QBE Insurance Group Stock

Good day, and thank you for standing by. Welcome to QBE Half Year 2026 Results. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Group Chief Executive Officer, Andrew Horton. Please go ahead.

Good morning, everyone. Thanks for joining us today. I'm here with Chris Killourhy, our Group CFO. And we'll spend the next half hour taking you through what is another strong result for QBE.

Momentum in the business is positive, and we're on track for another year of sustainable growth, resilient performance and excellent returns. Before we begin, I'll start by acknowledging the traditional owners of the many lands on which we meet today. For me, this is the Gadigal lands of the Eora Nation and recognize their continuing connection to land, waters and culture. I pay my respects to elders past and present and extend this respect to any First Nations people joining us today.

Starting on Slide 4 with a snapshot of our results. First half performance was consistent with all our key guidance and targets for 2026. We launched our medium-term guidance in February based around an outlook of durable mid-single-digit premium growth and confidence in sustaining returns in the 15% plus range. For the first half, returns were excellent with a group ROE of almost 18%, representing strength across underwriting and investments.

Headline gross written premium growth of 6% was in line with the prior period and consistent with our full year guidance. Underlying growth was closer to 7%, noting the modest remaining impact from noncore exits. We've executed well on our growth plans, driving high-quality growth in our key focus areas.

Our combined ratio of 92.8% is in line with our outlook for a full year result of around 92.5%, representing the stability and predictability we strive for. This included favorable prior year development plus better-than-expected catastrophe costs, which underscore the actions we've taken to build resilience.

We delivered another exceptional half for investment income at around $830 million. This represented an annualized return of almost 5% and growth of 5% on the prior period. Our adjusted net profit was just over $1 billion, up 4%, and we announced an interim dividend of $0.33, up 6% on the prior period.

Disciplined capital management is a core pillar of our strategy, and our balance sheet remains very strong. We completed our first share buyback in several years in April, and we'll continue to use active capital management to drive value for shareholders.

Let's turn to Slide 5. I want to open with this slide, which outlines the industry's attractive long-term outlook. The role of commercial P&C has never been more critical. 2026 will mark another year in which a range of global events and structural trends have reinforced a heightened awareness of risk among businesses.

Operational resilience is a key objective for our customers who place value on capacity, but also insight, expertise and long-term partnership. These comments are equally evident surrounding the phenomenal investment in global infrastructure, electrification, energy security, data centers and health care. Continued capital investment across these sectors is creating a growing need for specialized insurance solutions.

As pricing and claims sophistication have improved across the industry, competitive advantage is increasingly shifting towards those with superior risk expertise, scale and diversification. We are uniquely placed in this regard. We combine breadth, diversification and expertise with presence and ability to connect capital to risk across all major insurance and reinsurance markets globally. This underpins our ability to deliver durable growth while sustaining attractive margins and returns through the cycle.

Turning to Slide 6. This year, we're proud to celebrate our 140th anniversary, a remarkable milestone that reflects the adaptability, relevance and resilience of our business. This is a significant milestone for any organization, but particularly so in commercial P&C, where relatively few companies have stood the test of time and supported customers through generations of economic and social change. It's also a unique success story in the Australian context. Very few Australian businesses have successfully expanded internationally and built the scale, reach and diversification that we have today.

This slide recaps the journey we've been on more recently. With a series of remedial and foundational portfolio optimization initiatives now behind us, we enter this next chapter from a position of strength. Our focus is now firmly on driving high-quality capital-efficient growth while maintaining strong returns for shareholders. This will include accelerating efficiency through our technology and AI initiatives.

To give you some examples, in March, we launched Aurora, a fully automated lead algorithmic underwriting capability, cutting quote to bind from days to under 10 minutes in our British Marine P&I portfolio. We're expanding the capability across other U.K. commercial portfolios in the coming months.

In European Motor, we've deployed AI through our claims function. We expect around 25,000 claims will be handled by AI in the coming year. And we're processing over 100 claims daily across 600 claims attributes captured at greater than 94% accuracy.

Finally, in our Asian marine book, our AI solutions have led to an 88% reduction in cycle time for claims processing. Over the medium term, we aim to at least double the scale of production agents across underwriting and claims, each compressing loss ratios, accelerating claims outcomes and improving pricing position.

So let's move to Slide 7, which unpacks our growth for the period. This half, we extended our track record of sustainable volume growth, which we believe remains a key differentiator in the local market. Headline ex-rate growth of 6% leaves us well positioned to deliver a full year outcome in the mid-single digits. This growth once again is underpinned by the breadth and diversification of our global business.

This is also reinforced by the diversity of our distribution model. We can often access the same risk through multiple channels, including the open market, facilities, reinsurance, third parties and digital platforms. This provides flexibility to not only pursue growth but allocate our capital where risk-adjusted returns are most attractive.

Today, the industry narrative surrounding growth is overly focused on softening premium rates. We think this overlooks 3 important factors: premium rate adequacy is attractive across the vast majority of lines, a portfolio as diverse as ours is operating across multiple product and market cycles simultaneously, and there are structural growth opportunities across sectors, including infrastructure, cyber, facilities, data centers and energy.

I think this is clear in our growth this period, which was driven by many focus areas for the group. Our cyber proposition is now well established with key partners and complements many of our existing strengths and relationships. We're likely to end the year with cyber premiums around $600 million and with industry premiums expected to double or triple in the next few years, cyber can comfortably grow, whilst remaining a relatively small part of our portfolio.

QBE Re and QPS have maintained strong momentum, which I'll touch on shortly. We saw excellent growth across many Lloyd's portfolios this half, particularly across marine and political lines where developments in the Middle East created opportunities. Finally, in North America, we've combined the adjacencies discussed previously into a single segment here. This is a mix of more mature businesses, including specialty casualty and construction, alongside more recent builds in specialty health care and environmental. Collectively, these segments will contribute approximately $600 million in premium this year, continue to deliver strong growth while broadening the reach of our franchise.

Moving to segments we didn't grow. We spoke in our first quarter update about an intentional reduction in A&H. While rates were up significantly, we didn't target new business, whilst we focus on restoring margin. Also in North America last year, we stopped writing a workers' comp program no longer aligned with our service-led strategy. The A&H volumes and this workers' comp program had a disproportionate impact on the first half.

Finally, within large stand-alone property, we've been more selective given current dynamics. While there are still attractive opportunities in property, given the diversification of our business, we're under no pressure to chase the more competitive pockets of the market.

So moving on to Slide 8. This slide shows the evolution of our portfolio mix. The 3 key shifts in recent years have been the decline in stand-alone property exposure, which we've spoken at length about, a desire to build the profile of our reinsurance business, QBE Re, and the growth in our facilities business, QBE Portfolio Solutions. We thought we'd share some color on these 2 segments today.

QBE Re has grown well from around 10% of group to around 15% and is now a $4 billion business for us. It gives us access to a material profit pool within the wider industry. And importantly, we look to participate in ways that complement our insurance business, expanding our regional footprint and adding important diversification. It's often a much more effective pathway to enter a new market through partnership with a leading carrier as opposed to building a new insurance offering. We focused on building better balance in the portfolio, striving for roughly even balance across property, specialty and casualty. And you can see the extent to which we've reduced property exposure in recent years.

We've also shifted toward more proportional profit share or quota share business rather than excess of loss. This is now the majority of what we do and ultimately reduces volatility, generating more stable earnings. Much of the industry reinsurance rate commentary is geared around what is happening in property excess of loss rates with a general focus on North America. This is a relatively small part of our book. And to highlight this point, we expect rate for QBE Re to be roughly flat this year after cumulative rate increases of around 65% since 2017.

Our market position is attractive. Beyond the 4 major reinsurers, we stand out as having capability across most products, strong representation in all key hubs and have a 1- to 2-notch credit rating advantage relative to many nonmajor reinsurers. Our strategy is centered around becoming more relevant to a fewer number of strategic partners, building deeper relationships and offering valuable panel diversification.

Moving to QPS. In 2026, we'll have gross written premium of around $1.8 billion in our Portfolio Solutions business. This represents broker facilities where we provide a pre-committed level of capacity to a clearly defined broker portfolio. It also includes certain MGAs and platforms which we support.

These facilities are sometimes spoken about as market trackers, but the products are more sophisticated. We are the lead partner on many of our facilities. We work closely with the broker to codesign the facility and as a lead get to define the terms, structure and establish how and when the capacity attaches.

We're the clear market leader in this space and have participated right throughout the journey. We believe the segment has matured and expect a continued structural shift toward facilities, which offer more efficient placement for brokers and customers, can reduce costs for customers and in our experience, have delivered attractive returns. Particularly in syndicated or layered markets, there can be significant inefficiencies in needing to engage multiple follow markets. Importantly, the underwriters' role remains unchanged, defining the risk, price and terms is still critical, although many follow markets contribute little to this process.

The final point to note is the access to data we get in taking lead roles. We now see pricing, claims and terms data for a broad cohort of business. And in the age of LLMs, this gives us valuable insights for our open market underwriting. In both instances, QBE Re and QPS performance has been very strong. This reflects the balance and diversification we've built, where particularly for QPS, our facility by definition is highly diversified, which gets further enhanced through participation in multiple facilities. For instance, some target specialist niches such as cyber, marine and political violence, while others capture structural growth opportunities in construction, parametric insurance and AI liability.

Turning to Slide 9 on capital. Our approach to capital allocation is outlined here. We'll always hold a preference to grow the business, provided returns clear our hurdle rate. This is the case for the vast majority of our portfolio today. We have a dependable 40% to 60% dividend payout ratio and remain committed to returning any excess capital beyond the dividend. This was reinforced with our first buyback in several years, which we completed successfully in April.

This slide lists some of the actions we've taken to improve capital efficiency this year, which is a key focus for us moving forward. We have a series of initiatives, which we think can drive real value as we work towards a more capital-light model.

In February, we spoke about the launch of our first sidecar attaching to the QBE Re casualty portfolio, plus the addition of a cat bond into our group property program. These initiatives not only support capital efficiency, but also our cost of capital and earnings stability.

We also spoke in February about the sale of our trade credit and surety business. This was a capital-intensive business, which is quite correlated with macro cycles. The transaction is on track to close in the second half. And this morning, we've also agreed terms to a loss portfolio transfer for over $1 billion of reserves. The transaction covers North America and international reserves associated with segments we've exited, which will drive a release of capital. Collectively, these actions will have a positive and meaningful impact on our capital efficiency plus enhanced returns.

With that, I'll pass over to Chris.

Thank you, Andrew, and good morning, everyone. We've made a positive start to 2026 and delivered an excellent set of results, culminating in a very strong return on equity of 17.7%. These results reflect the continued benefit of actions taken to improve portfolio quality, build cat resilience, strengthen reserves, optimize capital allocation and drive greater efficiency across the group. While there is more work to do, I'm confident the business is well positioned to continue delivering sustainable growth and industry-leading performance through the cycle.

Turning first to the result on Slide 11. Gross written premium grew 6% to $15 billion. The combined ratio was 92.8%, in line with the prior period and on course to deliver our 92.5% outlook. The result was supported by cat resilience, the positive runoff of prior year reserves and robust current year underwriting performance.

Investment income was around $830 million, implying a return of 4.6% on an annualized basis. The net impact from ALM activities has been broadly neutral and our tax rate was 25%, consistent with our actual tax rate.

Profit for the half was up at around $1 billion. That's an increase of 4% on the prior year. And as mentioned, return on equity was an excellent 17.7%, comfortably above our medium-term guidance of 15% plus.

Our capital position remains very strong with a PCA multiple of 1.82x, and the dividend of AUD 0.33 per share equates to a first half payout ratio of around 33%. Consistent with prior years, our distribution is a little lower in the first half, and we'll true this up with a final dividend at the end of the year.

Turning now to growth on Slide 12. Premium growth has been solid. Group GWP growth of 6% was broadly consistent with the prior period and in line with outlook. The ex rate growth of 6% has been delivered at a time where we also pulled capacity back in areas where returns did not justify the deployment of capital.

As Andrew touched on, at this time, growth does continue to be weighted towards the Northern Hemisphere, highlighting the strength of our global brand and driven by strong contributions from Crop, QBE Re, Portfolio Solutions, our Lloyd's portfolios, cyber and adjacencies in North America. These are all portfolios where we continue to see attractive opportunities and strong returns.

Here in Australia, although aggregate GWP has remained broadly stable, we saw positive momentum in CTP and consumer, supported by distribution initiatives launched in 2025, alongside continued growth in the direct channel.

In North America, Crop delivered particularly strong growth of 17%, which we'll come back to in more detail shortly. Excluding crop, given the exited workers' comp program referenced by Andrew, alongside a temporary contraction in A&H volumes, GWP reduced by 12%. Adjusting for the exited program and noncore business, North America GWP remained broadly stable against the prior half.

Turning now to pricing. Overall, premium rate adequacy across the group remains strong with the majority of our portfolio being premium adequate or better. Premium rates are broadly stable and the majority of the move from 2% in the prior period can be explained by property. Excluding commercial property in our Lloyd's business, premium rates increased by around 3%. While many Lloyd's portfolios are more stable versus the prior period, rates in commercial property are down further following another strong year for profitability. As Andrew mentioned, we're being selective in how we participate in certain property markets, and where pricing heads into 2027 will be a key area of focus and depend a lot on cat activity over the coming months.

I'm going to turn now to Slide 13 to talk about the group's underwriting performance. Underwriting performance remains solid with a combined ratio of 92.8%. Catastrophe costs were around $450 million, that's comfortably below allowance and around $30 million less than the prior period. That's another resilient outcome in a half, which includes a $75 million impact associated with conflict in the Middle East.

The impact from the Middle East relates primarily to political lines property exposure in neighboring regions and includes IBNR. The result also includes favorable prior year development of around $110 million. That's modestly higher than the prior period and reflects a consistent and prudent reserving strategy where we look to hold long-tail reserving assumptions for at least 3 years before recognizing any good news. Whilst this does drive a negative bias on the current year, it should contribute to more consistent prior year releases as the approach matures.

The ex-cat claims ratio was relatively stable versus the prior period. The ex-cat continues to absorb industry-wide claims inflation impacting A&H and referenced in February. With only 2 quarters of experience, it's clear that claims inflation remains elevated. Though ultimately, it's too early to make a definitive decision for the year, we've assumed limited improvement on the 2025 full year combined operating ratio over the half. Regardless of where 2026 ends, it's clear that another round of material price increases across the industry is required into 2027.

Under AASB 17, we do take an onerous contract provision in the first half. Essentially, this pulls forward an expected full year loss into the half and does serve to inflate our half 1 combined ratio. The ex-cat ratio has also absorbed broader impacts associated with the Middle East. I mentioned the cat allowance of $75 million earlier, but our half 1 result also includes around $50 million of associated large losses.

As Andrew referenced, we've seen meaningful growth in certain Lloyd's portfolios, but particularly in marine war markets, premium rating has shifted materially. We're a market leader and have responded to support our customers and partners. We do anticipate meaningful earnings from this business in the second half, which will lead to a more balanced Middle East picture by the full year.

Diversification remains at the heart of our strategy to deliver resilient and predictable outcomes. And it's worth pausing to reflect on the various favorable and unfavorable movements across components of the claims ratio, including ex cat, cat and prior year development. Some variance across these metrics is inevitable, and it's important to assess them collectively rather than placing too much emphasis on any single component.

I'm going to turn now to expenses. The group expense ratio was 12.4% compared to 12.1% in the prior half. This increase was driven by investment spend in support of our transformation agenda, lower capital credits associated with the Australia CTP business and an increased weighting to a higher expense ratio AUSPAC business as a result of the strengthening Australian dollar.

From a headcount perspective, however, we saw an increase of just 1%, and that was driven by international, where we continue to support growth. We expect the full year expense ratio to trend lower over H2.

I'm going to move now to Slide 14, as I'd like to touch on cat resilience as cat performance has again been a feature of this half's result. Cat was below allowance in the first half, continuing the trend of cat tracking comfortably below allowance over the past 3 years. This slide shows our probable maximum loss or PML, a proxy for cat exposure, which has now reduced by around 11% since 2023. This contrasts with premium growth of nearly 20% over the same period. We've been able to grow meaningfully whilst reducing catastrophe exposure.

Notwithstanding the PML reduction, we've maintained our cat allowance steady, which continues to be set at around the 80th percentile. While that's not an exact science, mathematically, this implies that our allowance should be adequate 8 out of 10 years and indeed, recent experience would seem to support this. We believe, therefore, that our cat performance in part reflects a structural improvement in our portfolio rather than purely a cyclical outcome. Our business model is underpinned by a deliberate strategy of portfolio balance, and we place the same value on earnings generated through cat resilience as we do any other dollar generated in the P&L.

The slide also highlights that our maximum event retention has reduced 40% in 2 years, and that's as a result of a reduction in the attachment point for our main cat reinsurance program. I wanted to put these retentions now in some context. In the U.S., it would now take a $75 billion East Coast hurricane to reach our 250 -- sorry, our $240 million maximum retention. In the past 10 years, we've seen only one event, Hurricane Ian in 2022 that would have hit this level. Indeed, at that size, we're taking north of a 1 in 10-year event. For events in Europe or Australia, the likelihood is even more remote.

I'm now going to turn to our divisional updates on Slide 15. North America delivered a combined ratio of 97.3%. That's broadly in line with the prior half. But there are a few ups and downs that I'd like to take a moment to unpack. The commercial portfolio continues to perform well, and the crop current year result was broadly steady at 94%. The performance of specialty, however, was, of course, impacted by accidents and health. Rate increases were strong in the high single digits, underpinned by A&H at over 20%, aviation at over 10% and specialty casualty at 8%, with construction and health care only a fraction behind this. Catastrophe costs in North America were materially below allowance and better than the prior year. PYD has been favorable, evidencing the strength of reserves and is largely attributable to releases from crop and a number of commercial and specialty short-tail portfolios.

Moving to International. It's been another solid half for this business. That despite allowances, the situation in the Middle East with a combined ratio improving 1 point to 91.6%. Growth momentum remains impressive with ex-rate growth around 11%. And rate overall was modestly negative, really driven by Lloyd's portfolios referenced earlier, which were down mid-single digits. Most other segments, however, were broadly flat. And importantly, across international, terms and conditions are stable and rate adequacy remains attractive. The International has benefited from cat running below allowance, but this will broadly offset some reserve strengthening in our energy portfolio and certain liability classes across Europe. On the topic of European liability, the loss portfolio transfer announced today will address a portfolio which has had persistent strengthening over several years.

Finally, on Australia Pacific. GWP was broadly stable compared with the prior period as was rate, which strengthened in the 2% to 3% range. We're pleased with the underwriting result, demonstrating resilience in what was another heavy cat half with significant bushfires in January and numerous storm and flooding events. Favorable prior year development continued with releases in short-tail commercial alongside CTP and LMI.

I'm going to turn now to Slide 16 to say a little bit more on crop. It feels an opportune time for an update on our crop business. It's been roughly 2 years since we reset our strategy. Starting with growth, while GWP growth has been very strong, this highlights the impact from product extensions alongside a more modest level of organic growth in the core MPCI book. Product extensions are relatively new feature, which allow farmers to increase revenue protection up to 95% from typical levels of around 75%. While product extensions have been calibrated to favorable economics and indeed performed reasonably well in recent years, it remains a new product. And given our priority of managing uncertainty, we've chosen to seed the majority of growth to the federal fund. Going forward, we expect product extension uptake to moderate and for overall GWP growth to revert to more normal levels.

Exposure across our priority versus nonpriority states has now shifted materially, an important change given that the derisked states had weighed on performance in recent years. This change has been driven by not only managing gross exposure, but also increasing our session of nonpriority states to the federal fund. This, alongside the product extension strategy, gives a steady increase in cessions you can see in the chart and ultimately, why crop net insurance revenue growth has lagged GWP growth. We expect cessions to the U.S. fund to remain more stable from here with modest reductions to third-party reinsurers in 2027, resulting in net insurance growth that should begin to mirror or even outstrip GWP growth.

We've also reduced our exposure to private products. These products are ancillary purchases like hail coverage sold alongside the MPCI policy. The business tends to be less profitable. And you can see today, we write 40% more MPCI per dollar of hail. The overall portfolio today is materially different to the one we were managing just a few years ago. These actions have improved our confidence in achieving plan and reduce the level of downside risk.

Turning now to our investment result on Slide 17. Investment performance remains solid with a return of around $830 million in the first half. This is despite elevated geopolitical and macro uncertainty. Risk assets have returned around 7.2% on an annualized basis, while fixed income returned around 4% in the half. The core fixed income portfolio exited the period at around 4.1%, while futures markets currently imply the fixed income yield will exit 2026 at around 4.3% and total duration remained steady at around 2.5 years. Risk asset returns have been resilient, supported by strong returns across equities and infrastructure assets.

We do have a very modest private credit portfolio, which delivered a positive return and is well diversified with highly conservative lending. Funds under management increased 2% to $36.6 billion, while asset mix has remained unchanged with high-quality core fixed income representing 85% of the portfolio.

Moving now to our key theme of balance sheet and capital management on Slide 18. It was pleasing to complete our first buyback in several years, returning $450 million to shareholders. Hopefully, this reinforces our recent statements about a highly disciplined and transparent approach to capital allocation. Our APRA PCA multiple was 1.82x at the end of the first half or 1.78x when you adjust for the interim dividend. In the second half, the sale of our trade credit and surety business is expected to complete at an anticipated pretax gain on sale of around $70 million.

We also announced a reinsurance transaction this morning, including a loss portfolio transfer covering around $1.6 billion of reserves relating to exited U.S. middle market and workers' comp portfolios, not in prior transactions in addition to a European liability book. The Day 1 cost of the reinsurance transaction is similar to the gain on sale from trade credit at around $80 million pretax, and we booked in the restructuring line of the P&L. In addition to reducing reserve uncertainty, this gives rise to an immediate PCA benefit of around 2 points.

The ongoing impact of the transaction is not material. The modest amount of foregone investment income is partially offset by claims discounting benefit and the broader implications of reinvesting that capital into more productive opportunities is also supportive for returns.

I'll pause here and hand back to Andrew.

Thanks, Chris. No changes to note on our outlook. We're on track to achieve constant currency gross written premium growth around the mid-single digits. We continue to target a group combined ratio around 92.5%. As you analyze today's result, we suspect some will adjust our first half combined ratio for favorable cat and PYD. We've made some comments this morning as to why wouldn't necessarily -- why I wouldn't necessarily follow that approach. But nonetheless, we provided a simple bridge here to our guidance, touching on the issues Chris noted earlier.

Our first half ex cat was overstated by the A&H onerous contract provision. And we think the Middle East impacts in half 1 reflected mainly claims where we see a benefit from material marine war premium in the second half. And finally, we see improvement in underwriting across a number of sales in half 2 and are focused on driving a lower expense ratio.

Our medium-term guidance also remains unchanged, where we expect ongoing mid-single-digit growth and returns in the 15% plus range. As we said in February, underpinning this outlook is a view that investment returns track above 3%, which implies an outlook of reasonably stable combined ratio.

We'll hold our usual third quarter update on November 27 and look forward to discussing second half performance then. With that, I want to thank you for joining us, and I'll pass back to the operator for Q&A.

[Operator Instructions] First, we have Andrei Stadnik from RBC.

Well done on a solid result. Can I ask, firstly, just around the capital. Just in terms of the 6 percentage points of capital you're highlighting the relief that should come through going forward. Does that equate about AUD 750 million? And is that something you potentially could seek to return to investors in early 2027?

Yes. I mean the 6 points that we've highlighted are a combination of benefits we get from the LPT from a cat bond that we're looking at the moment. I think then in terms of how we look at returning to investors, I think we sort of articulated our capital strategy is the first thing that we will look to do with it is to support sustainable growth. But I think as we said a few times, as and when that is still above our target range, we will continue to look for ways to redistribute that, whether that's through buybacks or other levers.

Yes. And I think we're incredibly consistent on that. So we tend to look at the capital, Andrei, at the end of the year, probably with the November Board, see what the plan for 2027 is going to look like, see what profitability for 2026 is going to look like and then see where our capital position is. As Chris said, any excess, our aim is to return it.

And just double check, that AUD 750 million in terms, is that a reasonable number?

About 6 points.

The 6 points it's going to be -- yes, it's going to be -- that sounds like a touch high, but can just confirm the number.

Yes, Testing your mental arithmetic, this one.

Yes.

Next question is Nigel Pittaway.

First question is on QBE Re. I mean you're saying you've got about $4 billion of premium now. I think there's been sort of comments that there's a target for $6 billion by 2030. So my question was, first of all, is that an aspirational target or a sort of one that you think there's a good chance of achieving? And just also maybe whilst you're sort of answering that, can you comment on terms and conditions and how you're feeling about those and what -- how that would influence any sort of move towards that growth target?

Nigel, thanks for that. Yes, that is our aim. We believe from a position we've got in reinsurance and the depth of customers we have and the breadth of the portfolio that the $6 billion is an achievable target by 2030. But it's sort of linked to the second one. If all markets completely fell off a cliff between now and then, we'd obviously focus on profitability over growth. This point in time, we can see a way to do it. We talked about how property excess of loss has been under a lot of pressure in the first half of this year, but everything else is looking okay. So definitely driving towards a larger QBE Re business and $6 billion sort of puts us into the first division of the premiership of reinsurers, and that's where we want to be.

I think on the point of terms and conditions, although as Andy said, we have seen pressure coming through on rates. What we haven't seen is it translating into challenges on attachment points or broader terms and conditions.

Okay. Secondly, just on the crop, there's about 8.1% of PYD, I understand. What sort of drove that?

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Thanks. We just saw returns improve from the position we took towards the end of last year. Now we have been aiming for being slightly more conservative in our reserving, so we don't actually see the reverse of that of seeing the returns deteriorate. We had a good return when we announced the full year. And it looks like we held a little back because we didn't want to see any deterioration from there, but we saw the return to continue to improve in the first quarter.

Okay. And then maybe just finally, I mean, what caught you by surprise on A&H, given that you say you've got to go again in terms of pricing?

Yes. So what we had last year was -- I think we did try to flag that, Nigel, at the end of the year was where we thought we weren't getting enough rate to cover the claims inflation. So what we saw was claims inflation coming through mainly towards the end of the third and fourth quarter last year. A lot of the business has already been quoted at that point. So we were quoting based on what we've seen. And then when those claims came through, we saw that they were greater than the 20% we were putting through, probably nearer 30%. And therefore, we have a catch-up position in 2026.

You also have, to some extent, rate caps and you have to renew some business because it's in the admitted market there. So that constrained what we could do. This year, we believe we'll be able to catch up. The whole market is in a similar boat, not that, that makes us feel any better when a business isn't performing well, but it means the market is definitely moving as one in 2026.

Next, we have Andrei Stadnik from RBC for his second question.

Look, my second question, can I just ask around broker-led facilities? That business has grown amazingly well over the past few years. It feels like it's 30% compound or maybe better. Going forward, what should we be thinking low teens growth? And is there any color you can give on profitability of that business relative to the rest of the book?

So on the first one, it's a great question. We believe there are going to be more. So we've seen how the major brokers have are all creating them. So we saw one major broker start much earlier about a decade ago, and then others have done that. So we are expecting others to follow suit. We've also seen over the years, the percentage going into them has actually grown. So while the broker facilities tend to have started about 10% of the overall placement and now some are getting closer to 30%. So there's been growth in 2 elements, more brokers doing it and the percentage growing up. Also within our QPS portfolio, we do portfolios of MGAs, and we're seeing more of that happening. So we do see more growth.

It's going to be very hard, Andrei, to say whether it's going to continue at 30% or not. I guess I would be surprised if it grows at that level. But being a market leader in it, we are seen as a good place to start when brokers are thinking of doing them. So good growth going forward.

From a profitability point of view, they do act a bit like an enhanced market tracker. So if the Lloyd's market is performing well in total, the facilities are performing well. So they've performed, I would say, in the 80s combined ratio over the time we have been on them.

Next, we have Andrew Buncombe from Macquarie.

Just the first one from me. Some of your global competitors have been quite vocal about growth in global data center facilities. Can you just talk to how you're approaching those risks? But also, are they going through your QPS portfolio? Or are they separate?

Okay. So it's a good question. So yes, there's been a lot of talk about data centers and the opportunity, and we touched on it, I think, at the end of last year. So what we're doing, we already write some through our current underwriting teams across the globe, within QBE. What we have decided to do is appoint someone to coordinate our approach to them. So Jamie Thompson, who's actually based in London, has been with the company quite a long time. He is coordinating our data center approach where we can offer lines across multiple products to this data center opportunity. So a more joined-up approach of leveraging our expertise. So I think this is a great opportunity wherever data centers are cropping up, we will be able to grow with that.

Very hard to determine exactly how much premium is going to take place within it, but we see it as a great opportunity to lend to ourselves to our global footprint and the breadth of product expertise. QPS will definitely be writing lines on it because it writes a portfolio of business. So within QPS, it will write it as well. And the great beauty about QPS is it ends up having relatively small limits over many, many different things. So we will end up having that doubling up impact just as we do in all our other lines of business.

Great. And then my other one was just in relation to the FY '26 combined ratio guidance. Your first half accident year combined ratio for crop was a touch lower than the normal approach. Just can you help us think about how -- or what assumptions you're making for combined operating ratios in the North American crop business inside of your group guidance?

Yes. I mean I'll hand over to Chris, but I think it was only a touch lower than where it was. We're happy with the new strategy we put in place over the past couple of years, and we saw how that came to fruition in the 2025 results. The aim is to make a major move in it.

That's right. Yes, we're not looking to make any major change. I think we quoted earlier that the combined ratio is around about 94%. It's still early days. It's quite a second half business, but we haven't had -- at this stage, our view remains pretty positive on how that portfolio is performing as we get early views on planting conditions.

Next, we have Siddharth Parameswaran from JPMorgan.

I was hoping I could just get a comment around 2 things. Firstly, just inflation, just how that has been tracking versus what you were saying before. I think the last comment that I remember was that there was inflation that was above rate. And maybe if you could just comment maybe just geographically and also maybe particularly around some of the key classes like property and liability.

Do you want a go?

Look, I think we saw that rate for the half has come in at around about 0.5 point I think we expect for the full year, that remains our view for the full year. I think as you say, Sid, as we look now, inflation is tracking a little above where rate is, but we're not really seeing that translate through to sort of a material impact on our outlook really or in terms of our underlying performance. I think as we discussed in the past, the challenge for us with rates of inflation, of course, it does have some impact, but it's really just one lever in a much broader suite. I think the key line, as others have called out, has been property around the globe, where we are seeing rate coming off -- actually coming off and therefore, materially below where we see inflation. But this is a portfolio that has been particularly adequate for a long period of time. We've seen significant rate increases. So we're not really seeing that rate inflation dynamic translate into sort of a drag on the performance over the first half.

Okay. If I could just ask a second question, particularly about the strength of buffers then. As you said, rate over inflation, mathematically, things would be getting worse at least on your loss ratios. I think, you made the comment that you always start reserving a lot of your accident years very conservatively and you start releasing after 3 years, presumably, given that rate is below inflation, the buffers there would be reducing. I was hoping you could just comment, firstly, just on sustainability. We see some very large releases from Australia in particular. Are those sustainable? Maybe if you could just give us some comment on anything you could point to paid-to-incurred ratios or anything which might help us gain confidence that the reserving releases can continue?

Yes. I mean, look, I think what we have seen over the past few years is our IBNR to case ratios have been increasing fairly consistently over the last few years. That's exactly what we'd expect as we changed the reserving philosophy to holding on to ultimate for a period of 3 years before we release on the long-tail lines. We have seen, again, at the half this year that we've again seen that the ratio of IBNR to case has increased again. But some of that is also just down to mix as opposed to being purely kind of where we're setting the strength. But I think the point we're making is at the moment for our ex cat is kind of a one-way test. When we see bad news, we're reflecting it straight away. And where we're seeing good news, we're holding on to it for a period of 3 years. And some of what you're seeing in the release of the first half has really just been the math of that, that excess that we're holding on to flowing through.

In terms of the part of the extent to which the shift between rate and inflation is kind of eroding that, that's really something we take into account at the time of planning and at the time of sort of setting the allowances. So it's not as if we take any less prudent approach because of what we're seeing in rate and inflation versus what we would have done otherwise. So I don't think you should be interpreting rate inflation having an impact on our ability to see prior releases in the future.

Next, we have Kieren Chidgey from UBS.

First question is just on the U.S. If we take out crop and even if we adjust for your onerous provision on accidents and health, it does look like the first half combined ratio is still over 100% across the rest of the U.S. portfolio. Just interested in sort of what's still driving that outcome and sort of where you see combined ratios ex crop moving in the U.S. over the medium term?

Yes. So I think it's a really good question. So if you look at the business, crop has performed well in the first half. Our commercial business performed well, and we've had some challenges in the specialty portfolio, of which A&H is one. We've also had some challenges within financial lines within that, particularly within transaction liability, where there have been a lot more claims in the first half in that business line. So you probably -- if we unpacked it, you'd have 2 businesses performing well and achieving the return and one business over 100%, given the overall position in the U.S.

So answering the question, yes, I have confidence in us getting it to a lower combined ratio than the close to 97.5% and to achieve the 15% return on capital. It probably won't achieve the combined ratios of the AUSPAC business and International because it's a less capital-intensive business. We've got to continue to focus on improving that A&H, which is a Jan 1 issue. So we have to give an update as we get closer to the end of the year of do we believe we've got ahead of inflation on that and also improving parts of the financial lines business. We definitely need to improve those.

And Andrew, the sort of the action on A&H, you pushed up price, but obviously, a lot of that chunk of business moved elsewhere, just given your premium there is down. Do you envisage the same thing happening if we continue to sort of try and push price ahead of market? It sort of feels like you are trying to go ahead of market on rate, but the size of that book, which is quite big outside crop within the residual of your U.S. portfolio might continue to shrink.

I think the difference this year is the fact that the feedback from the market is they've all recognized the problem. So I don't think it will shrink if we move the rate because everybody else has to do the same. We can obviously see from some announcements, the performance of their medical stop-loss businesses, which are not dramatically different from ours. And the viewback from the broking community and clients is the market is going to move together because we all need the rate. So I think that's different from last year where we may have picked it up, although we couldn't move quickly enough, we may have picked it up sooner than some others in the market.

Next, we have Freya Kong from Bank of America.

On your broker facilities, it's very helpful for driving growth, but I'm just wondering what your ability to maintain underwriting discipline and oversight is. Would you be worried about not being able to shield the business and facilities against a broader market downturn from here?

Yes. I think it's a really, really good question on the broker facilities. So I think in our position as leading on some of them, we can dictate what is in and what isn't to some extent. Obviously, if we dictated too much wasn't in, they don't actually work as an efficiency mechanism. So there is some control around who we follow, what lines of business are in, and we can see the data coming through. So I think that gives us enough control on them.

The other element is they are a balance of a number of things. So they're not all operating in a similar way. The MGAs are definitely different. The facilities that we're writing through Lloyd's may have different elements in them. So there's balance within them in total. So I think we can react. We could, in a nuclear option come off them if we wanted to. But we believe these are fundamentally really good for the market, and we want to support them. They're making the market more efficient. It's giving a benefit to the customer. And the brokers are very aligned to us. So it's in the brokers' interest as well for these not to become unprofitable because the whole thing will collapse. So there's a massive alignment, I think, within the market from the customer through the broker to us to ensure they continue to work. So I feel pretty good about them and they're diversified in themselves and they're diversified between them.

Okay. And then second question, just on the rise of the sophisticated AI models like Mythos, which are putting corporate and governance in high alert on cybersecurity, how has this affected your risk appetite for cyber?

For cyber business or our own cybersecurity?

Cyber business. And I guess you've had the market leader Beazley saying that they're concerned about the backdrop and seeing rating levels is no longer adequate in some places.

So what we have seen in the first half is that the growth in our cyber business in the U.S. has been less than our growth in the cyber business outside the U.S., mainly due to that comment that the rating environment and capacity in the U.S. seems to be greater. From a point of an AI point of view, our aim is to continue to cover our clients, obviously, be as vigilant as possible, and we believe the rollout of AI may make clients both respond to the vulnerabilities more quickly and also the bad actors attack the vulnerabilities more quickly. So the jury is out on how that works. Key is having balance in the portfolio, not too much of it, good reinsurance program. So having a stop-loss program against it, having all those elements. So if things deteriorate, it has a limited impact on the overall group results. So obviously, thinking it through, do we need to adjust product on the back of it? So far, we're comfortable where we are.

Next, we have Blake Dowsett from Jarden Group.

I'm just looking at Slide 7 in the pack. It's really useful. I appreciate that. Just trying to get an idea on growth looking forward by lines from what you can see in terms of rate today. I want to get a better idea of which lines of businesses you think you're going to target for growth over the next 12 months to help support that mid-single-digit volume growth kind of target, while still seeing positive mix to shape your margin as well.

So the sort of easy ones, if anything is easy. The easy ones are continuing where we've actually grown of late. So we talked about QBE with this aspiration of $6 billion. We talk about the Portfolio Solutions where we think more brokers will come up with them, and there'll be opportunities within the MGA world. Talk about cyber despite the issue in the U.S., our portfolio is relatively small, so we can grow from there. And the crop business, now we have it in a good position. The drive forward will be to add crop business that actually improves the overall net premiums we're retaining rather than this supplemental product where we've reinsured most of it out. So those are the relatively straightforward ones that we can actually see growth into the foreseeable future.

What we're also trying to do is leveraging our position through distribution. We talked about this before about building deeper relationships with fewer distribution partners, and that gives us potential growth across a wider swathe of business. So a great example of this is we're focused very much on our top 7 distributors, our top 7 brokers in 2026 and beyond. And we've seen greater growth with them on average than we have with the smaller broker partners.

So we want to continue to do that because that gives us an opportunity of working closely with them, where do they see opportunities, where do we see opportunities, aligning our appetite and expertise and growing with them. And that's been a change over the past 2 to 3 years as we've had a group Head of Distribution getting us to focus on that.

So that's quite broad. I don't know that, Chris, you have anything to add.

Yes. I just -- the only thing I'd add is, and hopefully, you do find that chart helpful showing where we're growing and contracting. But if we sort of look around the world in North America and Australia Pacific as we sort of think about that rate inflation dynamic, we're kind of seeing in those regions that rates and inflation are really largely sort of offsetting each other. We're not seeing sort of a material contraction there. The one part of our business where we do see rate being below inflation is international, but international is absolutely the business where in the aggregate, the adequacy is by far the strongest. So we do see still plenty of opportunities around. And just sort of one thing I would add, and we touched a little bit on this, in February, is the majority of our business is still premium adequate or better.

In terms of lines where you -- sorry, go on, Andrew.

I was just going to say I want to add one other thing, which is the modernization programs we have in place, particularly here in the AUSPAC business. So we've had our first launch of that this year, and that ultimately is going to make us move more quickly in this market, which will make us easier to do business with and gives us an opportunity to grow. Sorry, are you going to add something?

Yes. No, I was just going to take the flip side as well, just areas where you're thinking of shrinking going forward. Obviously, moving away from workers' comp in the U.S. has been signaled and it looks like there's some shrinkage in property as well and your peers are talking to walking away from property business because of rate adequacy as well. I'm just trying to get a feel for where those lines are.

Yes. I mean I think definitely property will be down if rates continue as they are going forward. In total, there are certain areas which are fine. But overall, I can see property continue to reduce. We could see some of the Lloyd's business continue to reduce if the rate pressure in some of the lines aren't that great. But most are not falling a lot at this point. Other than property, most lines are not falling a lot. So it could be in a stable position. So I haven't got a lot of ideas of where we're going to reduce. Probably it's going to be very similar to where we are currently reducing.

Next, we have Andrew Adams from Barrenjoey.

Just first one on the expense ratio. We did have a target of 12% in '26 and lower in outer years. Is that still the case?

Yes. Look, I think 12% remains absolutely our target. We're going to be working towards getting either there or very close to there by the end of the year. In the first half, the expense ratio we're printing, we recognize is higher than that. There's been a little bit of Australia dollar movement that has impacted that. So we get a bit of an FX impact. There's an impact from a capital point of view on CTP business and also just the continued investment spend. But the guidance we gave around target of 12% for the end of '26 remains our target. Whether we'll get there exactly, we'll see how the second half.

Sorry, for the end of '26 or for all of '26. I interpreted as in '26. Are you saying an exit rate of 12%?

No, in '26. So for the full year, our target remains 12%. As I say, whether we get there is -- we'll see over the remainder of the second half.

Yes. Cool. And then just on -- I guess, on reserves and the points we make on the 3 years, et cetera. Just can you give us a bit more color on international? I guess we're still getting central estimate top-ups. So just what's driving that? Like are we getting some reserve releases, but they're being offset by top-ups elsewhere, so net top-up. It still feels like the reserve releases I'm getting are just short tail and a bit of Aussie CTP. So just a bit of color on what's going on in international. And then also, you mentioned on the call, some of the problem childs go to the LPT. So just maybe a bit more detail on what's going into the LPT.

Yes. I mean look, I think in terms of your point on reserving, I think we you're right. We do see some portfolios where strengthening is coming through. International, in particular, is where we've seen those come through over the first half. But I guess the point of this building up this more resilient approach to reserving means that we can take the opportunity to strengthen portfolios or reserves where we think that's the right thing to do. But in the aggregate, as you can see, Andrew, we have had overall a reserve reduction. But I guess the bit that you can't see within the headline number is we absolutely have had releases on long-tail portfolios as well. But it's just that in the aggregate, we've sort of -- some long tail has come down and then we've taken the opportunity to strengthen elsewhere.

What we have in the LPT we've announced today it's several portfolios, where we have just seen too much prior year coming through over a sustained period, and it just made sense for us to just take that noise out of the result once and for all. But I guess the main point to your question is we absolutely are seeing releases on long-tail portfolios, but we're also seeing long-tail portfolios. We just want to take the opportunity to improve the strength -- improve the robustness of where we're holding the numbers.

Our next question comes from Julian Braganza from Goldman Sachs.

Just following up on the LPT conversation. How much of the adverse PYD in international that we've seen, I guess, over the last 5 years, would that have theoretically covered? Just want to understand that point. And also, I guess, what accident years does the LPT relate to? Just want to be clear on that. And also, is this the end of the kind of remediation program in terms of LPTs? Just want to understand those 3 parts of that question, please.

That's good. This is the end of the remediation program. I always hope it is. We're not -- our aim isn't to write business that we then put into an LPT at some point in the future. But casualty reserves, if you look at the volatility of our P&L, it generally is driven by the current year underwriting investments and our long-tail reserves. So I'd never say never to doing an LPT at some point in the future because there may be the opportunity to release capital and just take them off our balance sheet. And there is that arbitrage opportunity from somebody else who can manage it better than others from a capital efficiency and investments and so on point of view. So it's not the aim to create these reserves.

It's interesting, the second question, about the -- which underwriting is because these LPTs are slightly unusual in that they have an element of current underwriting on them doesn't it, Chris?

Yes. Look, I think that's an important point. I mean, we probably won't share exactly sort of dollar numbers of PYD they've driven in the past. But the -- I guess what has been true is they've been consistent drivers of prior year development over a sustained period. I think to Andrew's point, the -- I guess these are different to some of the LPTs we've done in the past in that these are now portfolios we've made the decision and announced an intention to exit from each of the portfolios that are included within. So in some ways, this is just a way of accelerating the certainty we get from exiting portfolios onto the result today.

To Andrew's point, we don't feel that LPT should be a way of managing reserves. But where we've got an opportunity to just bring finality on portfolio, we're intending to move away from. It's just, I think, tidier to get them done.

Got it. But just to be very clear, it doesn't include any of the recent accident years. It's old, I guess.

No, I was saying it does do that for some. So when you -- because when you pull out of something, you have it up to the current day. So it does have some recent accident years. So yes, it does. That's what I was saying. So it's a business that was still being written, and we've decided to stop it, but it goes up to the current moment.

Yes. And it -- exactly as Andrew says, not only does it include the current accident years, but because there's also an element of unearned premium on some of this business, we've also included the unearned component as well to bring absolute finality.

Okay. Got it. No, that's clear. And then just on the previous commentary on rates versus inflation, like the math of it would suggest your ability to maintain the same level of resilience in your current accident year reserving estimates would naturally over time, reduce. I just want to get comfortable that as we sit today and your kind of outlook, are you still able to maintain that same level of strength and resilience in your current accident year estimates? We can't see that on our side. You're talking to rate adequacy, but I just want to understand that current accident year estimate resilience and how you're thinking about that given rates are coming off and there is some claims inflation in the system.

So a simple premise from my point of view, if you're going to put resilience into your reserves, you've got to do it at all points, whatever happens in the rating environment or inflation environment. So yes, that would be the aim to do it. How we will try to hold the current accident year loss ratios is through improving lines of business that aren't performing to the level we'd like. So there's more than just the rate of inflation. There's the churn in the portfolio.

Some businesses are performing incredibly well. So let's grow those as well as we could/should and some just aren't performing as well as they should, and let's improve those. So to maintain a similar combined ratio, going forwards, we have to be very active in the management of the balance in the portfolio, which means we can counter the view of a pure mathematical model of rate and inflation. And of course, a pure mathematical model of rate of inflation is that inflation number has so many elements in it. Talk about A&H, where A&H inflation is 30%. Some portfolios don't have any inflation at this point in time. They're all sitting. They're not all sitting there at 3%, and this is very much an averaging. So we can beat the average by not redoing the portfolio that's generating the average now and changing the shape of the portfolio going forwards.

And where that prudence comes from of holding on to ultimate for 3 years, that's our reserving philosophy. It's not something that's kind of cycle dependent that we have that philosophy in certain parts of the cycle, but we change it in other parts. So the approach to the resilience being there at the end of the year should be the same.

Thank you. Thank you for all the questions. This concludes our Q&A session. I will now hand back to Andrew.

Well, thank you for joining us today, and thank you for those questions. I hope to see some of you over the next week or so.

Well, good morning, ladies and gentlemen, and welcome to the 2026 Annual General Meeting of QBE Insurance Group Limited. For those of you that I haven't met, my name is Mike Wilkins. I'm the Chairman of QBE, and on behalf of your Board, it's my pleasure to welcome you to this hybrid AGM. I also welcome those joining us via the web and via teleconference. Before I begin, I'd like to acknowledge the traditional custodians of the land on which I stand today, the Gadigal people of the Eora Nation and recognize their continuing connection to land, waters and culture. The continuing connection well forecast and present and to any first at well joining us today. There being a quorum present, I declare the meeting open. The notice of meeting was made available to shareholders on the 30th of March of this year and will be taken as read. The minutes of the 2025 Annual General Meeting being in order was signed, and a copy is available for shareholders upon request via Computershare. Every effort has been made to ensure that this meeting runs smoothly. However, if any technological issues do arise and it becomes necessary to provide any procedural information in respect to the meeting updates will be provided on our website. A recording of the meeting will also be available on our website. If you're watching the live webcast, whilst also listening through the teleconference, you may notice a slight delay with the webcast. There are a number of procedural matters to which I must draw your attention. Firstly, how to vote at today's meeting. All resolutions at today's meeting will be decided by a poll, which recognizes the votes of those shareholders present today and those who voted by proxy, and it gives all shareholders an equal voice in determining the matters before the meeting. Each share in QBE carries 1 vote. Once I've opened the polls, shareholders who are attending in person can vote on their devices in the room via the Computershare platform. do this by scanning the QR code on your blue attendance card with your smart mobile device. This will take you to an online voting page. To cast your vote, select 1 of the options. There's no need to hit to submit or enter a button as the vote is recorded automatically. You'll receive a vote confirmation notification on your screen. You can change your vote up until the time when I declare voting is closed. For those shareholders without a mobile device, you may complete and sign the back of the blue attendance card. A Computershare representative will collect your voting card at the end of the meeting. Nonvoting shareholders will receive a yellow card and will not have the ability to vote online. Shareholders attending online should refer to the instructional slide now on your screen for voting instructions. If you're eligible to vote, once voting opens, press the vote icon and all resolutions will be activated with voting options. To cast your vote, select 1 of the options. Once again, there's no need to hit to submit or enter button as the vote is automatically recorded. you can change your vote up until the time that I declare voting closed. Consistent with how we've conducted our meetings in recent years, I'll open the poll for all resolutions requiring a vote at the same time, and for those that are eligible to vote, you may vote on all resolutions at any time during the meeting whilst the polls are open. The items of business that we're considering at today's meeting are set out in the notice of meeting.

For those of you attending in person, copies of the Notice of Meeting are available in the foyer. And for those of you attending online, the resolutions can be reviewed in the platform. Proxy holders should note that all directed proxies have been accumulated and recorded. Only proxy holders with open votes are asked to record a vote in favor or against a resolution or an abstention. Secondly, the protocol for asking questions at today's meeting. This is a shareholders meeting, and therefore, only shareholders, their return earnings, proxies and authorized corporate representatives are entitled to vote and ask questions. Questions relating to a shareholder's personal or business affairs, including as a customer, aren't appropriate for the AGM, but they can be addressed outside of the meeting. arrangements have been made for shareholders to ask questions online and over the phone and we'll open the lines later in the meeting. We take questions on all items of business at the same time.

Shareholders who are participating online may submit a question at any time, and you may start to lodge your questions now. They will be addressed at the appropriate time of the meeting. I refer you to the instructional slide now on your screen. To ask a question, select the Q&A icon. Select the topic that your question relates to from the drop-down list, type your question in the text box and press the send button. If you're having any difficulties in asking a question, please refer to the user guide, which can be accessed through [indiscernible] platform. Shareholders who are attending in person will have an opportunity to ask questions when we've reached the relevant part of the meeting. We ask shareholders to use the microphones that are placed throughout the order atrium so that we can all hear you clearly. Please show your voting attendance card to the microphone attendant. Please introduce yourself to the meeting when it's you'll turn to speak by giving your name and any organization which you represent I'll nominate the microphone from which I'll take the next question. For those who'd like to ask a question by telephone, you can do so by calling the telephone numbers set out on Page 1 of your notice of meeting and voting. To ask a question via telephone, press the star key, followed by the #1 on your own keypad and you'll be connected to an operator once we've reached that part of the meeting. to cancel your request, press star 2 on your phone. All questions should be addressed to me as Chairman and should start with the item of business to which it relates. We ask that you keep your questions short and to the point and avoid any lengthy preambles or extended remarks so that as many shareholders as possible have a chance to participate in today's meeting. Please also note that as our time is limited, it's possible not all questions will be able to be answered today. And if we receive multiple questions on the 1 topic, they may be amalgamated together. We also ask that you choose 1 platform to ask your question rather than submitting the same question through multiple platforms. At the conclusion of this meeting, light refreshments will be served outside in the foyer for those who are attending in person in Sydney.

Having now outlined the procedural requirements of the meeting, we'd like to play a video, which showcases how QBE has been at the heart of it for 140 years.

[Presentation]

Ladies and gentlemen, joining me here today is our Group CEO, Andrew Horton as well as my fellow directors, Yasmin Allen and Steve Ferguson. Our other directors are joining via teleconference. Penny James, Taneli, Kathy Lisson and Neil Maidment. Our Group General Counsel and Company Secretary, Carolyn Scobie, is also here with me. Mario Coppola of Computershare Investor Services will act as returning officer for the purposes of conducting and determining the results of the poll. Scott Hadfield, partner from our external auditors, PricewaterhouseCoopers, is also here and is available to answer questions on the accounts or the conduct of the audit. As I mentioned earlier, voting today will be conducted by way of a poll on all items of business that require a vote. The items of business to be considered at today's meeting are showing on the screen now and are set out in the notice of meeting. I now put each resolution to the meeting and declare voting open on all items of business other than item 1, given that no vote is required to be held on this item. The voting icon will soon appear, and please submit your votes at any time whilst voting is open. I'll give you a warning before I move to close voting at the end of the meeting. As set out in the Notice of Meeting, as the Chairman of the meeting, I'll be voting all undirected proxies in favor of each item of business that requires a vote today to the extent permitted by law in each case. -- with the exception of items 5a, 5b and 5c, for which undirected proxies will be voted against. I now formally vote all undirected proxies in this manner and all directed proxies in accordance with the directions provided by shareholders. The proxy results for each item will now appear on the screen. This year, we again asked shareholders to submit questions prior to the meeting. The key themes within the questions have been answered through my address, and we thank shareholders for taking the time to submit questions as we very much value your views.

QBE delivered another year of resilient and meaningful progress in 2025, reflecting disciplined execution of our strategy and the strength of the foundations that we've built across the group. We remain guided by our purpose of enabling a more resilient future, and I continue to be proud of the essential role that insurance plays in supporting customers, communities and economies around the world. Insurance is a long-term business, and its importance has never been more apparent than it is today. During my time on the Board of QBE, we've operated in an environment marked by heightened geopolitical uncertainty, economic volatility and the increasing frequency and severity of weather-related events, not to mention a global pandemic. Amid that uncertainty was our clarity of purpose, together with consistent execution that help keep us on course. I'm incredibly proud of QBE's continued focus on customer centricity, underwriting discipline, operational efficiency and translating strategy into tangible outcomes. That discipline has delivered stronger financial performance over time and helped to drive positive cultural change across the organization. Those foundations are critical to the role insurance plays as a shock absorber for society enabling investment, protecting livelihoods and supporting recovery when adversity strikes. In a world marked by significant catastrophe events I'm particularly heartened by the care, professionalism and commitment of our people. They demonstrate that in supporting customers during their most difficult moments. 2025 reinforced the growing pressure on households and the critical infrastructure that supports modern societies from transport and energy systems to public services. As weather-related risks continue to intensify the need for sustained mitigation efforts and greater investment in resilience and resilient infrastructure is clear.

Reducing underlying risk is essential to strengthening community preparedness and improving long-term affordability. We're encouraged by the increasing focus on resilience from governments and regulators and by the growing collaboration between insurers, policymakers and communities. These are shared challenges and progress will require coordinated long-term solutions. These are the conversations that QBE is participating in globally.

The financial results for 2025 reflect the strength of QBE's operating model and the consistency we've built across the group. During the year, QBE delivered a statutory profit after tax of USD 2.157 billion, representing a 21% increase on the prior year. The Board declared a final dividend of AUD 0.78 per share, and that compares to AUD 0.63 per share declared in 2024. That did end resulted in a full year payout of $1.09 per share in respect of the 2025 year. The profit and dividend reported in 2025 with QBE's strongest in many years. In November of last year, we announced an on-market buyback of AUD 450 million, which is now being completed bringing the total shareholder distributions in 2025 to around 65% of annual profits. These outcomes reflect the Board's confidence in the group's performance, its capital position and its outlook. We're indeed fortunate to have the benefit of a solid balance sheet and the strength that comes from our global diversification. These attributes position QBE well as the world faces into an increasingly complex and uncertain geopolitical environment, and we continually monitor what that uncertainty means for our business. Equally so, a strong culture is central to long-term sustainability of any business. To that end, I'm extraordinarily proud of the culture at QBE and of the leadership shown by Andrew Horton and the Group Executive Committee. Since 2021, Andrew and his team have led the organization with clarity, discipline and a strong sense of purpose, strengthening performance whilst continuing to invest in our people. The consistency we see in QBE today is a direct reflection of that leadership and the commitment of our people across the group. As Chair, has been a privilege to work with such a capable and values-driven leadership team, and I thank Andrew and the Group Executive Committee for their commitment.

Sustainability remains important to our purpose of enabling resilience. In February, we published our first impact report, highlight initiatives that support our people and communities. We also included in our annual report our first mandatory climate-related financial report alongside our climate transition plan. And I encourage you to read these reports together for a comprehensive update on QBE's sustainability agenda. You will have seen that we've been asked by a small number of shareholders to consider resolutions relating to our climate disclosure. This refers to Resolution 5 in the notice of meeting and the substantive parts of this resolution, Part 5 B and C, can only be formally considered as shareholders vote in favor of Resolution 5, which seeks to amend the QBE constitution.

I'd like to summarize the Board's position in relation to these resolutions, which we don't support. In short, the assertions made demonstrate a fundamental lack of understanding of insurance. A fundamental misunderstanding of QBE's insurance business model and the structure of our products and our portfolio optimization decisions that have been made to date. The Board's role is to act in the best interest of the company and all of its shareholders. This requires balancing a range of considerations associated with operating global business and addressing diverse stakeholder interests. The proposed resolution would undermine the authority and accountability of the directors in fulfilling this role. Our climate disclosures have been prepared in line with the AASB S2 standard. That standard requires us to apply materiality judgments in preparing our disclosures, and we believe it's essential to maintain the ability to exercise that judgment. Adopting the proposed resolutions would limit our ability to do this and in our view would not result in disclosures that are useful for users of the report. The Board remains committed to strong climate governance, diligent risk management and transparent disclosure, and we believe these objectives are best achieved through our current risk and governance frameworks and our disclosure approach, informed by materiality judgment and an ongoing engagement with investors rather than through adopting prescriptive requirements.

Moving on. The QBE Foundation continues to play a vital role in delivering on our purpose through our programs such as catalyzing impact and our Ascella City challenges, QBE Foundation is helping to drive innovation, back early-stage ideas and foster collaboration across sectors for lasting impact. In 2025, we began a new partnership with Humanity insured, aiming to provide affordable insurance to climate vulnerable communities in Asia. After meeting our women and leadership targets early and ending '25 with 41.9% of our leadership cohort women, we refreshed our targets to take us to 2030, requiring QB to maintain between 40% and 60% for women in leadership for our Group Executive Committee and on our group board. In 2025, we ranked fourth globally for gender equality in Equileap's Top 100, an international benchmark assessing corporate performance on gender equality world wildwide. We also exceeded our premiums for good ambition with USD 2.4 billion that impact investments at the end of 2025.

Board renewal and strong governance remains central to QBE's long-term success, and I'd like to thank my fellow directors for their stewardship, insight and constructive challenge. Together, we've overseen a period of meaningful change, and it's been a pleasure to serve alongside you. During the past year, we continued to strengthen the Board through thoughtful succession planning and renewal. In early 2025, we welcomed Nonexecutive Director, Neil Maidment, to the group Board and Peter Wilson stepped down from our Board later that year following his decision to join a competing carrier. -- today marks a number of important transitions for QBE. Firstly, Kathy Lisson will retire from the Group Board at the completion of today's meeting. And on behalf of the Board and our shareholders, I thank Kathy for her significant contribution and the expertise that she's brought to QBE. -- who counsel on technology and transformation together with her perspectives on governance have been highly valued, and we wish her all the best. And finally, at the conclusion of this meeting, I formally hand over the role of Chair to Yasmin Allen, AM. Yasmin has been a valued member of the QBE board since 2022 and brings deep experience in financial services governance and strategy. And I do so with confidence in her leadership and the Board's continued focus on guiding QBE through its next chapter, and you'll hear more from as later in the meeting.

Ladies and gentlemen, this meeting marks my final Annual General Meeting as Chairman of QBE. It's been a privilege to serve the company and shareholders during a period of significant change and challenge. As QBE marks 140 years of serving customers and communities this year, I'm proud of what the organization stands for, and I'm particularly proud of our people across 26 countries who live our purpose every day to enable a more resilient future.

To our shareholders, thank you for your continued confidence and support. And to our people, thank you for your professionalism, resilience and dedication. QBE is a strong organization with solid foundations, and I leave the role incredibly optimistic about its future. I'll now ask Andrew to address the meeting.

Thank you, Mike, and good morning, everyone. I'd also like to acknowledge the traditional owners of the lands from where we are joining today and pay my respects to elders past and present. It's a great pleasure to be here today to update you on QBE. Thank you for joining us, whether here in person or online. 2025 was a year of strong performance and one that demonstrated the benefits of consistent and sustained execution against our strategy. In an environment shaped by geopolitical uncertainty, major loss events and rapidly evolving risks such as cyber, the role of insurance has never been more critical. Against this backdrop, we delivered results that exceeded our financial plan and reinforce the quality and resilience of our business. Before I speak to performance, I'd like to acknowledge a key leadership transition. In January this year, we named Chris Killourhy as Group Chief Financial Officer. Chris' appointment reflects the depth of talent within QBE and provides continuity as we progress our strategy. I look forward to working closely with him in the years ahead. Financial performance in 2025 was strong. The group's combined operation ratio tracked ahead of our plan, and the result was supported by catastrophe costs comfortably below allowance. Gross written premium increased, reflecting continued organic growth in targeted lines. Investment returns were also robust, contributing to an adjusted return on equity that was the highest QBE has delivered in over a decade. These outcomes enabled us to deliver significant value to shareholders, including a higher dividend and the announcement of the share buyback and while maintaining a strong and resilient balance sheet.

Through the early months of 2026, we continue to see positive outcomes from our portfolio optimization initiatives. We entered the year with momentum, a strong balance sheet and a clear strategy. And looking ahead, the outlook remains constructive. We remain focused on disciplined execution, delivering our plan and creating long-term value to shareholders. To date, we released an update on our first quarter performance and reiterated our outlook. I'm pleased with performance through the start of 2026, underpinned by resilient underwriting and investment management. On balance, we are tracking to plan and have maintained strong premium growth. For the first quarter, gross written premium growth was 11% compared to the prior corresponding period or 7% on a constant currency basis. Market conditions remain broadly supportive with favorable rate adequacy across our well-diversified global portfolio. Group premium rate increases around 2% in the first quarter were in line with expectations as our teams continue to execute well against our portfolio objectives and what remain dynamic markets.

Our underwriting performance has been excellent, notwithstanding the growing geopolitical instability across the world. In the 4 months to April 2026, the net cost of catastrophe claims totaled approximately USD 300 million relative to QBE's first half catastrophe allowance of USD 517 million. Direct underwriting impacts associated with the conflicts in the Middle East have not been material to date. With net claims estimated around $60 million, which is included within the USD 300 million I just referenced. Exposure to conflict in the region is generally limited and our teams will remain closely connected and seek to mitigate risk as the situation continues to develop. Resilient investment performance has continued through the start of 2026. Given the meaningful recovery in markets experienced through April, our first quarter update notes total investment income for the 4 months to April of around USD 500 million. This was supported by an increase in our core fixed income yield to around 4.1% currently.

Turning to our balance sheet. As Mike mentioned earlier, we completed a AUD 450 million buyback program last month. The buyback alongside the ordinary dividend lifted total shareholder distributions in 2025 to around 65% of our profit. Disciplined capital management is integral in our ambition for strong and sustainable returns, and we'll continue to return any surplus capital in the business.

Finally, we reiterated our outlook today. We expect mid-single-digit GWP growth and a group combined operating ratio of around 92.5% for 2026, and remain confident in sustaining strong performance over the medium term.

Throughout 2025 and into this year, our 6 strategic priorities are helping us transform QBE into a more customer-led unified and agile organization. We continue to deliver on our sustainable growth priority, supported by enterprise alignment around our priority businesses, deep broker partnerships and leading regional franchises. We're actively managing our portfolio mix to reduce volatility and improve consistency. Our portfolio optimization efforts have delivered meaningful change over recent years. The acquisite of our North American noncore portfolio progressed well and has broadly concluded, leaving us with a more focused business. This has strengthened the quality of our earnings and position QBE for more stable -- QBE received credit rating reflecting favorable external validation on of our -- we also continue to invest in modernization, reframing to focus on pace and efficiency. Ongoing investments in digital, cloud and AI capabilities is supporting better underwriting decisions, improved customer experiences and stronger operational efficiency across the group. Investment in AI is pivotal in our industry. We are building in close partnerships with innovative new companies to help us and be ready for how this technology is changing our industry. We're seeing real momentum in our customer agenda. And our ambition is simple, to build stronger, deeper connections and to consistently deliver an excellent service experience. Brand and our first global product campaign under that brand cyberprotect are tangible examples of how we're bringing the enterprise together around this ambition. Our people remain at the heart of QBE, and this continues to show in our engagement results. Our latest engagement score is 68%, up from 65% at the time of our last AGM. These are results to be proud of, particularly in the context of a challenging external environment, and they reflect the strength of our culture and the commitment of our 13,000 people across the organization. Our 2025 annual report provides a more detailed progress report on each of our 6 priorities. Through our core business and the work at the QBE Foundation, we continue to support customers communities and partners when they need us most. In 2025 alone, QB paid out more than $12 billion in claims globally. Behind that number, or individuals businesses and communities working to recover and rebuild after unexpected events, often with profound human consequences. I'm proud of the care and empathy our people bring to these moments particularly with those who are most vulnerable. Before I close, I would like to extend my sincere thanks to Mike Wilkins, for his exceptional leadership and service to QBE. Mike has championed our purpose of enabling a resilient future, guided us through significant transformation and strengthen governance. Personally, Mike has been wise counsel to me, and I'm grateful for his support as I transitioned into my role here in Australia. He is highly respected across the market and his deep industry expertise an unwavering commitment to performance and culture have left a lasting legacy. We are grateful for his contribution and wish him every success in the future. On behalf of the QBE team, thank you for your continued support. It's an exciting time for us as we focus on building and growing our business. I'd now like to hand to our Chair elect, Yasmin Allen, to address you.

Thanks, Andrew. And thank you, Mike, for your leadership as Chair of QBE. Under Mike's stewardship, QBE has strengthened its foundations, sharpened its focus on performance and positive cultural change and reinforce the disciplines that underpin long-term value creation. I have greatly valued working alongside Mike and I know the Board management and the broader organization share a deep appreciation for the contribution that he's made to QBE. As I step into the role of Chair, I do so with a real sense of excitement and with strong confidence in this company. I am a big believer in QBE. That belief is grounded in what I have seen firsthand during my time on the board. This is a global insurance business with a clear strategy, strong leadership deep technical capability and a culture that understands both opportunity and responsibility. I feel very positive about QBE's future the executive team and our people across the organization who deliver for customers, partners and shareholders every day. I too aim for consistency. This will be a defining feature of my approach as Chair. QBE's performance has been driven through disciplined execution, clarity of strategy and a long-term view. -- consistency matters, particularly in a complex and fast-changing environment. My focus will be on steady leadership that builds on what is already working. -- you should expect a seamless transition with continuity in the way the Board supports management and oversees the delivery of the group's strategy. The Board is aligned with management on QBE's strategic priorities and clear about our role in supporting performance. Our focus is firmly on the drivers of long-term value. Underwriting discipline operational excellence, capital strength and resilience through the cycle. As a Board, we remain deeply engaged in oversight of performance risk and returns and ensuring that QBE continues to make sound, well-tested decisions in the interest of shareholders and other stakeholders. QBE has enduring strengths that position us well for the future, and it's important that we continue to build on these strengths. Our portfolio diversity provides balance across markets and risk environments. It gives the group perspective, resilience and the ability to navigate volatility. Equally, the strength of QBE's balance sheet remains fundamental. A strong capital position supports confidence, flexibility and the capacity to invest throughout the cycle particularly as the risk landscape continues to evolve. These attributes will be as important going forward as they have been in the past. Like Mike, I share a strong belief in the role insurance plays in enabling economic progress. Insurance underpins economic activity by helping businesses, communities and individuals manage risk and invest with confidence. As a global insurer, QBE has an important role to play in supporting growth, resilience and recovery across the markets where we operate. The Board remains committed to ensuring QBE continues to fulfill that role while delivering appropriate returns.

And finally, I want to emphasize that while this is a change in chair, it is not a change in direction. The Board is confident in Andrew and our executive team, and we're aligned with the strategy being executed. As Chair, my approach will be pragmatic and engaged with governance focused on driving performance and supporting QBE's long-term success. I'm proud to take on this role, and I look forward to working closely with the Board, management and the broader QBE team as we continue to build on the strong foundations already in place. Thank you, and I'll hand back to Mike.

Thanks, Yahmin. Before we open the meeting to questions, I'll now present a video of your director, Penny James, speaking to her election as outlined in resolution 4 of the Notice of Meeting. This has been prerecorded due to the time zone differences as Penny is currently overseas.

Hi. My name is James on the risk, the people and remuneration and the Governance and Nomination Committees at QBE. I have around 30 years of experience across financial services including leadership roles in general insurance, life assurance and wealth and asset management businesses. Those roles include being Chief Executive Officer and former Chief Financial Officer at Direct Line Group plc; Finger Chief Risk Officer at Prudential plc and being the Chief Financial Officer at Oger Insurance Holdings Limited. My nonexecutive portfolio currently includes St. James' Place plc, a wealth manager. Mighty plc, a facilities manager and Vitality, a life and health insurer. I also chair the FTSE Women Leaders review in the U.K. My previous nonexecutive roles include being on the Board of Admiral plc, a general insurer and Harris Lansdown plc, a wealth management business. I've also sat on the U.K.'s industry Board, the Association of British Insurers, and I've chaired the FCA's practitioner panel. It is a real honor to be on the QBE board. I'd like to thank Mike Wilkins for his support his stewardship and frankly, his wisdom through his tenure as Chair. And I'd like to welcome Yasmin Allen into the chair world and offer her and Andrew Horton, the CEO, and the wider management team, my support as we seek to maximize QBE's potential on behalf of our shareholders, our customers, our people and the wider community. I will be very grateful for your support for my reelection to remain on the QBE board. Thank you.

Ladies and gentlemen, I'm now opening up the meeting to questions from all shareholders. I refer you again to the instructional slides on how to ask questions on your screen and behind me. We will start firstly with questions here in the room in Sydney. Microphone 2.

Thank you, Mr. Chair, Natasha, shareholder Firstly, I'd like to thank the Board for their performance this year, noting that there are things which you can control and things like your card in the sort of industry, but overall, I'm pleased with the results. Also taking on all of the comments last year about the color intensity of the report, which was much easier to read this year. Also, there's a degree of sad that said you're stepping down, Mike, but we've had good engagement over the years, but I look forward to having engagement with Yasmin in the future. So the first question I've got -- you've -- in the report, you talked about catastrophe bonds in relation to climate incidents to mitigate against the future availability and cost of reinsurance. How exactly will response work? If you can just give a bit of context.

Thank you, Ms. Lee. Thank you for your continued interest in QBE. Catastrophe bond is essentially what it suggests. It's a bond that pays out in certain events that relate to catastrophe. And it is an adjunct to the reinsurance program that we currently run. We look at it as an addition to our reinsurance protections. However, there are various triggers that go with that. So certain conditions have to be met before the bond is called upon. -- if the bond is not called upon, then the participants in that bond have had a significant benefit. However, if it is called upon, they can potentially lose the entire value of the bond that's associated with them. It is a one-shot protection rather than ongoing from a reinsurance perspective. And as such, it is that adjunct that I was talking about, but we see it as an important addition to our protections more generally and to the cost of those protections because of the catastrophe bonds and generally speaking, less expensive than the ongoing reinsurance protections.

Okay. You talked about sort of diversification of your sort of asset base and businesses I note that the investment property funds increased by some $911 million. But I couldn't really get clarity about the basis of that, looking at Page 19, we've got revaluation of units, what sort of seems to be based on revaluation of units without much explanation. Was that due to purchases or revaluations.

It's probably a little bit of both, to be honest with you. We did indicate that we have increased our risk assets and property would fall into that to around 15% of our portfolio. I'm looking at our Chief Investment Officer, who's not in his head. So I think it would be -- we added some to it, but also there would have been some revaluation increments that went with.

As we expect, yes, it might be helpful just to sort of in the footnote, just put a bit of an explanation for next year. Orders as remuneration increased by nearly 12%, which seems a lot give an explanation.

Well, given that the auditor is here, I probably got to be careful what I say about all of this. I think it's a combination of some additional work that has been required, including the work in auditing our climate -- try again, our mandated climate reporting that was included in QBE for the first time, plus some other reporting obligations internationally. But I think there was probably an element of exchange rate that found its way into that as well.

Right. The sort of final question in this section and you did mention exchange rate. I suppose the 2 parts of it is the impact of expected higher inflation given the global geopolitical situation. But also given that you report in U.S. dollars and have part of a fairly substantial part of your business in the U.S. How do you see the impact of inflation as well as potentially the erosion of the U.S. dollars, the reserve currency impacting the business? And what are your plans going forward?

Well, I guess the good thing about QBE is our liabilities are also represented in the same currency as our assets. So we automatically have a bit of a hedge that goes with that. Inflation is an issue that we and everyone else is having to face into, we do have an inflation working group looking at what we think the implications of inflation may be on our business. But of course, the rates of inflation are different depending on the different markets in which we're involved. I think Australia is currently running much higher than a number of our other international markets in which we operate. But we do have regard for that. But as I said, the currency piece that you were talking about, we tend to get a bit of a natural hedge because we hold our assets in broadly the same proportion as the currency and the liabilities that we have.

So there's no plans or thinking about changing or doing...

not at this stage. I have microphone one

Good morning, everyone. My name is Professor Amerita Leslie Hughes. I'm a former Federal Climate Commissioner; former lead author with the intergovernmental panels on climate change, fourth and fifth assessment report and a founding counselor and now Director with the Climate Council of Australia. My comments and questions relate to Resolution 5b. I've joined today to question the company's assessment of the impacts of climate change on the economy reflected in your annual report, which notes that you expect only a 20% increase in average annual loss by 2090 under the IPCC, RPC 4.5 pathway. And for those in the audience, and I expect it's most don't understand what that pathway is. It's a midrange emission scenario, and it projects temperature increases in Australia by 2090 of between 1.4 and 2.7 degrees. For example, Adelaide is expected to have 150% more extreme hot days by that time. And as a consequence of these climate changes, we are also seeing and expecting further increases in the frequency and severity of climate disasters such as bushfires, floods, rising sea levels, tropical cyclones, et cetera. These place tremendous pressures on both natural and human ecos -- human ecosystems. We've had a number of recent reports on the impacts of climate change on insurability that affect the bottom line of insurance companies. For example, the climate councils at our front door report estimated that uninsurability of households will rise to nearly 20% in the next 25 years. The Australian Prudential Regulator, APRA, has released started indicating that 1 in 7 households now are estimated to be uninsured or uninsurable and that could increase to 1 in 4 by 2050, let alone 2090.

So in conclusion, even a very, very cursory understanding of climate change and of the risks associated with it does not match the assessments in your annual report.

So my question to the board is this, how do you reconcile our knowledge of climate science with your assertion that climate disasters will only increase annual average losses by a mere 20% by 2090. Thank you very much.

Thank you, Professor Hughes. A couple of comments to that. One, I think the basic premise of your question assumes that QBE's business is entirely climate exposed and property based. It is not I talked earlier about the diversification of the business that QBE has and I repeat my comment that I believe that the fundamental tenets underpinning the resolutions 5a, 5b and 5c demonstrate a lack of understanding of insurance and a lack of understanding of QBE's business model. We apply judgment in terms of looking at the climate risks and the scenarios that we think are going to be the most useful to our shareholders and investors rather than looking at worst cases. People are interested in the overall resilience that we are able to bring rather than necessarily going to worst case because QBE has a number of levers available to it rather than continuing as you would have suggested or as is implied in your question. The disclosures that we made highlight that QBE is quite resilient. We believe that average annual loss, which is the measure that we've used is the appropriate measure and it does demonstrate that for property, the long-term indication of scale and the impact of claims is as you set out. So we believe that what we have put forward is an accurate representation of what QBE's current exposure is rather than the implications that come with these particular resolutions. So thank you for your question. I have microphone 3.

Good morning, Mr. Wilkins, Matalan, the Board and shareholders, a manager Richman from Australian Ethical Investment. Australian Ethical holds around $66 million worth of QBE shares -- and we, together with 6 co-filed the shareholder resolutions. I have a question on each of the Climate Resolutions. Early last year, we wrote to the Board and asked QBE to disclose how much of its current insurance underwriting portfolio. It is anticipating based on climate modeling, it will need to actively exit or aggressively reprice to climate change. QBE did not answer our question. We asked again at QBE's AGM last year. Your answer suggested that this might be captured by mandatory reporting. In December last year, we wrote QBE asking whether its 2025 annual report, QBE's first report under mandatory climate reporting would include disclosure of that information. We received no response. QBE's 2025 report did not include the disclosures we asked for. QBE has already exited markets in Australia and North America in part due to climate amplified risk. Does QBE anticipate that it will need to continue to exit markets to manage increasing catastrophe volatility due to climate change. And will it disclose the scale of anticipated market exits to investors?

Ms. Richard. Thank you for your question. A few comments that go with that. Firstly, going to the communication that you had with us in December of last year. My understanding is that the information you sought was confidential inside QBE, and we were concerned that you were seeking to have selective disclosure, which, of course, we are not going to have. We have produced a climate report, which we believe meets the needs of the majority of our shareholders, and we will continue to evolve that report as those needs change, as legislative requirements change and as contemporary disclosures continue to be improved.

I don't agree with your assertion that QBE withdrawing from certain markets was solely related to climate exposures. QBE considers a number of issues when looking to exit markets and in a number of those situations climate was not a significant consideration. It was more about our capacity to compete, the scale that we needed to have and the outlook that we saw for the growth of those markets.

Can I just -- I just wonder to to QBE's 2023 annual report, which first mentioned deliberate property portfolio exits in North America and Australia. On Page 11, it provides that the rationale for exiting was to reduce property catastrophe volatility. And then further on Page 28 of the 2023 report QBE says that its climate risks include significantly increased frequency and severity of events related to certain perils and regions, particularly flat in Europe and Australia and cyclones in North America and its strategic response to those risks refers to reduced exposure to North America hurricane risk as part of portfolio optimization initiatives.

And then in the 2024 annual report, QBE refers to those exits again, saying on Page 8. catastrophe costs remained below allowance despite global insured losses being 1 of the most elevated years for industry on record, exposure to hurricanes Milton and Helene were notably lower than historic experience given recent portfolio exits and portfolio optimization initiatives. Now researchers at the world weather attribution have concluded with high confidence that both of those events were made worse by climate change. And in the most recent annual report, QBE refers to California wildfires and Hurricane Melissa plus a number of Eastern Starman flight events in Australia, including Cyclone Alfred and says, exposure to these events was notably lower than historic experience given recent portfolio exits and portfolio optimization initiatives. So I think to the extent that QBE has suggested to investors that these market exits had nothing to do with climate change from QBE's past reports, that seems to be a mischaracterization and I think QBE might need to reach out to those investors and correct the record. But back to my question, does QBE anticipate it will need to continue to exit markets to manage catastrophe volatility as catastrophe volatility increases due to climate change.

A couple of questions. I would like to just correct you, firstly, on the comments around withdrawing purely because of that. The comments that we refer -- that you referred to in those annual reports related to an over exposure that we had. Insurance is all about spreading risk. And when we have an overexposure in terms of 1 area or 1 risk, -- it's a natural reaction for an insurer to seek to diversify that into other areas. That's what drove a lot of those comments that you referred to rather than any other particular reason with that. In terms of ongoing portfolio construction, we continue to monitor the performance of individual portfolios, and we will keep doing that. The exposure to climate-related risk will be one of those factors that are considered as well our capacity to compete, the scale that we have in those marketplaces, the cost of our capital relative to the returns that we're able to generate and a number of other factors. Can we please move to your second question.

Okay. Just 1 follow-up question though. In the 2020 annual report -- sorry, in the Annual Report that QBE published in 2020, QBE said that we recognize that over the longer term, climate change will impact our customers and the communities that we serve. This may cause insurance premiums to become unaffordable, especially for customers and areas more operating to weather-related risks, potentially resulting in loss of revenue. And Professor Lesley Hughes also referred to the APRA study, which refers to increasing and interability in Australia. I understand that QBE has diversified exposure. But are you telling investors today that the man to its draw insurance because of climate risk or insurance becoming unaffordable because of climate risk is not a material risk for QBE.

What I have said is that we continue to consider a number of factors. I think going back to ancient history in terms of annual reports, what we are calling out is the key risk that we see and that we believe investors should consider in terms of the business of QBE we called those out. And what we continue to do is to monitor all of those risks and make determinations based on our assessment of the performance of the portfolios as we see them going forward. Climate risk is one, but there are a number of other factors that go into all of that.

I'm going to move on to question 2, which relates to QBE's Oil and Gas underwriting policy. QBE continues to underwrite conventional oil and gas new oil and gas expansion oil and gas without any climate restriction of substance. APRA stress test identifies social license risk as a material risk for QBE -- sorry for insurers. Has QBE assessed and does it have a plan to manage the specific social license risk created by it being the only Australian insurer that is both withdrawing insurance from those most exposed to climate risk, while at the same time, underwriting new 1 expansion in oil and gas without any restriction of substance.

Sorry, is that your question?

Yes. Have you done that assessment of the specific social license risk that, that creates.

Well, we believe that QBE is a responsible insurer, and part of our responsibility is to ensure that the transition is undertaken in an orderly manner. Given the current situation geopolitically and otherwise, we think that energy is a very key factor that needs to be considered. What we have said is that we are rolling out our transition maturity assessment for our key oil and gas customers. We will continue to do that. We will look at their emissions performance. We'll look at their decarbonization goals, and we'll understand where those customers are in the transition. We'll continue to do that. However, in terms of being responsible and supporting that transition, we believe that there may be some instances, I don't know how many. So please don't ask me. There may be some instances where we would undertake or would take further exposure in the short term to 1 of our energy customers to assist them in that transition. I believe that QBE is acting responsibly in that role. And as I've said to you at a number of annual meetings previously, I think going cold turkey in terms of oil and gas is not something that is sensible and certainly, in the current environment is something that QBE couldn't contemplate.

And I've never suggested going cold turkey. And I think the issue isn't that QBE underwrites oil and gas. It's that the policy has no mechanism to distinguish between projects needed for energy security and projects or other corporate conduct that undermine the transition. And that's the contrast between QBE and peers like Allianz, AXA, Zurich, and including local financial institutions like CBA and NAB. So back to my question, has QBE assessed and doesn't have a plan to manage the specific social license risk created by it being the only Australian insurer that is withdrawing insurance from those most exposed to climate risk, while at the same time, exacerbating that risk.

I think I've answered your question. I can't comment on our competitors. What I can say is QBE acts responsibly, will continue to act sand we believe that our social license will remain intact.

Just 1 final comment. I would distinguish a response from an answer. I think your answer suggests that no QBE has not conducted such an assessment. And I'd be concerned personally, if I were remaining on the board as to the personal implications of there being a reasonably foreseeable risk to the business, like we know [indiscernible] it out a few years ago, suggested breaking up insurance companies. That wasn't a sensible policy, but just purely in response to the premium increases that we were seeing across the insurance industry. So there is a material social license for companies like QBE as an insurance company. And then it's particularly acute when you have an oil and gas underwriting policy that has no mechanism as substance to distinguish between projects needed for the for energy security and projects that undermine the energy transition. And there is a distinction. And you not managing that foreseeable risks carries risk and suggests serious governance concerns.

I reject your assertion around the position of QBE. I have said that we manage all of our risks. I believe we continue to manage reputational risk as well as any other. So I reject the implications, particularly for my continuing fellow board members. Microphone 1.

Thank you, Mr. Chairman. My name is Dr. Tomita Fleur [indiscernible] is a bit high or just going to stand here. So my name is Dr. DimichLafhler. I'm Chief Climate Scientist at the Australasian Center for Corporate Responsibility. I've got questions regarding 2 topics in relation to the climate disclosures Climate change and 2015 '16 super El Nino resulted in the highest s service temperatures on record at the time. The energy of the lingering ocean heat in 2017 worsened the impact of the 3 Atlantic hurricanes, Harvey, Irma and Melissa and the tropical cyclone Debbie that year contributing significantly to our company's losses. In 2017, losses were equivalent to 10.3% of net earned premium, with absolute losses tripling compared to the year before. El Nino was expected to be declared in the second half of 2026, and models suggest it could develop in a very significant El Nino later in the year. This would amplify the global awarding trend of around 0.3 degrees per decade, compounding the probability of extreme severe extreme weather events and impacts across multiple regions over the next 2 years. Against this backdrop, our company has stated that the increase in catastrophe average annual loss before reinsurance due to climate change across key per regions is not expected to be significant by 2030.

I've got 2 questions here. First, given climate-related damages are increasing nonlinearly, how can our company assess whether its current allowance is for catastrophic losses is sufficient? And secondly, climate science tells us that the shape of the probability distribution of losses should change over time. Even if the average remains relatively unchanged, does the AAL calculation account for this?

Well, we believe the AAL calculation is the best methodology. It's based on the actuarial science that we apply to all of this. I think that referring back to my answer to Professor Hughes question, your implication is that QBE is totally climate exposed, totally property exposed, which we are not. The AAL is the best representation of what we believe the most likely outcome is going to be. And also in terms of our catastrophe allowance, we do disclose that each year. It does go into our pricing. And as Andrew said to you, thus far this year, our catastrophe costs, all in, including the costs from the Middle East which are not climate related, they are otherwise loss related are $300 million, which is well within the allowance that we currently have.

Can you say anything about the distribution?

In terms of?

Of the AAL.

Well, the distribution is based on where the exposure is had, and we demonstrate that it's set out in our annual report as well.

I mean, the probability distribution.

The probability of distribution. Clearly, it is the best estimate that we have, and that's what insurance is based on the best estimate of what the most likely outcome is going to be.

All right. The second question is in regards to the projections to 2090. Professor Lisa Hughes has stipulated what the consequences could be in such a scenario. I would only want to add that events towards that year can occur in isolation, but can also cascade or compound and can occur simultaneously across regions. They will greatly challenged people, businesses and entire ecosystems meaning climate risk shift from manageable to systemic. This level of future warming brings systemic climate risk that cannot be realistically captured in models of loss to an insurance portfolio. So the question is, can the Board explain the key assumptions and modeling tools it uses to conclude that average annual loss will be 20% by 2019 under an ICP 4.5 scenario and what is the full losses distribution of the projected outcome.

Well the short answer is I think we set out our assumptions in terms of our climate report, and I don't think it serves the meeting to go into any great detail with that at this stage.

Okay. So my last question is you don't consider it appropriate to the investors to inform what the probability distribution is apart from the average. What is the low and high case in such a circumstance?

We have set out what we believe the most likely case is going to be. That is around a series of assumptions, but we believe that the majority of our shareholders want to understand what we believe the most likely outcome is going to be. We've set that out, we've set our assumptions out. And as a broader comment, I would say that I'm very proud of that report, which we think, for a first effort because QBE was 1 of the first companies to do it was a pretty good effort in terms of that. We will continue to look at improving that report over time, but I won't give any commitments in terms of what that will include because we will have to see how legislation changes, how certain other conditions in the market change before we do that. But I am proud of that report. Microphone 2.

Thank you, [indiscernible] at the Shareholders Association. I wanted to ask you about the LTI performance period. Currently, it's running at 3 years -- and it seems very short compared to a number of ASX companies. Have you thought of increasing the LTI performance period and if not, why not?

Thank you, and thanks for the engagement for the ASA, which we always appreciate. As I think we explained to your colleague, we believe 3 years is the appropriate time for that LTI to vest, we believe that given insurance is an annually renewable business. we are on to see what the performance is. However, as you're also aware, under CPS 511 from APRA, there is then a further significant deferral of those awards, under the LTI such that I think Andrew has to wait 6 or 7 years before he actually gets the full benefit of those rewards. We have [indiscernible] clawback provisions that are available to us during that time. So for all of those reasons, we believe 3 years remains the appropriate period.

I'm not seeing any other questions. in the room. Perhaps we could go to those questions online. We'll come back to you, Matesh.

Thank you, Chairman. We have a question from Mr. Maine. Congratulations to Yasmin Allen on being elected by her colleagues as Chair. He's asking who ran the process and was there a competitive vote within the Board. He made mention of last year's protest vote asking where any of the major protesting shareholders and proxy advisers consulted about her elevation as Chair. And finally, could you ask employees publicly commit to retain the hybrid AGM at QBE under her chairmanship something didn't happen at Santos during her final 3 years on that Board?

Well, Mr. Mayne, thank you for your questions, and thank you for congratulations to Yasmin. I agree with that. The process to elect the chair is 1 that is conducted by the Board. I did not participate in that process because I believe that it's not appropriate for the outgoing chair to participate in selecting his or her successor. I can tell you that external and internal candidates were considered and Yasmin was the unanimous choice of her colleagues to lead the Board into the future.

In terms of publicly committing to a hybrid AGM, interestingly, Yasmin and I had this discussion just this morning. And I think I can speak for her, but she can speak for itself as well that we believe that a hybrid AGM is the appropriate mechanism in the current circumstances. But Yasmin, you may want to comment on that.

Yes, I think it gives a good amount of access, and we should be using as much updated technology as we can. So I think for now, we'll continue with it. .

Thank you, Chairman. We have a further question from Mr. Stephen Mayne, referencing that it would be good to see the proxies lodged with the ASX and hoping that Yasmin may look format in the following years. The proxy vote live revealed the biggest protest against the Board's recommendation was a 13% vote against the CEO's LTI grant. What was the issue? And could CEO, Andrew Horton also summarize this past LTI grants as to whether they have vested or lapsed. Have you ever sold a new ordinary shares in the company or bought any on market without relying on an incentive scheme to build his equity position. Please don't say look at the annual report through announcement, it's complicated and the CEO could actually summarize in 60 seconds.

Well, Mr. Maine, much as you may want to say don't look it up in the annual report, it is clearly set out on Page 67 of our annual report. So I think it's there for you to see rather than putting Andrew on the spot or indeed going through multiple years of outcomes. So I believe the disclosures we've got are appropriate with all of that. In terms of the vote on Andrew's LTI, we believe that the -- the measures that we have put in place are both testing and stretching in terms of achievement. And frankly, if Andrew and the management team can continue to deliver an ROE in excess of 15% per annum on a 3-year plus basis that I think that they deserve every award that they can get, particularly given the risks and volatility that are inherent in an insurance business.

Thank you, Chair. We have 1 further question from Mr. Stephen Mayne in relation to opinion-based nonbinding resolutions. There was a 10% vote in favor of 1 of the climate resolutions today, suggesting that some of your shareholders and perhaps 1 of the proxy advisers recommend a vote in favor. Did any of the proxy advisers recommend against the Board nation on any resolution today, including the climate resolutions. Also when disclosing the outcome of the poll to the ASX will you also include the head count data so we can see how many of the 67,782 shareholders participated in today's vote.

Again, thank you, Mr. Mayne. In terms of the disclosures that we make I believe that they are appropriate. They are in accordance with the law and with the ASX listing requirements. And I can't speak for the future, I suppose. But at the moment, I believe those disclosures are appropriate. In terms of the vote for Resolution 5b, I can't comment on that. I don't know, certainly in terms of some of the interactions that I've had with shareholders over the past few weeks and months. none of them have shown any support for that resolution.

Thank you, Chair. One final question Stephen Mayne. Thank you to Mike Wilkins, and Kathy listened for their long years of service to this Board in the excellent shape they have left QBE in. It is always helpful for investors to have access to some exit perspectives retiring independent directors and chairs. In their final contributions to QBE directors, could Mike and Kathy, please both comment on what they regard as the best 2 decisions made during their tenure. And if they have the time again, what would they have done differently.

Well, thank you, Mr. Mayne. You may be surprised with this. But Kathy, would you care to comment on that?

Yes. Thank you, Mike. I hope you First of all, it's been a pleasure to serve on this board through a period of significant change and improvement, I think, of QBE. To best decisions. I think the portfolio optimization that we've undertaken to reduce the volatility in our business and to generate consistent returns. The second, quite frankly, the selection of Andrew Horton as our Chief Executive Officer, I think he's led a tremendous turnaround both within our management teams and within our divisional businesses. As I look back over my decade on the Board, I must say it's with pride, not regret the journey QBE has been on and the strong position we're in now. I think with hindsight, if I -- as I look back, I would press maybe for earlier focus on strong culture metrics because that helps to guide the governance and the culture of the company as it delivers its strategy.

Thanks, Kathy. I think my reflections are very similar to Kathy. I'm proudest of the cultural development that QBE has shown and the culture that we currently have in the organization. I think culture is an important contributor to performance of the organization, and we're seeing that performance now starting to come through. Very happy with the consistency of the organization. And like Kathy, I believe that our recruitment of Andrew was 1 of the key highlights of my tenure as Chair of the Board. As I said earlier, I'm very proud of QBE, I'm proud of the position that it finds itself in today, and I'm proud of the outlook that it has for the future. If there was a regret it would only be not moving quicker. And I think that, that's probably a regret that as all of us look back on anything that we've done, it's the 1 reflection that we have.

I think we had another question in the room in Sydney.

Thank you, Mr. Chair. Policy wasn't sure whether you're going to deal with questions at each resolution. And this sort of concerns the Board appointments. So yes, I see that you've got good gender diversity and resale diversity on the Board. I did note that the skills matrix it seem to be a bit of a weakness in the AI STEM skills apart from Yasmin and Tan, noting that Kathy's technology skills, as she's stepping down will be lost part of -- I suppose the first part of the question is how is the Board compensating Tetris AI and STEM given the comment that II is integral to the business and going forward. And the second part of that question is that from what I understand of companies can take sort of an incremental process where you replace certain functions of AI, such as when e-mails place facts and the like. But productivity gains from that method are somewhat limited, essentially AI seems demand that the technology, be it the have which means changing processes, hierarchies, which is more disruptive for a company in the short term, and there are various risks involved in it, but the productivity gains in the longer term are greater. So -- how are you implementing AI in QBE.

Natasha. I think you and I are probably the only 2 that you remember e-mail replacing facts, but -- in terms of where we're at with AI, you asked a couple of questions there. I think AI is just an area that all of us are learning about and QBE is no different. The Board is compensating for its understanding by having experts come to speak to us regularly by looking at the way in which we are deploying AI into the business. And as Andrew mentioned during his presentation, we are looking at -- we are looking at digital, cloud and AI, all to enable our people to make better decisions. And I think that those better decisions are also going to be faster decisions that we make. I think by necessity, we can't go just random in terms of what we want to do with AI. We do have a policy that we've set around the responsible use of AI, and we stay within those guidelines. But it is an expanding part of our business. And Andrew is the champion of that across the business, encouraging people to use it to make those better decisions. And I think by making those better decisions and making them faster, we will then ultimately get the benefit of AI. But it's -- each day is kind of a new adventure in that. And I read as you do about something new in the papers every day.

Okay. Look, -- we'll leave it at that for now. It's something which I'll get back to next year on the board on how you're progressing which you won't have to worry about.

Yes, so, Yasmin, over to you. Thank you. Question from microphone 3.

I'm Adam Belem the shareholder and I'm also CEO of Shared Trading Platform 6, which proposed some of the shareholder resolutions today. My question relates to Item 5 C and the policies and processes QBE has in place to manage conflicts of interest. And I know that Director, Yasmin Allen has now resigned as a Director of Santos However, I'd like more information about the conflict management process of the Board but allowed a director of an oil and gas company to participate in discussions around the company's continued underwriting of oil and gas companies. At last year's AGM, we asked if Director, Alan Ricus, to sell from Board level discussions about the environmental and social risk framework. The answer was no. I in their proxy advice, highlighted and I quote. In fact, that Director, Alan did not recuse yourself from Board level discussions about QBE's oil and gas policy will an office at oil and gas Tim Santos is a valid governance -- so my questions are what changes have been made since the last AGM to ensure that directors are not involved in discussions and decision-making concerning issues that may affect other companies that they are also directors of and has the board reviewed its process and decision-making around the environmental and social risk framework to ensure it wasn't influenced by any real or perceived conflicts of interest.

Well, a few comments to go to that. Firstly, the Board is very well aware of its responsibilities around managing conflict of interest that's set out in the Corporations Act. We have made definitive disclosures in terms of our corporate governance statement, and you can read that online in terms of where we're at. We don't believe that there was any conflict that was in there. I think the basis of your question seems to imply that Boards have particular discussions around individual customers, which we don't in same way that boards do not underwrite individual risks. The implication that you're making, frankly, I find is insulting and defensive to the Board.

So the comment isn't about specific companies. It's about your policies in relation to the industry. And if you have directors involved in that industry, it feels like a very obvious conflict of interest.

I think I've answered your question. We're well aware about conflict of interest obligations. Disclosures are regularly made and updated, and we set those policies and procedures out in our corporate governance statement.

I'll just note, it's not just our shareholder group that raise this as a concern also the proxy advisers, ISS as well.

I think I've answered your question. Thank you. I'm not seeing any further questions in the room, and I don't believe there are any other questions online. As there are no further business, I'll shortly be closing the polls for all items of business. I ask any shareholders who haven't submitted their votes yet to do so now. I refer you again to the instructional slides on how to vote now on your screen and behind me. And I'll give some time for people to finalize their votes.

[Voting]

Looks like all votes have been collected. I now close the poll and declare the meeting closed. Thank you for voting. The results of each item will be announced on the ASX shortly. Thank you to our shareholders for attending today.

And on a personal note, I'd like to thank you for the support and the encouragement that shareholders have given to me over my tenure on the Board. It's been a privilege to have served as Chair of QBE, and I wish you and the company all the best for the future. I now declare the meeting closed. And as previously mentioned, light refreshments will now be served in the foyer for those of us who are in Sydney. Thank you, and good morning.

Hello, and thank you for standing by. Welcome to QBE Fiscal Year 2025 Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Andrew Horton, Group Chief Financial Officer. Sir, you may begin.

Good morning, everyone, and let's begin. I'm here with Chris Killourhy, our new group CFO. Hopefully, you've had a chance to take a look at our release this morning. We've had a great year with an ROE just shy of 20%. And and we're very proud of these results. Before we begin, I'll start by acknowledging the traditional owners of the many lands on which we meet today. For me, this is the Gadigal land of the Euro Nation and recognize their continuing connection to land, waters and culture.

I pay my respects to the elders past and present, and I extend this respect to any First Nations people joining us today. Moving to Slide 4 with a snapshot of our results. This is a great summary of our performance. We exceeded all our key guidance and targets this year. Headline GWP growth picked up to 7% and and tracked ahead of our guidance for mid-single-digit growth. We beat our combined ratio guidance again this year with an excellent result of 91.9%. Our catastrophe experience and an improvement in our crop business drove the majority of the upside relative to the 92.5% we reiterated in November. Profitability is attractive across the majority of portfolios, and we're confident of sustaining strong underwriting performance.

We had an exceptional investment result this year. Our high-quality investment portfolio returned 4.9%, driving another record year of income. Collectively, both post tax profit of USD 2.1 billion and earnings per share were up around 25% for the year, and our return on equity at around 20% is excellent. Capital improved to 1.7x and remains comfortably above our targets. This leaves us with valuable flexibility to support growth alongside active capital management. In November, we announced our first buyback in several years and we wasted no time in getting started through late December.

The final dividend of $0.78 takes a full year dividend to $1.09, which is a 50% payout. It's clear the business is in fantastic health with strength across the board from growth to underwriting investments to capital. Moving on to Slide 5. This is a simple summary of our progress in recent years. It's been roughly 4 years since we refreshed our strategy in late 2021. Since then, we've executed well, driving steady improvement in both financial performance and also the key metrics we track around people culture and customer.

This year, we've extended a strong and consistent track record of growth. Underlying organic volume growth continued at 7%, and we have a business that can confidently sustain this trend. We have strong messages of catastrophe costs and reserving. This year, catastrophe costs were $400 million below budget, marking the third consecutive year below allowance. These have not been light cat years by any means, with '23 and '24 amongst the cost years on record for the industry. And the $130 billion of insured losses in 2025 was only modestly below last year. I'd also remind you that these aggregate figures masked the fact that the insurance industry is picking up a greater share of industry losses as reinsurers have moved further away from the action.

We had a favorable reserve development this year, and we've spoken about our confidence in more stable and predictable reserving outcomes. Piecing these elements together, the end outcome is a simple picture. Our combined operating ratio steadily improved, volatility is down and ROE is up. This is driving strong returns for shareholders our TSR is roughly double the local market since we launched our strategy, and we see great opportunity ahead. Before passing to Chris to unpack the results in more detail, for the next few moments, I want to take a step back and share how we're thinking about performance over the medium term. So turning to Slide 6.

This is a summary of how we think about the industry outlook and the 5 medium-term aspirations as we have for Q2. The audience -- this audience will appreciate the increasing complexity in the world, which is resulting in a risk landscape for our customers, which is highly complex. Risk awareness is elevated and the role commercial P&C has to play has never been more important. With this complexity, the industry is needed to become more mature and sophisticated, but ultimately, those in the industry, you truly understand risk, plus of scale, diversified operations are going to be in the driver's seat over coming years. We have great breadth and diversification in the business with capacity to deploy across all our key markets, expanding insurance and reinsurance.

I do think this point is underappreciated, but is going to become more obvious and bad new asset for QBE as we continue to execute around these aspirations. Delivering durable growth while sustaining strong margins and returns. So turning to Slide 7 on growth. The great breadth in our portfolio means there will always be classes we can grow. Looking out over the medium term, there are 3 overarching pillars to how we think about growth. Firstly, we remain in supportive market conditions. While rates are softening in parts of the portfolio, this is coming from a starting point of very strong rate adequacy.

As we look to 2026, over 90% of our portfolio is expected to be at or above rate adequacy, defined by the pricing we need to achieve target returns. This foundation of strong and broadly distributed profitability is an excellent starting point as we look to grow the business. This picture may not be present every year, though with a diversified business, we'll always have flexibility to navigate various product cycles. Touching on some of the structural opportunities over the coming decade. Many of the global investment mega trends on this graphic will give rise to new risks and, in some cases, rapid growth in insurance value pools.

We have broad expertise across most specialty and commercial lines with leading underwriters and strong relationships. It's hard for many in the market to match our capacity to deploy collaboratively across 3 divisions, multiple class of business covering both insurance and reinsurance. [indiscernible] with our major trading partners to provide innovative solutions and position into these fastest-growing economic megatrends. I'll leave you with a handful of data points. We have a leading energy and renewables presence who truly shine when brokers are looking for innovation. Investment in clean energy will be substantial resulting in insurance premiums in the tens of millions dollars.

We're finding our strong position in these segments dovetail nicely into the growing energy requirement supporting artificial intelligence. Alongside this, the construction of data centers will drive significant growth in premium across multiple classes over the next few years. And as the world continues to digitize, cybersecurity moves higher as a risk for companies of all sizes while AI liability will be of increasing focus. Cyber premiums around $15 billion today are expected to increase towards $30 billion at the end of this decade. Growing mobility demands will result in more boats, planes and trucks, while infrastructure investment support growing and urbanizing populations will be substantial.

So plenty of areas where premium growth will substantially outpace the general economy and we're well placed to capture a sensible share in the context of a well-balanced portfolio. The final pillar speaks to some topical trends in the industry. Firstly, surrounding the structural increase in market facilitization. We have a leading portfolio solutions franchise, which has been around for roughly 2 decades. We've seen and participated in the complete journey of this burgeoning market and learned a lot along the way.

Today, our portfolio solutions team manage about 20 different facilities and we lead 2 of the world's largest. Facilitization is only going to increase as it represents a more efficient option for the customer and broker and if structured correctly, strong performance for the carrier. In and around each of the investment mega trends I just touched on there are facilities already being developed. And as a market leader, we'll get the first look. As more business gets facilitized, it will come at expense of those without a strong market proposition or genuine underwriting expertise. This will ultimately consolidate capacity toward market leaders.

Finally, on AI, we continue to build, deploy and partner to enhance many aspects of our business. AI will allow us to boost underwriter productivity, unlock shopper risk insights and become a more efficient and effective business. We have a significant amount of proprietary data and market insights which have been built through market-leading franchises in operation for many decades. AI can help us to better unlock and leverage these data assets and further enhance our market position. So let's turn to Slide 8.

This slide brings many of these points together, detailing our new medium-term outlook. Our financial outlook has been primarily based around a single year ahead for both premium growth and the combined ratio. With where we stand today, having restored performance and pivoted the business as an organization, our strategic focus is much longer dated. The quality of our earnings has substantially improved with better breadth stability and visibility. Our planning is more medium term, and we organize ourselves around a much clearer view of value creation for the enterprise. So we want to start sharing some of that with you and begin translating our medium-term plans into our guidance. To get ahead of the obvious question, medium term for us here means the next 3 years. So starting with growth.

We see a continuation of mid-single-digit GWP growth over the medium term. Where we can do better and deploy capital at strong returns, we'll always hold a preference to grow the business. Over the medium term, we see our group ROE trending in the 15% plus range. This assumes an effective tax rate of around 25% and an investment return sustained in the 3% plus range, which is essentially what futures predict today. Underpinning the outlook is the view that combined ratios are fairly sustainable around current levels. We spoke in August about the breadth in our business with 50-plus cells, which aggregate up to around 14 underwriting pools. Each have different P&L characteristics, different claims drivers, different capital requirements and different dimensions across combined ratio and investment income.

How effective we are as capital allocators will be a key driver of our performance as we look to deploy our capital to optimize risk-adjusted returns and drive value. With 2025 marking QBE's fourth consecutive double-digit ROE -- on the right-hand side, you can see the extent to which we've driven compelling value for our shareholders. As we continue to execute over the medium term, we should be able to extend this picture where a 15% plus ROE profile will continue to deliver great value for shareholders. Before moving on, I want to emphasize that this is not signaling any relaxation of our focus on combined ratio. It will always be a key metric for QBE. Now ultimately, we manage the business to a view of return on equity, and the combined ratio is really an output of our portfolio mix.

So moving to Slide 9. Having discussed growth and returns, this slide gives some color on how capital fits into the picture. We shared our capital allocation from last year, it's relatively straightforward. We have an aspiration to grow the business provided we can achieve adequate returns. All our pricing models and view of rate adequacy is calibrated to an ROE hurdle, which works out to roughly 1.5x our weighted average cost of capital. This is a hurdle, not a ceiling, which many parts of the portfolio are comfortably clearing. Just delivered an ROE of almost 20% and see returns holding over the hurdle over the medium term.

We have a 40% to 60% dividend payout ratio, which will be highly dependable through market and economic cycles. And finally, we have additional levers to distribute surplus capital beyond the dividend as needed as we recently highlighted with the buyback announcement. We had a small window in December to start buying before the close period and completed around 90 million of the total. I want to build a track record of following through on these announcements and moving through them with some pace. So looking ahead, the simple outlook of mid-single-digit growth alongside returns of 15% plus ROE suggests a very healthy picture for capital.

We have ample flexibility to support growth and likely see ongoing surplus capital generation on top. To ensure we optimize returns, we'll look to return any surplus -- this will be an annual assessment as we exit the year where we have full visibility of our current profits and growth plans for the year ahead. The final message on this slide relates to alternative capital. We've historically had limited alternative capital in our business. As these markets and investors have evolved, we do see opportunities from both a cost of capital and capital efficiency perspective.

This can be an important lever for us as we strive for sustainable mid-teen returns, particularly where we can build long-term strategic partnerships. I'm going to stop here and pass to Chris to take you through the financials. And I should take a moment to welcome him this morning. As you know, we placed a great deal of emphasis on consistency and stability of management in recent years. We've been focused on building greater talent depth and genuine succession pathways. I'm proud that we've been able to announce Chris into his new role in such a quick time. He's a highly experienced and talented executive and having operated through a number of key roles for QBE in the past decade, will no doubt settle them well and become a great asset for us. So over to you, Chris.

Thank you, Andrew, and good morning, everyone. It really is a privilege for me to be speaking for the first time today as Group CFO. As Andrew mentioned, I've been lucky enough to be with QBE for around 12 years now. Across actuarial leadership, divisional CFO roles and most recently leading QBE. Across those roles, two things have consistently stood out, the depth of our talent and the strength of our culture. And it's that foundation that I believe that underpins performance we're sharing with you today.

Turning first to Slide 11. 2025 was an excellent year. We exceeded plans and delivered QBE's strongest return on equity in many years. Gross written premium grew 7% to $24 billion or around 8% if we exclude crop and exits. The combined ratio improved to 91.9%, that's more than a better -- it's more than a point better than last year and comfortably ahead of our outlook of 92.5%. This result is underpinned by both prudent reserving and a continued focus on portfolio optimization. Investment income was around $1.6 billion, delivering a return of 4.9%.

The net impact from ALM activities was again broadly neutral, and our tax rate for the year was 24%, modestly better than our actual tax rate around 25%. And that's driven by the mix of our earnings tilting towards our North American tax group. Profit for the year was a record $2.1 billion. Earnings per share grew around 25% and ROE has increased to 19.8%. Our capital position also remains very strong with a PCA multiple of 1.87. Our final dividend of 0.78 takes the full year dividend to $0.19, up 25%.

The payout ratio remains at 50%, a level we see as sustainable. Above this level, it's likely that we'll continue to use buybacks to distribute surplus capital. We've also increased the franking raise of the final dividend to 30%, which we expect to maintain going forward. Turning now to Slide 12. Headline GWP growth of 7% exceeds our mid-single-digit outlook with underlying growth close to 8% if we exclude exits. This is a full 4 points higher than headline growth in 2024 and highlights the impressive momentum we continue to see across the business. Growth continues to be skewed to the Northern Hemisphere, led by Reinsurance, Accident & Health portfolio solutions and targeted adjacencies in North America.

Australia Pacific was broadly stable, but the story here is momentum, which improved through the second half with a return to x rate growth that we expect to continue into 2026. We entered 2025 with a clear set of initiatives to restore growth in AsPac, including new partnerships, distribution improvements and a more dynamic approach to pricing. It's been great to see the outcome of execution as these actions gain traction. A brief comment on our crop business and its impact on net insurance revenue. Crop GWP increased 11% to $4.3 billion.

However, given our focus on portfolio optimization, net insurance revenue actually declined by 6% over the period. This is because of increased sessions to the federal reinsurance pool, materially reducing exposure to those states we regard as underperforming, including California and Texas. This does, however, weigh on group net insurance revenue growth in 2025. But in 2026, I'm pleased to say that group GWP growth and net insurance revenue growth should be much more closely aligned. Before moving on, it's worth remembering that our ex rate growth here includes both volume and exposure adjustments. And these exposure adjustments play an important role in managing inflation.

Our underwriters generally adjust and sums insured for property lines on wage roles or turnover for workers' compensation and liability lines. And in the case of energy and marine lines, premiums often adjust of commodity prices. Turning to Slide 13 for a little more on the group's underwriting performance. Underwriting performance was excellent with a combined ratio of 91.9%. Catastrophe costs around $750 million, which is well below allowance, but this is a pleasing outcome in a year where industry losses have been pegged $130 billion including a challenging year here in Australia the devastating California wildfires. We shared catastrophe cost at our November update and losses increased only modestly from this level.

I do think that highlights the quality of the portfolio, given the challenges observed here through the Australian summer. I'd also remind you that if we cast our mind back to the first half, we were comfortable our catastrophe budget then in what was actually the most expensive first half on record for the insurance industry. Turning now to reserving. I do believe we're now starting to see the impact of our more prudent reserving strategy that Andrew and have outlined over recent years. During 2025, we recognized a modest central estimate release of $40 million and that's our first full year lease in several years, driven by short tail lines plus while retaining prudence against more uncertain longer tail lines. Over the strength and resilience has steadily proved over recent years.

I'm confident we're exiting 2025 with group reserves in the strongest position we've held for many years, needed. Importantly, this chance also highlight the extent to which we're managing to multiple pricing cycles. This diversification provides a meaningful lever through which QBE can manage the overall underwriting cycle. This picture results in an overall rate increase of around 1% for the year. If we exclude property business and Lloyd's -- the rate increase is actually closer to 4%, which have been fairly steady throughout the year. Premium rate adequacy remains comfortably in excess of targets across the group. And as Andrew touched on, is broadly distributed across the business as we look to 2026. Expense ratio was 12.4%, while absorbing an elevated investment envelope of around $300 million.

These investments are supporting modernization, including the migration of Australia Pacific portfolios onto our new cloud-based Guidewire platform. Importantly, expense growth has moderated meaningfully now at 5% from close to 10% over the past few periods as we're starting to drive greater efficiencies. Highlighted another way, in 2025, headline GWP growth was 7%, which contrasts favorably with a head count reduction of 1% over the same period. Efficiency, along with capital allocation is going to be a major focus for me and we've got a meaningful opportunity as we drive greater benefits from recent investments, embedded the deployment of AI and work ruthlessly to eradicate process in efficiency.

Looking ahead, we expect an expense rate of around 12% in 2026 and over the medium term. Turning now to Slide 14 with some more information on the performance of each of our divisions. Pleasingly, all 3 divisions have delivered margin expansion. Under Julie's leadership, North America improved by over 1 point despite pressure in Accident & Health and aviation. Starting with our crop business, this business delivered a result of 88%. That's our strongest performance in 7 years. The positive performance reflects in part the early benefits of the strategic overhaul we've highlighted throughout the year. We reset our leadership team, recalibrated our utilization of the federal fund and repositioned our private products portfolio, further benefit from these actions is anticipated in 2026.

Alongside the benefits of internal actions, the portfolio was supported by better than average yields in a number of our key Midwest states, including the Dakotas, Iowa, Illinois and Nebraska. Our commercial lines business in North America has also performed well. However, as flagged earlier, our specialty business has been impacted by claims activity in A&H and Aviation. Resulting in a combined operating ratio of over 100% for our U.S. Specialty business. I'd like to say some more on Accident & Health. This is an excellent business in a growing sector of the economy with strong market position, good track record and a highly attractive through-cycle return on capital. We write close to $1 billion in premium.

And this year, we did see a lift in claim severity on account of rising treatment costs medical advancements and the demand for new drugs. The team has responded quickly through rate, policy terms and attachment points. Around 70% of the book renews at 1 January, and we achieved a rate increase north of 20%. In addition to tightening terms. We'll continue to monitor loss trade and we'll take whatever action necessary to return this book to profitability. Moving now to international. It's been another year of impressive performance for Jason's business with growth across all segments and a combined ratio of 88.5%. We did benefit from CAT running below allowance, which offset some reserve strengthening in certain liability marine portfolios as called out at the half.

Given 2 of our more cycle exposed segments, namely Lloyds and Reinsurance, reside in International, it's sensible to say a little more on rate here. Rate for International was fairly flat for the year. where our U.K., Europe and reinsurance businesses are rate to the low to mid-single digits. This was partly offset by some softening in our Lloyd's portfolio. Putting this in some context, however, since 2018, our Lloyd's business has benefited from cumulative rate change to 2025 of around 60%. This contrasts with a rate reduction of around 3% of the 1/1 renewals last month.

Similarly, for QBE, rates were down 1% at 1/1, where we renew over half the book, but that contrast with cumulative rate increases of around 65% since 2017. We do see it as a positive that competition is largely restricted to rate, while discipline remains around terms and conditions. For both QBE and Lloyd's, terms and conditions, attachment points, how we selectively deploy your capital year-on-year and how we leverage facultative reinsurance are frequently more important in rate when it comes to delivering performance.

Finally, on Australia Pacific. Su's business had an excellent year with a combined ratio improving significantly supported by favorable reserve development across 15 of our 20 sales, along with easing inflation. The impressive performance is despite catastrophe costs running modestly over budget in what we know was an active catastrophe year. Overall, rate increases tracked to the low single digits, fairly stable and what we reported at the half year. And looking ahead, we'll benefit from substantial CTP rate increases put through in recent months, including around 15% in New South Wales.

Turning now to our investment results on Slide 15. Our investment portfolio delivered another record result with income of around $1.63 billion, representing a return of around 4.9%. Risk assets returned almost 10%, while fixed income yields exited the year at approximately 3.7%. And for reference, futures markets currently imply the fixed income yield will exit 2026 at around 3.8%. Investment fund increased by 17% this year, with roughly 1/3 of that attributable to the weakening U.S. dollar. Our assets and liabilities are, however, well insulated from FX.

And while funds under management have increased so to of our claims reserves. Similarly, the increased prescribed capital amount associated with higher farm and reserves is absorbed by an increase in available capital, resulting in a negligible impact on the PCA multiple. There remains a modest FX gain of $24 million in the group P&L, and that's reported within the expense of another line shown here in this table. Investment mix shifted slightly with risk assets of 15% of portfolio. The OCI fixed income book now stands at around $3.5 billion or 12% of our overall core fixed income portfolio.

Moving now to Slide 16 and an update on reinsurance. We created another strong and importantly, sustainable reinsurance outcome. Our diversification by region and class of business means we have a highly sought-after proposition in the market. Given the support of our strong reinsurer relationships, we were again able to reduce the attachment point of our CAP program now to $250 million. That's a reduction of almost 40% in just 2 years. And this is at a time where in the market more generally, attachment points in terms and conditions are rarely moving. Ultimately, we see this as strong external validation of our approach to portfolio management and the initiatives we've executed to reduce problematic exposures.

The lower CAP retentions have allowed us to modestly reduce the CAP budget to $1.13 billion, whilst maintaining sufficiency around the 80th percentile. Whilst the allowance has been trending lower, group property premiums have been fairly stable. And the chart here summarizes catastrophe experience for our North American division and helps illustrate the improvements in our catastrophe portfolio. You may recall that historically, this division had driven much more cat volatility. It's a simple picture, highlighting the impact of portfolio remediation led by Peter and Julie including the exit of multiple programs the middle market business and our consumer portfolios.

Despite these exits, our share of regional property premium is down only modestly in contrast to a much more significant fall in our share of property losses. Finally, on reinsurance, I did want to expand on Andrew's earlier comments about alternative capital. Following the launch of QBE's first CAP bond in 2025, the 2026 bond has broadened coverage to the whole group attaching now at $800 million. The bond provides greater certainty around the availability of capacity whilst also reducing our overall cost of capital. We also launched the casualty side car on the QBE Cadet portfolio. As you know, you can think of the mechanics of the sidecar is similar to that of a quota share.

And we've effectively quota shared around 1/3 of the catal reinsurance portfolio for the 2025 underwriting year. In effect, this allows QBE to swap underwriting risk for fee income, enabling us to recycle capital, manage reserve risk and ultimately support more capital-efficient growth. These are early transactions as we build our profile in these markets, but I do see this space as important as an important lever for QBE as we calibrate the business to deliver sustainable mid-teen returns.

Turning now to my final slide, Slide 17. I'm fortunate to be inheriting a balance sheet in excellent health. We received credit rating upgrades from both S&P and Fitch moving to AA- for the first time. The year-end PCA multiple has increased to 1.87. And following payment to the final dividend and adjusting for the buyback, the pro forma PCA reduces to $1.73 alongside our 50% payout ratio, the buyback brings our total shareholder distributions to around 65% of this year's profits. And turning finally to funding. We retired our Tier 1 notes effectively replacing this funding with Tier 2 issuance. This reduces our cost of capital and leaves us with significant flexibility to engage these markets opportunistically if we were to need to in the future.

This does mean that our debt to capital increased by around 4 points to 24%, but we expect gearing will guide back toward the middle of our target range over the medium term. It's been a pleasure to have the opportunity to present what I leave or a very positive set of results today. But before passing back to Andrew, I wanted to briefly touch on a small transaction we announced earlier in the day. We've agreed terms to sell and exit our global trade credit and surety business, chiefly composed of our Australian and U.K. trade credit operations. While this business has performed well over an extended period, underpinned by an excellent team -- we recognize its leverage to macroeconomic settings.

The exit will allow us to recycle capital into our core focus areas where we see a greater opportunity for long-term growth. Total premiums under consideration around $200 million, and we're planning to close later in the year. The modest upfront proceeds and capital released will add to today's messages around capital strength. I'll pause here and hand back to Andrew.

Thanks, Chris. We gave our 2026 outlook back in November, and there's no change today. We see growth continuing in the mid-single digits and a combined ratio of around 92.5%. We expect the pace of growth will sustain over the medium term and see a solid 15% plus outlook for ROE. We've included a quick bridge here of our 2025 underwriting result to this year's guidance of 92.5%. I appreciate many will just our reported result of 91.9% for the favorable catastrophe experience and this will leave you in the early 94% range.

Consistent with what we flagged in November, there were 3 categories driving the bridge to our outlook. Firstly, reinsurance spend and our CAP budget. We achieved quite significant savings on the new program and our CAP budget will be a touch lower year-over-year. Secondly, on expenses, we had an expenditure ratio of around 12.4% this year and should be able to land at 12% or better in 2026. And finally, on CAP claims. We see support from pricing initiatives. Chris spoke to the substantive 20-plus increase at 1/1 in A&H. While small, our U.S. aviation portfolio recently saw rate increases of over 40% for the large airline segment. And closer to home, we've now put through mid-teen increases in New South Wales CTP. Where there's claims activity the industry is showing discipline and pushing for rate.

Our performance management agenda has plenty of remaining upside, particularly as we work through remaining underperforming cells. And finally, we've spoken about the elevated level of large claim costs where we expect some normalization. Through the recent reinsurance renewal, we're also able to lower the retention for our risk excess of loss cover. The coverage were generally attached for non-cat large claims of $50 million previously and in many instances, that is now just $25 million. This will help manage large claim volatility.

So I hope that gives you a bit more clarity on how we're seeing things into 2026. We'll hold our usual first quarter update alongside our AGM on May 8. Before wrapping up, I do want to thank our 13,000 people for their contribution to these outstanding results, which we can all be proud of. With that, I want to thank you for joining us. And before passing to the operator, I want to remind you, we'll be taking just 2 questions per analyst. Thank you once again.

[Operator Instructions] Our first question comes from the line of Andrew Buncombe with Macquarie.

Congratulations on a great result. Just the first 1 for me. In previous years, there's been some surprise around how you pay out the first half dividend just to set us on the right track for next year. Can you just remind everybody how you think about the payout in the first half results for dividends?

Yes, exactly. I think we're paying it, Andrew, on a 1/3, 2/3 basis. I was just getting confirmation before I made that comment. So we're just seeing 1/3, 2/3 rather than 50% of the first half profit. And that sort of takes out the volatility. So we look at 1/3 of where we're forecasting to be at the end of the year rather than 50% of where we are at the half year. .

Excellent. And then the other 1 from me was just can you remind us whether there's any benefit to the FY '26 combined ratio from the tail of any of the roll off of the North American portfolio, the noncore portfolios.

No. So we're expecting not to talk about the roll off of the North American book anymore. It's just an all-inclusive number. So no expected benefit, no expected negativity from it. It's relatively small at this point in time, so we can absorb it within the North American numbers. .

My congratulations again.

Thanks, Andrew. .

Our next question comes from the line of Andre Stadnik with Morgan Stanley.

Can I ask my first question around the casualty side. I think you mentioned reinsuring about 1/3 of the risk. But can you remind us the dollar begs involved? Because I thought they sounded relatively meaningful.

Yes. Chris, can I hand to you as you were running that business when we did it. .

Sure. I mean the size of the sidecar is in the region of $450 million. I think a way of thinking about the cycle, the benefits we get. It's roughly -- the ratio is roughly sort of 1 to 3 in terms of premium to capital. But where we really see the capital benefit potentially coming in, is it out to years as reserves build up and we bring more years in?

For my second question, you've spoken a lot about all facilities and how you've been growing that. Can you talk a little bit more maybe about some of the efficiency benefits? Are you seeing anything on the cost there, particularly in the context where there's some really heavy criticism about the cost of operating in the Lloyd's market and how long they've taken to replatform. So the way you run a facility, is that a way to maybe help with that?

Yes. So I mean, the great beauty about them is the facilities are both Lloyd's and some that are non-Lloyd -- from our point of view, we write about $1.5 billion of premium with a group of around 20 people. So our own costs of doing it are low. For brokers, it's very efficient for them because they have a preplace amount, so they don't need to open broke that amount within the facility. So the brokers costs go down, and they pass some of that on to the clients or some cost to the clients. So the clients benefit from a lower price. The brokers have lower costs, and we have relatively low cost to actually write it. .

So generally, it works out well for the buyer of insurance, the intermediary and ourselves. And that's why I believe these are things that are going to stay -- the market did have a facilitization 25, 30 years ago. And I don't think there was that balance of dividing up the economic benefit, particularly well. And therefore, they generally collapse in the late 90s. These are much larger, much more structural and the client and buyer benefits quite a lot.

[Operator Instructions] Our next question comes from the line of Kieren Chidgey with UBS. Your line is open.

Andrew and Chris, just first question on the North American combined ratio detail. you've provided today on Slide 14, just sort of 97.7% at a divisional level, obviously, including crop. And I think you're flagging a profit in noncore this period. So it does imply the core business, excluding crop and that noncore is well into the 100% level. And I appreciate Accident and Health, you've already flagged as an issue in aviation, but just keen if you can give us an idea around how the rest of the U.S. business was tracking last year ex those 2 areas, particularly given it was a benign CAP year and it looks like you had a bit of PYD support there as well.

Yes. So I have a go starting on that. So as it breaks down into crop, commercial and specialty. -- the crop business obviously had a very good year as we've talked about. The commercial also had a good year. That's broken down between the property programs, which not surprisingly perform well. You made the comment about having a few CAP and a percentage of losses also dropped. So the activity we've taken to rebound that portfolio has worked well. A commercial casualty within that business was also good, a bit of stress in workers' comp in that division.

But overall, the commercial performed well. So the challenge, I think, as Chris just mentioned, was almost all in the specialty and had a combination of factors. It has the A&H book, does have aviation, which had 1 or 2 large losses. We did pick up some prior year negative in transaction liability, which the market has recognized in the U.S., and we've seen rate increase quite considerably in transaction liability, particularly in the U.S. on the back of it. And 1 or 2 of the financial lines programs did not perform well. So you're right. I think the overall combined ratio, excluding crop, is close to 100% year-on-year, but we see the potential improvement in the ANH. We think we're on top of the transaction liability in the market moving financial lines programs we've either dropped or changed. So we see that as a positive, although it's negative in 2025, positive for the potential performance of the business in 2026.

Andrew, the x rate growth in the U.S. in the year ahead, sort of outside obviously, the repricing in A&H and aviation, are you actually growing in those specialty areas have been quite weak in the past year?

So I think that's a great question. I don't think there'll be any ex rate growth, particularly in A&H. We'll probably be looking at the rate and ensuring we've got the right clients in the right portfolio. I think there will be some extra growth in aviation. We've been working on that team for a number of years now. It's a great team. So we do want to build on that. And then within the U.S., most other lines will be looking for x rate growth in 2026. .

My second question is just on reinsurance you flagging significant reinsurance savings in the year ahead, I guess, not out of line with sort of double-digit renewal reductions we've heard sort of globally at 1 January, but there's quite a bit that goes on in your reinsurance line with the crop quota share and the like. Can you give us a better feel for how much cat reinsurance spend is and roughly how meaningful this rate reduction on the CAT cover is into 2026. I know it's complicated as well with some of the reinsurance transactions, Chris has probably talked about earlier.

Yes, it's not going to be an easy 1 to answer on this call. We may have to come back to it. And as you say, we saw the reductions in the property cat reinsurance, which is in line with what people have been talking about. And it seems to vary between 10% and 20% depending on who you talk to and whether you've changed your retention or not. So we're definitely in the mid-teens in terms of price savings on the cat reinsurance. I think we'll have to come back to you on the mix because you're right, there's some -- in our reinsurance spend.

There's always going to be some complexity of how much we reinsure in the crop world, and we're looking at how do we balance what we retain and what we reinsure. And we do this reinsurance to the federal funds in the U.S., but we also buy some external reinsurance. And if we're comfortable about the crop performance, we may lower our external reinsurance. It's not a simple 1 to work out exactly what percentage of our gross premiums we're going to reinsure out because I don't know if you have a better answer than that, but we may need to come back to you and give you a bit more depth on that outside this call.

Yes. I think on the breakdown, we can come back with more detail. I think to Andrew's point that we we hugely value the relationships we have with our reinsurers. So we don't want to go into too much of exactly where we got to on the final negotiation. But to Andrew's point, we see the -- you would have seen ranges between 15% to 20%, and we'd like to think we came out towards the better side of that. But I think most meaningfully for us is the fact that we're able to secure the reduction in attachment point and also the Cat 1 we placed this year has just helped us a little bit with bringing down the overall cost of the program.

You can't sort of give us a rough feel for that combined cap budget, reinsurance building block on your core waterfall, how you're viewing that from a materiality point of view, next gen. You've been quite clear on the expense ratio improvement .

Will on the water for is not obviously not coming from crop. It's coming from the cap mainly because that is the 1 where we're seeing rate reductions I don't know, we actually give it in size on the quarter 4. So well, let's guys come back to you and we can come on something on that.

It's approaching a point of premium, maybe in the region of 80 basis points for both the cat, the combined benefit of the reduction in the cat allowance and also the reduction in the cost of the program. So in the aggregate, it's around about 80 basis points.

Our next question comes from the line of Julian Braganza with Goldman Sachs.

Just the first one, just looking at your initial estimate of ultimate claims for 2025. You sort of alluded to that. It's looking very strong and improved materially just over the last few years, particularly from 2024. Just want to understand, one, how much of that improvement is due to mix versus resilience? What are your expectations here for leases over the medium term? And also just what's baked in your in your ROE guidance for reserve releases as well over the medium term? That's the first question.

So I mean I mean part of it is what we've been talking about in a number of years of ensuring we are reserving well for claims, especially medium and long-term claims, and we do think that's building up. which is a positive sign for us. I don't know whether you've got anything else to add to .

Yes. I mean I think in terms of as we look forward, we're not sort of factoring in specifically for reserve releases in the -- in our guidance. But if you -- exactly to Andrew's point, if we just think of the math that we're holding on to long tail on our long tail portfolio, we're holding on to the loss ratios for a period of 3 years. So by definition, you would expect that to all things being equal to translate into some releases, but we haven't factored that explicitly into the the guidance we've given today.

Okay. And just to clarify as well, your ROE guidance assumes 80% POA on the cat budget similar to what you've structured this year and last year, just the signification. .

No, definitely Yes. .

And then just a second question. In terms of just your cat loading, 5% to 6% of NEP, -- is there an opportunity to bring that down further as you think about derisking your business? from a cap perspective, look at some of your global peers, there around the low single-digit mark. We've seen your MERs come off. We've seen noncore losses run off as well. So just wondering how you're thinking about that over the medium term .

Yes, I don't think we necessarily think about lowering it. What we've spent the reason out of time over the past few years was taking out this -- the cat losses, which were too large. In other words, it wasn't in good balance. So I think writing property business in catastrophe zones is fine as long as you're in control of the balance of it, you don't have too much of it. you're comfortable with the reinsurance program you have, and you keep back taking that against various catastrophic losses that you haven't got an outsized share -- so we haven't really thought in bringing it down to a lower level. And while it delivers a good ROE and we can cope with that volatility within the rest of the book, we have not set ourselves a target of getting the 5% to 6% down to 4 to 5 to 3 to 4 -- so we actually quite like it at the pricing it is, complements everything else we do. It makes us important to brokers and clients when we can do both. So no, we're not thinking of lowering it. .

Our next question comes from the line of Nigel Pittaway with Citi.

First of all, a question on growth. I mean, Andrew, you mentioned that, obviously, at the moment, you're still seeing supportive market conditions with competition confined to rates and where necessary, people are disciplined in pushing for rate. I mean do you see any risk to that? And then in that context, do you expect your sort of GWP growth in to be in similar areas to 25%, obviously, taking into account the fact you've said the no unit growth in A&H and a bit of pickup in growth in Australia.

I think it's a great point. So I feel comfortable in the infamous medium term of looking at the growth of 2026, definitely, with the breadth of the book and the support we're getting in pricing and the areas we're focusing on, feel pretty comfortable about that. We do believe QBE and the portfolio solutions and cyber will continue to grow into 2026, and those were 3 good growth areas for us in 2025. We're trying to think of other areas. There are new areas, and we touched on earlier on about as renewables going to grow or the energy world going to grow and data centers, a lot of talk about insurance and data centers, and I'm sure we'll get a share of that. .

So I feel pretty comfortable about the 2026 growth. We're also trying to balance it of not putting too much stress into the system, and I've talked about this before, it growing mid-single digit is not trying to overstress us. We're not forced into growth in any way, shape or form because fundamentally, margin is by far the most important thing. And we're trying to get this margin under as much control as possible and manage the volatility around that margin. So yes, I feel pretty good about where the rating environment is. Just as a touch point, rates on Jan 1, where a right of risotto the international business were virtually in line, almost exactly in line with where we thought they were going to be. So we haven't seen anything in the first 1.5 months that takes us away from this potential growth for 2026.

And then I mean in terms of the rate rise in terms and condition changes you've put through in A&H, I mean at 3Q, you sounded pretty confident competitors were going to follow suit. I mean the latest intelligence is that that's what you've done is pretty much in line with the market? Or have you been sort of stricter than the rest of the market in your reaction to the losses that occurred this year.

I think, Nigel, we're in line with the market. As you say, there's been a lot of talk about this. So that's a good thing because it means the market needs to resolve it. and it's obviously nothing unique to us, and it's much easier to resolve when the market is accepting the issue rather than we're the only ones who think we need a rate of ex and the market is happy with x or 75% of ex. So it's definitely a market-wide issue and numbers are similar. I'm sure we're going to find some people who are further ahead of it, and some people aren't as up speed in it, and the portfolio is going to vary a bit. But fundamentally, I feel good that it's a market-wide issue and rate is holding. .

[Operator Instructions] Our next question comes from the line of Sid of with JPMorgan.

Couple of questions. Just firstly, on the ex cat claims ratio bridge that you've flagged the improvement that you're flagging from '25 into '26. I was just hoping you could help us understand what's happening on the inflation versus rate side. In terms of what I saw in the fourth quarter, it seemed like rates were slightly negative, and I know you're flagging some rate increases since 1 Jan, but just wanted to get a perspective, 1 would think that six months ago, you flagged that rate was behind inflation and rates go lower. So just keen to make sure that we understand where that improvement is coming from.

Yes. I mean if we just do it at a completely macro level, I think the rate increase across the whole portfolio in '26 is going to be a low number. And what we're planning for is inflation being 2 or 3 points higher than that. So we definitely have that. And that means if we did nothing and just renewed everything and nothing actually changed, margin would potentially shrink. But that's not what we'll be doing. And some of the rate increases built into the exposure you charge anyway. So the rate is always a bit of a -- this is a headline premium adjustment as opposed to that inflation being built into the exposure on which you charge the same rate.

So it's a very simple number. We're changing the portfolio on the back of it. You try and focus not surprising on core clients that have a better, better rating and you drop the ones that are worse in an environment where you potentially are being squeezed. That could be properly or A&H and therefore, you can end up with a similar outturn despite apparently having this difference between inflation and rate. The other thing I'd say is inflation is always an estimate, and generally, you don't really know what it's going to be like until a few years down the track while rate is what it is, and it's just purely based on a premium number.

I think another point I'd add. I mean, Andrew mentioned earlier about we see circa 90% of our portfolio as being above adequate. And actually, it entity when we look at rate movements, the 10% of the portfolio that, therefore, is inadequate is where we're still seeing rate strengthening come through. So I think it again goes to evidence that the market is still behaving pretty rationally.

Question was just around the 2 components. What is your view on rate and what is your view on inflation? .

Yes. So I'd say in total, the view on the rate is it's going to net to a small single digit, but the spread is obviously large because we talked about ANH getting 20% plus, and they are going to be 1 or 2 that go negative. And then the inflation assumptions are going to average to 3%, but some of the we're going to have inflation of 10% to 20%, and some are going to have not and overall, net-net-net, those are the 2 numbers. But there's so much more to the group than those 2 numbers.

So I'm not sure what to do with them because I don't see 1 to 3, meaning margins should go down by because that just assumes we don't do anything, and we will be. And that's what Chris was trying to pick up on. When you got it well rated, you're relatively comfortable to continue with it. And when you -- it's not well rated, you're not

Our next question comes from the line of Simon Fitzgerald with Jefferies.

Just quickly, Andrew, you talked about rate adequacy. I just wanted to explore that a little bit more in the context of property. I recall that you said, I think, at the half that property could fall by 25% in terms of rate adequacy before you would lose interest in that segment. In some pockets of property, property core, for example, we are getting a little bit close to that. And I noticed in terms of the graph on Page 21, property forms 33% of GWP. I was just hoping you could maybe break that down a little bit more in terms of the ones that are exposed to that sort of as you described or more. And ones that aren't, maybe you could just sort of describe that property portfolio in a little bit more detail.

Yes. I haven't necessarily got the quantum of it all, but I'll have a go at it. So we we write catastrophically exposed property and non-cat exposed property. So what we're finding is the specifically U.S. cat exposed property is taking the largest decrease. So that's starting with the largest decrease or planned was in 2025, probably will be in 2026. And that's often what's driven the reinsurance, the cat reinsurance. It's been the reduction in the U.S. property cat reinsurance going down.

Elsewhere in the world, it is less than that. going to if your non-cat European property, of which we write a reason out, we're probably seeing no rate decrease, rates holding and it's spine. So you've got that big spread. So within the 30-odd percent, -- there is a big spread between the U.S. cat and, let's say, European non-cat. And everything else is plotted in between on that. So of course, when we're looking at rate adequacy, we're trying to break it down by portfolio, by country, by type and determining what is rate adequate and what isn't.

So I'd expect this year, potentially the most rest could be the U.S. cat. That said, of course, it was the 1 that went up the most in the 4 years prior to it. So its rate adequacy went up over shot. I mean this is what the insurance industry can do with a volatile classes. We find myself inadequate, we overshoot and then we start coming back to where we could have been the whole time if we've known exactly what everything was going to happen. So that's why we tried to show these cumulative rate change charts, just to remind people where we've actually come from in each of the lines business.

I'm not sure I've answered it as precisely as you would like. What I'm trying to flag is we've got a lot of different types of property geographically non-cat within the portfolio and trying to manage those to deliver the best risk-adjusted rear again, just maybe a question.

Just in regards to the change in the reinsurance structures and so forth. Can you just give us a little bit of guidance in terms of '26 about how we should be thinking about that reinsurance expenses line and Will it be broadly similar to '25 Or what sort of decrease should we expect given the new change?

Yes. I mean the property cat reinsurance is definitely coming down. And we -- I think we were saying earlier on, we probably need to do some analysis of that and share that with you because it's quite hard to determine the net position of that reinsurance line is going to be based on it having property and casualty and some quota share and crop in it. And so we need to do that rather than me try and estimate it now. So let's come back to you on that.

Our next question comes from the line of Freya Kong with Bank of America.

Providing the bridge to 92.5 million for this year. Just as a follow-up to Sid's question about 1% rate versus 3% inflation. Are there any business mix shifts that are being assumed in getting us to 92.5%, i.e., shift towards lower combined ratio lines next year?

Yes. I mean, obviously, when we were talking earlier on about trying to grow the QBR and QBS and cyber, potentially those at this point in time have good margin -- and therefore, we're trying to push those. So that's -- I mean, that's a really important point that we're forever rebalancing the portfolio, and therefore, it's not seeable -- so the math just doesn't work that we just take these 2 numbers and assume everything is going to come down on that basis because we're not at all sitting in a consistent position year-on-year. .

So we're doing exactly what you're suggesting of -- and it's pretty obvious, isn't it, remediate the ones which are under pressure and really grow the ones where the margins are good. And that's what I think we're getting better at and why the results are improving as we've done more and more of that. And what we've done is let go some of the businesses that historically gave us combined ratios were greater than 100% and also drove quite a lot of the volatility around it. So that's why we feel comfortable. So in that ex cap element, there is a reason out of rebalancing and is also looking at some of the portfolios that truly need to change and how do we change those and that can be re-underwriting, going back to our core shrinking, there could be a number of things in it. That's why you talk about it.

Chris. I think it's a great question because I think 1 of the things we do want to be really respected for is how we move capital between portfolios across cycles. And we just see that as good underwriting, good sort of running an insurance company. So absolutely, there will be sort of change in the portfolio in terms of rebalancing the business we see as being more adequate or performing better. What I would say, however, is there isn't sort of a fundamental mix shift in terms of as, for example, increasing our weighting to property cat because it runs at a lower combined ratio, that would then bring in some additional volatility. So we are -- the mix will change as we just look to keep rebalancing towards the business we see is more adequate. -- but we're certainly not relying on a shift to sort of more volatile business to bring the combined ratio down.

And can I just ask on accident and health what's the impact been on retention in the book, given you push through 20-plus percent price increases? And is this still an area for growth in the medium term, assuming remediation this year go as well?

So the latter part, definitely. I mean we've been involved in this group or the team since 2001, and I think we acquired the company in the late -- around 2010. So it's been with us a long time. They've got a lot of tenure. They manage all sorts of different types of events that have taken place. So definitely want to grow it. I think in the short term, we've don't really want to grow too much this year. We've been able to retain almost everything we wanted to retain.

I think that just shows stress in the market, the fact that people are shipping around and struggling to get a move and have come back to us on the back of trying to do that. It's generally a relatively low retention business. So these companies do move on a regular basis. So I think the average retention normally is around 70%, which is considerably lower than our average, which is in the 80s on average. So generally, it is a shopping around business, and I think more has taken place this year. And therefore, we've been able to retain everything we wanted to retain.

Yes. And the thing we do see, as Andrew says, this is a portfolio that, I guess, does have lower in general retention rates than we'd see elsewhere. And 1 of the things we do all see generally over time is that the the renewed business tends to perform better than the new business because it does sort of take that 1 cycle just to sort of harvest the business. And so there is an element of well it was growing. You will just get a little bit of strain in there. So that's part of what we're just managing going forward as well.

Thank you. Ladies and gentlemen, due to the interest of time, I would now like to turn the call back over to Andrew for closing remarks.

I'd just like to thank everyone for joining us today, and I'm sure we're going to be seeing a number of you over the next week or 2. Thank you very much.

Good day, and thank you for standing by. Welcome to QBE Third Quarter Market Update. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chief Executive Officer, Andrew Horton. Please go ahead.

Thanks, and good morning, everybody, and thank you for joining us today. As you know, this morning, we released our third quarter trading update. On track for another year of exceptional performance, with strong momentum in the business, and we're confident of sustaining strong returns from here.

There are 3 main parts to the release. First, we've announced an on-market buyback of AUD 450 million to take place through 2026. Secondly, the release includes the usual detail on the performance of the current year. And finally, we've also included some early thoughts for the year ahead.

I'm here with Inder Singh, our Group CFO, and we'll take the next 5 to 10 minutes to unpack each of these points in a little more detail. So let's start with the performance in the current year.

Confident of delivering our 2025 guidance for both growth and the combined operating ratio. Strong underwriting result alongside excellent investment performance leaves us well placed to deliver another return on equity in the high teens, QBE's best performance in well over a decade.

Year-to-date gross written premium growth was 6% compared to the prior corresponding period, which included ex-rate growth of 5%. If we exclude the drag from noncore lines and Crop, underlying ex-rate growth at 6% is broadly in line with the first half result and continues to be driven by a breadth of profitable growth opportunities across our diversified business.

It's worth reminding you that our ex-rate growth includes both volume and exposure adjustments, and these exposure adjustments play an important role in managing inflation. Premium rate increases in the year-to-date were around 1.5%. Change relative to the first half was prominently driven by commercial property, where market dynamics have been well documented in recent months.

And as we outlined in August, competition is more pronounced in Commercial Property and Lloyd's, which represent about 1/5 of our premium. Excluding these segments, rate increase was around 4% across the remainder of the business, broadly in line with the first half. Worth noting the profitability in Commercial Property and Lloyd's is very strong. And when we look to 2026, returns in these areas remain attractive.

We'll now turn to claims. In aggregate, group claims are tracking broadly to plan. Our goal is to deliver resilience and consistency, and I think we've managed this well.

The release details our second half catastrophe position. Experience through the 4 months to October was quite favorable on what was a relatively quiet hurricane season, and our allowance for November and December is around $200 million. We have indeed experienced some local cat activity in November, which will take some time to assess, though as it stands, we're likely to be comfortably below our full year catastrophe allowance again in 2025, which will mark the third consecutive year that we've beaten the budget.

This highlights the resilience of our property portfolio and the improved confidence in our catastrophe allowance. We expect a modest reserve release for the year, which I think will mark the first full year release in several years. We spoke in August about our confidence in the quality and stability of reserves from here.

I'm really pleased with how property lending on our current assessment will have a current year result, which is slightly ahead of plan. While the overall price and yield dynamics were more supportive this year, the strategic initiatives we implemented over the past 12 months had a tangible impact on performance. And these initiatives will deliver further benefit into the year ahead.

Group ex-cat claims are a little above plan. At the half, we spoke about large risk claims and mix, and we've also seen some industry-wide claims frequency in North America's accident and health business. We expect normalization across a number of these aspects into the year ahead, particularly in A&H, given the pricing and terms adjustments anticipated at the upcoming 1/1 renewals. I think we've generally adopted a cautious stance on the current year where warranted. And ultimately, with the portfolio and better balance, we're well placed to manage through any period-to-period variability.

If we move to 2026, moving to the year ahead. We've included an early view of our combined ratio outlook in the release today. 2026, we see another year of strong returns, underpinned by a combined operating ratio of around 92.5%. We're able to share guidance at this point given the much improved stability, breadth and visibility of profits in the business.

We'll provide GWP guidance in February with the benefit of some of the upcoming data points for our 1/1 renewal businesses plus Crop. Generally speaking, however, we think premium rate increases for the year should track at similar levels to 2025, and we've spoken a lot about our focus on delivering sustainable mid-single-digit volume growth.

So touching on some of the key drivers of the underwriting outlook. We see 3 key components driving our outlook into next year. Firstly, catastrophe and large risk costs, where some normalization on the latter should occur and our absolute cat allowance in dollars will be fairly steady year-over-year.

Secondly, a generally supportive operating environment, where we expect some reinsurance savings, operating leverage and modest operating efficiencies.

And finally, core underwriting performance. We expect further margin expansion from performance management initiatives and a reduced drag from noncore lines, notwithstanding rate softening in certain lines. We'll be able to have a better discussion with more detail around these drivers in February once we've landed the result and any other outstanding aspects of our '26 plan.

Moving now to capital management. We've previously spoken about the uplift in our medium-term planning effort. As it stands today, our medium-term outlook is characterized by mid-single-digit growth, driven more so by the volume than rate, fairly sustainable combined ratios around current levels and modestly lower interest rates.

With this outlook, returns will remain robust, we'll generate enough capital to fund growth and a 50% payout will continue to generate modest surplus capital.

Today, we've announced a AUD 450 million on-market buyback of ordinary shares, which we will fund through surplus capital. If you assume we hold a 50% payout ratio for the full year '26 -- full year '25 results, the buyback will increase our total shareholder distributions to around 65%. With the approvals required, we may be eligible to commence purchasing shares in late December, but ultimately expect the majority of activity in 2026 and intend to conclude the program in 2026.

We remain upbeat about future growth prospects and really see an environment where we can both generate targeted growth, but also return a little more capital than we have in recent years. Each year around this time, we'll review the outlook for growth, returns and the balance sheet and use active capital management as a lever to optimize performance.

So with that, I'm going to finish here. In February, we'll unpack these points, I know, in some more detail. So thanks for joining this morning, and we're now happy to take some questions. Over to the moderator.

[Operator Instructions] Our first question comes from Kieren Chidgey from UBS.

Maybe just starting on the sort of trajectory you're talking about into '26. I mean it does sound like you've encapsulated the roughly $250 million cap budget beat into achieving this 92.5% guidance for FY '25. You've also flagged some modest prior year reserve benefits this year. So I mean, back of the envelope, if we add those back, it would suggest you're sitting probably about 94% for this year ex sort of that cat budget beat and reserve release and you're talking to 92.5% next year.

So just wondering if you can sort of expand a little bit on some of the areas you called out then in terms of what is going to drive that underlying core lower next year, particularly your comments around further margin expansion, where that is coming from, if it is more mix because of strong growth in these broker facilities as an example? Or how we should think about what is driving that and what your confidence is around achieving it?

Yes, Kieren, thanks for the question. I mean I think it's a really important question because, of course, we're managing the company in total rather than in various elements. We're trying to deliver this overall consistent strong return with some growth. And that seems to be, I think, quite a noble aim if we can achieve that through areas that can be quite volatile.

So we do look at it in the round. So you're right, we've beaten non-cat, and we've had some lines of business haven't performed as well as we originally planned, and it nets out to this 92.5%. And not surprisingly, we're expecting in 2026 cat to normalize. So we're not planning for another beat in cat. So we don't assume we're achieving the 92.5% in 2026 with the same beat we got in '25.

But we also expect the lines of business where we had more challenge this year to improve. And that can be some of those nonprofitable lines that we've been flagging for the past year or 2, and we've done a pretty good job at lowering their losses, but there's still some more to do, and that's a number of lines across the various businesses.

The A&H specifically, there is talk in the market that rates will go up by at least 20% on 1/1. And therefore, that should counter the fact we've seen ex-cat in A&H or the losses in A&H be greater than planned. And there are just 1 or 2 other lines of business like that. So it ends up being an accumulation of a number of things that brings us down.

The large losses have been greater this year. And I was talking to someone the other day about what is going on with the oil refinery world because there seems to be a number of energy losses and they have been more than normal, and we don't expect that to continue. So we do take a bit of credit for that into next year. So it is a combination of factors that gives us confidence we're going to deliver a pretty strong return of 92.5% next year, consistently with the 92.5% this year.

But one thing is certain, the makeup will be different. One of the things about the company, as I said a number of times, the breadth of geography and product means we should be able to balance it out. So if we do take a deterioration in one line, we can offset it in another. I think that's been one of the challenges of the company in history that we haven't been able to do that, and we just take the losses and the return deteriorates.

And just to clarify [indiscernible] I presume you're not counting on any reserve release at this stage into next year? And also, you touched on...

Yes, you always plan with nothing into 2026. So you plan with that. The only area where we do contemplate every now and then is whether LMI because it's generally reserved relatively conservatively. But no, you have to plan on nothing because if you know about it now, you have to take it now. So you can't really plan to have something you don't know about.

Yes. And finally, sort of last subcomponent of that question, Andrew, just on the cost sort of remarks you made, what sort of -- like how are you thinking about the cost base across the organization, particularly as we're going through a softer part of the cycle?

Yes. We're planning on growth. I mean, growth this year has been greater than our growth in expenses, and we're planning to repeat that into 2026. So that brings us -- brings the expense ratio down a bit. So I think I'm looking at -- we're talking about up to 0.5 point-ish, we hope.

Yes. So Kieren, as we project forward, obviously, we have good line of sight of the net insurance revenue for next year, given we've written quite a lot of the premium that is going to earn in the first half at least of next year. So we're sort of seeing the growth in net insurance revenue as being higher than the growth in expenses, and therefore, we're seeing positive jaws that are contributing. And I guess at the margin, we're also baking in some level of savings from reinsurance year-on-year when you think about your bridge that you're trying to construct.

Next question comes from Nigel Pittaway from Citi.

So first of all, if we just sort of maybe delve a bit more into this A&H. And obviously, you're talking about 20% rate increase at 1st of January. So I mean, is there an element to which you feel you've been pretty conservative in taking those loss picks through into this year?

Because it does look as if you look at almost, following on from Kieren's question, I mean, if you look at the ex-cat attritional loss ratio, there must be a fairly big negative offset in that, given you've got 260 favorable on cat. You're saying crops better than expected, you've got favorable prior year releases. So can you talk a little bit more about that?

Yes. So I mean, on the A&H one, Nigel, it's definitely been market-wide and been talked about a lot in the market that many of the A&H insurers have been surprised, have taken a reasonable amount of extra loss in 2025, and that's why the market moves quickly. I mean on the positive side, it's a relatively short tail class.

You see the claims pretty quickly, and therefore, you can respond to it. On the possibly negative side, if you don't respond enough on Jan 1, you've got problems because 70% of the business is written on January 1. So if you find out after January 1, you should move more, you have to suffer that year until you can move again on to January 1 the following year.

That's been the main change in the -- I don't think we've been conservative in taking it, and we're very in line with others, and we see others who write this line report similar things to us. I don't know if there's anything you want to add, Inder, to that?

Yes. I mean it's hard because we're reacting to claims trends. If you look back a couple of years ago, we saw an uptick in Q3 claims activity. We then picked our inflation loss picks higher. And then we found that didn't actually hold as true as we thought. But this time around, we have seen some of that claims activity actually come through.

So I wouldn't say it's necessarily conservative on A&H per se. But we are trying to obviously make sure as we exit 1 year into the next that we're not seeing changes in our loss picks, especially on short-tail lines. So we are trying to be thoughtful, I'd say, across the piece. But A&H is a specific one we're just wrestling with as is the industry.

And the only other comment, Nigel, I'd make, we've said a number of times, we're trying to make the balance sheet more robust by setting what we think are sensible reserves for our medium- to long-tail businesses and not adjusting them based on short -- seeing short-term benefits to them because it normally takes 3 years and beyond to get good insight into where the reserves should be.

So we're -- I don't know what year we're into doing that, year 2 or 3 of doing it. But of course, if you see something deteriorate against it, you have to take the deterioration. So you take the deterioration, you don't take the credit until year 3 or beyond. So we're trying to get into a position of a more robust balance sheet where we don't get prior year top-ups and there are potential things to take against it. So I'm not sure that's conservatism or just good common sense in the balance sheet.

Okay. Secondly then, just on the dividend. I mean, previously, you've sort of hinted that the sort of interim dividend would be that 30% of full year payout, which does imply sort of a payout ratio maybe a little bit above the 50% that you're sort of hinting at in today's release. So I mean, I guess there is -- initially, that raises the question as to whether or not the buyback is sort of being taken at least in part from the dividend. So can you just sort of maybe expand on that a bit?

Nigel, just to clarify, I think we've consistently said that our planning assumption is that we pay out a full year ratio of 50%, right? Now what we've said is at the first half, we would probably be a bit at the lower end of that, just given cat and crop and other variables in the second half, but we then true that up through the second half payout ratio. So I'd look at the commentary as being consistent around the full year being struck at 50%, and I would see the buyback sitting alongside that.

So a 50% payout for the full year 2025 plus the AUD 450 million buyback in addition to that, which then takes the payout ratio, if you want to look at that back to Andrew's comments around that 65%, 66% for the full year.

Okay. It just implies that the growth you got in the interim might not come through in the final if you take 50% literally, but obviously, the EPS is another variable.

All right. And then maybe just on -- obviously, one thing you haven't disclosed, which you've disclosed in prior quarters is your group rate movement for the third quarter. Is there any reason why you haven't disclosed that? And is it possible we could get the number for this quarter?

Yes, Nigel, definitely, I'm the driver of that because I think looking at 1 quarter or 1 quarter in a mixed insurance business doesn't mean much in itself because it depends on what we're writing at any point in time. And I am -- I mean, the rate increase is obviously of interest to us and the rate increase versus inflation is sort of vaguely interesting, although I think we're being cautious is on inflation, rates are what they are.

And that's the reason we're not doing it because I think it's relatively well known where rates are going down is property, where they've gone up a lot and Lloyd's to some extent, where the margins are good. But a lot of the rate decrease has nothing to do with inflation at all. It just purely has to do with the margin everybody is making from these at this point in time. So I think we're getting very stuck on a quarter-on-quarter.

It makes some sense year-to-date, quarter-on-quarter. I'm not sure what it means because we then have to explain how much of every line of business we wrote in that quarter because it's a completely different mix per quarter, but are not comparable.

Where we can be helpful going forward, Nigel, is talking to you about full year year-to-date rates, we'll continue that. And we'll also just then provide some color on various product lines to give you a better sense of what is actually happening in the lines of business, so you can get a sense of where margins might be heading, which I think is more consistent with the way we look at the business internally, and then we can be a little bit more constructive around the dialogue around that.

Okay. So I mean, is it possible to say whether rate increases were still positive in 3Q?

Rate increases are positive in a number of lines and rates are not positive or flat in property and some of the Lloyd's lines, which I think we've flagged. I mean that's exactly what we're trying to do. So yes, so we flagged property in the London market being the most challenged and everything else sort of okay. But even in everything else, there's going to be some going up and some going down within that.

Yes. No, I mean it's just the market that seem to focus quite a bit on this at the moment. So it's an important number...

Yes. No, I get it. I get it. But it's not how -- what I'm really trying to do is reflect how we look at it. And we don't look at it like that. So we can talk about it. It's not that meaningful to how we're running the company, and that's the challenge we have. So I'm trying to get it into how we actually look at the company. I'm not surprising, we're focusing line by line, estimating inflation line by line, although inflation, a few years ago, no one really estimated inflation line by line, certainly while inflation kicked in.

So that's what we're trying to reflect. So definitely flagged that property is a challenge. Property is a challenge from where it was, but it's still much higher than where it started from, and people are still making a reason amount of money from writing property business. So it doesn't mean it's a negative line to write. It's just not as super profitable as it would have been a year or 2 ago if everything else was the same, which it isn't.

Next question comes from Freya Kong of Bank of America.

Can I just ask on the ex-cat ratio for 2025? Maybe asking Kieren's question another way. Would you be able to give us the breakdown of where the deterioration has been driven from this year versus last year, so between noncore, business mix shifts and the high ex-cat losses?

I mean it's mainly in -- it's not really in the noncore business. So it's not there. It's definitely in the A&H, as we've flagged. I'm not sure I can go into any more detail than we've done, but it's not in the noncore. It's in the core business rather than noncore. I don't think noncore has caused us too much of a problem.

Yes. I mean I think it's those drivers we've been very consistent about through the first half. We've seen elevated large losses, and that's more broadly speaking, but particularly pronounced in the international business. We've talked about some of the mix shifts. A&H is definitely a contributing factor.

So those are the 3 main elements, Freya, in terms of -- then we've got, obviously, the improvement into next year along the lines that Andrew has laid out, where we see the opportunity to improve the underwriting performance of a number of cells, which are either still slightly unprofitable or not meeting their hurdle rates.

Okay. Great. And then just on Accident and Health again, given that -- given the deterioration you've seen this year, is it influencing your business plans for next year? Because I know this line was an area of targeted growth.

I think it's a good point. I mean it's definitely made us think whether we want to do volume growth in the A&H rather than remediate. So it's a bit like how we look at the Crop business in 2025 that we weren't really pushing them to grow, what we really got them to focus on how do they ensure they hit a good combined ratio.

So I think it's going to impact the non-rate volume growth. That said, it wouldn't surprise me if they grow just as much as we thought because the rate is going to be higher than we planned. So on the stuff, not new stuff, the renewal, they need a larger rate increase. So we'll see A&H grow. It's just the exposure probably won't grow as much as we would have planned earlier in the year. So I'd rather they focus on margin rather than looking for new business at this point in time.

I'd probably look at it -- we're thinking about it short to medium term. So we remain, Freya, of the view that we've got one of the finest businesses. And over the medium term, we should be able to grow it. We've got some really nice competitive positioning. It's a very data-driven business. So you can actually start to segment where you've got the business, where you're seeing some of the loss trends and some of the actions you can take.

And these are industry-wide issues. So they're not very idiosyncratic to QBE's book. So I'd say medium term, still strong conviction as an attractive growth area. Short term, we just need to make sure we're on top of some of these claims trends.

I completely agree. And we've also been involved in the business for 25 years, and it's been a fantastic performing business for us.

Okay. Great. And sorry, just last question on other areas of growth in 2026. I think previously, you've called out cyber reinsurance as well. Do the fairly significant price declines in the market maybe change the plans? Or you -- do you still see them as very adequate and good areas to grow?

Yes. So the 3 areas in addition to A&H, we've been talking about, are cyber, QBE Re and facilities. So those are definitely still areas in focus. Got to remind ourselves, remember, QBE Re is only 1/3 property, 1/3 specialty and 1/3 casualty. So it's the property areas generally where the pricing is under pressure.

So there's still growth opportunities, and we start from a low-ish base. So that's fine. On the facilities, the facilities will just naturally grow because we started some in 2025, and therefore, we've only been on them for half a year or a period of year. So in a full year cycle, they will grow. And we're still seen as a leader in this space.

Generally, they're performing well because they have good balance. Again, they're not purely properties. They're writing different lines and they perform well. So I think you can see the facilities continue to grow. QBE Re continue to grow. Cyber, we've got to be wary of because pricing is not brilliant, although it looks as though it's flawed and it is coming back a bit. But remember, we started from a relatively low base on cyber, and we've done well at growing out consistently across the QBE portfolio.

So yes, still expect that. And then we're looking for other areas. I mean we've got good margin in a number of lines of business. We've mentioned before, Australia is quite competitive at this point in time. But the business has performed really well in '25. Therefore, we're looking at brokers and how can we support them into '26.

Technical pricing generally is pretty good across the portfolio. So we still want to look for growth opportunities if we can. We have got to be wary because every other insurer company on the planet seems to be looking for growth opportunities as well. So we need to play to our strengths. And that's why those 4 areas were the ones we flagged for '25 and continue to be positive about them in '26 and beyond.

Next question comes from Julian Braganza from Goldman Sachs.

Just a couple of quick questions for me. Just in terms of the budget for next year, I think you mentioned sort of flattish. Just thinking maybe we expect a reduction given the runoff of the noncore portfolio, the losses coming from that? Can you maybe talk about that and maybe that improved resilience further in the budget [Technical Difficulty]?

Julian, your line is very untidy. If I understood the question, you're asking about the dollar value of the cat allowance being flat given the unwind of the noncore. Is that right?

That's correct. So should we have expected a benefit there to come through or have you improved the resilience further?

Yes. Obviously, net insurance revenue is growing, Julian, so we are growing the business overall. And what we're doing is, in essence, the benefit we're getting from some of the exposure runoff in noncore is then supporting some of the growth in the business more broadly. So we're not changing, I'd say, the settings in terms of cat.

We've talked about broadly holding a high level of confidence around that cat pick. So we're not necessarily changing our settings. That's just a roll forward of where we're seeing, in essence, the net exposure change, obviously, taking into account where the business is growing, noncore running off and kind of the changes in the reinsurance program that we're assuming at the moment.

Sorry, it also encapsulates change in the reinsurance program. I'm sorry, you're saying that, that would be an uplift to the cat budget? Can you share some initial views of how your reinsurance program might change?

Yes. No, I think what we're saying is that there are minor assumptions we've made in and around the reinsurance program. We'll have to see how that lands ultimately, right? But what we're saying is that the net cat budget is set on the basis of broadly similar confidence levels from a planning basis and the rest of it is just a roll forward of the business mix.

Okay. Okay. That's fine. And then maybe just to be very clear, just incrementally, the cat beat was about $180 million from the third quarter, that's the last 4 months versus the first half result. So just to be very clear, it all -- it's largely been offset in terms of just A&H and the inflation that's coming through. Is that all largely coming through that third quarter period?

Is that how we're sort of seeing that's offsetting it just that the 92.5% is being retained? Just want to get the clarity on the timing of this inflation that's coming through in A&H, specifically over that third quarter period.

Yes. I mean, look, I wouldn't get too hung up on the quarter-on-quarter, but your analysis is right that what we're looking at for the full year in terms of our full year guidance commentary of 92.5% assumes that we will have a cat beat along the lines you have said, right, which is you take the first half cat beat and kind of the year-to-date where it's tracking. It is offset by some of the trends we're seeing in ex-cat, which we have highlighted, which includes A&H as one of the components.

Yes. Okay. So it's the A&H is quite material over that third quarter. And it's all coming to the claim payments line as opposed to anything we've set on reserves. Is that fair? Is it all on the claims payment line and it's paid claims? Is that that's coming through in the third quarter?

Yes, yes. So it's -- as we talk about ex-cat, we're talking about current accident year. On the reserves, we are saying that we're assuming a modest release for the year. And if you look back at the half year, we had a modest release at the half year, right? So I mean, the reserve development half-on-half is not materially different.

Just to be super clear for that third quarter, it's a combination of current accident year reserves as well as claims payment, it's not all claims payment is what you're saying?

I'm just struggling to understand your -- can you just repeat that again?

No, I was just wondering, the claims inflation coming through an Accident and Health over the third quarter that's offsetting some of the sales beat. Is that all -- it's very clear that what you're saying is that it's not all paid claims, it's also a combination of higher reserves for current accident year...

Yes, that's right. I mean yes, I mean, obviously, it's loss picks even in short tail lines. So we're sort of making assumptions in the 92.5% reiteration of full year guidance, Julian, the best way to think about it is we are making a series of assumptions around loss picks for A&H that we will just have to see how that seasons over the first quarter, the second quarter of 2026.

Okay. Got it. That's clear. And then just specifically on the -- for FY '26, just what's your view of underlying inflation assumptions that -- you mentioned rate increases holding in line with -- I think you said rate increases holding in line with 2025. Confirm [indiscernible] if that's correct. I just want to understand where that confidence is coming from given the trends that we're seeing on rate and arguably going more into the negatives territory? And then secondly, your inflation assumptions, underlying inflation assumptions ex-cat, ex large losses, how you're sort of thinking about into '26?

I mean we -- on the inflation assumptions, we can -- to Andrew's point earlier, when we look at the lines of business where we are seeing some inflation, areas like, say, motor, for example, or in parts of the world or even areas where we're assuming some level of continued elevation in claims, for example, in casualty, we are seeing that we're getting rate that is compensating us for that.

The rate in property lines that's coming off is a margin issue, not a relative to inflation issue. So as we look into 2026, we've been pretty sensible about our inflation picks year on year on year. So as we said sort of in the low single digits for 2025, we're sort of moderating that a little bit into 2026 at an aggregate level. And where we are seeing inflation, we're getting some rate to cover that. But the rate versus inflation at an aggregate company level is not -- is imperfect science.

Next, we have Simon Fitzgerald from Jefferies.

Just wanted to unpack the trends that you're seeing in property just a little bit more. But firstly, Andrew, if I could just reiterate the weighting of property. I remember in the first half '25 presentation, it says about 34% of GWP. But I think I heard you just say Property and Lloyd's would be about 1/5 of our business. Can you just elaborate on that firstly?

Yes. I mean I think because we're trying to put in the large commercial property in there -- the cat exposed -- I mean, where we're seeing property rates fall a lot is the large cat commercial property and a reason that in the U.S. So Europe is not seeing the same sort of rate decreases everywhere else in the world. And this is one of the challenges with everybody is bucketing it all together and saying we're in a soft market because cat commercial property is coming off when it's a subset of a subset.

So that's what I'm trying to do. So we can in theory break obviously in the commercial -- in our property book, we have the retail business here, which is property, we have more than just purely cat.

Yes. Okay. And then just on the pricing, I remember a comment that you mentioned at the first half '25 results as well, where you said property could fall by about another 25% before we would not be interested in that sector. When certainly, we look at some of those larger accounts, second quarter, third quarter, we've seen minus 5% to minus 10% in terms of rate renewals. So for some parts of your business, you're going to get there pretty quickly, I would have thought in terms of down 25%.

I mean that's right. So you take evasive action. So if you go below your technical adequacy, you start questioning why you're writing it. You can write it for long-term relationships and all that sort of stuff. But generally, you'll wright. I mean if you look -- an example of this is standing up our excess and surplus lines property business in the U.S. in 2025.

That's not surprisingly, they're quite a long way behind budget. But when we first formulated this idea, so we're just writing less of it. We're doing exactly what you say. For accounts where we're not happy with them, we don't write them; for accounts we're comfortable with them, we do.

So you're letting some business slip there. Could I also just get your comments just with the reinsurance renewals on 1 Jan. Obviously, we've seen a really good cat climate for reinsurers and primary carriers as well. But just interested to know what your sort of thoughts are at this stage in terms of what you might see?

I mean we've got really good reinsurance support. So our aim is to renew a program that's very similar to what we had in 2025. And the view is, not surprisingly, the market view is rates are going to come off by 10-plus for cat-exposed property. Obviously, we renew some other non-cat property programs, and they will not come over 10-plus. That does not mean the whole reinsurance program goes down by that amount. But for property, it's definitely going to come off by more than 10%.

This concludes our Q&A session. I will now pass back to Andrew.

I'd just like to say, once again, thank you for joining us this morning. I, of course, look forward to our results in February. So I'll speak to you all then, if not before then.

This concludes today's conference call. Thank you for participating. You may now disconnect.