Tower Limited (TWR) Earnings Call Transcript & Summary

Morena, and good morning, and thanks for making the time to join us today. Good to see so many of you here. We have -- it could have been less. Anyway, I'm Michael Stiassny. I'm Chairman of Tower. And I'm pleased to open today's Tower's Annual Shareholders Meeting. On behalf of my fellow directors, welcome to all of you here at the Ellerslie Event Center as well as those who have joined us via the Computershare webcast. This is your meeting, and we thank you for taking the time to join us today. With me in the room this morning are my fellow directors, Wendy Thorpe, Marcus Nagel, Graham Stuart and Geraldine McBride. Also joining us in the room today, our Chief Executive Officer, Blair Turnbull; our Chief Financial Officer, Paul Johnston; senior members of our executive team. Our auditors, PricewaterhouseCoopers, are also present and are available to answer shareholder questions. As you can tell, this is a hybrid meeting. So before we start the meeting proper, there are separate housekeeping matters to cover off. So please, we appreciate your patience. For those of you in the room, if you have a cellphone, please switch it off. If you need to evacuate this room for any reason, there is an exit to the left of the side of your route -- at the side of the room and also the entrance you came through. In the event of emergency, please listen to the instructions from Tower staff, who are identified with name badges. Bathroom facility's located along the corridor to the right where you came in. And if you are unwell -- feeling unwell, please advise one of our Tower staff, who will assist you. And as you can see, we have a St. John's Ambulance, gentlemen, in the room as well. For those of you attending the meeting online, we ask that you follow the information provided in the Notice of Meeting regarding voting and asking questions. Should you require any assistance, you can type your query, and one of the Computershare team will assist, or alternatively, you can call Computershare on 0800-650-034 or from overseas +649-488-7800. Please note, only shareholders and proxies can ask questions and submit votes. I encourage all of you attending online to submit questions via Computershare at any time during the meeting. If you have a question, please select the Q&A tab on the right half of your screen, type your question into the field and press send. Your question will be submitted immediately. Specific questions on any of the resolutions to be considered will be answered as the relevant resolution is put forward, while general questions will be addressed later in the meeting. Questions may be moderated or if we receive multiple questions on a topic, there may be -- they may be amalgamated. However, questions will not be censored unless they are unseemly rude. If we run out of time to answer all questions in the course of this meeting, we will answer them directly via e-mail and post the responses on our website. To any media presence, welcome. A reminder, this is a meeting for shareholders that Blair and I will be happy to talk to you after the meeting. Voting process. Voting today will be by way of poll on all items of business. And to provide you with enough time to vote, I will shortly open voting for all resolutions. At the time, if you are eligible to vote at this meeting, you will be able to cast your vote under the Vote tab. To vote, simply select your voting direction from the options shown on screen. You can vote for all resolutions together at once or for individual resolutions. When the tick appears, your vote has been cast. To change your vote after that time, simply select Change Your Vote. And you can do this until I declare voting closed. For those in the room, if you do not have a voting paper, please indicate now by raising your hand, and a member of Computershare team will assist you. Voting papers will be collected at the end of the resolution and voting section of the meeting by Computershare team who will act as scrutineers, and the results will be posted to the NZX and ASX exchanges later today. I now declare voting open on all items of business. The resolutions will be opened in the Vote tab. You may submit your votes at any time, and I will let you know in advance of the voting we'll be closing. We're finally getting to the detail. Here is today's meeting agenda. We will provide you with an update on last year's performance, our strategy as well as the progress we've made at Tower in recent months. Following Blair's presentation, we will move to the formal resolutions set out in the Notice of Meeting. So let's now move on to the formal part of the meeting. Apologies. Are there any apologies? Thank you. Quorum. The company's constitution requires a quorum of 25 shareholders for this meeting. This requirement has been met, and a quorum exists. In addition to those attending in person today, 452 shareholders holding a total of 113,713,958 shares were appointed proxies, including proxies instructed to abstain. The appointed proxies represent 29.7% of valid securities voted. In my capacity as Chairman of the meeting and in my own name, I hold proxies for 373 shareholders representing 111,535,562 shares or 29.39% of all shares. 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 the 16th of December last year. I propose that we take the annual report and Notice of Meeting as read. So before I talk about our performance over the past year, the devastation brought by the recent events, including Cyclone Gabrielle in the North Island, are top of mind for me and along with all New Zealanders. People have lost their lives, and it's become clear that the scale of destruction is significant. The road to recovery for individuals, [indiscernible] community and businesses will be both long and painful. There is no question, that has sharpened the focus on the impacts of climate change and how we, as a nation, propose to respond. And I don't just mean in the days, weeks and months ahead, as we rebuild, but I mean in the longer term. We can't keep kicking the can down the road. We need a far more comprehensive national resilience and [ adaptation ] plan. New Zealand must develop a feasible strategy, understand who will be doing what, and importantly, who and how we pay for this. There needs to be a top-level conversation right now about roles, responsibilities, and then there needs to be immediate action. It would be kind to say that our infrastructure is not up to scratch. Years of underinvestment have left major cities and regional areas woefully unprepared for catastrophic natural events. This is not new news, but Cyclone Gabrielle has [ sheathed ] at home in the most tragic way. Developers have been allowed to build on risky areas, and we are seeing building on flood plains and at the edge of or on below cliffs, and it's not smart. In trying to protect land, property and lives, we now have a multitude of issues to address. Where are we going to build? What and how are we going to rebuild or build anew? How can we ensure tomorrow's built environment is resilient to weather extremes? These are huge questions that require urgent consideration and a comprehensive plan to resolve. No question, we, the insurance industry, certainly has a major role to play. Tower has already been working towards this future, leading the way in terms of engaging around climate change, developing sophisticated data sets to underpin risk-based pricing on an individual property basis, and more recently gaining a more granular understanding of inland flood risk profiles. When it gets to the gnarly decisions around potential longer-term solutions to address the most severe impacts of climate change, especially the vexed and complex question of manager retreat, the rubber is going to hit the road, who pays. There is a sentiment expressed by government that insurers should bear some of the costs potentially associated with managed retreat. This may sound reasonable on the face of it, but it completely ignores the fact that global insurance model is predicated on paying out after an event, not before one. And let's face it. Once you know it's a risk, it is morally indefensible to wait until after an event to instigate some version of managed retreat. Tower remains committed to risk-based pricing. We believe in our customers paying fair insurance premiums for their risks. Similarly, we don't believe that customers in low-risk areas should pay a disproportionate share of levies. Many people are unaware that today, 45% of the average Auckland house insurance premium is collected on behalf of the government in the form of EQC and fire levies and tax. Tower would be deeply concerned to see additional levies or increases that result in even further cross subsidization of risks as has occurred with the most recent EQC levy hike. Tower is focused on offering competitive insurance to what we deem to be good risks. As a Kiwi and Pacific insurer with a smaller market share when compared to our Aussie conglomerates, this is essential to ensure that we remain a resilient business. And for the good of the New Zealand economy, our shareholders and our customers, Tower has an obligation to protect that resilience while making fair returns. Having said that, Tower is continuing to contribute meaningfully to the information and discussion required to create long-term solutions to the challenges facing us all. However, whatever way you look at it, the unfortunate truth is that there are some areas in New Zealand that should not be rebuilt in the event of a disaster, or that will become literally uninsurable. In my view, we need to have this debate now. We need to identify and accept that in some parts of New Zealand, managed retreat will be the safest and the most pragmatic way to address the risks associated with climate change in order to protect lives and property. Only then can we engage with the communities affected, enabling them to have input in some control over their collective future and importantly, agree and identify and agree on innovative funding solutions. In the face of such an enormous natural disaster, I want to acknowledge how proud the Board is of the way Tower has supported customers while maintaining our financial strength and operational resilience. Tower's response to the last two events in quick succession has been proactive, well coordinated and empathetic. There is no doubt today that Tower today is a vastly improved company from the one that I joined in the wake of the Christchurch earthquakes a decade ago. We are a strong business that is achieving sustained premium growth, delivering on our strategy of innovation and customer focus. We remain well positioned to support the recovery from these events, and shareholders can be confident in our ability to continue delivering performance. As I've just mentioned, our business is adapting to the challenge, navigating the changing climate and the interest of our shareholders as well as our customers, team and communities across the Pacific and New Zealand. We are committed to matching premiums to individual risk rather than averaging total risk across town, cities or broader regions. And we're using advanced data to inform this. Our reinsurance program also has multiple treaties in place that help protect us from the volatility of large weather events. This year, we've increased our budget to $40 million to cover these large events. And we are progressing reinstatement cover to ensure we retain the full levels of our catastrophe protection. However, as I noted in the 2022 financial results presentation, there is no room for complacency. Tower remains tightly focused on managing climate change risks, along with the inflationary pressures that are likely to be prevalent in New Zealand for some time. Our strong financial position continues to be recognized by external agencies. International ratings agency, AM Best rates us as an A- excellent. And last June, the Reserve Bank once again reduced our license condition from $25 million to $15 million. In February, only 27 days ago I think, we paid a final '22 dividend of $0.04 per share, which brought total dividends for the year to $0.065 per share. As always, final decisions on dividends occur when Tower's results are approved and in accordance with Tower's ordinary dividend policy acting prudently and in light of information available at the time. However, despite the recent large events, Tower expects to pay a dividend of $0.05 per share in the '23 year. This year, we completed our purchase of the minority interest in National Pacific Insurance and the acquisition of legacy books, which have been migrated to Tower Direct. This has resulted in further efficiencies and growth benefits, and we continue to look for investments that will deliver strong shareholder value. Tower's strong performance reflects the investments made in our core technology platform and distribution footprint, which have positioned us well to continue delivering GWP growth. Our flagship Tower Direct business and unique partnership distribution capability continue to go from strength to strength. Digitization of our Pacific business continues at pace. And we are now operating on one core platform across New Zealand and the Pacific, leading to further improvements in efficiency and competitiveness. In closing, I'd like once more to thank the Tower team. The business is strong. It's continuing to achieve sustained premium growth and it's supporting customers in their time of need. None of this would be possible without the vision, dedication and commitment of all our people. I'll now hand over to Blair, who will take you through the results and outlook before we take questions.

[Foreign Language] Thank you, Michael. A warm welcome to everybody today for joining us. Before I recap our full-year 2022 results and provide a performance update for the first 3 months of the 2023 financial year, I would like to take this opportunity to acknowledge the events of the past few weeks. It's been a very challenging time for Kiwis. It's hard to believe that only in January, Cyclone Hale was declared an emergency event by cabinet. Then things got a lot worse. The widespread storms in Auckland and the upper North Island in late January, early February, followed by Cyclone Gabrielle only a week later, has devastated communities. The daily conversations we are having with our customers have been heartbreaking. And in the past few weeks, we've been called upon to not only provide assistance with claims, temporary accommodation and make safe fixes, but also for a lot of moral support. As an insurer, these are our defining moments. Paying claims is why we exist. And these events are an important reminder of the critical role insurance plays in both personal and economic resilience. While these events are a moment of truth for insurers, there are also a moment of truth for New Zealand as we collectively tackle the climate change elephant in the room. What's clear now from the data we have and the claims that we've seen in recent years is that the frequency and severity of these weather events is increasing rapidly. And as a country, we need to adapt and protect our communities. Tower has been advocating for greater transparency around risks for several years now. When we launched our flood risk tool in late 2021, we wrote to relevant ministers as well as every council and MP in the country, offering to share our model and insights into their community's flood risks. And we were pleased to have met with a number of councils to share our data. In the wake of the Auckland and Upper North Island event and Cyclone Gabrielle, this offer remains open. And in the coming weeks and months, we will be reaching out again as we add coastal erosion and inundation as well as landslide risks to our models. Tower is committed to acting in the public interest, doing what we can to help inform good decision-making and building back better. And as Michael emphasized, we believe that risk-based pricing is a fairer way to price insurance so that customers only pay for the risks they have. Pricing appropriately for risk will ensure we continue to have a robust business for New Zealand and the Pacific. We're also rising to the climate change challenge by developing new products and models to support communities through climate change, such as our Cyclone Response Cover in Fiji, a parametric insurance product that provides a rapid cash payout when a customer is impacted by a cyclone, regardless of damage and without the need for an insurance assessor's sign-off. And we're also helping people to build back better by providing $15,000 above the sum insured for a total loss to use for additional sustainable materials or products like solar panels or eco-friendly paints. But insurance is only one part of the equation. At a national level, we must do more to help protect communities as the effects of climate change worsen. Firstly, we need to urgently stop building in risky areas. As we have seen in recent weeks, the worst damage is often in areas where people have the least. It seems obvious that large developments built on flood plains will fill up with water when it rains a lot. And as we have seen this month in far too many places, our infrastructure is simply not up to the job. Innovative upgrades are needed to protect communities from flooding. We need urgent consideration of the building system and regulatory framework to ensure existing natural risks and changing or intensifying weather patterns are factored in as we plan new housing developments. Simply installing more concrete pipes and walls is not the answer. We need to be looking at alternative materials and reinstating nature's wetlands as standard features. It all adds up to creating a built environment that can handle high-intensity weather events that are going to keep hitting us. I'm incredibly proud of the way our people have risen to the challenge posed by these events and the tireless effort they continue to make in supporting our customers and communities. We put out our first communication on the morning of the 27th of January, warning people to be careful on the roads over the Auckland anniversary weekend. And that evening, we followed up with 117,000 text messages to customers in Auckland, Northland and Waikato to offer assistance, provide information on what to do during the storm and to how to make a claim. By 7:00 p.m., we had already lined up a car yard in South Auckland. In the following days, we towed hundreds of vehicles there for assessment. Since the Auckland and Upper North Island event began, we have sent around 330,000 text messages and 940,000 e-mails and many calls, providing advice on personal safety, claims, emergency repairs and what to do with flood-damaged items. We quickly bolstered our resourcing to support phone lines and online claims lodgement. And this included our team in Fiji. We had assessors on the ground from the Saturday morning and flew more assessors into Auckland from the South Island and Australia to assist, and we had people in all the community hubs. Our online reach enabled rapid claims lodgement and saw us receive the bulk of our approximately 5,325 claims within a week of the event. We received 80% of our claims via online channels, showing the value of this technology investment, which enabled us to respond much faster to customers. When Cyclone Gabrielle hit us less than a fortnight later, our teams and partners were all in place and ready to scale up these actions. We are continuing to support customers impacted by both the Auckland and Upper North Island weather event and Cyclone Gabrielle. We currently estimate the total claims cost for the Auckland and Upper North Island weather event to be $95 million to $125 million, which will be predominantly be covered by reinsurance after a excess of $11.875 million. We have received around 2,200 claims from Cyclone Gabrielle. And while we are still assessing the financial impact of this event, we expect it to also trigger our catastrophe reinsurance cover, which I will take you through next. Tower's reinsurance strategy provides protection from volatility caused by large events. And as I outlined, we anticipate that it is likely that both the Auckland and Upper North Island weather event and Cyclone Gabrielle will be classified as catastrophe events, each with an excess of $11.875 million. To manage the impact of further large events on our results, we have increased our large events allowance from $30 million to $40 million in our FY '23 plan. And in line with Tower's comprehensive approach to reinsurance, we are progressing reinstatement cover with a view to retaining our full levels of catastrophe protection. That is 2 additional catastrophe events up to $889 million. Any further large events this year, we'll have an excess of $12.5 million. Tower is uniquely positioned to adapt quickly to challenges while enhancing our resilience. Our ability to price quickly is evidenced by the more than 140 pricing adjustments we made in FY '22, which allows us to stay ahead of inflation and changing claims trends. Our approach to risk-based pricing allows us to quickly gather the data we need to make more precise decisions about the risks we will accept and for the right price. Our geographic footprint enables us to move workflows across multiple countries and manage spikes and business interruptions, such as the events we have seen in recent weeks. And increasingly, automating our renewal process has ensured that 97% of our New Zealand customers' sum insured amounts have been updated, either by CPI or the Cordell calculator, which accurately calculates rebuild costs. And our partnership approach to supplier relationship gives our customers access to preferred suppliers, helping us to manage claims costs. And now to recap on our FY '22 financial year ending 30 September 2022, which seems like a long time ago just now. To start, a brief overview of Tower's journey in recent years. We've come a long way from our ambition of simplifying our business by first reducing our New Zealand product set from more than 400 product variants down to just 14 products, and we've done similarly in the Pacific. Our 3 businesses were set up to represent a different regional and customer groups, direct partnership in the Pacific. This business and product simplification enabled us to move our operations onto one core platform, which is now live across New Zealand and the Pacific Islands. And as we continue to simplify and scale across the New Zealand and the Pacific, our [ near-future ] ambition is to leverage our core platform to ensure all of the Tower customers enjoy the same great experience with the same common set of products, irrespective of where they live, a scalable and progressively more efficient model, which we -- will be key to our long-term success. Now underpinning this is a strong culture of high performance, a culture where all of our people can contribute and feel valued because ultimately, they are at the heart of delivering an exceptional customer experience. Our focus remains on deepening customer relationships by offering a rich product suite, which supports higher customer satisfaction and engagement. We will keep customers for longer, which, in turn, ensures Tower remains a financially strong and resilient business. We reported positive business performance for the 2022 financial year, which was achieved through strong growth and efficiencies. Tower's gross written premium for the year to 30 September rose to $457 million, up 13% on the previous financial year. We managed external headwinds well, with Tower's BAU claims ratio dropping to 48.9%. We were pleased to have seen our management expense ratio, MER, improve again from 37% in FY '21 to 36%, thanks to our disciplined cost control and further efficiencies. Tower planned for $20 million of large events costs during FY '22, and these came in at $19 million net impact, up from $13.9 million in FY '21. And reflecting a positive business performance underlying NPAT, including large events, was $27.3 million, up 31% from $20.8 million in FY '21. Reported profit was down 2% at $18.9 million versus $19.3 million in FY '21. So Tower's focus on simple and rewarding customer experiences, combined with our digital and data capability, contributed to strong growth in both premium and customers in FY '22. As previously mentioned, we grew our gross written premiums 13% to $457 million as well as our customer numbers to 319,000, up 5% on prior year. Our digitization strategy helped increase the number of Tower Direct quotes online, with 2/3 of sales in FY '22 taking place on digital channels. And these new customers were brought on board at a lower cost to acquire at 12% of net earned premium versus 12.6% in FY '21. We are continuing to sell more to existing customers as we grow, with half of our New Zealand customers having 2 or more products now with Tower. Two achievements we are particularly proud of. We're winning Canstar's Top Car Insurer of the Year award and also the Outstanding Value Award for the second year running. Our increasing scale, combined with decisive actions to address inflation, continued to deliver efficiencies in FY '22, with Tower's BAU claims ratio reducing well to 48.9% compared to 50.2% in the 2021 financial year. And this is despite the stormy weather across New Zealand over the year, resulting in total claims costs of $18 million compared to the 5-year average of just $11 million. By global standards, a 1% reduction in management expense ratio in any good -- any year is a good result for an insurer. So in last year's highly inflationary environment, we were particularly pleased to have achieved yet another improvement in MER to 36%. With half of all tasks and transactions in New Zealand completed digitally versus 46% in FY '21, the customer and efficiency benefits from our leading digital and data technology platform are being realized. In the 2022 financial year, Tower returned $55.3 million to shareholders in the form of dividends and the capital return. As a result of these payments to the shareholders, Tower's surplus capital decreased. Tower's solvency ratio was 205% as at 30 September, after the capital return and final dividend. We paid a final dividend of $0.04 in February 2023, bringing the full-year dividend to a total of $0.065 per share. Turning now to our trading results for the first 3 months of the 2023 financial year. We had a very positive start to the financial year with continued premium growth. In the first quarter, we achieved $123 million of gross written premium, representing growth of 12.5% on the same period last year. Again, this has been achieved by a combination of new business, improving customer retention and inflation-based price -- inflation-based rating adjustments. We are pleased to have increased our market share of personal lines to 9.5% by the end of Q1 compared to 9.2% in the same period last year. Our online sales channels are helping to drive this growth with 74% of Tower Direct new business coming through online channels, up from 62% in the first quarter of FY '22. And the number of New Zealand risks we hold in force is up 5% year-on-year to 582,000. We are focused on driving operational efficiencies to underpin our profitable growth. And as I mentioned before, we were pleased to reduce our management expenses in FY '22, and we continue this trend in the first quarter of this year. Our management expense ratio was 35% compared to 38% in Q1 FY '22. We also increased MyTower registrations to 218,000, a 45% increase on 150,000 during the same period in FY '22. And in the first quarter, 55% of our claims were lodged digitally. In Q1, we also completed our legacy bank book acquisitions, saving us $11 million in commissions annually and contributing to a further reduction in our commission expense ratio, which is now just 1.8%. In Q1, our claims ratio increased to 54%, and this is largely as a result of changes in claims trends. And as you can see from the charts, average motor claims frequency has increased to 13%, up from 12% pre-COVID, due to higher traffic volumes and increased motor thefts. The first quarter of the prior year saw reduced traffic on the roads due to the Auckland lockdowns. We continue to take a disciplined response to addressing claims inflation. And other challenges -- and made 49 targeted rating and underwriting adjustments in Q1. We have also made targeted underwriting changes to improve our risk selection. And these actions will benefit our loss ratio, going forward. At the end of the first quarter, we also had 32 Canterbury earthquake claims open compared to 36 in September 2022. We continue to leverage technology and establish preferred partner networks to optimize our recoveries and investigations of potentially unjustified claims. Our AI-based fraud detection system, FRISS, went live in 2022 and is already delivering results. And we have successfully integrated a new digital recovery solution, [ DebtCol ], into our core technology platform. We recently updated our full-year underlying NPAT guidance to between $18 million and $23 million from a range of between $27 million and $32 million. And this guidance reflects the positive actions we've taken to prepare for future events, including increasing Tower's large events allowance to $40 million, up from the initially forecast $30 million. This FY '23 guidance also factors in the expected cost of reinstating reinsurance arrangements. This range is based on GWP growth of between 10% and 15%. A decision will be made on whether to pay an interim dividend when Tower's half-year results are approved. For the full year, in line with Tower's ordinary dividend policy to pay a sustainable annual dividend in the range of between 60% to 80% of adjusted earnings, we're prudent to do so. Tower anticipates FY '23 dividends to be $0.05 per share. In summary, despite two significant catastrophe weather events in quick succession, Tower is in good heart. We are supporting customers enabled by our investments in technology and people. We are very focused on the job at hand. And we remain well positioned for the future. I'll now hand you back to the Chair.

Thank you, Blair. I now propose to move to the next item of business, which is shareholder resolutions, which are before the meeting. Resolutions 1 to 3 are ordinary resolutions, each passed by a simple majority of votes of those shareholders entitled to vote and voting on the relevant resolution. As noted, voting has already opened online and will close shortly after discussion on the resolutions are completed so that everyone has the opportunity to cast their vote. The first resolution, authorization to fix the remuneration of the auditor. Companies Act provides that a company's auditor is automatically reappointed, unless there is a resolution or other reason for the auditor not to be reappointed. The company wishes PricewaterhouseCoopers to continue as the company's auditor, and PricewaterhouseCoopers has indicated its willingness to do so. Companies Act provides the fees and expenses of the auditors either be fixed by the company or in the manner that the company that's -- determines at the annual meeting. The Board proposes that consistent with past practice, the auditor's fees be fixed by the Board. I therefore record that the auditors, PricewaterhouseCoopers, are automatically reappointed as auditors of the company and move that the Board be authorized to determine the auditors' fees and expenses for the 2023 financial year. At this point, I'd also like to note the New Zealand Shareholders Association Policy and international best practices that an audit firm should not serve more than 10 years. And the lead partner should be rotated at 5 years to ensure the appropriate degree of independence is maintained. We agree with this view and have noted audit firm tenure and lead audit partner rotation information in our corporate governance statement on our website. Are there any questions? Thank you. I now move to the reelection of directors. As the first reelection concerns myself, I'll hand over to Graham Stuart.

Good morning, everyone. Resolution 2 is the reelection of Michael Stiassny as a Director of Tower Limited. This year, Michael retires, and being eligible, offers himself for reelection. Michael has the unanimous support of the Board. And I'll now ask Michael to address the meeting.

Thank you, Graham. I was appointed the Tower Board in October 2012 and have held the role of Chair since March 2013. I'm a chartered fellow of the Institute of Directors in New Zealand and a past President of the Institute. I am now a retired ex-member of the Chartered Accountants Australia & New Zealand and was a fellow member. I also hold a commerce and law degree. My corporate career has largely been centered on financial and corporate services. I'm now bringing those skills to bear as a partner in an organization called Founders Advisory, supporting entrepreneurs and start-ups to bring their ideas to market and to build successful businesses. I also continue to advise Boards companies, local and central government on high-stakes negotiation and conflict resolution. As you're aware, I have had an extensive governance career and continue to hold directorships in a number of companies. Tower remains at the heart of my governance portfolio. Transforming this business has been long and, more often than not, arduous. It's required a steady hand, a prudent approach. That was before you were here, Blair. It's required a prudent approach, a clear vision in what is ever-changing world. And I'm grateful to our shareholders, who have kept the faith. As I noted in my opening remarks, in the wake of Cyclone Gabrielle, the need for informed national debate and leadership and how we traverse climate change adaption is a priority and should be a priority for the insurance industry. When it comes to identify solutions and who pays, reason and common sense must prevail because these decisions will have far-reaching ramifications to the industry and indeed for all of us as New Zealanders. As New Zealand's only NZX-listed insurer, ensuring Tower participates in the national discussion and that its views on these matters are heard will be an important focus in the ensuing months. In closing, I want to acknowledge that I've had a long tenure, I do -- on this board. And I do not intend to seek -- I will not be seeking reelection in the next rotation. However, I believe that continuity at this time of uncertainty is both useful and valuable. And most importantly, I'm committed to ensuring Tower remains a resilient business, capable of continuing to deliver value to all our shareholders. Thank you for your attention and continued support.

Thank you, Michael. As Michael retires on rotation in accordance with the NZX listing rule 2.7.1, I now move that Michael will be reelected as a Director of Tower Limited. Are there any questions? There's a microphone coming. Just 1 second.

Mr. Chairman, thanks very much. You'll be aware that our association, the NZSA, does like to see rotation of directors. And this Board has accomplished that by and large. Mr. Stiassny has a remarkable record in this company alone, and not to mention his other interests. And I remember when we first met back in about '13 that I asked that the Board try and desperately keep this company listed on the New Zealand Exchange because it seemed as though -- at that time as though it was disappearing with a number of rationalizations that were occurring. And he very quickly told me,"You can't hold me responsible for keeping this company listed." But in fact, I think it was very largely due to his efforts that, that has been the case. And I thank him for that because I think we need a listed general insurer in New Zealand. So thank you very much for your service. We -- in spite of our record of advocating for a maximum of that 9- and 10-year service for directors, we've been pragmatic about that. And we do recognize that there are some very valuable people who should stay longer. So thank you for extending your term.

Thank you. There being no further questions, I'll hand the chair back to you, Michael.

Thank you for those kind words. So the Resolution 3 is the reelection of Geraldine McBride -- sorry, I think it is only the election of Geraldine McBride. Geraldine was appointed by the Board on October '22 to fill a casual vacancy following Steve Smith's retirement in February '22 and in anticipation of Warren Lee's retirement. As required by Towers Constitution, Geraldine retires, and being eligible, offers herself for election. So I now invite Geraldine to address the meeting on her election. We are having this discussion, but if she's never been voted on, can it be a reelection? So I'm sure someone will have a view on that at another time.

Thank you, Michael. And yes, that's a very good question. Morena, and good morning. I'd like to thank you, shareholders, for the opportunity to speak with you this morning. As you know, I've been introduced to, my name is Geraldine McBride. I'm seeking your support for my election to the Tower Board. And I bring a very diverse range of skills and relevant experience. The first one is the governance experience. I've obviously served since I returned from living half my life away from New Zealand. I served on the Boards of National Australia Bank, which was a fascinating time going through the Royal Commission and redigitizing the bank and getting it to the position it is today. Fisher & Paykel Healthcare, I joined that board, served on 9 years. Started as a $450 million company. By the time I left, it was a $1.5 billion successful NZX company. And then, of course, Sky Television, which is still work in progress. And I've recently stepped off these boards, having served my 9 years for the normal term. I'm also a chartered member of the New Zealand Institute of Directors and take my governance work very seriously, and that gives me to now to dedicate to Tower. So it's a great privilege to be able to offer myself here for election today. A little bit of background on myself. I'm actually a scientist by training and a New Zealand frog expert, very rare frogs in the Coromandel and -- but I decided there was no money in frogs and moved to technology. So 27 years later, I have become a business and technology expert that still deeply is connected to the beauty of our forests and nature. And I find being on the Board of an insurance company is a fascinating piece because insurance is about insuring risk, and risk is due to nature. And I have a deep understanding of nature, but I also have a deep understanding of business, and I also have a deep understanding of commerce and the financial services sector. So I find the discussions that I've been involved with so far absolutely fascinating as it touches on many interesting points that I have. But I would -- but the other topics that I also bring in is that I've got a lot of experience in things like cybersecurity, which is really important, digital customer experience, which we've spent quite a bit of time speaking on today, as well as leveraging data in real-time risk management and the interesting conversations we can have around using data to manage risk in real-time. And I think as climate change becomes more prevalent, having static ways of underwriting risk actually won't work. The world has become much more dynamic, much more complex. It's very much more difficult to price risk. So being far more data-driven using things like -- I think, Blair mentioned, things like parametric insurance and other types of approaches gives us new business models. So I have some sort of background to be able to have an intelligent discussion about how we might do that. So I also have an international reputation as a leader in the use of artificial intelligence. So I've spent a lot of time in AI space since I left the big tech sector, particularly artificial intelligence for banking and insurance. And for those of you who have been reading articles on things like ChatGPT, which is bringing sort of AI more into the normal living room of everybody talking about it, I've actually been building my own technology, founding a company based out of New Zealand and Australia that is like the ChatGPT for enterprise processes. So it's basically how do you build a process? Well, you don't have to write a line of code. So it's called no-code, low-code technology. So I spend a lot of time in that world. And so I've been asked to go and speak at a banking and insurance forum in Boston in about a week's time on these topics as to how do we actually digitize these processes and bring back more efficiency. So those are the sort of things that I -- is my background to give you some sense of who I am as I stand before you today. I think that Tower's focus of delivering on the simple and rewarding customer experiences and its current investments in digital technology and data has seen it as we've heard in this presentation today to enable it to become one of New Zealand and Pacific's leading insurers and obviously, as you've rightly pointed out, listed on the NZX. And I think that there is a tremendous opportunity to be able to do even more in that digital space. So in closing, I'm excited about the opportunity to contribute positively to Tower's continued success and growth. I was delighted that having met all my fellow directors that I can be part of that team. I bring the experience and the know-how in the governance. And so today, I seek your support for my election as a Non-Executive Director for Tower Insurance. So thank you. Over to you, Michael.

Thank you, Geraldine. I will now move that Geraldine McBride be reelected as a Director of Tower. Are there any questions? There being none, that concludes our discussion on the items of business. So if you haven't already done so, please may I ask that you cast your votes now. Voting will close in approximately 2 minutes. The votes will be counted under the scrutiny of Computershare, who will now then begin collecting papers from within the room. In the meantime, I think we can move on because I'd love a sausage roll. So the final item on our agenda is questions in general business. So are there any matters of general business that anyone would like to discuss? There is one on the web.

One online from Stephen Barrows. As we listen, our Tower's extra reinsurance reinstatement cover's fully bound. That is, as I signed up for, 100% or still being negotiated?

Please, answer, paul.

Thank you, Michael. The Towers reinstatement covers are still being renegotiated, and we are progressing well with these. We have bound a number of quotes that we have received. And we're continuing to work with global reinsurance markets around the world to receive quotes. We will update shareholders as soon as we have more news to tell you, which we are looking forward to doing very soon.

No further questions.

Thank you. Has the regulator imposed any conditions on Tower, pending reinsurance being in place? And if so, what are they?

I'm glad to say there are none. We did comment, I think, in our presentation that the relationship with the Reserve Bank and the FMA are both what I would classify as good to positive. And there are no issues. We have kept them fully updated, and they presumably have had those discussions with all insurers, but there are no issues in regard to Tower.

Am I correct that they are [ depending ] the reinsurance being put in place, there is a third catastrophe cover originally in place, which has an upper limit of around about $45 million after the [ XCS ] is included. Is that correct as being the only catastrophe reinsurance cover available to Tower at the present time?

Good question. So you are correct that we do have a third reinstatement cover that we have purchased called the drop. And that does go up to $45 million above the $12.5 million retention level. However, that is not all that we have in place because the way the towers work is that we still have access to the reinsurance that we've not used on the first 2 towers. So actually, depending on the level of Cyclone Gabrielle, we have a full -- we have full reinsurance available today right now as well.

So do I understand then that the amount of reinsurance cover that's available for the Cyclone Gabrielle event is more than $889 million, considering that you won't have used the full reinsurance sum with respect to the first catastrophe event?

No, because the towers have vertical limits as well. So $943 million for the first tower and then $889 million for the second tower. So you don't get to go above the towers.

But we are predicting Gabrielle to be at a maximum of...

Well, we don't have a number yet for Gabrielle, but we certainly are not anticipating it going anywhere near the upper levels of the towers.

Thank you. Any other questions? If there aren't, voting, I think, will be closing very, very soon, like 30 seconds. And the results, as I've said, will be released to the stock exchange later today. So I think we can close the voting. I can thank all of you for taking part today in the meeting, either virtually or in person. And for those of you that are here, please join us for a cup of tea and whatever else is available. So thank you very much, and thank you once again to management and my fellow Board members. Thank you.