Tower Limited (TWR) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Tower Limited Full Year Results Announcement 2023 Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Chair, Michael Stiassny. Please go ahead, Sir.

Good morning, everyone, and thanks for making the time to join us for this investor call and presentation of our 2023 full year results. With me in Auckland is our Chief Executive Officer, Blair Turnbull; and our Chief Financial Officer, Paul Johnston, who will take you through the results in more detail shortly. The word unprecedented gets banded around plenty of these days, but is an appropriate description for what the global insurance industry faced in 2023. A raft of catastrophic weather events worldwide, not only highlighted the immediate impacts of climate change, but also put all insurance businesses on notice that the risk environment in which we operate is irrevocably altered. Risk-based pricing continues to be Tower's best prediction to address these issues and has enabled us to remain resilient withstanding the challenges that this past year has served up. Tower has been the poster child for risk-based pricing in New Zealand. We were the first to implement risk-based pricing for inland flooding, and we continue to expand hazard modeling to other climate-related risks. Our view remains that risk and pricing transparency is not only fear it to customers, but is also in the interest of our shareholders. It has certainly proven to be a compelling factor in securing a comprehensive reinsurance program for FY '24 at competitive rates. This is crucial as reinsurance provides protection from volatility caused by large events, maintaining flexibility to enable Tower's growth and support strong solvency. However, while risk-based pricing successfully underpins Tower's competitive pricing, robust underwriting, continued growth and response to issues arising from climate change, it is not a cure for all challenges. Ideally, comprehensive insurance will be affordable and accessible for all. Unfortunately, the twin challenges of an inflationary environment and increasing risks from climate change make this unrealistic. The unpalatable truth is that not everyone is or will be able to afford to ensure their home and the way that they do now. However, the New Zealand market enjoys strong insurance penetration and people will be low to give up all protections. So whilst the full ability is currently presenting challenges, there is the desire and need for insurance will not dissipate. Our view is that fortune will favor those insurers who can pivot and adapt, something that Tower has the digital capability and proven ability to do. Tower will continue to innovate by developing cost-effective alternatives to traditional comprehensive insurance cover. In the future, options likely to be offered in New Zealand include parametric cover, which has already been successfully trialed in the Pacific and named payrolls policies, which only cover certain hazards, for example, offering fire-only policies and flood prime areas. This approach is already common in many other parts of the world and whilst it will take some time getting used to, it will likely become a necessary replacement to comprehensive cover for at least some New Zealanders. In short, Tower's continued resilience will be fostered through innovation and meeting the market where it is at, not where we would like it to be. Despite the obstacles of 2023, Tower continues to be well positioned for long-term growth. Looking ahead, Tower's sharp focus is on continuing to deliver strong sustainable growth via its rating approach and customer experience. Careful risk selection and risk-based pricing expansion will remain at the forefront of our strategy. Tower's solvency margin is $53.8 million, which is above RBNZ's minimum solvency capital. And although this is below historical levels, it will continue to increase, please guide on FY '24 as catastrophe event claims are settled. The fundamentals remain strong. I would like to take the opportunity to welcome Mike Carter, who has recently joined the Board and thank his life's contribution as an interim Board member. Mike brings extensive global governance and executive experience in the financial services sector that will be valuable as Tower continues to evolve. Finally, on behalf of the Board, our sincere thanks to the entire Tower team from the front line to management for digging deep and tough times to deliver on our strategy while supporting our customers and communities. I'll now hand over to Blair and Paul to take you through the results.

Thank you, Michael, and good morning, everyone. Thank you for joining us for our 2023 full year financial results. Here is a summary of our results, which overall demonstrate Tower's resilience through a challenging year. I'll talk through these points in more detail shortly, but first, an overview of our performance this year. Gross written premium for the year to 30 September increased to $527 million, up 17% on the same period last year, and this was driven by strong rating actions as well as continuing customer acquisition and retention. Customer numbers increased to 321,000, up 4% from 310,000 in FY '22. Increasing inflation and the higher frequency of motor claims have contributed to an increase in the BAU claims ratio to 55.5% compared to 48.9% in FY '22. Tower is continuing to apply targeted rating and underwriting actions to address these challenges. We are pleased to see our management expense ratio improved once again to 32.2% versus 36% in FY '22, thanks to our disciplined cost control and improved efficiencies through digitization and increasing scale. Large event costs totaled $35.6 million, up from $19 million in FY '22 and these costs include the additional reinsurance cover purchased to reinstate our reinsurance arrangements following the 2 New Zealand catastrophe events earlier this year. Given these large events costs, our solvency ratio decreased to 159% from 205% in FY '22, but remains in a solid position and which Paul will talk to shortly. Despite these challenges, we're reporting an underlying profit after tax of $7.6 million, down from an underlying profit of $27.3 million in the full year 2022. Reported FY '23 loss was $1.2 million compared to an $18.9 million profit in FY '22. And on the basis of these results, Tower will not pay a full year dividend in FY '23. As you can see in this graph, large event costs have been rising steadily in recent years. Tower is monitoring these trends and this important mitigations in place to help manage these risks. Our robust reinsurance arrangements have provided protection from catastrophe events this year. We estimate reinsurance cost will cover more than $200 million of customers' claims for both catastrophe events combined. As at 20th of November, we had completed approximately 84% of claims for the New Zealand weather events and 88% of claims for the Vanuatu cyclones. We are working hard to close the remainder. To help mitigate large events impacts in FY '24, we have purchased cover for 2 catastrophe events up to $750 million each as well as prepaid cover for a third event up to $75 million. We have also included a large events allowance of $45 million within our guidance. And this allowance has been calculated with an estimated 90% confidence the outcome will be below or up to this level. We now plan for a higher frequency and intensity of large events in both our financials and our business operations. While we respond to the challenges presented by climate change, including increasing reinsurance and other weather-related costs, Tower has also been actively managing the impacts of inflation. Tower's dynamic rating ability saw monthly inflation-based rate changes and other pricing activity totaled 77 rate changes in the past year. We're also continuing to improve the accuracy of existing customers some insured amounts, and therefore, their pricing. In New Zealand, for the second year running, nearly 100% of our house customers, some insurers were updated automatically as part of their renewal offer, mainly using data from the Cordell calculator. This helps customers choose a suitable level of cover. And as we noted earlier this year, motor theft is a continuing challenge in New Zealand. Therefore, we continue to increase premiums and excesses for vehicle models that are being stolen more regularly. This chart demonstrates the annual growth in Tower's average premium after taking into account changes to excesses and some insured amounts. The substantial annual growth highlights the impact of technical premium increases and how this flow through to gross written premium. Increases to home insurance premiums were moderated by the change in the EQC cap, which came into effect from 1 October 2022. We're also continuing to address the challenges presented by inflation through strong, disciplined underrating. Following the New Zealand large events in January and February this year, we introduced manual underrating for landslide risks and automated underrating on C surge risks. Risk ratings for these hazards will be presented to customers and MyTower in the coming months. We are also targeting good risks like new build homes with competitive rates. On the motor side, we continue to improve our data by taking a more granular approach to rating factors that are proven to influence claims frequency and severity. And this helps predict the likelihood of claims and possible customer behaviors with greater accuracy. We're also exploring new telematic options and ultimately, this is all about getting the right risks for the right price for the right customers. I'm proud of Tower's resilience, which has enabled us to continue delivering on our strategy this year while responding to catastrophic events and other external challenges. At Tower, our purpose is to inspire, shape and protect the future for the good of our customers and communities and after a year navigating the impacts of catastrophic weather events in New Zealand and Vanuatu, widespread inflation and increase in crime and purpose is more important than ever. In FY '23, we took the opportunity to review and confirm our strategy and focus on 4 key areas, and these are delivering a leading customer experience, being operationally efficient and effective, continuing to develop a high-performing culture and ensuring continued resilience. Our focused outcomes will help lead the to the new 2-year financial targets that Paul will talk through shortly alongside our FY '24 guidance. Tower's focus on simple and rewarding customer experiences, combined with consistent rating actions continue to deliver strong growth in both customers and premium. And as you can see in this chart, we are growing steadily in our core home contents and motor product offerings with GWP reaching $527 million year-on-year. In the context of this high inflation environment, a 17% growth in premium reflects an appropriate mix of rating and organic growth with $0.75 of premium growth driven by the size of rating actions. Our partnerships channel is delivering positive growth with GWP from active partners in New Zealand, increasing by 26% to $82 million in the year. And we also continue to drive customer engagement with our retention rate for New Zealand remaining stable at 77%. Half of our customers hold multiple policies with us and these customers stay with us for an average of 8 years. Our digital platform is improving the overall Tower experience for our customers as they increasingly adopt our online sales and service channels. And in FY '23, 77% of New Zealand direct sales occurred online, up from 66% in the prior year, while 56% of New Zealand service and claim tasks were completed online, up from 50% in FY '22. Customer satisfaction for these online engagements remain strong and combined New Zealand Net Promoter Score for online experiences remains steady at 55%. With our core platform now live across the Tower group, we're able to flex resources up or down across Fiji and New Zealand, our 2 biggest markets. Following post-COVID resourcing challenges in FY '22, which led to customer service challenges, we scaled up our operations, particularly through our Suva Hub, and this helped a core abandonment rate improved to 12%, down from 17% in FY '22. We are pleased to see MyTower registrations continue to rise, increasing by 32% this year to 264,000 registrations, and we look forward to this number further climbing now that MyTower is live in all the markets where we operate. An important part of delivering the leading customer experience we aspire to is fronting up and fixing things when we don't get them right. As we noted in our recent market announcement, we have made substantial progress in refunding customers who did not receive their correct multi-policy discounts extending back to 2016. And as of 31 October, we've paid $6.2 million, excluding GST to these customers and Paul will talk you through the financial impacts of this in more detail shortly. Importantly, we are focused on putting things right for customers, and we sincerely apologize to those who have been affected. In addition to reviewing our processes, we are also redesigning and simplifying a multi-policy discount offering. Our investments in simplifying and digitizing our business continued to deliver MER improvements. And in the context of the external challenges we are managing, we are particularly pleased to have achieved yet another reduction in our management expense ratio to 32.2% this year and contributing to this MER improvement as our increasing scale as well as the rating actions we have taken to tackle inflation and other external challenges. With our core platform across all countries, another key driver of MER improvement is our increased digitization, which continues to lower the cost to acquire and serve customers. The expansion at our Suva Hub this year has also delivered operational efficiencies as we moved workflows between sites to manage workload peaks. In the year, our Suva team entered 16% of all New Zealand calls to Tower, and we expect this portion to further increase. Pleasingly, these efficiencies have also seen our management expenses increase below the rate of inflation. Our commission ratio continues to improve, reducing to 1.7% in the year from 2.2% in FY '22, thanks to legacy portfolio purchases and commission terms focused on referral arrangements. Despite the unprecedented year of weather events, record inflation and crime, our underlying core business remains profitable, and this is due to our actions to streamline the business, continuous efficiencies through digitization and targeted customer growth. I will now hand you over to our Chief Financial Officer, Paul Johnston, who will take you through the details of our financial performance this year.

Thank you, Blair. Looking at the consolidated results, we can see that growth in GWP has been strong, increasing by $69.5 million or 17% on FY '22. This growth was predominantly driven by rating actions and excludes Tower's Papua New Guinea subsidiary, which was sold during the year. Increased motor frequency along with high inflation and a number of small weather events contributed to our BAU loss ratio increasing 6.6% to 55.5%. Large event costs totaled $55.6 million and included net claims costs of $38.2 million and reinsurance reinstatement costs of $17.4 million. Pleasingly, the MER improved to 32.2% as a result of expense efficiencies and scale. Higher yields have seen net investment income increased by $13.1 million to $14.3 million. Underlying net profit after tax was $7.6 million, down from $27.3 million in the prior year, reflecting the catastrophic weather events experienced in FY '23, including large event costs, we've reported a net loss after tax of $1.2 million. This was impacted by non-underlying transactions, which include an increase to the CEQ valuation, tax adjustments relating to the prior period and an increase to the customer remediation provision. These were partially offset by gains on the sale of our Papua New Guinea subsidiary and our building in Suva. Here is the bridge between underlying NPAT and FY '22 of $27.3 million and underlying NPAT of $7.6 million in FY '23. You can see that business growth, management expense ratio and investment income have helped support this result. But large events and the change in the BAU loss ratio have had adverse impacts this year. We have been taking strong rating actions over the last 2.5 years to combat rapidly increasing inflationary pressures. However, BAU claims costs continue to be challenged by the increasing frequency of motor claims as well as inflation and supply chain capacity constraints, which are impacting the severity or cost of claims. These are continuing to track above historical norms in New Zealand following a more subdued period due to COVID lockdowns in previous periods. Motor crimes tend to result in the total loss of a vehicle. So this trend of increasing motor theft contributes to both higher frequency and severity. Average New Zealand motor claims costs are now up to $3,201. While house claims frequency in New Zealand is flat at 7.2%, the average severity is up to $3,766. These factors have led to our BAU loss ratio increasing to 55.5%. The large events experienced this year have contributed an additional 13.4% to a total claims ratio of 68.9%. Tower has applied targeted premium increases across motor and time to offset inflation and other increases. We also continue to work closely with supply chain partners while focusing on internal efficiencies to moderate the impact on customers as much as possible. This page illustrates the increase in the loss ratio from FY '22 to FY '23, reflecting the increases to motor and home severity as outlined on the previous page. We are pleased to see our management expense ratio continue to reduce with an improvement over the last year of 3.8% to 32.2%. Increased scale from business growth has enabled efficiencies and a 4.8% reduction in management expense ratio with a further 0.3% decrease in net commission expenses due to the legacy portfolio purchases. The effects of inflation were offset by cost containment measures in the year, particularly staff costs, which provided a 1.1% decrease. A 0.8% percentage point increase in amortization was due to legacy portfolio purchases and continued spend on investments to drive growth and efficiency automations. Net investment income in FY '23 increased to $14.3 million before tax. This was $13.1 million higher than in FY '22. This increased income reflects interest rates stabilizing, resulting in higher running yields. Tower maintains a conservative investment policy with a focus on high credit quality and liquidity bonds and a target duration for the core investment portfolio of 6 months. Our strategy has mitigated the impact on our profit from macroeconomic factors and mark-to-market movements in the past and now allows us to benefit from higher interest rates as evidenced by the running yield on the core investment portfolio increasing to 6.07% at 30th September 2023. Our outlook for investment income is to remain near current levels over the next year. Tower's reinsurance strategy provides protection from volatility caused by large events and maintains financial flexibility to support growth while underpinning strong solvency. This resilience was realized in the year as we expect our reinsurance arrangements to cover $204 million of FY '23 large event claims costs. In line with our conservative approach to reinsurance, we reinstated our reinsurance arrangements following the 2 catastrophe events at a cost of $17.4 million. We were very pleased with the successful placement of our reinsurance arrangements for FY '24, which include catastrophe reinsurance of up to $750 million for 2 events with an excess of $16.9 million for each event. This was down from $889 million in FY '23 due to the EQC cap change, which reduced the amount of coverage needed. We've also purchased coverage for a third event of up to $75 million with a $20 million excess. We are continuing to make steady progress and settling catastrophe claims with 33 closed over the year. In line with expectations, we received an additional 20 new overcap and reopen claims, bringing the total number of open claims to 23 at 30th of September 2023. This was a net decrease of 13% from the end of September 2022. FY '23 has seen an adverse candor earthquake P&L charge of $1.2 million after tax in non-underlying items. Some of our open CEQ claims are complex and long term. However, the remaining gross outstanding claims provision reduced to $19.1 million over the year from $24.5 million at September 2022. We continue to closely manage these outstanding claims and our specialist team is working to finalize claims as efficiently as possible. We progressed well settling catastrophe event claims in the second half of FY '23 and collecting the recoveries from reinsurers, which has improved our solvency position compared to the first half. With the solvency ratio of 159%, we are now holding $53.8 million above the minimum capital required for solvency. This is below our new internal target of $67.4 million set in preparation for the new interim solvency standards released by RBNZ. Our minimum solvency capital has increased from historical levels due to the underlying business and claims growth, higher catastrophe risk retention and capital required for open catastrophe claims. We expect our solvency position to further improve in FY '24 due to business profit and as catastrophe claims continue to be settled. In FY '24, solvency will be reported under the new interim solvency standard with no material change in excess solvency expected. Our AMI credit rating was reaffirmed in April by AM Best. In FY '24, Tower expects GWP growth, excluding revenue from sales of subsidiary operations of between 10% and 15%. We have set a conservative large events allowance of $45 million for FY '24 versus $38 million in the prior year. Consistent with FY '23, we will measure large events as those which have a total cost of more than $2 million. Assuming full utilization of the large events allowance, Tower anticipates underlying net profit after tax of between $22 million and $27 million. We expect further improvements to our management expense ratio, which we anticipate will be between 30% and 32% in FY '24. As the rating and other actions that we have in place to address inflation begin to improve our BAU loss ratio, we expect a reduction in our combined operating ratio to between 95% and 97%. You'll note new medium-term targets that we are sharing with the market for the first time today. And FY '25, we'll be focused on delivering another 10% to 15% GWP growth, a management expense ratio of less than 28% and the combined operating ratio of less than 91%. We are targeting a return on equity of between 12% and 15%. Thank you. I'll now hand back to Blair, who will provide an update on our priorities for FY '24.

Thank you, Paul. In line with our strategy and focus on delivering the medium-term targets Paul just highlighted, our 5 priorities for the coming year are clear. I'll take you through some of the actions that support these priorities in our final few slides. We will continue to invest in creating leading customer experiences and targeting profitable growth. And this includes adding landslide and Caser risk ratings to our automated customer-facing quote-to-bill where customers can already see their homes risk ratings for earthquake and flood hazards. In the coming year, we anticipate a greater proportion of new business to come from home insurance policy sales as we target high-quality risks, and this includes a greater emphasis on new builds. We will continue to grow organically through our existing partnerships. And we expect the rating changes we have made in FY '23 to continue to flow through the portfolio as policies renew. An important priority is to complete the multi-policy discount remediation while continuing to redesign a multi-policy discount offering. And as you can see in the example on this phone screen on the slide, we are also working to give customers greater transparency of their discounts. We're focused on delivering efficiency, digitization and process improvements. And by the end of FY '25, we won digital transactions to account for 80% of all New Zealand service tasks, increasing from 55% at the end of FY '23. We will launch new house and motor assessing systems to reduce assessment times and repair costs, and we're expecting more than half of our core volumes to be answered by a team in Suva. We will continue to streamline the business through the sale of our Solomon Islands subsidiary and exiting our New Zealand rural commercial portfolio. It is also our intention to sell our NOC business, and we are going through a process of identifying a buyer. We'll update you once we have progressed this further. We will continue to invest in our future resilience and sustainability. Large events are now business as usual for insurers, and we will continue to protect both our financial and operational resilience by conservatively budgeting for increased large event costs while embedding large events response processes into our everyday operations. We are scaling our parametric insurance offering by partnering with Global InsurTech, CelsiusPro and the United Nations to expand that pilot beyond Fiji to Tonga. We plan to offer parametric insurance across 5 specific territories by FY '25. We're excited by the possibilities parametric insurance provides for people who may not benefit from traditional insurance products. We are reducing our operational emissions, which are now 13% below our baseline year. In FY '24, we will expand our measurement of scope 3 emissions to include emissions from our underwriting activities and supply chain. And while we expect the inclusion of this previously unreported data to increase Tower's total carbon emissions profile, we look forward to turning this new information into actions that contribute to a lower carbon future. Our first climate-related financial disclosures required for the 2024 financial year. We look forward to sharing more information with you then about how we are preparing for a range of possible futures shaped by climate change. We know that sustainability issues are important to our people and customers. A consumer research shows that almost half, 47% of people, a commitment to sustainability and climate action matters when choosing an insurance company. And with this in mind, Tower is aiming to achieve B Corp accreditation in the coming year. B Corp is a globally recognized sustainability benchmark, which measures the company's entire social and environmental impact. Thank you for your time this morning. I will now hand back to the operator to ask for questions.

[Operator Instructions] Our first question comes from the line of Kieran Carling from Craigs Investment Partners.

Just first question from me. Just on your motor claims are obviously a key driver of the step change in the BAU claims ratio through FY '23. Just wondering if you can comment on what the key driver is of the 17% increase in cost per claim. And then adding to that, perhaps get your thoughts on why you might be seeing the frequency of motor claims increase when we heard from Turner's yesterday that their insurance book has seen the frequency of claims declined through the latest year?

Sure. So 2 parts to that. The first part, there's really 2 drivers as to why we're seeing the average severity increase by that much. One of them is theft. As I highlighted in my call script, the theft tends to result in the total loss of motor vehicle. And so we've seen a doubling in the frequency of theft in our book from just over 0.5% to just over 1%. And as a result of that, our incurred cost has doubled for theft as well, which has obviously pushed up the total average. And then the third one, which also answers your second question to some degree, is we have seen an increase in collision well packed in particular. And that come along since following the COVID lockdown. And again, those tend to be higher cost claims. But obviously, also, we've got inflation and supply chain constraints in there, which has also flowed through to that increase in the loss ratio.

And I guess with us such a significant uptick in the severity of the motor claims, can you comment on what the average quantum of policy increases or policy price increases you're looking to push through in FY '24 are, and perhaps what the consumer responsiveness to those increases is likely to be?

Sure. So our key approach to pricing is targeted, the right price for the right risk for the right customer. And so if it's a vehicle that is subject to particularly high crime or seems to be have a particularly high accident frequency, then we'll be putting through higher rates for those and then inversely, lower rates for others. So we really are focused on being targeted. The other point there is the effective rate that the customer sees. But fundamentally, we're sort of looking to push between around that 10% to 20% price increase. But as I said, it really does depend on our targeting.

And maybe, Kieran, if I can just add a little bit more effectively, we're doing risk-based pricing, as Paul said, for not just home, but we're also doing the motor, and we're really selecting those models. And as we mentioned in the script, doing a lot more around the algorithms to put more factors in to get the right risk right price. I think the second part of your question also was, how do you see customers responding to this. What we are doing is helping customers. We understand at the moment, things are pinch through MyTower, customers can go on. Their excess if they need to potentially reduce their premium. We're also helping them get the right, most suitable cover. And also, and the final point is by bringing all of their policies together, they can also save costs by having them in one place. So that's how we're helping customers manage that affordability through.

And then just last one for me. On your management expense ratio target of 28% or less than 28% by FY '25. Can you just comment on the key drivers for achieving that and perhaps the breakdown of contribution and split between moving staff to Fiji versus tech improvements?

Maybe I'll touch on a couple and then Paul can give you a little more detail on the numbers. But look, there's 2 or 3 key drivers, Kieran. The first of all, is absolutely digitization. We highlighted that our goal is to have 80% of our already were there with new business, but also service transactions online, they come at a much lower cost to serve, and we're also increasing our level of claims lodgment and support online. That's a big part of it. What we want is when we pick up the telephone is to have those richer conversations with customers, not things that we can do systematically online. That's the first big plus. Yes, the Suva Hub at the beginning of this year, we had about 50 people. We now have 250 people that has enabled us to really hire manage those peaks and troughs of demands that come through post those events, but also be able to serve and get efficiencies through that operation. And of course, the whole of the Pacific now and ASR were all on one platform. And that is a key one, actually decommissioning those old legacy systems and concentrating on one core cloud-based platform enables us very tangible efficiencies and helping drive that MER down. In terms of the mix of that MER, we carry around about $130 million of management expenses that are basically in 3 big buckets, there's a tech spend, there's people costs, and then there's management and support that sit around that. All 3 of them will be working very hard on to get greater efficiencies out off.

I think I probably only got one more thing to Blair's comprehensive answer there is obviously, also the denomination in that fraction will continue to grow, and that's through our top line growth. But fundamentally, I guess, I can say, over the next 2 years, we will see small increases in the absolute cost of our spend below inflation. We will start to see the benefit of earning through the increase in the Suva Hub population that Blair highlighted there. So that will benefit us this year. And then our continued investment in digitization will also help bring down some of our costs there. But obviously, as well, we will continue to invest now our marketing spend and our technology investment and our digitization and straight-through processing activities.

Our next question comes from the line of Andrew Buncombe from Macquarie.

Just a couple from me. The first one, on Slide 25, you've obviously given FY '25 combined ratio targets, which would suggest to me that you have an estimate for the large events allow us in that year. Can you just give us some color on what you think that's going to be in your assumptions in '25?

Sure. It is an increase on this year, we're proposing around about another 10% increase. So we are expecting in our future trajectory to continue to slowly bring that large events allowance up or continue to increase it.

And that's as a reflection of the growth in the underlying book.

The next one is just in relation to how you're thinking about dividends for next year. Going forward, is there a willingness to pay dividends on a half yearly basis? Or are you going to move to a full year basis?

We absolutely want to continue to pay dividends. Last year, as I'm sure you recall, we did pay dividend both the half year and the full year, and that's the expectation that we'll be there. At the moment, we're still in the phase of rebuilding our solvency capital back to our previously high levels. And so depending on how much we are able to exceed our plan next year, then we'll reassess then. But fundamentally, our policy is that the Board considers our dividend on a year-by-year basis and looks at what's prudent to pay out at the time.

The third one for me again is in relation to the guidance on Slide 25. So that FY '25 GWP growth guidance. What are you assuming for volume versus price? What's that mix?

We're expecting to be closer to 50-50 on that one by FY '25.

And then the final one from me, just in relation to some of the previous questions. What are you seeing at the moment in regards to customers changing their accesses for home and motor, are you starting to see any movement there?

Yes. Thanks, Andrew. Look, we are seeing customers increasing. It's not numb of customers, but we are seeing customers coming in and increase their excesses and consolidate their policies with an aim to manage that affordability, as we mentioned earlier, Andrew. But it's still a single-digit number of customers who are making those amendments. It's not by any stretch imagination large volumes of people and I guess it's also reflected a retention. Our retention has been very stable across the year at 77%, which is consistent with the prior year at 78%. So even in the year that we've had with a lot of weather events and the like, people still recognize very much. This is when you need insurance and still value that insurance.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to final remarks.

Well, thank you for listening this morning. And as usual, if there are any other questions, please reach out to Blair or Paul, and I'm sure they will answer them. So thanks very much.