Tower Limited (TWR) Earnings Call Transcript & Summary

Good morning, everyone, and thanks for making time to join us this morning. I'm Michael Stiassny, I'm Chairman of Tower Limited. And now that it is past 10:00, I'm pleased to open Tower's Annual Shareholders Meeting. On behalf of my fellow directors, welcome to all of you here at Eden Park, 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. With me in the room today, Marcus Nagel, Geraldine McBride, Graham Stuart and Mike Cutter. Also joining us in the room today are Chief Executive, Blair Turnbull; our Chief Financial Officer, Paul Johnston. Our auditors, Pricewaterhouse, are also present, as indeed most of our executive team. This is a hybrid meeting. So before we start the meeting proper, there are separate housekeeping matters for you, which, please just be patient while I read them to you again. For those in the room, if you have a cellphone, please switch it off. If you need to evacuate this room for any reason, the exit is back down the stairs to Gate G, where you entered. To help guide you, there will be a green and white exit sign located above the exit. In the event of an emergency, all attendees will be directed by the Eden Park staff or security who are identified either by uniform or name badges. Please listen to their instructions. Bathroom facilities are located at the back. And if you're feeling unwell, please advise one of our staff who will assist you. For those who are attending the meeting online, we ask you that you follow the information provided in the Notice of Meeting regarding voting and asking questions. Should you require any assistance, please type your query and one of the Computershare team will assist you, or alternatively, call Computershare on 0800-650-034, or from overseas, +649-488-7800. Questions. Please note that 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 questions will be submitted immediately and 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, they may be amalgamated. However, questions will not be censored. I obviously didn't write that, unless they are unseemly or 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 present, welcome. Just a reminder, it is a meeting for shareholders. And Blair and I will be happy or more than happy to talk to you after the meeting. The voting process. Voting today will be by way of a poll on all items of business. To provide you with enough time to vote, I will shortly open voting for all resolutions. At that 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 votes. 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's team will assist you. Voting papers will be collected at the end of the resolution and voting section of the meeting by the 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 open in the Vote tab. You may submit your votes at any time, and I will let you know in advance that voting will be closing. On the screen is the agenda for today. We will provide you with an update on last year's performance, our strategy, as well as the progress we have 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 now let's move to the formal part of the meeting. Firstly, are there any apologies? There being none, we can move on. The company's constitution requires a quorum of 25 shareholders for this meeting. This requirement has been met and a quorum therefore exists. In addition to those attending in person today, 410 shareholders, holding a total of 117,477,526 shares, have appointed proxies, including proxies instructed to abstain. The appointed proxies represent 30.93% of all valid securities voted. In my capacity as Chairman of the meeting and in my own name, I hold proxies for 322 shareholders, representing 114,582,403 shares or 30.19% 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 23 November 2023, and I propose that we take the Annual Report and Notice of Meeting as read. So my update. When I discuss Tower's performance with you each year, the substantive focus is often on New Zealand. And it can be easy to overlook that we are proudly both New Zealand and Pacific insurer. It can also be easy to forget that our Pacific business and customer relationships are as deep, long-lived and strongly forged as those that we have in New Zealand. Last week, we marked a significant milestone for Tower. We celebrated 150 years since we first set up shop in Suva, with 1 agent and 1 customer. Only 5 years after launching in New Zealand. Acknowledging Tower's long historical association with Fiji, the Honorable Deputy Prime Minister of Fiji, Professor Biman Prasad, officially opened our brand-new Suva office, joined by the New Zealand High Commissioner to Fiji and other political and business signatories. Later, there was [indiscernible] blessings, toasts and speeches, a feel-good occasion, but it represented significantly more. For me, particularly in these turbulent geopolitical times, it reinforced the Business, with the capital B, has a responsibility to every community in which we operate. I was proud to see how successfully Tower continues to meet these obligations to the benefit of our shareholders, our customers, our staff and indeed our 2 nations. Today, Tower has a vibrant presence and solid Pacific business headquartered in the Fijian capital, staffed by a very talented local team of more than 250 people. So we are now a very large employer in Fiji. As an employer, we provide those 250-plus people with a well-paid career path, leadership options, and reduce the need for them to head offshore to pursue opportunity. This has proven instrumental in enabling our team to expand their experience, build their skills and contribute to both their families and, importantly, the nation's economic prosperity. The quid pro quo for us is that we have an engaged, a talented and skilled workforce that is increasingly supporting our New Zealand and other Pacific operations across all our business functions. As a Pacific insurer, Tower has continued to innovate to meet the specific needs of a region that has traditionally had low rates of insurance penetration, while at the same time being prone to catastrophic weather events. From writing that first policy in 1874 through to launching Fiji's first online insurance service, and delivering our parametric insurance product and partnership with the United Nations. Tower has fundamentally improved insurance accessibility. And in the time when climate change is threatening communities worldwide by increasing rates of insurance in the Pacific, those nations will be far less reliant on foreign aid and disaster relief and can improve their long-term economic resilience. Don't panic, I haven't lost my mind. I'm not going soft, and this is not about only hearts and flowers. Let me be clear. While Tower is proud to be living up to our obligations, this is indeed in the best interests of our shareholders. Accounting for the sales of our Papua New Guinea, Solomon Islands and Vanuatu operations, our remaining Pacific business generated $43 million in GWP in FY '23. And with the Suva hub now in a brand-new modern building with the latest technology, and infrastructure required to successfully operate and upgrade My Tower is in place. These capabilities are key to delivering on the Pacific GWP growth potential, albeit with a strong focus on robust underwriting practices and prudent risk appetite. Our strong performance in the first 4 months of FY '24, which Blair will take you through shortly, indicates that, despite unavoidable increasing premiums, insurance remains critical and valued. However, the need to carefully manage risk to innovate and to meet the market is also abundantly clear. And this is where the rubber hits the road in terms of insurance and for the future. Tower was the first New Zealand insurer to introduce risk-based pricing, and continues to expand the risks this covers. Landslide and sea surge risk data at an individual property level have been added and will be automated through our quote-to-buy tool later this year. People can expect to see further new and innovative offers from Tower that identify and manage risk in an increasingly granular fashion. We have invested in the technology necessary to be nimble. We know that agility will be essential to respond to the increasing number and severity of weather events and emerging global trends. As I said, we had a particularly strong first 4 months trading period with full year underlying net profit after tax now expected to be at the upper end or indeed exceed the previously advised range of between $22 million and $27 million. This has been achieved through a sharp focus on targeted sustainable growth via underwriting discipline and rating actions and delivering further business efficiencies. Most importantly for you as shareholders, as of today, we have an untouched $45 million large events allowance, which is considerably more than we had last year. Nature willing, we are hopefully well covered for the remaining 8 months and with upside still to be had. By all metrics, the business is in good shape. Our solvency position is above target, thanks to improved profitability and the comparatively swift resolution of catastrophe event claims, all of which, in my view, clearly indicates our share price remains far too low and is not reflective of our true business value. As always, final decisions on dividends occur when results are approved in accordance with our ordinary dividend policy. We look forward to reporting our half year results in May and giving consideration to reestablishing dividend payments if prudent to do so at that time. Late last year, we announced we were undertaking a strategic review. The purpose is simple: to explore options to maximize value for all our shareholders and optimize our capital structure to provide the strongest possible platform to support our competitiveness in the market. The review is progressing well. A range of options are being considered. However, no decisions have yet or indeed close to being made. And naturally, we will update the market at the appropriate time. In the meantime, it's business as usual, with the Tower executive fully focused on strategy and business delivery. Every day tower's teams strive to grow business and assist our customers. Over the past year, there have been many challenges to overcome, particularly in the wake of the tragic cyclone and flooding events. No business gets it right every time. However, there are thousands of customers who are now in repaired homes with positions and cars replaced, thanks to the work that we have done at Tower. The team has worked tirelessly to do its best. In behalf of my fellow directors and, indeed, on behalf of you as shareholders, I thank everyone of our Tower team for their efforts. My pleasure now to hand over to Blair, who will take you through the FY '23 results, the 4-month trading update, and longer-term outlook, before we take questions.

[Foreign Language] And thank you very much, Michael, and a very warm welcome to everyone joining us today in the room and also online. Look, I'm pleased to share with you our full year 2023 results as well as our performance update for the first 4 months of the 2024 financial year. I would also like to take this opportunity to give you an overview of Tower's plans to continue growing and innovating in the future. And to start, a brief overview of Tower's journey in recent years. We have indeed come a long way from our ambition of simplifying our business by first reducing our New Zealand product set from more than 400 product variations down to just 14 core products. And following the process of transformation and replatforming and the important job of resolving legacy issues, Tower has now focused on streamlining and scaling the business via bank closed book acquisitions and continuing to decommission legacy platforms. Adapting to the effects of climate change while continuing to innovate has been a priority as we navigate the increasing frequency and severity of large events, and managing an unprecedented 3 catastrophic events in 2023. Our continued resilience and strengthening of the Tower business remains our priority, and in particular, completing the transformation of our claims experienced by the end of 2024. And this will include our fully digital end-to-end process, which will lead to claims being processed and settled more quickly. A dedicated large events team, which can scale up quickly, including a specialist assessment team with leading tools is also being established. In recent years, we've streamlined our business via strategic divestments of noncore portfolios, such as the recent sale of our commercial agri book to Aon, sales of the Papua New Guinea and Solomon Islands operations. The conditional sale of our Vanuatu operation and the acquisition of National Pacific Insurance minority interests. We are now well positioned to grow in our chosen markets enabled through our leading cloud-based platform and investment in operational centers, including the new Suva hub. Tower's journey of focus and streamlining our business is entering an exciting new phase, one that is ultimately aimed at Tower becoming the best direct personal lines insurer in New Zealand and the Pacific. Our objective is to deliver a leading end-to-end customer experience enabled by being a lean business that is simplified, digital-first processes and has talented people and capabilities. In FY '23, we took the opportunity to review and confirm our strategy, and focus on these 4 key areas outlined on this slide. Our focused outcomes will help lead to the new medium-term financial targets that I will talk you through, along with our guidance shortly. And now to recap our FY '23 financial year ending 30 September 2023, which was impacted by the catastrophic events in New Zealand and Vanuatu. Gross written premium for the year to 30 September increased to $527 million, up 17% on the same period last year. Customer numbers increased to 321,000, up from 31,000 in FY '22. Increasing inflation and a higher frequency of motor claims contributed to an increase in the BAU claims ratio to 55.5%, compared to 48.9% in FY '22. And throughout the year, Tower continued to apply targeted rating and underwriting actions to address these challenges. We were pleased to see our management expense ratio further improved 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 $55.6 million, up from $19 million in FY '22. And these costs included the additional reinsurance cover purchased to reinstate and reinsurance arrangements following the 2 New Zealand catastrophe events earlier in the financial year. Now given these large events costs, the solvency ratio decreased to 159% from 205% in FY '22. But despite these challenges, we reported an underlying profit after tax of $7.6 million, down from $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. Tower's focus on simple and rewarding customer experiences, combined with consistent rating actions, continued to drive strong growth in both customers and premium throughout FY '23. And as you can see in the chart, we grew steadily in our core home contents and motor product offerings with GWP reaching $527 million year-on-year. Our partnerships channel delivered positive growth from GWP from active partners in New Zealand, increasing by 26% to $82 million in the year. And as a customer-focused business, we work hard to ensure our prices are competitive. In the context of the high inflation environment, a 17% growth in premium reflected an appropriate mix of rating and organic growth as we also work to mitigate the challenges of inflation, rising claims costs and increasing reinsurance costs following the catastrophe events. We continue to drive customer engagement in the year 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's service and claims tasks were completed online, up from 50% in FY '22. Customer satisfaction for these online engagements remained strong. A combined net -- a combined New Zealand Net Promoter Score for online experience was steady at 55%. With our core platform now live across the Tower Group, we can flex resources up and down across Fiji and New Zealand at 2 biggest markets. Following post-COVID resourcing difficulties in FY '22, which led to customer service challenges, we scaled up our operations, particularly through our Suva Hub, as Michael said, and has helped our core abandonment rate improved to 12%, down from 17% in FY '22. We are pleased to see My Tower registrations continue to rise, increasing by 32% in the year to 264,000 registrations. And we look forward to this number climbing further now that My Tower is live in all of our chosen markets where we operate. An important part of delivering leading customer experiences we aspire to is fronting up and fixing things when we don't get them right. 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 had paid $6.2 million, excluding GST, to these customers, and we sincerely apologize to customers who have been impacted. In addition to reviewing our processes, we are also redesigning and simplifying a multi-policy discount offering. We know we're not the finished product yet, and we are committed to improving and investing in all of our customer experiences. We've taken strong rating actions over the past years to combat rapidly increasing inflationary pressures. However, in FY '23, BAU claims costs continued to be challenged by the increasing frequency of motor claims as well as inflation and supply chain capacity constraints, which impacted the severity or the cost of claims. And in the year, this continued to track above historical norms in New Zealand following a more subdued period due to COVID lockdowns. Motor crimes tend to result in the total loss of a vehicle. So the trend of increasing motor theft contributed to both higher frequency and severity of claims. Average New Zealand motor claims costs rose to $3,201 in FY '23. While house claims frequency in New Zealand was flat at 7.2%, the average severity increased to $3,766. These factors led to our BAU loss ratio increasing to 55.5%. The large events experienced in FY '23 contributed to an additional 13.4% to a total claims ratio of 68.9%. Tower applied targeted premium increases across Motor and Home 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. Our investments in simplifying and digitizing our business continue to deliver management expense ratio improvements in FY '23. And in the context of the external challenges we were managing, we were particularly pleased to have achieved yet another reduction in our management expense ratio to 32.2% in the year. And contributing to this MER improvement is our increasing scale, with our core platform now across all of our countries. A key driver of our management expense ratio improvement was our increased digitization which continued to lower the cost to acquire and serve customers. The expansion of our Suva Hub in the year also delivered operational efficiencies as we moved workflows between the sites to manage workload peaks. And in the year, our Suva team answered 16% of all New Zealand calls to Tower, and we are already seeing this percentage increase further. Pleasingly, these efficiencies also saw our management expenses increase at below the rate of inflation. Our commission ratio continued to improve in FY '23, 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. One year on, the Auckland anniversary weekend flooding, closely followed by Cyclone Gabrielle were the most impactful weather events in a generation. The impact on our customers was significant, with more than 9,400 claims received by Tower. As at 19th of February, we have settled 92% of claims for these events. For the most part, the remaining customer claims are the most complex. Some have an earthquake commission element, while others may also be impacted by various council buyback schemes. We continue to work diligently to settle these as quickly as we possibly can. We are continuing to innovate and improve our processes through our digital offering, our claims transformation program, and looking at how we structure insurance in the future. It is critical that insurance remains affordable and accessible to protect Kiwis now and in the Pacific, and in the future, as a country, we must develop longer-term plans to address infrastructure gaps and reduce the risks of climate change. And that starts with more collaboration between business, central governments and councils to share data and ideas to accelerate this. Other tools like Tower's risk-based pricing model and risk ratings for flood and earthquake help to inform our communities so that they're more aware of the risks they have in their home space. We will add sea surge and landslide risks to the customer tool in FY '24. We are also building our future resilience through our strong relationships with reinsurers. Tower attracted a lot of interest and support from global reinsurers last year who liked our story of growth, strong risk selection and direct customer engagement, in addition to having covered for our 2 catastrophe events of up to $750 million, we now also have cover for a third event of up to $75 million. Overall, the events of 2023 are a reminder of the importance insurance plays in our economic, community and personal resilience. I'm incredibly proud of the effort our teams put in over the past year. We're continuing to work as hard as possible to help our customers and communities recover. Turning now to our trading results for the first 4 months of our 2024 financial year, which features strong growth and cost control. I will provide more detail on these results as I talk through the following slides. The financial information provided in this update is based on Tower's unaudited management accounts as at the 31st of January 2024. We've had a very positive start to the financial year with continued premium growth. In the first 4 months, we achieved $194 million of gross written premium, representing growth of 21% on the same period last year. And this was predominantly -- or this has predominantly been driven by rating adjustments to offset inflation and increasing reinsurance and claims costs, along with good organic growth. This was helped by Tower's partnership business, which saw GWP increase by 32%. Our focus on the New Zealand home insurance market has also resulted in GWP from the home portfolio increasing by 28%. New Zealand retention rates remained stable at 77% compared to 78% in the prior period. We are very focused on driving operational efficiencies, which ultimately helps us to manage premiums for customers as well as deliver to shareholders. And as I mentioned before, we are very pleased to further reduce our management expenses in FY '23, and we continued this trend in the first 4 months of this year. And management expense ratio was 31%, compared to 35% in the first 4 months of FY '23. Tower's digital offering continues to deliver efficiency benefits with the core digital platform now handling 57% of all sales, service and retention transactions, up from 53% year-on-year. And in the period, Tower's Suva hub answered 45% of inbound sales and service calls relating to New Zealand policies. The Suva Hub is enhancing both our customer experience and efficiency through improved call times. Increases in our management expenses continue to track below the rate of inflation. And Tower continues to streamline the business as we focus on our core strategy of offering direct personal and small business lines insurance in New Zealand and the Pacific. In January, we announced the sale of our Vanuatu subsidiary following the earlier sales of the Solomon Islands and Papua New Guinea subsidiaries. In February, we completed our referral arrangement with Aon for our commercial rural book, which brings us a step closer to decommissioning the last of our legacy technology systems. Commission expense ratio continues to trend down due to the legacy portfolio purchases and modernized referral arrangements. The BAU claims ratio has increased year-on-year to 54%, up from 52%. However, the targeted rating increases for higher risk assets implemented in the past 12 months across the motor and home portfolios are taking effect. The BAU claims ratio has dropped substantially from 59% in the 4 months ending 30 September 2023. We have seen an elevation of large house claims in the first 4 months of FY '24, which we will monitor closely for any emerging trends. The higher frequency of motor claims, which challenged insurers in the past year has settled with the motor loss ratio now trending downwards. No large events were recorded in this period. Our dynamic rating capability, which is thanks to our investments in digital and data technology, means we are continuously monitoring and adjusting our rating to remain competitive and to respond to macroeconomic conditions. And accordingly, as inflation settles, we expect overall premium increases to level off near the second half of this year. Noting, of course, that our approach to risk-based pricing means that pricing for individual customers will always reflect their individual risks. We are continually looking for opportunities to improve the accuracy of our pricing. And in the past year, we enhanced our motor pricing algorithm with additional rating variables to ensure our customers receive more accurate pricing for their particular vehicle. And in line with our commitment to transparency, we are improving how we explain discounts we offer to customers. On the slide, you can see a screenshot of what customers will see when this feature is launched in the coming months. Throughout FY '23, we continued to improve and refine our risk-based pricing to ensure we further protect the business from the volatility of weather events. We quickly implemented heightened risk selection criteria for landslide risks in early 2023 and also increased the weighting we put on the flood risk portion of customer premiums to ensure our pricing accurately reflects the changing risk profile. We now have risk-based pricing in place for earthquake, flood, landslide and sea surge risks across New Zealand. We are working to present hazard ratings for landslide and sea surge risks to customers through our automated quote-to-buy tool in FY '24. And we will continue to review our underwriting criteria to align with our strategy and in response to new and emerging trends. In the past year, we have tightened our risk appetite in the Pacific and we have reviewed our commercial risks to ensure we write the right risks at the right price. We will continue to invest in our future resilience and sustainability, and we're scaling our parametric insurance offering by partnering with Global Insurtech CelsiusPro and the United Nations to expand our pilot beyond Fiji to Tonga. We are now live with parametric insurance in Fiji, Samoa and Tonga, and plan to offer parametric insurance across 5 specific territories by FY '25. We are excited at the possibilities parametric insurance provides for people who may not benefit from traditional insurance products. And as Michael noted, this year, we are celebrating our 150th year anniversary in Fiji, which commenced last week with an event held at a new hub in Suva, which we call Villa Athena, which translate -- translates to beacon or lighthouse. The premises were officially opened by Fiji's Deputy Prime Minister and Minister for Finance, the Honorable Professor Biman Prasad, who you can see here in the photo alongside Michael and Graham. Fiji government officials and our many stakeholders in the country are very positive about Tower's historical role and vital contribution to Fiji's economy. New Zealand and Fiji are our 2 biggest markets. For Tower, our Suva Hub is a crucial part of our overall business strategy with our BAU operations now able to operate seamlessly across both countries and as well as the wider Tower group. I'm proud to say that 100% of our more than 250 employees in Fiji are locals. And we are committed to continuing to invest in our people and, therefore, Fiji's future. While what better way to invest in our collective resilience than investing in our young people, and Tower is planning a scholarship program in conjunction with the University of the South Pacific, offering scholarships to students in Fiji who are studying topics that contribute to lifting Fiji's financial capability and resilience to climate change towards a more equitable and sustainable future. In New Zealand, we fund scholarships for students of Waikato University's Bachelor of climate change studies. Our first climate-related financial disclosure is required for the 2024 financial year, and we look forward to sharing more information with you 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 to our customers. Our customer research shows that almost half, 47% of people, a commitment to sustainability and climate action matters when choosing an insurance company. 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 our company's entire social and environmental impact. In FY '24, Tower expects GWP growth, excluding revenue from sales of subsidiary operations to be at the upper end of or exceed our guidance range of between 10% and 15%. We have set a conservative large events allowance of $45 million for FY '24, which currently remains unused as no large events have been recorded in the financial year-to-date. Consistent with FY '23, we will measure large events as those which have a net cost to Tower of more than $2 million. Assuming full utilization of the large events allowance, Tower anticipates underlying net profit after tax to be at the upper end of or exceed the guidance 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 combining operating ratio of core to be at the bottom end of or favorable to current guidance of between 95% and 97%. You'll note, we are now sharing new medium-term targets for FY '25 and FY '26, including new underlying net profit after-tax targets. And these targets reflect our plan for future growth and improved efficiencies and ultimately attractive shareholder earnings. It's worth noting that should we exceed FY '24 guidance in line with current expectations, this will positively flow through to the FY '25 and '26 target ranges. In summary, Tower is delivering on our strategy. We are continuing to deliver double-digit premium growth while also reducing our management expense ratio. The claims ratio is normalizing after a period of heightened inflation and catastrophic events. Our solvency position has improved and is estimated to be above our internal solvency target. And in FY '24, we expect profits at the top end of or to exceed our guidance range. Thank you very much, and I'll now hand you back to the Chair.

Thanks, Blair. So I now propose that we move to the next item of business, which is shareholder resolutions, before the meeting. Resolutions 1 and 2 are ordinary, each passed by a simple majority of votes of those shareholders entitled to vote and voting on the relevant resolution. Resolution 3, special resolution, and in order for a special resolution to be passed, it must be approved by a majority of 75% of the votes of those shareholders entitled to vote and voting on the resolution. As noted, earlier, voting has already opened online and will close shortly after the discussion on the resolutions are completed, so that everyone has the opportunity to cast their votes. I'd like to acknowledge we have received proxy votes from 2 shareholders after the closing date for proxy votes. Whilst we are unfortunately unable to count these votes today, we do not believe we know they will not change the outcome of the resolutions based on votes cast and proxies received prior to the cutoff. So Resolution 1, the election of Mike Cutter as a Director of Tower. Mike was appointed by the Board on November '23 to fill a casual vacancy. Sorry, he was appointed by unanimous vote to the Board. As required by Towers Constitution, Mike now retires and, being eligible, offers himself for reelection. So I will now ask Mike to address the meeting.

Good morning, and thank you, Chair, and thank you, shareholders, for the opportunity to speak with you this morning. My name is Mike Cutter and I'm here seeking your support for my election to the Tower Board. With more than 36 years worth of financial services experience, including a strong background in risk management, I believe my skill set will be a valuable addition to the Tower Board and business. I've got extensive board and governance and executive experience in financial services throughout New Zealand, Australia, Asia and Europe throughout the entirety of my career. In addition to my position with the Tower Board, I'm also currently the Chair of PF BidCo, trading as Arteva, Australia's largest insurance premium funding company. I'm a nonexecutive Director of the NASDAQ and previously ASX-listed buy-now-pay-later company Sezzle and the consumer finance company, Pepper Money, which operates in Australia and New Zealand. I'm also the co-founder of the credit risk management consultancy cadre. Previously, I've held various directorships and chairmanships serving Australian-based boards, including the Women's Cancer Foundation, the Ovarian Cancer Institute, the Australian Finance Congress, which is now known as AFIA, the National Insurance Brokers Association and the Australian Retail Credit Association. My prior executive experience includes 10 years as the CEO of OAMPS Insurance Brokers, which is now Gallagher, best known in New Zealand as Crombie Lockwood. GE Money Australia and New Zealand, the Chief Risk Officer of ANZ, Australia, One Path, and the Global Retail Banking Group. I'm also a graduate of the Australian Institute of Company Directors. I'm a Senior Fellow of the Financial Services Institute of Australia. Tower has a very proud history in New Zealand and the Pacific, and I'd be thrilled to have the opportunity to contribute to its ongoing success. I look forward to helping drive further growth and innovation at Tower with the team and the Board while managing it -- while it manages and navigates through an insurance industry's changing environment. I today seek your support for my election as a Nonexecutive Director for Tower. Thank you.

Thank you, Mike. I'll now move that Mike Cutter be elected as a Director of Tower Limited. Are there any questions? There being none, I'll now move on to the second resolution. The Company 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. Company Act provides that the fees and expenses of the auditors are to be fixed by the company or in the manner that the company determines at the annual meeting. The board proposes that, consistent with past practice, the Auditor's fees will 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 2024 financial year. In line with NZX listing rules and international best practice, our new Lead Auditor is [ Lisa Crook ] who replaces Karen Shires following her 5-year term as auditor. We have noted audit firm tenure and lead audit partner rotation information in the corporate governance statement on our website. So are there any questions regarding Resolution 2? There being none, Lisa and Karen will be available over tea and coffee to chat to everyone. Resolution 3, adoption of the new constitution. Tower proposes to adopt the new constitution, which reflects the latest version of the NZX listing rules. Tower is taking this opportunity to update references to relevant legislation, modernize outdated provisions, remove unnecessary repetitions to the company's Act 93 and NZX listing rules, as well as to remove redundant provisions. If this resolution is not passed, the constitution will not reflect the latest listing rules and current legislation. If approved by shareholders, it will take effect from today. A number of key -- of the key changes to the substance of the current constitution was set out in the Notice of Meeting and copies of the current constitution, a markup showing all changes to the current constitution and a clean version of the proposed new constitution were and still are available on our website. I will now move that the proposed new constitution be adopted by Tower Limited. Are there any questions? Thank you. So that concludes our discussions on items of business. And so if you haven't already done so, please cast your votes now. [Voting]

Voting will close in approximately 2 minutes. Votes will then be counted under the scrutiny of Computershare who will now begin collecting the voting papers from within the room. We'll now pause for a moment to ensure that all questions relating to the resolutions have been received.

Okay. We can move on. Final item on our agenda is questions and general business. And are there any matters of general business or any questions? Don't be shy. Here we are. [indiscernible] from the Shareholders Association.

Thanks. My name is [ Alan Best ] and I'm a shareholder. Mr. Chairman, when the last clearing up of the Christchurch earthquake happened about a year ago, and we were all dismayed to find that we're still hammered with these questions 2 or 3 or 4 years after the incident. I think it's important...

No, 10.

10, sorry. Yes. I think it's important that we ask the question. What's happening to the legacy of those claims well over the 92% which we've already cleared up? [indiscernible] have a horrible habit of identifying the screamers and those people who have been swinging the lead well after the event.

I think it's a disgrace that we can be sitting standing here or sitting here 10 years after this event still dealing with it. And that's no comment on our staff because they've done everything they can. To me it's diabolical the way we have structured as a country, the aftermath of Christchurch. We're down to 22 claims, I think, that are open. Now some of us might say 22 claims isn't worth even discussing, so to speak, other than for the individuals concerned. But I can't guarantee you that 22 is actually the number because it could actually be more, because we still get some claims from EQC who pass them over to us at this point. So speaking of, sure out of school, it is absolutely ridiculous then that can occur. And God forbid we have another incident like Christchurch. Let's hope that the government and the insurance companies and everyone else get together and come up with a process that is far better. Now that should happen, but let's sadly wait and see. Is there any more detail you want to give?

Particularly -- the question was particularly aimed at the current major events. Are we still in a situation where these claims can be referred years afterwards and without our expectation and knowledge?

Thank you, Alan, for your question. Yes, there is no statute of limitation on the likes of Christchurch for these large events. So they can come in well after the event. But I do think we've learned a lot from Christchurch, and we've taken that forward in terms of the agency agreement that now sits in place. So that sits between ourselves and the likes of the earthquake commission, EQC. So we're now at behalf and directly with the customer to manage a claim. A lot of what happened after Christchurch was a lot of back and forth, a lot of confusion. It wasn't easy for the customers. Point in case, Kaikoura, which was the first time that the agency agreement was put in place following the Kaikoura earthquake, all of those claims have now been settled. We do sit here today, and you're right to highlight, we're pleased to be at 92%. These are now the complex cases. We're pushing daily. I can see some of the team in the room. We're working as hard as we can with EQC and the council to move these cases through. And we are -- we have invested and engaged in trying to get outcomes for those customers as much as anyone. So I think we've taken a lot of learnings from Christchurch. I'm not going to downplay the complexity of some of the cases that we still have outstanding. But we're very focused on it, and we're going to work those as hard as we can.

But unfortunately, if you look at Auckland, for instance, so a year after the cyclone, we still wait, and you saw we had an incident in the press, I think, a couple of weeks ago. We're waiting for Auckland City in regard to the red stickers properties. And so a year later, the first stage in their process hasn't occurred. And whilst we can do a lot of things, you don't expect us to write a check to people when there are other bits of the jigsaw that need to come together. So we are caught in that process. Again, it's untenable a year later that we haven't had that information from council, and council has been -- sorry, Wayne Brown well no doubt so we are being -- they're being helpful, but they're not that helpful. So they are the things that we haven't quite got right as a country, and God forbid we have another major incident.

And maybe if I can add from a financial point of view as well [indiscernible] Tower and these events is that we still have significant reinsurance cover. So from a P&L point of view, we don't -- they shouldn't exceed that reinsurance cover, and we won't see that in the P&L.

Yes, Graham Wakefield, shareholder. I believe that Tower is carrying forward some tax losses at the present time. And I'm wondering when you envisage those will be amortized and you'll be attaching imputation credits to dividends?

Paul.

So our current strategic plan, which is referred to in the -- our targets for FY '25 and FY '26 has us using up those tax losses sometime during FY '26. And then after that, we'll be able to think about imputation credits.

Sorry. Just wait for the mic please.

Gordon Wallace, just to ask, so for house, or not housing, but unit insurance for apartments, how does it work if there's others insured with other companies and you get tied -- would you not leave that alone? Because otherwise get tied up in...

Hopefully, we can manage it, but I'll let Blair answer that.

It sounds that you can because -- yes.

Thanks, Gordon, for your question. Firstly, we look at all homes. We do risk-based pricing. We look right through to the individual property and we assess that property for the risk that applies to that house. In the past, historically, we haven't done a lot of multiplex units. We are still very selective on doing multiplex units because of the challenge that you just highlighted, that if one person can't go in without others going in and often the buildings back on to each other, which makes them very complex. So in terms of our underwriting, we do homes like that at a manual level, we look right through to that property and understand the risks involved with it and walk through the customer, the situation with that customer. So it's not an easy yes or no. We blanket to them yes or no. Historically, we have opted out of those types of cover because of the complexities you highlighted.

[indiscernible].

It does take time. You need to individually seize a property like that.

[indiscernible] for flooding.

Oh, we did.

But it did look like there that you had only for houses and contents, but you have now blue circles in those areas. That was all. I just wondered why.

It comes back to our core principle and risk-based pricing. And so we do offer insurance for all of the country. But because we do risk-based pricing, we do weight in higher to areas that are more prone to flooding. So we do offer insurance, but it will be more expensive because we see it as more expensive because of the propensity for flooding. So we had a much smaller portion of home policies in that area, only about 2%.

Any gentleman down the back?

Michael Bowden, shareholder. Is there any truth to the rumor that a party was interested in buying Tower? I mean, if the Board been approached?

I can think we have not been approached. So sorry, categorically, no, we have not been approached.

Yes, Michael Shroff, shareholder. Who is your reinsurer?

We have about 40 different reinsurers on our reinsurance panel. Big notable reinsurers, Berkshire Hathaway, Swiss Re, Hannover Re, Munich Re. But yes, we have 40 that are all based in different parts of the world. And I'll point out that every single one of those has an extremely high credit quality and at least an A or better.

Are there any other?

I just wonder if you can expand briefly on your strategic review and the areas that you have a particular focus on in that context?

The strategic review is a process where we are examining optionality as to the way forward from a capital perspective. And we're in the middle of that process. If there are outcomes that the Board believes are of interest, which, in essence, means they are value enhancing. They will respond to the shareholders at that time. So it is possible we won't come back to again on that matter. But we might.

[indiscernible].

This is a Board-driven exercise, not a shareholder of any form exercise. Any other questions?

I have 2 questions online from Michael and Constance Connor. If, in theory, there are no large insurance events in the current financial year, what number would that add to the impact in FY '24?

$40 million. Sorry?

$45 million lease tax.

$45 million lease tax. Sorry, it's 45, yes.

Which is about $33 million.

Thank you. Second question. The company has considerable tax losses of $105 million, which at current rates of profits will last at least 2 to 3 years. Are there any restrictions on these losses being used against the current New Zealand profits of Tower?

No. And we've covered the rest of that question previously, I think.

No further questions.

Thank you. Any more from the floor?

Just want to thank the staff [indiscernible] hell of a year.

That is very appreciated.

[indiscernible] one of the fortunate ones that -- well, it's good to know you [indiscernible].

We love shareholders who are customers as well. So thank you. Sorry?

I don't think there's many here.

Well, there's some. If there are no other matters of general business or any questions, I will close the voting. And so I assume everyone has -- have voted. If not, there is a final chance. So now the voting is formally closed. The results will be released to the stock exchange later today. That concludes our meeting. It remains for me to thank you, as always, for your participation, either online or in person. I declare the meeting closed. And happy to invite everyone for a cup of tea if you're in the room. So thank you.