Tower Limited (TWR) Earnings Call Transcript & Summary

Good morning, everyone, and my name is Michael Stiassny and as it's just about 11:00 o'clock, or is 11:00 o'clock, as Chairman of Tower Limited, I'm very pleased to welcome you all to our annual meeting of shareholders and to declare it open. On behalf of my fellow directors, welcome to you all, and welcome to those of you who are joining us via webcast as well. This is a shareholder meeting and we appreciate all of you making the effort to be here. With me today are my fellow directors, Warren Lee, Marcus Nagel, Steve Smith, Wendy Thorpe and Graham Stuart and Richard Harding, everyone knows and Jeff Wright, our Chief Financial Officer. As well, we have senior executives and our auditors sitting in the front rows. Today's agenda is on the screen over there, not quite behind me. And we'll hope today to provide you with an update on last year's performance, our strategy and the work we have underway to keep transforming Tower as well as the progress that we have made in recent months. Following Richard's presentation, we will move to the formal resolution set out in the notice of meeting. Shareholders are welcome, as always, to ask general questions following the presentations and to ask specific questions on the resolutions to be considered as each is put forward. I remind any media that are present that whilst you are welcome, this is a meeting for shareholders. And Richard and I are more than happy to talk to you after the meeting. Before we start the presentations, a couple of housekeeping matters. If you have a cellphone, please switch it off or put it on silent. If we do need to evacuate this room for any reason, there are exits through the doors to my right and also the entrance you came through. In the event of an emergency, please listen to and take instructions from the Ellerslie staff, who are present. Bathroom facilities are located along the corridor which you entered through. And if you are unwell, please advise one of our Tower team who will assist you. Finally, we do hope that you will join us for refreshments at the conclusion of the meeting. So now let's move on to the formal part of the meeting. Are there any apologies? Thank you. I will ask. The company's constitution specifies a quorum of 25 shareholders. As you can see, and as confirmed by Computershare, this requirement has been met. And in addition to those persons attending today, 646 shareholders holding a total of 224,466,247 shares have appointed proxies, not 8, 247, have appointed proxies including proxies instructed to abstain. The appointed proxies are represented by 10 proxy holders. In my capacity as Chairman of the meeting and in my own name, I hold proxies for 517 shareholders, representing 221,755,996 shares. As is the custom, I intend to vote all undirected proxies I have received in favor of resolutions 1, 2 and 3. The annual report was made available on Tower's website on 20 December 2019 and spare hard copies of the annual report are available in the registration area. I propose that we take the annual report and notice of meeting as read. So last year, Tower celebrated 150 years of insuring New Zealanders. Naturally, over those years, the company has changed considerably. A little over 4 years ago, Tower embarked on its latest and, arguably, it's most difficult transformation to date to reposition itself as a digital challenger brand. We believe that underpinned by a customer-focused, digital-first strategy, Tower would step-up to successfully compete in the 21st-century industry marketplace. Our belief has not been misplaced. Whilst transformation is never easy and there have been some bumps along the way, it is extremely gratifying to see Tower returning to profit in the 2019 financial year. Your Board has long-held the view that Tower is undervalued and the return to profit reflects the work done to remove legacy issues, to refocus and to grow the business and implement core insurance fundamentals. Richard and his team have created and are now driving an ambitious plan to have New Zealanders and Pacific Islanders see Tower in a new light and to set the bar for how insurance should be. As a result, the business has been simplified and is growing strongly with more customers now choosing to ensure with Tower. I spoke to you last year about the importance of new technology and how this will accelerate our growth. Since then, the new IT platform has been successfully delivered with customers already noticing the improvements in our digital channel and the business continuing to grow. The significant uplift in customers using our digital channels to engage with and purchase Tower products is proof that our confidence in user-friendly technology is well placed. Digital technology is a vital part of our plan. And with this core infrastructure in place, we are now ready to capitalize on the value that exists in the Tower brand. The successful completion of the Youi New Zealand acquisition earlier this year was an important signal to the market. The acquisition adds over 32,000 new policies to our books and solidifies our position as a market challenger, providing more Kiwis with a better homegrown offering. As well as adding to our portfolio, the acquisition leverages our risk-based approach to pricing and investment in technology, which will result in synergies that drive value for you. Value will be achieved by providing these customers new offerings as their policies renew over the coming year. The recent Australian Royal Commission and the RBNZ and FMA conduct and culture review have made it clear that the general public takes a dim view of the insurance industry and that change is needed. Tower has taken this to heart and is leading by example. We are already actively pursuing a platform of insurance the way it should be. This perhaps gives us a jump-start on the broader industry, but there is no room for complacency. The board has already received and endorsed Tower's own conduct and culture review. And while some aspects of our practice need further investigation, our undertaking is to ensure any shortcomings are improved. The board strongly supports Tower's challenge to the industry to regain the trust of the New Zealand public. We are keen to see all insurers respond to the conduct and culture review with action, not rhetoric. Collectively, we can and we must do better. Interestingly, but not surprisingly, the conduct and culture review did not take into consideration the impact of the Earthquake Commission's response to the Canterbury earthquakes may have had on public perceptions of the insurance industry. One suspects it was and continues to be a significant piece. If the same standards of customer care and engagement that are being applied to the private sector were applied to EQC and other agencies that form part of the Canterbury recovery, it would be found severely wanting and not at all customer centered. A true step-change in conduct and culture would see the industry join forces with the government for an honest and transparent appraisal of the EQC and to forge an agreement on a sustainable future model for the agency. An EQC that delivers fair customer outcomes would have a significant impact on restoring New Zealanders' trust in our industry. However, at its core, Tower's job day in and day out is to continue to earn and to keep the trust of our customers. Tower's FY '19 results demonstrate a continuation and expansion of the positive trends we've spoken about over the past few years. We are delivering strong growth and value is being achieved through sound underwriting and investment. As shareholders, you can have confidence that our plan to deliver something better is having a positive impact. Following the capital raise in 2019, Tower is in an even stronger capital position with solvency of 268% of the RBNZ minimum. As we signaled with the capital raise, the ring-fencing of the EQC receivable and excluding it from Tower insurance and solvency calculations, means we are able to pursue litigation to maximize the recovery, which is looking more and more likely. Tower's Board and management team remains strongly committed to paying dividends and to the efficient management of capital. In FY '16, we made the prudent decision to suspend payment of dividends as we managed the effects of the Canterbury earthquake legacy. This was only ever intended to be short term. And as previously advised, in respect of the 2019 financial year, no dividend will be paid. Tower's board has determined that in FY '20, Tower will pay a dividend of 50% to 70% of reported net profit after tax we are prudent to do so. You've seen the recent announcement that Richard intends to step down as CEO at the conclusion of his current contract, towards the end of the calendar year. A recruitment process is already underway, allowing ample time for an appropriate handover and smooth transition. We will keep you informed of developments. However, as this is the last annual shareholder meeting, on behalf of the Board and indeed, on behalf of shareholders, I'd like to thank Richard for his efforts to date. He has successfully led Tower's transition from a traditional insurer to one that is profitable, nimble and ready to disrupt and challenge the industry. It has not been an easy or small feat. Richard has built a management team who are committed and have the skills to complete and leverage the digital transformation. The Board would like to also thank them and all our staff for their sustained efforts to deliver a strategy that has seen us return to profitability. I'll now hand over to Richard, who will take you through the results and our plans for the business before we take questions. Thank you.

Thank you. Thank you, Michael, and good morning, everybody. It's great to see you all here. The 2019 financial year saw us return to profit as we continue to drive our strategy and transformation agenda forward. Last year, our focus was on delivering a new IT platform that would underpin our future success and we successfully delivered this. As well as delivering this major piece of work, we continue to simplify and improve all aspects of our business to differentiate ourselves, drive growth and control costs. It is pleasing to report that Tower returned to profit in 2019, delivering a full year reported result of $16.8 million after tax. This is a significant achievement and a $23.5 million improvement on the previous financial year, proof that our strategy is paying off. Underlying profit after tax increased $13.8 million to $27.4 million, a result of our relentless focus on improving all aspects of the business. Over the past 4 years, we have worked to completely transform Tower by fixing the foundations and we are growing the business by challenging and breaking the industry norms. Our results demonstrate inherent strength -- the inherent strength of the business and the future potential that exists in the Tower brand. Our determination to deliver something better to customers has been noticed and we continue to achieve solid growth. Gross written premium in the core New Zealand portfolio increased by 9.1% in the 2019 financial year, and total gross written premium reached $356.8 million across New Zealand and the Pacific. Our efforts to become a digital insurer are paying off, with 51% of new business coming through our digital channels in September 2019. This compares to less than 10% of the business in 2016 when we started the digital program. Over the year, we delivered significant growth with GWP through digital channels reaching $20 million in the second half. This is in evidence that our belief and investment in digital will deliver value for the business and for shareholders. Continued implementation of risk-based pricing, along with improved underwriting and a benign weather environment significantly reduced claims costs. Over the year, our total claims ratio has reduced to 48.8%, a 7.6% reduction from 56.4% in 2018, which is largely thanks to benign weather as well as improved underwriting. Our claims costs, excluding large events, decreased to 48.4%, a 3.9% reduction from 52.3% in 2018. In the 2019 financial year, our Pacific business returned to historical norms with solid and profitable growth, improved underwriting and again, benign weather, helped deliver these better results. An increase to Canterbury provisions resulted in a $1.3 million after-tax expense in the second half, which brought the full year impact to $6 million. This is principally due to the ongoing receipt of EQC overcap claims and we continue to closely manage these issues to reduce ongoing risk and our liability. As I mentioned earlier, we successfully delivered and launched our new IT platform in 2019. New business is on sale and we're also migrating customers to the new system. Operating expenses were slightly higher than previous as our IT investment drew to an end. The successful delivery of our IT platform was an exciting milestone for Tower. We are now well positioned to maximize the benefits and opportunities this system offers. Our business has transformed and the company is vastly different to what it was 4 years ago. Our results demonstrate the long-held belief of the Tower Board and management team that Tower offers an exciting platform for growth and that we are now able to fully accelerate. Over the past 4 years, we have fixed the business and turned Tower around despite distractions of takeovers, legacy issues and unprecedented weather events. Having returned to profit, we have a strong base to work from and implementing our strategy that leverages technology will allow us to truly challenge the market and drive substantial growth. Our customers have told us that New Zealand insurers are complacent and lack transparency, which has led to a lack of trust, as Michael was saying earlier. We believe that people deserve better. Our strategy is built on this belief and we're now creating a company that sets the bar for how insurance should be. It's the right thing to do, and it's going to drive industry-wide change and deliver growth for Tower. Our belief that people deserve better means we need to create stunningly simple products, new systems, simpler processes, all that enable and deliver amazing claims experiences. We're going to turn industry norms on their head. We're getting rid of big words and complex policies. We don't ask tricky catch-all questions. We're increasing transparency around risk and insurance information and knowledge. We're simplifying pricing and removing confusing discounts. We're creating an employee culture that always pushes for better and is there to help set things right when they go wrong. We will set the bar for how insurance should be. You've already seen and heard some of this -- evidence of this. Our simple policies have won Plain English Awards, so customers can now easily understand what they're covered for. We implemented risk-based pricing, so you pay fairly for the specific level of risk your property faces. We removed the catch-all duty of disclosure question. And internally, we've seen significant shifts in our culture and engagement. Our people are passionate about doing things differently and that is delivering good customer outcomes. You may also be pleased to know that we recently achieved the Rainbow Tick as recognition of the efforts we are making around diversity. This forms part of our broader diversity agenda to ensure we reflected community in which we operate. All of this is just a start. Tower is a radically different company from what it was 4 years ago. We are now in a position to take on New Zealand's insurance market and change the large incumbent organizations who are slow to adapt. We're offering customers something better, which will drive growth and real value for our shareholders. Our plan has driven change and transformed the business. The work we've completed over the past few years has set us up well for the future, and our focus is firmly on delivering shareholder value. One of our biggest priorities is to migrate our 350,000 customers to our new platform and our new easy-to-understand products, reducing from a couple of hundred product variants to a core set of 12. This will be completed by the end of 2020 calendar year. We'll build on the past 7 consecutive halves of growth by continuing to price more fairly, working hard to deliver amazing client experiences, improving efficiency and profitability. Together with our shift to a more agile operating model, Tower will deliver improvements progressively over the coming year. But financial year '21 is where the full benefits of our investment in technology will be fully realized. In FY '21, we will decommission complex legacy systems that currently take significant resources to manage and maintain. We will be able to accelerate growth opportunities, improve customer experience, and combined with our push to move 50% to 70% of all of our transactions online and a rationalized product set, will deliver significant cost savings and productivity gains. In the Pacific, our new operations center will support local teams through improved product pricing and underwriting capability to ensure we grow sustainably. In short, we will continue to accelerate our customer-centered strategy and do our bit to raise the bar for the industry by putting customers first and by leveraging our new technology. Our strategy and work program is closely aligned to the outcomes of the recent conduct and culture reviews. While we know we're not perfect, and there's a lot more to do, we are making progress and working hard to maintain and build trust with our customers and our stakeholders. What we have achieved and the plan we have in place position us well for the future and we'll build trust, drive growth and deliver shareholder value. In September 2019, we announced that we had signed a portfolio transfer agreement for the purchase of Youi New Zealand Proprietary Limited's insurance portfolio. Following approval from the Reserve Bank of New Zealand, the transaction settled earlier this year for a final purchase price of $12.7 million. The Youi -- the purchase of Youi New Zealand portfolio will also accelerate our growth and these customers will migrate progressively to Tower's new system over the coming year. The portfolio is well underwritten and utilizes a risk-based pricing approach, which aligns well with our own focus on underwriting excellence. It will also deliver a positive shift in the mix of our portfolio. The acquisition drives shareholder value through the realization of scale benefits with our intention to incorporate the portfolio into Tower's existing reinsurance cover and management expenses at marginal cost. In September 2019, Tower announced that additional capital of $47.2 million was needed to facilitate a change in Tower's license condition and the acquisition of the Youi New Zealand portfolio. As Michael mentioned earlier, following the successful completion of the capital raise and the change in license condition, Tower Insurance remains in a strong capital position with actual solvency capital well above the Reserve Bank minimum requirements. We have ring-fenced the EQC receivable and are currently participating in an alternative dispute resolution process with the EQC. This process is now nearing its end and is looking more and more likely that we will need to pursue litigation. As at 31 January 2020, Tower Insurance Limited's solvency margin is estimated to be $87 million, which is equivalent to a ratio of 268% of minimum solvency capital. As you've seen, our challenger brand strategy is driving positive results. And while only 4 months into the financial year, we are pleased to see the positive momentum continuing. Our ongoing push to differentiate ourselves from our competitors has seen continued GWP growth. Core New Zealand GWP is up 11%, a result of customer growth and pricing improvements. Online sales remained strong with 55% of new business coming through our digital channels. Customer migration is well underway with over 60,000 policies now transferred from our old IT system and now on to simplified -- our new simplified product set. Customer migration is at full velocity at a rate of around 30,000 per month and this will largely be completed by the end of the calendar year. Once our customers are migrated to the new system, they will have access to the benefit it offers, along with being rationalized to simple and improved products, customers will be able to manage their policies, payments and profiles completely online, lodge and track claims and easily understand what they're covered for. To manage the migration successfully, we're investing in the business, bringing 20 new frontline team members on board and reorganizing our queues and processes to deliver a better customer experience. This will help reduce the wait times you may have experienced over the past few months. We are working hard to reduce this and wait times will improve as these new people join and our team fully adapts to the new systems and processes in place. A reduction in costs will be achieved in the year after customer migration is completed and we remain firmly focused on controlling operational expenses. There is no change to Tower's previously communicated FY '20 guidance of underlying net profit after tax of between $27 million and $30 million. The Timaru hailstorm, while significant for the industry, had a smaller impact on Tower due to the fact that we do not ensure large commercial operations. The total cost of this weather is estimated currently approximately $4 million pretax. As a result, $4 million remains of the $8 million allowance for events within the FY '20 guidance. Investment income is also tracking slightly below forecast due to the unexpected reduction in the cash rate by the Reserve Bank in the second half of 2019. And in Canterbury, we continue to make progress closing claims with claim numbers reducing from 109 at the end of September to 81 at the 31st of January. These results demonstrate that the strategy plan and the team we have in place is delivering, and the future looks bright. Before I hand back to Michael, I want to thank Tower executive team and the wider team. This is my last shareholder meeting as CEO and is somewhat bittersweet. I'm proud of what we have achieved. The company we have created is vastly different from what it used to be. And I know that so much opportunity still exists at the business. While I'm excited to return to my family in Sydney and spend more time with them, I will be closely following Tower's progress as it transforms itself into a true digital challenger in the marketplace. I'd like to thank the Board for their support over the past few years. It has been critical in our journey to transform Tower and achieve these positive results. And thank you for your support as shareholders during my tenure and time here. I know that there have been some challenges along the way, but we are now on a very solid footing. Thank you to everyone at Tower for all your efforts and a relentless focus on working together to drive change and transform this business. Thank you very much, and back to Michael.

Thanks, Richard. So are there any questions or comments anyone would like to make in regard to the presentation, the annual report or the financial statements. If you do, please raise your hand and a microphone would be brought to you. We would appreciate it if you could please introduce yourself when you begin your remarks.

My name is [ Mark Hamilton ], and I'm interested in some comments on -- further comments on the digital platform program. Having recently taken upon myself to change the car policies across to Tower on the digital platform, I experienced it, and it was a very good experience overall. It saved me $1,000 overall a year, which I thought was a very good outcome for me personally, but...

I hope it was a good outcome for us too.

But what struck me, I suppose, is that the ease at what you can gain customers online is also something you have to take into account in terms of the ease of what you can lose customers online, especially with pricing. And while there are inducements to get me across in terms of pricing, that will become an area of increased focus going forward. And what -- the question I have is, what are your thoughts and your forecast about retention in the business modeling going forward? Because it seems to be a very key area in terms of modeling the -- not only acquisition of new customers, but modeling the loss of existing customers.

That's a very good question. Retention is always a key focus for us. Obviously, it's a core part of growing the businesses, keeping the customers you have. From a digital point of view, whilst we have an advantage at the moment, what you're really saying is that, over time, is very quickly eroded as people -- competitors catch up, we're well and truly aware of that. It really comes down to our drive around customer experience and how we want to deliver an amazing claims outcome and make insurance simpler and more straightforward for customers so that it isn't about the, it isn't about what digital capability you have. It's actually the experience you have gaining the product and then using the product over a lifetime. And that's the only way that we will be able to retain and sustain the businesses by delivering what customers expect, which is a great claims outcome. I hope that answers what you really wanted.

I was really seeking some sort of understanding of the expected loss of customers and expected gain. What's the net retention we're looking forward to go -- looking at going forward?

So we don't provide a sort of forecast on retention. Our retention rates at the moment are normal as compared to our competitors in a normal range. And we don't expect that to increase. We don't expect a loss of customers to increase. In fact, all of our work is targeted at reducing the loss of customers and keeping more customers. So we'd expect -- and in fact, the Board demands of us that we continue to drive the retention rate up over time. And that's really what I'm trying to say about the core of delivering an excellent customer experience is the best way for us to achieve that.

[ Rob Dorough ]. A couple of questions. With the outstanding amounts at January and for the earthquakes, the flow of new overcap claims, whether that's slowing. I'd like to see this year the Board look at buying back our shares, I mean, the share price is disappointing and it seems annoying that the company doesn't buy its own shares rather than it's getting about 2% or 3% on its investments. And the other thing that's crossed my mind is the heat out of Australian forest is presumably going to go into the sea and go down to the Antarctic and lead to some sort of interesting events with the melting ice and I was just wondering how Tower's positioned for coastal flooding and low-land housing, which seems to me we have quite a lot in New Zealand.

Yes. Okay. So why don't we start with Jeff talking about Christchurch and then we'll move to Richard talking about climate change, which is an exceedingly serious topic.

Okay. So in relation to Canterbury, as we've said, the numbers have continued to reduce from 109 down to 81 at the end of January. That's all going in line with expectations and marginally better in most cases. We did raise at the end of year, the issue with the ongoing new overcaps, I can say that has stabilized. We did make large provisions through last year that we considered to be quite conservative. And at the moment, they're continuing to hold up and we are seeing some stability of that flow from EQC. However, it remains something have no control over, and it remains something that we are strongly pushing back with EQC to get an end to it as soon as we can.

So the question on climate change and the warming oceans, it's obviously, definitely having an impact. If you go back 2 years, we saw severe weather events here in New Zealand, a result of a warmer ocean, especially in the Tasman. I suppose our role in that is to look at how we price risk and all of the modeling that we do around storm risk and weather change is built into our pricing models to ensure that we're accurately pricing for the increased, either severity or frequency of storm activity. In terms of coastal flooding, it's a long-term issue that we -- and I was in Wellington, talking to a number of government members about it earlier this week, but it is an issue where the whole community will have to come together to work out a plan for how we deal with that. It's not a straightforward issue that is going to be solved by 1 insurance company. It's a collective problem that we're going to need to manage. So it's about working with government to find remediation processes and working with communities and local councils to put those into effect. But from an insurance underwriting perspective, I suppose, we price in the increasing severity and increasing frequency of those storms and their impact into the way we think about insurances on a day-to-day basis.

But on a very high level, the issue about risk-based pricing is something you as shareholders should be exceedingly cognizant of. So there are pockets of New Zealand, where people are at more risk, whether that's in low-lying areas or areas where there is more seismic activity. It's our objective to make sure we are talking about those issues. And so that this becomes an issue that the country and all citizens need to deal with to ensure that there is a fair pricing for insurance. We aren't going to carry that risk and have all our policyholders sharing the risk when it relates to only some people who have a home in certain areas when others don't have them in those areas. So we need to make sure that everyone agrees with risk-based pricing moving forward and that will be a big debate, probably pre-election. Any other questions, gentleman over here?

Thank you, Mr. Chairman, [ Jim Turner ], shareholder. The capital raising and dividend suspension last year, I understand a large part of it -- or the major part of it was to do with the Reserve Bank requirements. And it was a bit of a surprise as a shareholder, but I understand also that from the material that was sent out that the claim from the EQC was not allowed in the assets of the company. It was a contingent asset as far as the Reserve Bank is concerned. If that was the case, that it had been allowed, the capital raising might not have been necessary. So if I'm correct in that and when that capital raising -- when that claim is recovered, I'd like to ask what the Board's thinking is as to what to do with that recovery. This shareholder would like to see it returned. Not a buyback, but returned. Thank you.

This shareholder would like to see it returned as well. The simplistic position is that there are significant changes and headwinds in regards to financial institutions in both Australia and New Zealand. And it is clear that there is going to be far more regulation/supervision by Reserve Bank, FMA and others. We took our position earlier than others and have got ourselves into a position where we think we have a relationship and a position with the Reserve Bank that is a good one moving forward. The EQC position, I think, very simply, for those of us -- you, sorry, not us, who negotiate contracts, we have put ourselves in a position where we cannot be squeezed by the EQC, saying that we need the capital, we need the money and hence we will take less than what we are entitled to. So by removing it from the focus of the Reserve Bank and others, we allow ourselves to be exceedingly strong and well positioned when we enter into or continue those negotiations with the EQC. As Richard commented and then both I did as well, it is likely that we will end up in litigation with them. The amount of money we get is critical. Every dollar is a dollar more to us as shareholders. So we're positioned that we can stand our ground and stand that ground very, very securely, vis-à-vis the EQC. So I hope that answers that question.

Can we get our money back?

That will be for the Board at that time to decide, but surely, it would be, I think, not unreasonable to think that.

So Mr. Chairman, [ Graham Wakefield ], also a shareholder. It's clear that this EQC receivable is the elephant in the room for this company at the present time. It's a multiple of your annual profit. And -- so I've got questions about it. First is whether other companies, which clearly must have the same issues with EQC are being treated the same by the regulator and that better outstanding is excluded also from the solvency calculation?

I think we need to come back a little bit, [ Graham ]. It is not an elephant in the room. By removing it from the Reserve Bank calculation, we have taken it from being an elephant probably to a plant that is capable of flowering or growing and that's what we're trying to do. So I think the elephant in the room is totally an incorrect view. It is an asset, and we are trying to ensure that it multiplies and grows to its rightful position. We don't know how the Reserve Bank deals with other people, but what we do know is that our position now with the Reserve Bank is a positive one as a result of where we've negotiated to. And we assume that any government regulator is dealing with everyone fairly.

So obviously, the EQC is short of funds and has called upon the government guarantee. So it has a limited incentive to settle these issues, particularly in an election year. Are you getting any assistance from the regulator with respect to the relationship with EQC?

[ Graham ], I think what we've said is that by removing that asset from that discussion with the Reserve Bank, we actually have received significant assistance because we now do not have pressure from any quarter as to what we do with it other than from our shareholders, which we understand clearly. So our position is, we are sitting at their table, 6 foot 6, looking into the eyes of EQC and saying, "We are not being pressured here. We want what is rightfully ours." We also have to remember EQC is part of government. There is no issue about their ability to fund it. They will fund what is due to us when we reach a conclusion. So the asset is secured. It is simply the quantum that is a question here. So I think we are in the best position we could be for this argument.

I suppose you don't have an understanding about the extent of EQC outstandings to other insurance companies and whether or not there can be some collective pressure applied on the cost...

I'm sure we can't do that because that would be countered through the Commerce Commission. Why don't...

Richard. So [ Graham ], just to give you a little bit more context. So every insurance company in New Zealand has a receivable or is owed what we -- what colloquially is termed the washout. So it arose from the basis that we all did the right thing in 2011 and said, we would look after our customers and the EQC's customers to get people back into their homes. Unfortunately, what that meant was that now we're at the point where, at the end of the process, where we are now trying to determine how much we paid on behalf of the EQC. And that's the nature of the dispute. Every insurance company has an element of washout in their accounts that they are owed by the EQC. It's not transparent to us and our 2 largest insurers in this country report through Australia and the numbers aren't transparent in their accounts because of that. So unfortunately, we don't know how much. We do talk to them, but again, as Michael says, we don't collude in a process with them. But we do understand that they are talking to the EQC, the same way we are and trying to negotiate a better outcome for their shareholders at the same time. So the process is happening across the industry. The EQC is aware. It has a liability. It is about the quantum of that liability, not about whether the liability exists.

Other questions? Yes. Please.

I'm sorry. I've come late to this meeting. But -- and I intended to be here early because I had a few points to make. But anyway.

Well, now's your opportunity.