. But I'm very excited about it. Like we do in consumer, we've enabled risk address pricing in that package segment. It's very important to make sure that again, we're understanding at a granular level and pricing for risk at a granular level in that portfolio. Importantly, like Clive's business, when you're dealing with brokers, turnaround times really matter. So this system allows us to instantly respond with the price and confirm that the risk is within or with outside our risk appetite. So it's making us easier to deal with because if you are too late on your turnaround times, you missed the business. So we'll continue to update that technology. Importantly, next year, we need to integrate better with some of the large broking groups like steadfast with that platform. But it puts us in a good foundation to continue to grow the business from a position of strength, especially with the returns that we're creating.

Just one more question. So just with the home portfolio, obviously, a very clear aggressive push on the pricing front. So I just want to be clear how we should be thinking, I guess, your focus on volumes and share? Or is it just merely a redistribution of how you're managing risk geographically.

Yes. So as I touched on from a home perspective, across all the portfolios, we maintain a very disciplined approach from a portfolio management and a pricing perspective. We have been for the last couple of years and continue to respond to the inflationary environment. Obviously, in recent years, we've had the reset of the natural hazard allowance as well as reinsurance costs. So there is what I would deem significant pricing going through the portfolio will continue to be disciplined around that and certainly make sure that we can continue to deliver good returns from the home portfolio.

So just to fill it in a little bit. I mean, one of the interesting slides at Lisa had up there was the mapping of the home peril view. And so we'd like to grow stronger in those areas where the perils don't have as big an impact on the underlying risk, and we've been very clear about that over a number of years, and we want to make sure that we're pricing appropriately in those areas where the payrolls do have a material impact. And then our advocacy program kicks in after that because we want to be able to be in a position where we can provide insurance to those customers. They are impacted by the payrolls in a larger way. And we also want to be interacting with government to make sure they play their part and working alongside us to make sure that there is an affordable product for those consumers in those areas. So pricing appropriately, understanding through our modeling where the risk is sitting and getting the right price again so that our actual and technical pricing is lined up. and then have a very aggressive, very strong, very loud advocacy program that works with governments to improve the quality of the infrastructure for those in the high-risk areas.

We now have Doron from Credit Suisse.

Steve, you mentioned the home panel was renewed in line with expectations. Just wondering if you're able to share what the expectation...

I think we've done a little bit, Doron, sort of we're not quite there. I could lock fall into an outcome here right now, he's not 100% there. But look, when we came through the full year result, obviously, we're getting a lot of questions around this inflation cliff that people talk about. And obviously, the best-in-class claims program, I think, is recognized as having -- had a big impact on allowing to stand apart from inflation. One of the key things on the working book, the working book on home has been that renewal that we've been talking about. I think Paul's 60% to 70% of the way through. I'm not going to give you the precise number, but it is significantly lower than the inflation that the economy is seeing and then that the inflation in building repair across the economy, you would expect it to be to some extent. We've got big volume, and we're now utilizing our scale effectively to drive down that cost, and that's what a volume provider should be able to do. And why is it in the best interest of those that work with us on the building panel? Well, obviously, we're seeing some retraction in the renovation market. New build market is starting to slow down. And the builders that work for us like insurance work. They like the consistency of it because that gives them good cash flow to support their trades and the others that work with them, subcontractors that work with them. So they like the work that we provide and they recognize that in their rates. We're also allowing them to utilize our bulk buying capabilities. So instead of them going into Bunnings with their rack rate that they get as a building company or as an individual builder, they're going in there with the Suncorp, pay that they can take to the procurement of the products and services that they need. And we do pay and we pay in good terms. And that's a good thing as well. So we still got a bit more work to do, but so far, so good.

I could just ask one more on claims inflation, clearly elevated now, but have you seen any green shoots in terms of the go forward? There's been some easing in supply chain, secondhand car prices. And do you expect maybe in FY '24, potentially start to see some of that coming down?

I don't think anyone is in the business of making inflationary outlook statements. I just mentioned a few of the dynamics in the working book in home. I think the monetary policy changes that the RBA have been putting through will have an effect on new building construction. They will have an effect on the private renovation market. So I think that's probably going to have a -- it's not going to be great for the economy more broadly, but necessarily good in terms of our ability to keep a lid on inflation in our working book. On the motor side, the dynamics are slightly different. Secondhand car prices are stubbornly high. I think they are off their peak, but they will take some time to normalize. They're very much a reflection of the supply chains that they operate within. But we would expect that would start to normalize probably into next year. The other components of motor inflation are probably more entrenched, but ultimately get priced in. The other one being the mix change between drive and non-drive. So certainly post-COVID, we've seen more non-drive claims relative to drive claims as a total of the claims pool. You would expect that because the sophistication of motor vehicles now with the sensors and everything that's embedded in it are reducing the number of small dense and knocks et cetera, haven't had a material impact yet on severity of larger losses, but certainly, the mix change is coming through. Again, we price to that. And then the challenges that we, as an organization, have had are also reflected in our supply chain. So repair is access to talent, access to overseas migration, EIT, COVID, have all had an impact on the motor vehicle supply chain and the repair networks that all the insurers assess. So motor is probably remaining stubbornly elevated at the moment, which is a reflection of the pricing that we've be needed to put through. But we're hopeful that over time, some of those pressures will start to moderate as you would expect them to, as the RBA and other public policy institutions start to bring their policies to bear on inflation more broadly.

And Steve, just to add on the motor [indiscernible] something like 40% of our cost of motor claims sits in the total loss category. And there's obviously an indexation then between the -- we're driving total loss, which is secondhand cars and agreed values and premiums. There's a sort of an effective indexation between the 2. It's different to other forms of claims inflation.

Nigel from Citi.

So first of all, just returning to home pricing. I'm not sure whether I heard it clearly, but I thought you said that the first review under the new pricing engine been done in [ October 22 ]. Did I hear right?

So this is a full review. So we do optimizations on a very regular basis. So this is a full rate review.

And so that was the first one under the new pricing engine?

Yes. But that doesn't -- you can't read that to me in terms of we haven't adjusted prices. That's on an ongoing optimization basis.

Yes. Okay. But I mean, I guess the question is, did the review under the new engine change things materially?

In terms of -- where we do a full rate review, we looked at the experience, say, from the East Coast loads. So we looked at things like the average annual loss per flood. We looked at some other perils. So this is full payroll doing deep dives on perils. We've updated some of the features in terms of some of our pricing algorithms. But I think what I'll in terms of from a home insurance perspective, we're very focused and continue to be focused throughout the year in terms of responding to any sort of inflationary trends that we see. And as I said, cat gives us the ability to deploy that very quickly. So we don't wait for a full rate review on an annual cycle, if that helps you understand that point a bit better.

Also just wanted to return to that sort of analysis, Jeremy put up on the hazard allowance being sufficient for 5 out of 9 years. If you were sort of setting your allowance correctly, how many years do you think it should be sufficient? How many should it over on? What's the sort of overall target?

Well, I mean, we said it on an expected basis, which is by its nature of 50-50 in any given year. And then over that sort of period of time. if we're getting it right, it will probably be a little bit over because we've got to pay back for those that have got a frequency that's sitting outside that sort of category. So I think where it is at the moment is on that sort of basis, is there or thereabouts. It's not to say that we won't -- setting the natural hazard, as I said, is something we continue to refine, improve review, et cetera, and we'll continue to do that. But I think where it is at the moment is probably around the right sort of level. But I'm not saying that we won't continue to finance it as we go.

So if things went according to expectations, you'd expect to over 4 out of 9 years, really?

Yes, that's sort of. I mean that sort of category Yes.

Yes. Fair enough. And then maybe just thirdly, I mean, I'm not sure whether you said this, but how are you intending to return the BI provision shareholders on 1H '23?

We'll see it. We're not at that stage yet of working through all of that, but we'll see it in our cash profit. We'll reflect on what the right dividend policy is in that 6% to 8% range, et cetera. And so we'll deal with it in that way.

It will be just subject to ordinary, you're not going to do anything special?

Not being intended at this time.

Another question from Sid from JPMorgan.

Siddharth Parameswaran from JPMorgan. A couple of questions, if I can. Firstly, just on claims inflation again. Just -- could you give us an update on what is happening on long-tail inflation, the with salary inflation picking up? And I noticed you didn't change your claims assumptions in the -- on inflation in the last half. So just wondering if you could give us an update on how you're looking at that, whether that has any implications?

Yes. I mean we're -- we do our valuations every quarter, and so we're going through the process of having those valuations over the next month or so for the half year end. But at this stage, I don't think we have any intent to change those assumptions. We've got 3.5% on wages and 2.5% on superimposed. So in aggregate, we think that's a reasonable amount to maintain. And as we are today, we think they are appropriate assumptions. We don't see any particular changes in terms of reserving against those. We're obviously -- that's in those longer tail portfolios. We're obviously keeping an eye on some of the super imposed social inflation that has been called out on some of the injury portfolio, so bodily injury being sample. We're keeping an eye on that. But there's nothing material that we're seeing across the portfolio at this stage.

Just another question, just on the cyclone pool just give us an update what that means for your business going forward? And I mean, given that you do right in these areas that are exposed to cyclone risk, is there -- does it mean that take off some of the pressures that have been there, perhaps and maybe a little bit of cost subsidization that was there in your book?

Yes. Again, that's one that we're working through. Look, we've done a fair bit of modeling on the pricing consequence, et cetera, with the commission on that. I think we will obviously see some reduction in risk. So at the moment, we retain cyclone risk up to $250 million main cat retention. So we will no longer retain that risk in our portfolio because it obviously passes across to the pool. The complexity around it really is the interplay between the reinsurance premiums that we're going to get charged from the pool going forward, relative to the adjustment that the reinsurers will make to our historical reinsurance premiums in respect to cyclone and there's complexity around it in terms of the pool will cover cyclone flood for 2 days post the event, for example. And so there's going to be complexity around trying to recalibrate our models with loan to reinsurers models for flood that's in cyclone and outside cyclone. So that's a degree of complexity that we've got to work through with reinsurers. So we haven't yet looked at our work through the FY '24 renewal with reinsurers, but there will be a range of complexities around that. And so the extent to which we get on net, the net impact of all of that is a little unclear at the moment. But in aggregate, we would expect everything else being equal to see some of the pressure on some of those policies that we've had kept should give us a little bit of opportunity to get close to technical pricing on those policies.

Or the other -- just quickly, the other dimension here that is quite beneficial at this point in time is that it will draw down our requirements to purchase reinsurance. So that tower that we have $7 billion or thereabouts now will come down as a result of less demand through the cyclone elements of the program and also the EQC changes in New Zealand. So that will mean that we'll have a less requirement for capacity out of the global reinsurance market, which at the current dimension is a good thing.

Okay. I just want to give everybody a few minutes break. We're up against time. We're happy to take your questions offline and come back to you if you have more questions. So you probably have about 4 minutes. Freshen enough, and then check your group that you've been allocated to and then see you in the breakout sessions. Thank you very much.