Full Year 2026 Insurance Australia Group Ltd Earnings Call

August 13, 2026

Nick Hawkins: Good morning, everyone, and welcome to IAG's FY26 results presentation. I'm joined here today by our Chief Financial Officer, William McDonnell, together with members of the executive team, who are all sitting in the front row here in our offices. We're holding today's event in IAG's Sydney office on the lands of the Gadigal people. We acknowledge the traditional owners of country throughout Australia, and we recognize their continuing connections to lands, waters, and communities. Of course, I pay my respects to elders past, present, and emerging. This has been a strong year for IAG, and I'm really proud of what we've delivered. We've refreshed our strategy, and we've sharpened our strategic priorities as we set out on this slide. Of course, our purpose is unchanged. We make your world a safer place.

Speaker #3: We're holding today's event in IAG's Sydney office on the lands of the Gadigal people. We acknowledge the Traditional Owners of country throughout Australia, and we recognize their continuing connections to lands, waters, and communities.

Speaker #3: And of course, I pay my respects to Elders past, present, and emerging. This has been a strong year for IAG, and I'm really proud of what we've delivered.

Speaker #3: We've refreshed our strategy, and we've sharpened our strategic priorities, as we've set out on this slide. Of course, our purpose is unchanged: we make your world a safer place.

Speaker #3: As part of this, we act as an economic shock absorber across Australia and New Zealand at an individual, community, and business level.

Nick Hawkins: As part of this, we act as an economic shock absorber across Australia and New Zealand at an individual, at a community, and at a business level. Our growth-orientated strategy is all about helping more of Australia and New Zealand. We'll do this by leveraging the strengths of IAG and the investments we've made to help more people and more businesses across our two countries. This has been a year of delivery. Our financial results reflect the deliberate strategic choices we've made to grow our business, reduce our volatility, and importantly, deliver sustainable growing shareholder returns. At our top line, our premiums have grown by 7.6%. This includes strong growth momentum in our direct retail businesses in both Australia and New Zealand of around 5%. Importantly, we've seen strong quarter-on-quarter improvement that I'll touch on later in those two businesses.

Speaker #3: Our growth-oriented strategy is all about helping more of Australia and New Zealand. We'll do this by leveraging the strengths of IAG and the investments we've made to help more people and more businesses across our two countries.

Speaker #3: This has been a year of delivery. Our financial results reflect the deliberate, strategic choices we've made to grow our business, reduce our volatility, and, importantly, deliver sustainable, growing shareholder returns.

Speaker #3: At the top line, our premiums have grown by 7.6%. This includes strong growth momentum in our direct retail businesses in both Australia and New Zealand, of around 5%.

Speaker #3: And importantly, we've seen strong quarter-on-quarter improvement that I'll touch on later in those two businesses. Underlying insurance profits were up 2.3% to nearly $1.6 billion.

Nick Hawkins: Underlying insurance profits was up 2.3% to nearly AUD 1.6 billion, and the net profit after tax was just over AUD 1 billion. This, combined with our strong capital position, has enabled us to increase our final dividend by 5% to AUD 0.20 per share. Pleasingly, with our franking on that AUD 0.20 increase to 80%. Our positive momentum provides the foundations for our FY27 guidance of continued strong top line combined with growing earnings. More broadly, we successfully completed the acquisition of RACQ Insurance in September last year, and we're pleased with the integration momentum and our member retention within that. That alliance contributed AUD 1.3 billion of premium for the 10 months that we owned it in last financial year. As we discussed in February, the severe Queensland storms, which occurred before the RACQ business came under our reinsurance arrangements, did impact our H1 results.

Speaker #3: And the net profit after tax was just over $1 billion. This, combined with our strong capital position, has enabled us to increase our final dividend by 5% to 20 cents per share, and, pleasingly, with our franking on that 20 cents increased to 80%.

Speaker #3: Our positive momentum provides the foundations for our FY27 guidance of continued strong top line, combined with growing earnings. More broadly, we've successfully completed the acquisition of RACQ Insurance in September.

Speaker #3: Last year, we were pleased with the integration momentum and our member retention within that. Our alliance contributed $1.3 billion of premium in the last 10 months that we owned it in the last financial year.

Speaker #3: And as we discussed in February, the severe Queensland storms, which occurred before the RACQ business came under our reinsurance arrangements, did impact our first half results.

Speaker #3: Our second-half performance, though, was strong, and the business is on track to meet all of the expectations we had when we purchased it.

Nick Hawkins: Our H2 performance, though, was strong and the business is on track to meet all of our expectations we had when we purchased it. Across the whole business, we actively responded to 65 weather events in Australia and 44 in New Zealand. We paid more than AUD 12 billion in claims to support our customers and their communities to recover. We know our customers recognize the role we play and the dedication of our teams with our NPS scores up 55 in Australia and at 63 in New Zealand. What those scores are really are sort of top quartile performance in our industry. We continue to work through the process with Western Australia and remain confident this will be completed in FY27, and we are excited about the prospect of welcoming the RAC Insurance team into IAG.

Speaker #3: Across the whole business, we actively responded to 65 weather events in Australia and 44 in New Zealand. We paid more than $12 billion in claims to support our customers and their communities to recover.

Speaker #3: And we know our customers recognize the role we play and the dedication of our teams, with our NPS scores up—55 in Australia and at 63.

Speaker #3: In New Zealand, what those scores really are is sort of top quarter performance in our industry. We continue to work through the process with Western Australia and remain confident this will be completed in FY27.

Speaker #3: And we're excited about the prospect of welcoming the RAC Insurance team into IAG. And then finally, on this highlight slide, we've flagged the acceleration of AI that is helping drive efficiency and better customer experience.

Nick Hawkins: Finally, on this highlight slide, we have flagged the acceleration of AI that is helping drive efficiency and better customer experience. At the Investor Day that we held in May, the team talked a lot about the extensive technology transformation taking place at IAG and the tangible benefits that transformation is delivering. More than 60% of our people are regular users of AI. We have more than 600 activators who have published more than 90 AI agents to improve workflows in areas like customer service operations and within our corporate functions. Over 2,000 employees using AI in claims, fraud, and service and delivering significant benefits to our claims costs that we are reinvesting for growth. We have also recently signed a landmark partnership with OpenAI that will help our people deliver faster and more effective customer service, particularly within our claims teams.

Speaker #3: At the investor day that we held in May, the team talked a lot about the extensive technology transformation taking place at IAG, and the tangible benefits that transformation is delivering.

Speaker #3: More than 60% of our people are regular users of AI. We have more than 600 activators who have published more than 90 AI agents to improve workflows in areas like customer service, operations, and within our corporate functions.

Speaker #3: And over 2,000 employees using AI in claims, fraud, and service, and delivering significant benefits to our claims costs that we are reinvesting for growth.

Speaker #3: We've also recently signed a landmark partnership with OpenAI that will help our people deliver faster and more effective customer service, particularly within our claims teams.

Speaker #3: And our initial focus is greatest: scaling our claims-handling capabilities during natural disasters and severe weather events. This initiative represents the next step in our AI journey.

Nick Hawkins: Our initial focus is greatest, scaling our claims handling capabilities during natural disasters and severe weather events. This initiative represents the next step in our AI journey, growth in our businesses. What they have done is they have continued to accelerate throughout the year, driven by both volume and price. You can see here, combined, they delivered growth of around 7% in the final quarter of FY26, and we expect this to continue into FY27. In addition, we will have a full year of RACQ Premium and the potential additional benefit of RAC in WA. In Australia, price has been the key driver, with recent improvements in net volume growth in both NRMA Insurance and RACV. In New Zealand, growth has been primarily volume driven with strong AMI organic growth supported by the transfer of Aon into that business.

Speaker #3: Growth in our businesses—what they've done is they've continued to accelerate throughout the year, driven by both volume and price. You can see here, combined, they delivered growth of around 7% in the final quarter.

Speaker #3: ...of FY26, and we expect this to continue into FY27. In addition, we'll have a full year of RACQ premium, and the potential additional benefit of RAC in WA.

Speaker #3: In Australia, price has been the key driver, with recent improvements in net volume growth in both NRMA Insurance and RACV. In New Zealand, growth has been primarily volume-driven, with strong AMI organic growth supported by the transfer of Aeon into that business.

Speaker #3: Going forward, we expect New Zealand growth will be supported by a mix of both volume and price. This is real momentum, and what that does, of course, is set us up well.

Nick Hawkins: Going forward, we expect New Zealand growth will be supported by a mix of both volume and by price. This is real momentum, and what that does, of course, is sets us up well. The markets we operate in are structurally growing. General insurance premiums in both Australia and New Zealand forecast to grow at around 6% per annum through to 2030. With clear strategies and strong leadership, we have the brands, technology, and distribution to grow and protect more customers across our two countries. Returning now to some of the individual businesses, let me start with the Australian retail, which is of course the largest part of IAG. This business delivered strong headline premium of 17.8%, or an underlying 4.5% after excluding RACQ.

Speaker #3: The markets we operate in are structurally growing. General insurance premiums in both Australia and New Zealand are forecast to grow at around 6% per annum through to 2030.

Speaker #3: With clear strategies and strong leadership, we have the brands, technology, and distribution to grow and protect more customers across our two countries. Returning now to some of the individual businesses.

Speaker #3: Let me start with the Australian retail, which is, of course, the largest part of IAG. This business delivered strong headline premium growth of 17.8%, or an underlying 4.5% after excluding RACQ.

Speaker #3: Retention rates are strong and customers are enjoying the term. We've done a great job to deliver home growth in line with the market, and it's really a competitive market.

Nick Hawkins: Retention rates are strong. Julian and the team have done a great job to deliver home growth in line with market and what really is a competitive market. In motor, our recent trends have been very favorable, contributing to the 6.7% direct growth that we saw in the final quarter of the financial year. The core direct business of NRMA Insurance and RACV are performing well. While our bank partner business has been slightly weaker over the last 12 months, underlying profits were up 7% to AUD 846 million. Our reported insurance profit was down slightly due to some of the perils that we had in the H1 from RACQ. If we exclude that, the reported insurance profit was up 7% and significantly stronger in the H2 versus the H1.

Speaker #3: In motor, our recent trends have been very favorable, contributing to the 6.7% direct growth that we saw in the final quarter of the financial year.

Speaker #3: So, the core direct business of NRMA Insurance and RACV are performing well, while our bank partner business has been slightly weaker over the last 12 months.

Speaker #3: Underlying profits are up 7% to $846 million, and our reported insurance profit was down slightly due to some of the perils that we had in the first half from RACQ.

Speaker #3: If we exclude that, the reported insurance profit was up 7% and significantly stronger in the second half versus the first. The business is clearly benefiting from the implementation of enterprise platform, improved risk selection, and sales and service processes that we've heavily invested in.

Nick Hawkins: The business is clearly benefiting from the implementation of the enterprise platform, improved risk selection and sales and service processes that we've heavily invested in. Our NPS is strong at 55, and NRMA Insurance has continued to be the most trusted insurance brand in Australia. These provide the foundations for our positive growth going forward. In New Zealand, our retail business delivered a strong result. Premium growth was 3.7% in local currency, with a strong direct growth of 5%, reflecting market share gains. We had 7% growth in motor, driven by strong retention rates, improved customer satisfaction, particularly within our AMI brand, where we continue to expand the AMI motor hub sites. We've also transitioned Aon customers. Bank and partner businesses has also shown some similar trends in New Zealand to what we've seen in Australia, so it's been slightly weaker.

Speaker #3: Our NPS is strong at 55, and NRMA Insurance continues to be the most trusted insurance brand in Australia. These provide the foundations for our positive growth going forward.

Speaker #3: In New Zealand, our retail business delivered a strong result. Premium growth was 3.7% in local currency, with strong direct growth of 5%, reflecting market share gains.

Speaker #3: So we had 7% growth in motor, driven by strong retention rates and improved customer satisfaction, particularly within our AMI brand. We continue to expand the AMI motor hub sites, and we've also transitioned Aeon customers.

Speaker #3: Bank and partner businesses have also shown some similar trends in New Zealand to what we've seen in Australia, so it's been slightly weaker. During the year, we've completed the migration of our core AMI and State motor and home portfolios onto our retail enterprise platform.

Nick Hawkins: During the year, we've completed the migration of the core AMI and State motor and home portfolios onto our retail enterprise platform. What this does is improves underwriting, pricing and customer experiences, providing strong platform for continued growth of this business going forward. Underlying profits grew by 10.7% in local currency, when we've seen improved loss ratios from better risk selection, claims handling and the claims supply initiatives that were put in place. Reported margins remained strong at over 20% here by 140 basis points, where prudent reserving and claims management have delivered AUD 78 million in reserve releases here as well. Reported profits remained solid at AUD 316 million, despite a AUD 71 million perils impact within this business, and that's primarily from the Victorian bushfires in January.

Speaker #3: Of course, what this does is improve underwriting, pricing, and customer experiences, providing a strong platform for continued growth of this business going forward. Underlying profits are up by 10.7% in local currency, and we're seeing improved loss ratios from better risk selection, claims handling, and the claims supply initiatives that were put in place.

Speaker #3: Reported margins remain strong at over 20%, helped by 140 basis points. Prudent reserving and claims management have delivered $78 million in reserve releases here as well.

Speaker #3: Reported profits remain solid at $316 million, despite a $71 million perils impact within this business. And that's primarily from the Victorian bushfires in January.

Speaker #3: William will explain this later, but the adverse impact in CGU was more than offset by favorable experience in other parts of our company. During the year, we delivered important commercial enterprise platform capabilities.

Nick Hawkins: William will explain this later, but the adverse impact in CGU was more than offset by favorable experience in other parts of our company. During the year, we delivered important commercial enterprise platform capabilities. What we're doing now is we're accelerating those plans into FY27. What this, of course, is going to do, improve underwriting, simplify our process to support targeted growth through WFI and some of our other priority segments. Across the Tasman, the intermediated business in New Zealand, which represents around 8% of IAG, continues to navigate a soft market, with premium declining 11% in local currency terms. What we've done here is we maintain our strong discipline as that New Zealand commercial market experience suffers intense competition from global capital. Our underlying profits of New Zealand are AUD 133 million, reflect solid 14% margin after a highly profitable FY25.

Speaker #3: And what we're doing now is accelerating those plans into FY27. What this, of course, is going to do is improve underwriting, simplify our process, and support targeted growth through WFI and some of our other priority segments.

Speaker #3: Across the Tasman, the intermediate business in New Zealand, which represents around 8% of IAG, continues to navigate a soft market, with premiums declining 11% in local currency terms.

Speaker #3: Of course, what we've done here is we've maintained our strong discipline as that New Zealand commercial market experience suffers a sort of intense competition from global capital.

Speaker #3: Our underlying profits in New Zealand were $133 million, reflecting a solid 14% margin after a highly profitable FY25. Reported profits were down a third, largely due to the impact of increased perils.

Nick Hawkins: Reported profits were down a third, largely due to the impact of increased perils. More importantly, we are seeing signs of the market stabilizing in New Zealand, with commercial SME lines expected to be broadly flat in FY27, and we do expect some growth within our personal lines business here within NZI. Phil and the team are responding well with disciplined, targeted premium increases, strong broker service, and continued focus on costs, which is what is serving us well in this point in the cycle. Let us step back and look at our overall profitability. The underlying insurance result of AUD 1.58 billion was up AUD 36 million. The reported profit was around AUD 1.55 billion, and that is consistent with the guidance that we provided to the market in February. Importantly, this is a quality result.

Speaker #3: Probably more importantly, we are seeing signs of the market stabilizing in New Zealand, with commercial SME lines expected to be broadly flat in FY27.

Speaker #3: And we do expect some growth within our personal lines business here within NZI. Phil and the team are responding well with disciplined, targeted premium increases.

Speaker #3: Strong broker service continued focus on cost, which is serving us well at this point in the cycle. So, step back and look at our overall profitability.

Speaker #3: And the underlying insurance result of $1.58 billion was up $36 million. The reported profit was around $1.55 billion. That's consistent with the guidance that we've provided to the market in February.

Speaker #3: And importantly, this is a quality result. It does include the settlement of a significant portion of the green steel proceedings, confirming our announcement that we made in May that this would not have a material impact on the group’s financial result.

Nick Hawkins: It does include the settlement of significant portion of the Greensill proceedings, confirming our announcement that we made in May that this would not have a material impact on the group's financial result. The trial on the remaining claims is due to commence on 14 September. We will continue to defend these proceedings and with the potential for settlement discussions coinciding with the pricing period, what we have done is we have suspended our DRP for next month's dividend. In relation to RACQ integration and the amortization costs, we have not taken anything below the line. All of those costs associated with RACQ are in our underlying and reported margins. Key drivers of the quality of our numbers is the 50 basis point improvement in the underlying claims ratio and 120 basis point improvement in our expense ratios.

Speaker #3: The trial on the remaining claims is due to commence on the 14th of September. So, we'll continue to defend these proceedings. And, with the potential for settlement discussions coinciding with the pricing period, what we've done is we have suspended our DRP for next month's dividend.

Speaker #3: In relation to RACQ integration and the amortization costs, we have not taken anything below the line. So, all of those costs associated with RACQ are in our underlying and reported margins.

Speaker #3: Key drivers of the quality of our numbers are the 50 basis point improvement in the underlying claims ratio and the 120 basis point improvement in our expense ratios.

Speaker #3: And what, of course, this does is give us the confidence that we can continue investing in growth while delivering a strong, sustainable earnings profile. Many of you will be familiar with this slide, which we showed at our Investor Day in May, when we unveiled Ambition 2030 and defined our success metrics.

Nick Hawkins: What of course this does is give us the confidence that we can continue investing in growth while delivering strong, sustainable earnings profile. Many of you will be familiar with this slide, which we showed at our Investor Day in May when we unveiled Ambition 2030 and defined our success metrics. What this slide does, it shows our winning formula and our key performance drivers, many of which are evidenced in today's results. We continue to build on our portfolio of leading brands, leveraging our data and our technology, integrating our supply chain model, which is very important, our business model. Of course, our diversified distribution model is helpful, and our claims management expertise is giving us a competitive edge. Combined, of course, what these do is drive outcomes for our customers, our shareholders, and of course, importantly, for all of our people.

Speaker #3: What this slide does is show our winning formula and our key performance drivers, many of which are evidenced in today's results. We continue to build on our portfolio of leading brands, leveraging our data and our technology.

Speaker #3: Integrating our supply chain model, which is very important, with our business model. Of course, our diversified distribution model is helpful, and our claims management expertise is giving us a competitive edge.

Speaker #3: Combined, of course, what these do is drive outcomes for our customers, our shareholders, and, of course, importantly, for all of our people. With our capital-light balance sheet and low-volatility earnings model, these underpin our growth and strong investment proposition from a shareholder perspective.

Nick Hawkins: With our capital light balance sheet and low vol earnings model, these underpin our growth and strong investment proposition from a shareholder perspective. Our winning formula is delivering strong growth momentum at IAG. With that, I am going to hand over to William, who is going to run through the financials in a bit more detail.

Speaker #3: Our winning formula is delivering strong growth momentum at IAG. With that, I want to hand over to William. He's going to run through the financials in a bit more detail.

Speaker #2: Thank you, Nick. And good morning, everyone. I'll start with the financial summary shown on slide 16. At a high level, we're pleased with our FY26 outcomes, relative to the FY25 results, which were assisted by benign perils and a release from the business interruption provision.

William McDonnell: Thank you, Nick, and good morning, everyone. I will start with the financial summary shown on slide 16. At a high level, we are pleased with our FY26 outcomes relative to the FY25 results, which was assisted by benign perils and a release from the business interruption provision. Nick has discussed the positive growth and profit momentum in our retail businesses and our disciplined and resilient approach to the commercial cycle. Our H2 performance has been strong, and the negative movements on this slide relate to the one-off transitional impacts that we outlined at the half year results back in February. I will run through some of the key technical aspects of the result to demonstrate the quality and stability of our earnings, the improved efficiency, the core business momentum, and the strength of our balance sheet and capital position as we enter FY27.

Speaker #2: Nick has discussed the positive growth and profit momentum in our retail businesses, and our disciplined and resilient approach to the commercial cycle. Our second-half performance has been strong, and the negative movements on this slide relate to the one-off transitional impacts that we outlined at the half-year result back in February.

Speaker #2: I'll run through some of the key technical aspects of the result to demonstrate the quality and stability of our earnings: the improved efficiency, the core business momentum, and the strength of our balance sheet and capital position as we enter FY27.

Speaker #2: Starting with our reinsurance program, the increase in reinsurance expense reflects portfolio growth, the inclusion of RACQ Insurance, and the additional protection provided by our expanded quota shares from 32.5% to 35%, effective from January 1, 2026.

William McDonnell: Starting with our reinsurance program, the increase in reinsurance expense reflects portfolio growth, the inclusion of RACQ Insurance, and the additional protection provided by our expanded quota shares from 32.5% to 35% from 1 January 2026. Non-quota share expense increased by around 15% to AUD 1.34 billion. Most of the increase relates to RACQ Insurance, including specific catastrophe cover costs, reinstatement premiums following the severe H1 weather events, an increase in cyclone reinsurance pool costs, and incorporating RACQ Insurance into our long-term perils volatility cover. Importantly, we have achieved the targeted annual reinsurance synergies of more than AUD 50 million, and this provides a material benefit heading into FY27. Turning to FY26 perils, the group recorded net peril costs of AUD 1,579 million, which was nearly AUD 500 million higher than FY25.

Speaker #2: Non-quota share expense increased by around 15% to $1.34 billion. Most of the increase relates to RACQ Insurance, including specific catastrophe cover costs, reinstatement premiums following the severe first half weather events, an increase in cyclone reinsurance pool costs, and incorporating RACQ Insurance into our long-term perils volatility cover.

Speaker #2: Importantly, we've achieved the targeted annual reinsurance synergies of more than $50 million, and this provides a material benefit heading into FY27. Turning to FY26 perils, the group recorded net peril costs of $1,579 million, which was nearly $500 million higher than FY25.

Speaker #2: We finished the year $114 million above the net peril allowance, which was primarily attributable to the RACQ severe perils experience that we had in the first half, prior to it being incorporated into the IAG program.

William McDonnell: We finished the year AUD 114 million above the net peril allowance, which was primarily attributable to the RACQ severe perils experience that we had in the H1 prior to it being incorporated into the IAG program. Additionally, at the half year, the rest of the group's perils was stabilized by the peril volatility cover. The H2 result was much stronger, and therefore the peril volatility cover stabilizer unwound, and we ended with net peril costs AUD 38 million below the allowance. In terms of our divisions, I have shown in the bottom right that for the full year, RIA and New Zealand came in below allowance, and you will see that IIA finished the year AUD 71 million above allowance, with the Victorian bushfires in January having a major impact, as Nick mentioned. Overall, the net of these equates to the AUD 38 million favorable outcome.

Speaker #2: Additionally, at the half year, the rest of the group's perils was stabilized by the peril volatility cover. The second half result was much stronger, and therefore, the peril volatility cover stabilizer unwound.

Speaker #2: And we ended with net peril costs $38 million below the allowance. In terms of our divisions, I’ve shown in the bottom right that for the full year, RIA and New Zealand came in below allowance.

Speaker #2: And you'll see that IIA finished the year $71 million above allowance, with the Victorian bushfires in January having a major impact, as Nick mentioned.

Speaker #2: Overall, the net of these equates to the $38 million favorable outcome. Looking ahead to FY27, our perils allowance increases by only 2%, to $1.49 billion.

William McDonnell: Looking ahead to FY27, our perils allowance increases by only 2% to AUD 1.49 billion. This increase is below net earned premium growth, and it includes a full year of RACQ Insurance within the group reinsurance program. Coming back to the perils upside that Nick mentioned, I am sharing again here how our long-term perils volatility cover works to protect downside in over 95% of modeled scenarios, while importantly, the upside benefit is retained, as we presented at our recent Investor Day. The top chart shows the pattern of peril outcomes we faced before taking this cover into account. For each of the three remaining years of the contract, the cover provides improved by 50 basis points to 51.6%, and with further momentum through the year, with the H2 ratio improving to 51.2%. Some specific call-outs for each division. In RIA, we saw a modest improvement in motor frequency.

Speaker #2: This increase is below net earned premium growth, and it includes a full year of RACQ Insurance within the group reinsurance program. Coming back to the perils upside that Nick mentioned, I'm sharing again here how our long-term perils volatility cover works to protect downside in over 95% of model scenarios.

Speaker #2: Importantly, the upside benefit is retained, as we presented at our recent Investor Day. The top chart shows the pattern of peril outcomes we face before taking this cover into account.

Speaker #2: For each of the three remaining years of the contract, the cover provides moved by 50 basis points to 51.6%. With further momentum through the year, the second half ratio improved to 51.2%.

Speaker #2: Some specific callouts for each division: In RIA, we saw a modest improvement in motor frequency. However, in Home, we experienced higher claims inflation. Across long-tail lines, commercial claims in IIA and CTP experience was broadly in line with expectations.

William McDonnell: However, in home we experienced higher claims inflation. Across long tail lines, commercial claims in IIA and CTP, experience was broadly in line with expectations. In New Zealand, the underlying claims showed a material improvement, including the benefit from lower frequency in the home contents portfolio. The overall improvement reflects continued benefits from our claims transformation program, which includes supply chain efficiencies. Disciplined execution of these projects are delivering claims benefits of around AUD 350 million per year. On costs, we continued to deliver disciplined expense management and are seeing the benefits of prior investment in transforming the business. The admin expense ratio improved by 60 basis points to 11.6%, including a 100 basis point improvement in the H2 compared with the prior corresponding period.

Speaker #2: And in New Zealand, the underlying claims showed a material improvement, including the benefit from lower frequency in the home contents portfolio. The overall improvement reflects continued benefits from our claims transformation program, which includes supply chain efficiencies.

Speaker #2: Disciplined execution of these projects is delivering claims benefits of around $350 million per year. On costs, we continue to deliver disciplined expense management and are seeing the benefits of prior investment in transforming the business.

Speaker #2: The admin expense ratio improved by 60 basis points to 11.6%, including a 100 basis point improvement in the second half compared with the prior corresponding period.

Speaker #2: We'll continue to invest in FY27, with a focus on AI and tech modernization, improving productivity and customer outcomes, and the long-term scalability of our business.

William McDonnell: We will continue to invest in FY27 with a focus on AI and tech modernization, improving productivity and customer outcomes, and the long-term scalability of our business. Importantly, we expect the group admin expense ratio, excluding levies, to reduce to below 11% in FY27, achieving the target that we set in 2024. This reflects both continued cost discipline and the benefits we expect to realize from our transformation program. We continue to anticipate further cost reductions in our business, allowing us to accelerate our investments, including in AI, in order to grow and transform. Investment income, while lower than FY25, was a solid contributor, supported by underlying income from technical reserves and strong equity returns in shareholders' funds. Technical reserves reported investment income of AUD 246 million, including a AUD 136 million negative mark-to-market impact from the increase in risk-free rates.

Speaker #2: Importantly, we expect the group admin expense ratio, excluding levies, to reduce to below 11% in FY27, achieving the target that we set in 2024.

Speaker #2: This reflects both continued cost discipline and the benefits we expect to realize from our transformation program. We continue to anticipate further cost reductions in our business, allowing us to accelerate our investments, including in AI, in order to grow and transform.

Speaker #2: Investment income, while lower than FY25, was a solid contributor, supported by underlying income from technical reserves and strong equity returns in shareholders' funds. Technical reserves reported investment income of $246 million, including a $136 million negative mark-to-market impact from the increase in risk-free rates.

Speaker #2: The underlying investment income remains strong at $378 million, representing an underlying yield of 4.8%. Additionally, the FY26 exit yield of around 5.5% provides a supportive starting point for FY27.

William McDonnell: The underlying investment income remains strong at AUD 378 million, representing an underlying yield of 4.8%. Additionally, the FY26 exit yield of around 5.5% provides a supportive starting point for FY27. Shareholders' funds reported investment income of AUD 383 million. This was driven by strong returns in our equities portfolio, while fixed interest returns were reduced by negative mark-to-market movements as risk-free rates rose. The shareholders' funds portfolio remains defensively positioned with a growth asset weighting of 28%. The year-on-year increase in growth assets primarily reflected a higher infrastructure allocation, partly offset by a reduced allocation to higher yielding credit. We finished the year with a strong capital position with our CET1 multiple at 1.14 times above our target range of 0.9 to 1.1. Strong H2 earnings more than offset returns to shareholders from the dividend and buyback.

Speaker #2: Shareholders' funds reported investment income of $383 million. This was driven by strong returns in our equities portfolio, while fixed interest returns were reduced by negative mark-to-market movements as risk-free rates rose.

Speaker #2: The shareholders' funds portfolio remains defensively positioned, with a growth asset weighting of 28%. The year-on-year increase in growth assets primarily reflected a higher infrastructure allocation, partly offset by a reduced allocation to higher-yielding credit.

Speaker #2: We finished the year with a strong capital position, with our CET1 multiple at 1.14 times, above our target range of 0.9 to 1.1. Strong second half earnings were more than offset they more than offset returns to shareholders from the dividend and buyback.

Speaker #2: During the second half, we completed the $200 million buyback that we announced in February. This reduced the share count by approximately 27 million shares at an average price of around $7.30.

William McDonnell: During the H2, we completed the AUD 200 million buyback that we announced in February. This reduced the share count by approximately 27 million shares at an average price of around AUD 7.30. In terms of other movements, the reinsurance recovery timing headwind that we recognized in the H1 unwound as we expected. We also recognized a temporary capital impact of over AUD 100 million relating to the profit commission recognition, equivalent to 4 points. There were modest headwinds from growth in the PCA charges and the weaker New Zealand dollar. Overall, we remain strongly capitalized. Our strong capital position has supported a AUD 0.20 final dividend, up 5%, bringing the full-year dividend to AUD 0.32 per share. The full-year dividend represents a payout ratio of 73%, and we have also increased franking to 80% in the H2.

Speaker #2: In terms of other movements, the reinsurance recovery timing headwind that we recognized in the first half unwound as we expected. We also recognized the temporary capital impact of over $100 million relating to the profit commission recognition, equivalent to 4 points.

Speaker #2: And there were modest headwinds from growth in the PCA charges and the weaker New Zealand dollar. Overall, we remain strongly capitalized. Our strong capital position has supported a 20-cent final dividend, up 5%, bringing the full-year dividend to 32 cents per share.

Speaker #2: The full-year dividend represents a payout ratio of 73%. We've also increased franking to 80% in the second half. Looking ahead, we expect dividends to be 80% to 100% franked in FY27 and going forward.

William McDonnell: Looking ahead, we expect dividends to be 80% to 100% franked in FY27 and going forward. Together, the increased dividend and completed buyback demonstrate our capacity to return capital to shareholders while continuing to fund growth and invest in the business. Finally, this slide shows our indicative capital position after allowing for the announced RAC Insurance acquisition. Starting from a CET1 multiple of 1.14, the final dividend reduces this to 0.98 times.

Speaker #2: Together, the increased dividend and completed buyback demonstrate our capacity to return capital to shareholders while continuing to fund growth and invest in the business.

Speaker #2: Finally, this slide shows our indicative capital position after allowing for the announced RAC Insurance acquisition. Starting from a CET1 multiple of 1.14, the final dividend reduces this to 0.98 times.

Nick Hawkins: Australia and New Zealand, which is really core to Ambition 2030 and our community pillar. What we've done is we've set a clear 2030 goal to help Australian and New Zealanders take more than 2 million actions to help to better understand their natural hazard risk. This includes digital tools, face-to-face community workshops, and some practical guidance. We're also continuing to share our research, our data, and our insights to support national resilience. This includes our commitment to recognizing effective large-scale risk reduction activities in insurance pricing through our participation in the federal government's Hazards Insurance Partnership. It's critical that insurance remains accessible and affordable across Australia and New Zealand. So where we see resilient actions that materially reduce risk, our insurance costs need to come down.

Speaker #1: Strider in New Zealand, which is really core to our Ambition 2030 and our Community pillar. What we've done is we've set a clear 2030 goal to help Australians and New Zealanders take more than 2 million actions to help better understand their natural hazard risk.

Speaker #1: This includes digital tools, face-to-face community workshops, and some practical guidance. We're also continuing to share our research, our data, and our insights to support national resilience.

Speaker #1: This includes our commitment to recognizing effective large-scale risk reduction activities in insurance pricing, through our participation in the federal government's Hazards Insurance Partnership. It's critical that insurance remains accessible and affordable across Australia and New Zealand.

Speaker #1: So where we see resilient actions that materially reduce risk, our insurance costs need to come down. We're backing this up with our own investments, including the multi-million-dollar NRMA Insurance Help Fund and our new investments from our venture fund, Firemark.

Nick Hawkins: We're backing this up with our own investments, including the multimillion-dollar NRMA Insurance Help Fund and our new investments from our venture fund, Firemark. A great example is Spacecube, modular housing that can be deployed quickly for customers after major events, taking pressure off the country's housing and construction challenges. It was great to see this in action in regional Victoria in January following the devastating bushfires, where we were keeping customers comfortably on their land during recovery. So moving to guidance, the confidence in our underlying business is reflected in our FY27 guidance. This includes 5% to 8% premium growth with volume growth and targeted premium increases and a full year of RACQ. We anticipate underlying growth in our Retail Insurance Australia businesses of mid-single digit, and we anticipate low single-digit growth in the intermediated businesses trans-Tasman.

Speaker #1: A great example is SpaceCube. Modular housing that can be deployed quickly for customers. After major events. Adding pressure to the taking pressure off the country's housing and construction challenges.

Speaker #1: It was great to see this in action in regional Victoria in January, following the devastating bushfires, where we were keeping customers comfortably on their land during recovery.

Speaker #1: So, moving to guidance—and the confidence in our underlying business is reflected in our FY27 guidance. This includes 5% to 8% premium growth, with volume growth and targeted premium increase.

Speaker #1: And a full year of RACQ. We anticipate underlying growth in our retail businesses of mid-single digits. And we anticipate low single-digit growth in the intermediated businesses, Trans-Tasman.

Speaker #1: An FY27, we expect our reported margin guidance to be between 14 and a half and 16 and a half percent. The midpoint of this is above the 15% plus margin that we outlined in the investor day.

Nick Hawkins: In FY27, we expect our reported margin guidance to be between 14.5% and 16.5%. The midpoint of this is above the 15% plus margin that we outlined in the Investor Day and really forms the basis of our 15% ROE, high single-digit EPS targets, with IAG well set to deliver on this on a sustainable basis. You can see how the actions we've taken have delivered a materially improved financial profile in recent years. We are delivering more consistent growing earnings profile. As we head into FY27, the midpoint of our reported insurance margin guidance represents a 9% increase on results delivered this year. In addition to this, as William explained, our perils modeling shows that there is an additional extra average upside of over AUD 100 million a year from perils.

Speaker #1: And that really forms the basis of our 15% ROE and high single-digit EPS targets, with IAG well set to deliver on this on a sustainable basis.

Speaker #1: You can see how the actions we've taken have delivered a materially improved financial profile in recent years. We are delivering a more consistent, growing earnings profile.

Speaker #1: And as we head into FY27, the midpoint of our reported insurance margin guidance represents a 9% increase on results delivered this year. In addition to this, as William explained, our payrolls modeling shows that there is an extra average upside of over $100 million a year from payrolls.

Speaker #1: Based on the momentum in our business and the payroll protection we have in place, we're confident in what we'll deliver. So just let me finish with this.

Nick Hawkins: Based on momentum in our business and the perils protection we have in place, we are confident on what we will deliver. Let me finish with this. The past 12 months has been a period of delivery for us. I am proud of the company, our people, and the strong positioning we have for FY27. We will continue to be a customer-obsessed economic shock absorber, supported by our scale, our brands, and the platforms that we have built to service our customers. Ambition 2030 outlines clear goals for our customers, our communities, and our people. Importantly for our shareholders, we will deliver an ROE of 15% or above, high single-digit earnings per share, and top quartile shareholder returns. William and I are now happy to answer any of the questions. Why do not we start in the room, and I think Mark's got the microphone handing around to Kieran. Hi, mate.

Speaker #1: The past 12 months has been a period of delivery for us. I'm proud of the company, our people, and the strong positioning we have for FY27.

Speaker #1: We will continue to be a customer-obsessed economic shock absorber, supported by our scale, our brands, and the platforms that we've built to service our customers.

Nick Hawkins: We will continue to be a customer-obsessed economic shock absorber, supported by our scale, our brands, and the platforms that we have built to service our customers. Ambition 2030 outlines clear goals for our customers, our communities, and our people. Importantly for our shareholders, we will deliver an ROE of 15% or above, high single-digit earnings per share, and top quartile shareholder returns. William and I are now happy to answer any of the questions. Why do not we start in the room, and I think Mark's got the microphone handing around to Kieran. Hi, mate.

Speaker #1: Ambition 2030 outlines clear goals for our customers, our communities, and our people. But importantly for our shareholders, we’ll deliver an ROE of 15% or above, high single-digit earnings per share, and top quartile shareholder returns.

Speaker #1: William and I are now happy to answer any of the questions. So, why don't we start in the room? I think Mark's got the microphone and is handing it around to Kieran.

Speaker #1: Hi, mate.

Speaker #3: Good morning. Kieran Chidgey from UBS. Nick, three questions. I'd like to start on GWP, on the trends you showed on slide 8, on the quarterly progress in retail in Australia and New Zealand.

Kieren Chidgey: Morning, Kieren Chidgey from UBS. Nick, three questions. I would like to start on GWP on the trends you showed on slide 8 on the quarterly progress in Retail in Australia and New Zealand. Can you just unpack in a bit more detail by product, and I guess units and rate what you saw, particularly through that Q4?

Speaker #3: Can you just unpack in a bit more detail, by product and, I guess, units and rate, what you saw, particularly through that fourth quarter?

Speaker #1: Yeah, I mean, that's sort of a demonstration, I think, of the things we've been doing over the last couple of years starting to come together.

Nick Hawkins: Yeah. That is sort of a demonstration, I think, of the things we have been doing over the last couple of years starting to come together and really creating some real momentum. Breaking that down, we have definitely seen home volume growth as part of that, together with continued prices flowing through. I think we start with Australia, then we move to New Zealand. So we have got that low single digit of 1.1% volume growth as well as home, as well as prices flowing through in that home portfolio. Motor, that probably was a trend that we were doing well in the H1. I think the big change H1, H2 has been more about motor, where we definitely had some challenges, and we talked about that at the half and in the August results. Sorry, in the February for the H1 results.

Speaker #1: I'm really creating some real momentum. Sort of breaking that down, we've definitely seen home volume growth as part of that, and together with continued price, it's flowing through.

Speaker #1: I think we'll start with Australia, then we'll move to New Zealand. So, we've got that low single digit—1.1% and a bit—volume growth, as well as home, as well as prices flowing through in that home portfolio.

Speaker #1: And motor, we're probably—I mean, that probably was a trend that we were doing well on in the first half. I think the big change between the first half and the second half has been more about motor.

Speaker #1: Where we were definitely had some challenges. We talked about that at the half and in the August results—sorry, in the February, for the first half results.

Speaker #1: We've definitely seen a reversal in the second half, and we're seeing both price and volume growth there. We're winning new business as well.

Nick Hawkins: We have definitely seen a reversal in the H2. We are seeing both price and volume growth there. We are seeing new business. We are winning new business. That is really helping us, which was sort of slightly disappointing Q2, call it that. You can see Q3 and Q4, we are really seeing both of that flow through to that sort of 7% in total growth within the direct Retail business in that last quarter, which is very positive, right? That is really a result of the lots of things we have been doing in our company. We really feel pretty excited about that. New Zealand is probably more of a volume story. There is a bit of prices flowing through. There is also Aon that has come in and that is sort of, it is equal quarter on quarter on quarter, but it is definitely amplified each of those quarters.

Speaker #1: That's really helping us. Which was, we sort of had a slightly disappointing second quarter—call it that. You can see in the third and fourth quarters, we're really seeing both of that flow through—that sort of 7% in total growth within the direct retail business in that last quarter, which is very positive, right?

Speaker #1: That's really a result of lots of things we've been doing in our company. We really feel pretty excited about that. New Zealand is probably more of a volume story.

Nick Hawkins: That is really a result of the lots of things we have been doing in our company. We really feel pretty excited about that. New Zealand is probably more of a volume story. There is a bit of prices flowing through. There is also Aon that has come in and that is sort of, it is equal quarter on quarter on quarter, but it is definitely amplified each of those quarters.

Speaker #1: There's a bit of price that's flowing through. There's also Aeon that's come in, and that's sort of—it's equal quarter on quarter on quarter, but it's definitely amplified each of those quarters.

Speaker #1: Now, that'll run off, and we think we'll see in FY27, in New Zealand, a bit more price in there, as well as the continuation of volume.

Nick Hawkins: Now, that will run off, and we think we will see in FY27 in New Zealand a bit more price in there, as well as continuation of volume. That is kind of the story.

Speaker #1: That's kind of the story.

Speaker #3: All right. Thanks. Second question just on margins in two different areas: New Zealand intermediated, obviously under significant pressure in the second half, down to 8.9.

Kieren Chidgey: All right. Thanks. Second question just on margins in two different areas. New Zealand intermediate, obviously, under significant pressure in H2 down to 8.9%. I guess I am just surprised at the pace of

Speaker #3: I guess I'm just surprised at the pace of decline there, half-on-half from 18% in the first half. And if we look at your GWP, and I guess the earn-through of the premium into '27, I'm interested in where you see that margin headed.

Nick Hawkins: Yeah

Kieren Chidgey: decline there half on half from 18% in H1. If we look at your GWP and I guess the earn through of the premium into 2027, I am interested in where you see that margin headed

Speaker #1: Yeah.

Nick Hawkins: Yeah

Speaker #3: Into 27.

Kieren Chidgey: into 2027.

Nick Hawkins: Yeah. Sure. That's a tough market. We sort of highlight it's 8% of our company, but we're very focused on it. It's a real challenge for Phil and the team there. Our business is 10% down year-on-year, essentially, in NZI, in New Zealand, in local currency. What we can observe now, and we saw this at June renewals, because remember we have some of these big dates in that, it's more lumpier, that business. We saw a continuation in July. We've definitely seen a, is this the right expression, a slowdown in the rate of decline. Where that was double, sort of run rates minus 10%, which is not great. That's definitely slowed down a lot, as in, sort of now sort of minus 5%, call it that. We're expecting that to continue.

Speaker #1: Yeah, sure. I mean, that's a tough market. I mean, we sort of highlight it's 8% of our company, but we're not—we're very focused on it.

Speaker #1: It's a real challenge for Phil and the team there. I mean, our business is 10% down year on year—centrally and in MZI in New Zealand, in local currency.

Speaker #1: What I mean is, what we can observe now—and we saw this at June renewals—is that we have some of these big dates in that small lump, here, of that business.

Speaker #1: And we saw a continuation in July. We've definitely seen a—just the right expression—a slowdown in the rate of decline. And so, where that was double, sort of run rates minus 10, which is not great.

Speaker #1: That's definitely slowed down a lot, as in sort of now, sort of minus five—call it that. And we're expecting that to continue, although in my guidance, we did say—in our guidance—we did say low single digit for intermediate.

Nick Hawkins: Although in our guidance we did say low single digit for intermediates. We probably mean a couple of percent in Australia and probably 0% to minus a little bit, 1% or 2% in New Zealand. That's probably the blend. Zero would be a good outcome, I think, for FY27 and NZI. In relation to margin, we're just maintaining that discipline. I don't see it keeping reducing. We're not reducing the price 10% per risk. We've lost volume too, so I don't see that trend down. I see that sort of stabilizing around where it is in FY27.

Speaker #1: We probably mean a couple of percent in Australia, and probably zero to minus a little bit—one or two percent—in New Zealand. That's probably the blend.

Speaker #1: That's just—I can't—zero would be a good outcome, I think, for FY27 and MZI. In relation to margin, we're just maintaining that discipline.

Speaker #1: I don't see it keep reducing. We're not reducing the price by 10% per risk. We've lost volume too, so I don't see that trend down.

Speaker #1: I see that sort of stabilizing around where it is in FY27.

Speaker #3: And so the second part of that margin question was RACQ 6.3 underlying second half, still well shy of where the group looks to operate.

Kieren Chidgey: The second part of that margin question was RACQ's 6.3 underlying H2 is still well shy of where the group looks to operate. Where do you see that moving in 2027? Can it hit the 15% or is that still more a 2028 target?

Speaker #3: Where do you see that moving in '27? Can it hit the 15%, or is that still more a '28 target?

Speaker #1: Yeah, it's probably—it's definitely lifting up. I would expect it to be double-digit. And profit commission in a conservative way, so we do risk-adjusted, as we indicated in that note.

Nick Hawkins: Yeah, it's definitely lifting up. I would expect it to be double digit and

William McDonnell: Profit commission in a conservative way. We do risk adjust it, as we indicated in that note. You would expect it to gradually build towards the maturity date of the respective contracts. Broadly, we are expecting a similar amount in 2027 to 2026, but it will gradually build over time.

Speaker #1: So you would expect it to gradually build towards the maturity date of the respective contracts. But broadly, we're expecting a similar amount in 2027 to 2026, but it will gradually build over time.

Speaker #4: Hi. Freya Kong from BOV. Just on the group margin outlook again, is 15% underlying a good starting point going into next year? Can you just walk us through the moving parts and scenarios where you might come in at the bottom end of guidance 14 and a half and where you'd be at the top end?

Operator: Hi, Freya Kong from BofA. Just on the group margin outlook again. Is 15% underlying a good starting point going into next year? Can you just walk us through the moving parts and scenarios where you might come in at the bottom end of guidance, 14.5%, and where you would be at the top end?

Freya Kong: Hi, Freya Kong from BofA. Just on the group margin outlook again. Is 15% underlying a good starting point going into next year? Can you just walk us through the moving parts and scenarios where you might come in at the bottom end of guidance, 14.5%, and where you would be at the top end?

Nick Hawkins: Yes.

Operator: I am just surprised because at the Investor Day you guys said 15% plus.

Freya Kong: I am just surprised because at the Investor Day you guys said 15% plus.

Speaker #4: I'm just surprised, because at the investor day, you guys said 15-plus.

Speaker #1: Yeah, we decided to stay. I mean, the ambition is 15% plus. Well, the ambition is really 15% ROE, top quartile EPS—sorry, high single-digit EPS—top quartile performance.

Nick Hawkins: Well, we decided to stay. The ambition is 15% plus. The ambition is really 15% ROE, top quartile EPS. Sorry, high single digit EPS, top quartile performance. The maths of that is we need to run the business 15% plus to deliver that. We went with a 200 basis point guidance range, so 14.5% to 16.5%. We have sort of guided the market pretty quickly to take the midpoint, 15.5%. We have a slide there that sort of guides the market quickly there. Never say never in insurance, but you would have to think the lower end of that range is. We are more likely towards the top than the bottom, would be my thinking. But we have got a 200 basis point range for the uncertainty that we have in running the business we have.

Speaker #1: The mass of that is we need to run the business at 15% plus to deliver that. We went with a 200 basis point guidance range.

Speaker #1: So, 14 and a half to 16 and a half. So, we've sort of guided the market pretty quickly to take the midpoint—15 and a half percent—with a slide there that sort of guides the market quickly there.

Speaker #1: I mean, never say never in insurance, but you'd have to think, of that range, we're more likely towards the top than the bottom.

Speaker #1: That's my thinking. But we've got a 200-basis-point range of uncertainty that we have in running the business. We have spent a lot of time taking the uncertainty out—reinsurance, other things we've done, operational load, the technology transformation.

Nick Hawkins: We have spent a lot of time taking the uncertainty out, reinsurance, other things we have done operationally, the technology transformation. If you are stepping it through then, the run rate, we expect, to Kieran's point, that we will see a greater contribution in underlying. We will see a greater contribution and underlying level from RACQ in FY27 compared to 2026 being that our commercial businesses, there are challenges, particularly in New Zealand. So we are not expecting anything, certainly not in New Zealand, anything stronger. To hang on is what we are trying to do, and be disciplined is a better word to use, probably, than hang on. We are operating there. We do not have headwind in things like perils allowance and the like too much because we have only increased that by a couple of percent. You can see what we are doing on perils.

Speaker #1: So, sort of, you're stepping it through then. There's sort of the run rate we expect, to Karen's point, that we'll see a better, a greater contribution, and underlying we'll see a better, a greater contribution and underlying level from RACQ in FY27 compared to '26.

Speaker #1: Being that our commercial businesses are our challenges, particularly in New Zealand. So we're not expecting anything certainly not in New Zealand, anything stronger. And that to hang on is sort of what we're trying to do and be disciplined is the better word to use probably than hang on.

Speaker #1: So that's where we're just operating there. We don't have headwind in things like perils allowance and the like too much, because we've only increased that by a couple of percent.

Speaker #1: But we're trying to—you can see what we're doing on perils. We're leaving that $100 million outside of guidance. So we're purposely doing that, where our guidance is our perils allowance, which is the attachment of our layer.

Nick Hawkins: We are leaving that AUD 100 million outside of guidance. So we are purposely doing that, where our guidance is our perils allowance, which is the attachment of our layer. But actually, the modeling says on average, there should be upside on that, and we are leaving that outside of those guidance numbers purposely to make it simpler, hopefully, for investors. My overall tone for this release is business is going pretty well. So we are trying to get that balance right of 5% to 8% growth, which is pretty ambitious for IAG. But we have got some real evidence why that we are going to deliver that, as well as maintain those margins in the guidance range that we have set up.

Speaker #1: But actually, the modeling says on average there should be upside on that. And we're leaving that outside of those guidance numbers purposely to make it simpler, hopefully, for investors.

Speaker #1: I mean, my overall tone for this release is: business is going pretty well. And so we're trying to get that balance right of 5% to 8% growth, which is pretty ambitious for AG.

Speaker #1: But we've got some real evidence for why we're going to deliver that, as well as maintain those margins in the guidance range that we've set out.

Speaker #4: It's really helpful, thank you. And then just on the New Zealand margin, drilling into the retail versus commercial as well—would you expect retail margins to continue to moderate because pricing has been so good in that market?

Operator: That is really helpful. Thank you. Just on the New Zealand margin, just drilling into the retail versus commercial as well.

Freya Kong: That is really helpful. Thank you. Just on the New Zealand margin, just drilling into the retail versus commercial as well.

Nick Hawkins: Yeah.

Operator: Would you expect retail margins to continue to moderate because pricing has been so good in that market? Secondly, on commercial, is 10% margin sort of you earning your cost of capital there, is that your target or would you expect that to go higher just to be more disciplined?

Freya Kong: Would you expect retail margins to continue to moderate because pricing has been so good in that market? Secondly, on commercial, is 10% margin sort of you earning your cost of capital there, is that your target or would you expect that to go higher just to be more disciplined?

Speaker #4: And then secondly, on commercial, is a 10% margin sort of you earning a cost of capital there—is that your target? Or could that—yeah.

Speaker #4: Would you expect that to go higher, just to be more disciplined?

Speaker #1: I mean, the New Zealand market is similar to Australia. The retail and the issues affecting NZI are really quite different in the retail. So there aren't similar comments to what happens in Australia between Australia and retail and our CGE business.

Nick Hawkins: The New Zealand market is similar to Australia. The retail and the issues affecting NZI are really quite different in the retail side. There is not similar comments to what happens in Australia between Australian retail and our CGU business. Some of the challenges in NZI are not necessarily impacting the retail business, the AMI and the State brands. That business continues to do very well. The margins are strong. There is something in New Zealand which is a bit unusual that every year you do not have an earthquake, that there is an element of that pricing and profitability that sits there. So there are higher returns because of that. That business is going very well. It has got genuine growth happening and I expect those margins to stay roughly where they are. As I said, with NZI, that is a different story.

Speaker #1: So just some of the challenges in NZI are not necessarily impacting the retail business, the AMI and the State brands. No, that business continues to do very well.

Speaker #1: We know that margins are strong. We continue—I mean, there's something in New Zealand which is a bit unusual: that every year you don't have an earthquake, that there's sort of an element of that pricing and profitability that sits there.

Speaker #1: So, it's sort of that there are higher returns because of that. So, no, I'm—sort of, that business is going very well. It's got genuine growth happening.

Speaker #1: And I expect those margins to stay roughly where they are. And, as I said, with NZI, that's a different story; that's about maintaining the discipline, holding that position. As I said, if we could be flat in '27, that would be a great outcome.

Nick Hawkins: That is about maintaining the discipline, holding that position. As I said, if we could be flat in 2027, that would be a great outcome and I am thinking maybe minus a little bit, but definitely not minus 10. That is in relation to growth.

Speaker #1: And I'm thinking maybe minus a little bit, but definitely not minus 10. That's what I'm—that's in relation to growth.

Speaker #3: All right. Mike, someone's on screen. Following up on one of the quotes you've got in your annual report, on page 83 in the director's report, you mentioned that home non-perils claims inflation of around 15% was due to increasing severity of water claims, including the impact of changes in building repair standards.

Mark Timmins: Hi, Mark Timmins.

[Analyst 1]: Hi, Mark Timmins.

Nick Hawkins: Hi, Mark.

Mark Timmins: Hans Green. Following up on one of the quotes on your annual report on page 83 in the directors report. You mentioned that home non-perils claims inflation of around 15% was due to increasing severity of water claims, including impact of changes in building repair standards. Could I get you to maybe elaborate on that and what else you are seeing around claims inflation?

[Analyst 1]: Hans Green. Following up on one of the quotes on your annual report on page 83 in the directors report. You mentioned that home non-perils claims inflation of around 15% was due to increasing severity of water claims, including impact of changes in building repair standards. Could I get you to maybe elaborate on that and what else you are seeing around claims inflation?

Speaker #3: Can I get you to maybe elaborate on that, and what else you're seeing around claims inflation?

Speaker #1: Yeah. Maybe I'll cover some themes, and maybe I'll bring William in—he's been sitting there quietly. So, the themes on inflation are mainly a much better story.

Nick Hawkins: Yeah, maybe some themes and maybe I will bring William in. He is sitting there quietly. The themes on inflation are motor, a much better story. We are really seeing quite a drop. I think that has been helpful, obviously helpful for consumers. In our go-to-market strategy, we sort of feel like that has been helpful to us. Property, we continue to see property inflationary challenges, and that is not really driven by the industry. It is driven by the challenges of our country on repair costs, access to labor, building materials. There is just inflationary pressure in the system. That is right. We definitely have greater incidents of water damage, and then the standard to which we were repairing some of that, particularly anything to do with mold, has increased. That is not just an IAG comment, that is an industry comment.

Speaker #1: We're really seeing quite a drop, and I think that's been helpful—obviously helpful for consumers. But in our go-to-market strategy, we feel like that's been helpful to us as well.

Speaker #1: Property—we continue to see property inflationary challenges, and that's not really driven by the industry. It's driven by the challenges facing our country: repair costs, access to labor, and building materials.

Speaker #1: There's just inflationary pressure in the system. That's right. We definitely have greater incidence of water damage. And then the standard to which we are repairing some of that, particularly anything to do with mold, has increased.

Speaker #1: And that's not just an IG comment; that's an industry comment. So there's sort of, and then sort of throw in, just generally, we're going to see—we're seeing more perils and more events.

Nick Hawkins: Then sort of throw in just generally, we are seeing more perils, so more events. We expect over time, greater frequency of perils events, therefore adding to the challenge here. It is really the combination of those things that are driving that.

Speaker #1: So we expect, over time, a greater frequency of perils events, therefore adding to the challenge here. It's really the combination of those things that is driving that.

Speaker #3: And then on your expense ratio, are we likely to see it lower in the second half of the year? As your first question was around the top line premium guidance.

Mark Timmins: On your expense ratio, are we likely to see it lower in the H2 of the year as you-

[Analyst 1]: On your expense ratio, are we likely to see it lower in the H2 of the year as you-

[Analyst]: First question around the top line premium guidance. Between 5% and 8%, I think that is well ahead of what the market is looking for. I think the market is just below 4%. Can you step us through what is going to be driving that? That is quite a punchy number.

[Analyst 2]: First question around the top line premium guidance. Between 5% and 8%, I think that is well ahead of what the market is looking for. I think the market is just below 4%. Can you step us through what is going to be driving that? That is quite a punchy number.

Speaker #3: So, it's been 5% and 8%. I think that's well ahead of what the market is looking for. I think the market's just below 4%.

Speaker #3: So, can you step us through what is going to be driving that? That's quite a punchy number.

Speaker #1: Yeah, I mean, there's a few parts. I mean, that's part of the reason we showed the quarterly direct retail businesses in Australia and New Zealand, because you can see the evidence of why we're confident.

Nick Hawkins: Yeah. There are a few parts. That is part of the reason we showed the quarterly direct retail businesses in Australia and New Zealand because you can see the evidence of why we are confident. The elements are, there is probably 1% and a bit from RACQ. Last year in 2026, we only had 10 months. In 2027, we got 12 months. Just that. They can sort of bank that. The run rate of our direct retail businesses. We sort of said in there mid-single digits for retail in total. But the direct element of that, which is the biggest part, remember our retail business is a gigantic part of the premium pool. The run rate, which was on those slides, was sort of 7%. The banks are slightly softer than that in both Australia and New Zealand.

Speaker #1: So the elements are there’s probably one and a bit, one and a bit percent from RACQ. So last year, in '26, we only had 10 months; in '27, we got 12 months.

Speaker #1: So just that is so they can sort of bank that. The run rate of our direct retail businesses—I mean, we sort of sit in the mid-single digits for retail in total.

Speaker #1: But the direct element of that, which is the biggest part—remember, our retail businesses are a gigantic part of the premium pool. The run rate, which is on those slides, was sort of 7%.

Speaker #1: The banks are slightly softer than that, in both Australia and New Zealand. Both of them are not growing as fast as our direct businesses.

Nick Hawkins: Both of them are not growing as fast as our direct businesses, but they are still positive. There is 1% from that mid-single digit with our direct retail AMI, State, NRMA, RAC, they are more like 6%, 7%. Then within Jarrod's CGU and Phil's NZI, I have said low single digits, but actually behind that, the commentary I made was we will probably do slightly better than that in CGU in Australia. If we can do zero in NZI, I think we would be very pleased and probably -1%, -2%, something in that order. But then you have got to add the materiality of that to the numbers. That is the rough outline of our growth for FY27.

Speaker #1: But they're still positive. So that's sort of—there's 1% from that. That's sort of mid-single digit with our direct retail, AMI state, NRMA, RACV, more like 6, 7.

Speaker #1: And then within sort of Jared's CGU and Phil's NZI, I've said low single digits, but actually behind that, the commentary I made was we'll probably do slightly better than that in CGU in Australia, and if we can do zero in NZI, I think we'd be very pleased.

Speaker #1: And probably minus one, minus two, something in that order. But then you've got to add the materiality of that to the numbers. That's the rough outline of our growth for FY27.

Speaker #3: And for my second question, just following up on the cost side, you mentioned making about $400 million of AI and technology modernization investments for 2027.

[Analyst]: For my second question, just following up on the cost side. You mentioned you are making about AUD 400 million of AI and technology modernization investments for 2027. That is on an admin cost base of the group above AUD 1.4 billion. That is quite a meaningful improvement.

[Analyst 2]: For my second question, just following up on the cost side. You mentioned you are making about AUD 400 million of AI and technology modernization investments for 2027. That is on an admin cost base of the group above AUD 1.4 billion. That is quite a meaningful improvement.

Speaker #3: I mean, that's on an admin cost base of the group—about $1.4 billion. So that's quite a meaningful improvement. Can you talk a little bit about how that is going, partly through the CapEx line, and then also what kind of improvements are you expecting?

Nick Hawkins: Yeah.

[Analyst]: Can you talk a little bit about how, is that going partly through a CapEx line? And then also, what kind of improvements are you expecting? Because, that is quite a big deliberate investment you are making.

[Analyst 2]: Can you talk a little bit about how, is that going partly through a CapEx line? And then also, what kind of improvements are you expecting? Because, that is quite a big deliberate investment you are making.

Speaker #3: Because, yeah, that's quite a big, deliberate investment you're making.

Nick Hawkins: Just a comment from me before I throw to William, is that is roughly what we have been spending. So that is not new.

Speaker #1: Just a comment from me before I throw to William is that's roughly what we've been spending, so that's not new.

Speaker #4: Thank you, Nick. We have Julian Braganza from Goldman Sachs. Please go ahead, Julian.

Operator: Thank you, Nick. We have Julian Braganza with Goldman Sachs. Please go ahead, Julian.

Speaker #5: Good morning, guys. Thanks so much for taking our questions. Just the first one—I'm trying to work out where we can see the benefit of the reinsurance synergies. The $15 million within the non-quota-share reinsurance costs seems to be broadly flat, half on half.

Julian Braganza: Good morning, guys. Thanks so much for taking our questions. Just the first one. I am trying to work out where we can see the benefit of the reinsurance synergies, the AUD 15 million within the non-quota share reinsurance cost seems to be broadly flat half on half. And also just a second question on that is, what is your expectation here for this into FY27, given some of the drop-off in those reinsurance reinstatement costs? Thanks.

Speaker #5: And also, just a second question on that—what's your expectation here for this into FY27, given some of the drop-off in those reinsurance reinstatement costs?

Speaker #5: Thanks.

Speaker #1: Yeah. Thank you, Julian. So the part of it, in fact, of the larger part of it was the benefit of bringing RACQI onto the group's whole of account quota share.

William McDonnell: Yeah. Thank you, Julian Braganza. Part of it, in fact, the larger part of it was the benefit of bringing RACQ Insurance onto the group's whole of account quota share, which is better terms than the quota share that RACQ Insurance had beforehand. So that's where quite a bit of the benefit is. There's also just better pricing on a number of the other peril and non-peril covers that we have.

Speaker #1: Which is better terms than the quota share that RACQI had beforehand. So that's where quite a bit of the benefit is. And then there's also just better pricing on a number of the other peril and non-peril covers that we have.

Speaker #5: Julian, should we expect the non-quoted share reinsurance costs to reduce next year? Is that just given the drop-off of some of these one-off costs?

Julian Braganza: Sure. Should we expect the non-quota share reinsurance cost to reduce next year, just given the drop-off of some of these one-off costs?

Speaker #1: Yeah, I think it'll be fairly stable. We are also continuing to buy some drop-down cover on perils, in addition to the quota share.

William McDonnell: Yeah, I think it will be fairly stable. We are continuing to buy some drop-down cover on perils in addition to the quota share for the RACQ Insurance business.

Speaker #1: For the RACQI business.

Speaker #2: And the next big.

Nick Hawkins: The next big renewal date will be 1 January. So we will just sort of wait and see. There can be other factors that happen, and it's a bit hard to predict sort of out, when we've got some other global factors that may or may not be impactful over the next few months.

Speaker #1: The next big renewal night date will be January 1. So we're just sort of wait and see. There can be other factors that happen.

Speaker #1: It's a bit hard to predict, sort of, when we've got some other global factors that may or may not be impactful over the next few months.

Speaker #2: And Julian, I can take it offline with you later. That's how some of the items come through that we haven't quite met yet.

William McDonnell: Julian, I can take it offline with you later. There's how some of the items come through. We haven't quite met those yet, so we haven't yet executed something on that, but it is something we will just continue to explore. If it meets our targets, we'll do it, but we'll stay disciplined on our targets.

Speaker #2: So, we haven't yet executed something on that, but it's something we will just continue to explore. If it meets our targets, we'll do it, but we'll stay disciplined on our targets.

Speaker #2: And then just.

Nick Hawkins: Just a comment from me then on ROA and returns and commercial businesses generally. There's definitely around the world, that's where we're in a softer cycle, which returns are still relatively strong, but outlook is tougher. I think there's some real uniqueness around our CGU business and WFI business in Australia that's not quite that. Because the big chunk of that business is WFI, which is a rural agency business that really doesn't have some of the similarities to global commercial businesses at all. It's more retail-like. So that's a big chunk of the business. We've also got personal lines in there that's not like that. We've also got even compared to, say, our NZI business, proportionally smaller, proportionally, into that sort of SME, smaller commercial markets. That's why we continue to deliver really strong returns in that business.

Speaker #1: Just a comment from me then on sort of ROAs and returns and commercial businesses generally. I mean, there's definitely around the world that's we're in a softer cycle.

Speaker #1: Which returns are still relatively strong, but the outlook is tougher. I think there's some real uniqueness around our CGU business and WFI business in Australia that's not quite that.

Speaker #1: Because there's a big chunk of that business that's WFI, which is a rural agency business that really doesn't have some of the similarities to global commercial businesses at all.

Speaker #1: It's more retail-like, so that's a big chunk of the business. We've also got personal lines in there that's not like that. And we've also got, even compared to, say, our NZI business, proportionally smaller, proportionally.

Speaker #1: Into that sort of SME, smaller commercial markets, and that's why we continue to deliver really strong returns in that business. There's definitely pressure in our intermediate business here in Australia.

Nick Hawkins: There's definitely pressure in our intermediary business here in Australia. But we're being extremely disciplined, and we would expect to continue to earn the sort of return profile we're currently delivering despite the softer market over the next couple of years. Actually, we're doubling down on investment. We're accelerating our program into that business. It'll be really more match fit when I think there'll be more opportunities for growth, as the market sort of changes in the cycle.

Speaker #1: But we're being extremely disciplined, and we would expect to continue to earn the sort of return profile we're currently delivering—despite the softer market—over the next couple of years.

Speaker #1: And actually, we're doubling down on investment. We're accelerating our program into the business, so we're really more match fit when I think there'll be more opportunities for growth.

Speaker #1: As the market changes in its cycle.

Speaker #5: Got it. And just to follow up, Will, in terms of the financial hurdles—I just want to understand that a little bit better.

Julian Braganza: Just to follow up, Will, in terms of the financial hurdles, just want to understand that a little bit better that you're hoping to achieve.

Speaker #5: That you're hoping to achieve.

Speaker #1: For that business, or just generally? Even related.

Nick Hawkins: For that business or just generally?

Speaker #5: No, in terms of the reinsurance strategy, you mentioned that you weren't getting the financial hurdles across the line to make it work.

Julian Braganza: In terms of the reinsurance strategy, you mentioned that you weren't getting the financial hurdles across the line to make progress.

Speaker #1: Yeah, exactly. So, clearly, we would expect capital relief, and it improves the sort of volatility and distribution of our earnings. And we'd want something to be at least ROE-neutral, if not ROE-positive.

Nick Hawkins: Yeah, exactly. We'd expect capital relief, and it improves the sort of volatility and distribution of our earnings. We'd want something to be at least ROE neutral, if not ROE positive.

Speaker #5: Okay. And that's proving difficult to achieve in the current market for reinsurance.

Julian Braganza: Again, that's proving difficult to achieve in the current market for reinsurance.

Nick Hawkins: I won't go into detail, but there has been investor interest. We just haven't quite met the hurdle yet.

Speaker #1: I won't go into detail, but there has been investor interest. We just haven't quite met the hurdle yet.

Speaker #2: As part of the.

Julian Braganza: Got it.

Speaker #5: Got it. Got it. And just...

Speaker #1: Just a comment from me, sorry. I was looking to diversify our reinsurance; you're right. A mainstream quota share into our intermediate business tomorrow.

Nick Hawkins: Just a comment from me, sorry, is we're always looking to diversify our reinsurance. We write a mainstream quota share into our intermediated business tomorrow, easily, if we chose to. What we're into FY27.

Speaker #1: Easily, if we chose to. We're trying to, what we're into, FY27.

Speaker #5: Great, thanks so much for that, guys. Much appreciated.

Julian Braganza: Great. Thanks so much for that, guys. Much appreciated.

Speaker #3: Thank you. Your next question comes from Siddharth Parameswaran with JPMorgan. Please go ahead, Siddharth.

Operator: Thank you. Your next question comes from Siddharth Parameswaran with J.P. Morgan. Please go ahead, Siddharth.

Speaker #4: Good morning, everybody. Just a few questions. Firstly, I just wanted to ask about rates versus inflation and the outcomes we're seeing in RIA margins in Australia.

Siddharth Parameswaran: Morning, everybody. Just a few questions. Firstly, I just wanted to ask about rates versus inflation and the outcomes we are seeing in RIA margins in Australia. I think when I go through your commentary, it seems like home inflation is extraordinarily high. I think you flagged 15% at the moment. Just wanted to. I think it does not feel like rate is covering that. I think you are flagging high single digits. I know there could be some benefits from the cap reinsurance, but there seems to be a gap there. Motor seems like you are flagging low single digits for both rate and inflation, so that seems okay. But H1 on H1 ex RACQ, you do seem to have had significant margin improvement in RIA. So I was hoping firstly to understand two things.

Speaker #4: I think when I go through your commentaries, it seems like home inflation is extraordinarily high. I think it flagged 15% at the moment. Just wanted to—and I think it doesn’t feel like rates are covering that.

Speaker #4: I think you're flagging high single digits. I know there could be some benefits from the reinsurance, but it still seems like there is a gap there.

Speaker #4: Motors, it seems like you're flagging a low single digit for both rate and inflation, so that seems okay. But half and half—XRA, Q—you do seem to have had significant margin improvement in RIA.

Speaker #4: So, firstly, we need to understand two things. Inflation – just at home – is that likely to continue? And what are you going to put through in rate going forward?

Siddharth Parameswaran: Inflation just in home, is that likely to continue and what are you going to put through in rate going forward? Secondly, if it does not look like the improvement in margin came from short tail, was it long tail that led to the improvement in RIA margins?

Speaker #4: And secondly, if it doesn't look like the improvement in margin came from short tail, was it long tail that led to the improvement in RIA margins?

Speaker #2: Hey, Siddharth. I mean, I'll

Nick Hawkins: Hey, Sidd. Hi, mate. I will make some comments and then, William, you come in too. As a principle across the company right now, there is nowhere that we are not putting rate through in line with inflationary costs. So we have some challenges probably in NZI on sort of assessing that risk. It is not really inflationary costs that is the problem. It is sort of the competitive environment. But you park NZI, that is not the approach anywhere. So to your point, we have some examples of that sort of at 15% within some examples of within our property classes in Australia. But I do not think we can generalize to say that that is causing us to put pressure on our margins. That is not right. William, you say.

Speaker #1: Hi, mate. I'll make some comments, and then William, you come in too. I mean, as a principle across the company right now, there's nowhere that we're not putting rate through in line with inflationary costs.

Speaker #1: So, we've got some challenges probably in NZI on sort of assessing that risk. It's not really inflationary costs that's the problem; it's the competitive environment.

Speaker #1: But if you park NZI, that's not the approach anyway. So, to your point, we have some examples of that sort of 15%.

Speaker #1: With some examples within our property classes within Australia. But that's—I wouldn't, I don't think we can generalize to say that that's causing us to put pressure on our margins.

Speaker #1: That's not right. I mean, William.

Speaker #5: Sorry, I could do it—yeah. Unpack a little bit of what you said; we can go into this more later. But within the 15% is actually an average claim size inflation number.

Julian Braganza: I could do it. Unpacking

William McDonnell: Back a little bit for you, Sidd, we can go into this more later. The 15% is actually an average claim size inflation number. There is a little bit of mix in there. If you look at that is about non-peril claims. We have perils where obviously that is a much more stable position, and our overall peril allowance is only up 2% into next year. There is an admin cost component also, that all of these things feed through into rate. Of course, admin costs we are bearing down on. When you take all of those things together, and do not forget the net, the non-peril claims is actually only a minority of the cost of a home policy. When you put all of those things together, that is how you get to the high single digit.

Speaker #5: So there's a little bit of mix in there. But also, if you look at that, that's about non-peril claims. We have perils, where obviously that's a much more stable position, and our overall peril allowance is only up 2% into next year.

Speaker #5: There's an admin cost component also. All of these things feed through into rate. And of course, admin costs we're bearing down on. When you take all of those things together—and don't forget that the non-peril claims are actually only a minority of the cost of a home policy.

Speaker #5: So when you put all of those things together, that's how you get to the high single digit.

Speaker #4: Yeah, and sorry, just the last part of that question was about the margin improvement that we saw half-on-half, underlying in RIA, XRACQ.

Siddharth Parameswaran: Yeah. Sorry, just the last part of that question was just the margin improvement that we saw half on half underlying in RIA, ex-RACQ.

Speaker #5: Sorry, I didn't hear the first part of the question.

William McDonnell: Sorry, I did not hear the first part of the question.

Speaker #2: Just the half on half.

Siddharth Parameswaran: Oh, sorry. The margin improvement that was there sequentially H1 to H2 on RIA, ex-RACQ, was that driven by a long tail?

Speaker #4: Oh, sorry. The margin improvement that was there sequentially from the first half to the second half on RIA XRACQ, was that driven by long tail?

William McDonnell: No.

Siddharth Parameswaran: Or CTP?

Speaker #4: CTP. CTP.

Speaker #1: No, not by CTP. But obviously, we're just gradually getting benefits from all of those substantial claims actions, expense actions, and other things coming through.

William McDonnell: No, not by CTP. But obviously we are just gradually getting benefits from all of those substantial claims actions, expense actions, and other things coming through.

Speaker #4: Right. Okay.

Siddharth Parameswaran: Right. Okay.

Nick Hawkins: Yeah.

Speaker #2: Yes.

Siddharth Parameswaran: Okay. Thank you.

Speaker #4: Thank you.

Speaker #1: I mean, the run rate of the business is, sort of—it feels like we're on top of any inflationary pressure; we are pricing as we're seeing it.

Nick Hawkins: I mean, the run rate of the business is, it feels like we are on top of any inflationary pressure that we are pricing as we are seeing it. I do not feel like that is the case. CTP is relatively flat, so I do not think that is a driver. This is a gradual improvement where at the same time we are growing the company, we are getting some expense ratio relief as part of that. We have got some reinsurance benefits that have been helpful, too. So it is a combination of a few things, is that we have got the machine running well. That is how it feels.

Speaker #1: I don't feel like that's the case. CTP is relatively flat, so I don't think that's a driver. This is a gradual improvement where, at the same time we're growing the company, we're spreading, we're getting some expense ratio relief as part of that.

Speaker #1: We've got some reinsurance benefits sort of that are sort of being helpful too. So it's sort of a combination of a few things. Is that we've got the machine sort of running well.

Speaker #1: That's how it feels.

Speaker #4: Yeah. Okay, thank you. I just want to follow up on the profit commission component. So, if the second half is in line with the first half, I think that suggests you're tracking at a little bit over 2% of NEP as the contribution from profit commission.

Siddharth Parameswaran: Yeah. Okay. Thank you. I just want to follow up on the profit commission component. So if the H2 is in line with the H1, I think that suggests that you are tracking at a little bit over 2% of NEP as the contribution from profit commission. So I think previously you had guided to 100 to 200 basis points from the quota share. Just wanted to understand and just in terms of messaging, I am always just a little bit unclear exactly where the messaging is around profit commissions, because on one hand, what you are running through at the moment seems to be higher than the guidance you had given before, but you are also flagging upside further down the track. So I am just a little bit confused by the messaging around this. I was hoping you could clarify it once and for all.

Speaker #4: So, I think previously you’d guided to 100 to 200 basis points from the quota share. I just want to understand—in terms of messaging, I'm always just a little bit unclear exactly where the messaging is around profit commissions, because on the one hand, what you’re running through at the moment seems to be higher than the guidance you’d given before.

Speaker #4: But you're also flagging upside further down the track, so I'm just a little bit confused by the messaging around this. I was hoping you could clarify it once and for all.

Speaker #4: Are we tracking above the long-term guidance at the moment? Where is the potential upside? Maybe, if you could just clarify that for me.

Siddharth Parameswaran: Are we tracking above the long-term guidance at the moment? Where is the potential upside? Maybe if you just clarify it for me.

Speaker #1: Yeah, no, I'm happy to clarify. No, we are in that $100 to $200 range. We're not above that range, and we continue to book it conservatively.

William McDonnell: Yeah. No, I am happy to clarify. No, we are in that 100 to 200 range. We are not above that range. We continue to book it conservatively. The trend over time should be an increasing profile. That is the answer.

Speaker #1: And so the trend over time should be an increasing profile. And I mean, that is the answer.

Speaker #4: Okay. Could I calculate a number over 200 basis points, using the number that was consistent with the first half? That's...

Siddharth Parameswaran: Okay. Because I calculated a number over 200 basis points if the number was consistent with the H1. That is why.

Speaker #1: Well, it's not over 200 basis points—not at all. So again, I'm happy to dig into that further with you later.

William McDonnell: Well, it is not over 200 basis points. Not at all. Sorry.

Siddharth Parameswaran: Okay.

William McDonnell: Again, I am happy to dig into that further with you later.

Speaker #4: Yeah. Yeah. No worries. Okay, thank you. Thanks. Thanks.

Siddharth Parameswaran: Yep. No worries. Okay. Thank you. Thanks.

Speaker #3: Thank you. Your next question comes from Nigel Peterway with Citi.

Operator: Thank you. Your next question comes from Nigel Pittaway with Citi.

Speaker #1: Period. Sorry. We may be at, or maybe slightly below, system for the whole country. But I feel like we've got some momentum to take that forward in relation to, sort of, aspiration—call it that.

Nick Hawkins: Period, say. We may be at or may be slightly below system for the whole country. But I feel like we have got some momentum to take that forward in relation to sort of aspiration, call it that. Yeah, we want to be able to hold our own in both those parts of the business going forward, at least.

Speaker #1: Yeah. We want to be able to hold we want to be able to hold our own in both those parts of the business going forward at least.

Speaker #2: And obviously, I mean, you're sort of suggesting that system growth in home is around about 1%, so maybe just slightly higher than some quarters seem to be indicating.

Nigel Pittaway: Obviously, you are sort of suggesting that system growth in home is around about 1%, so maybe just slightly harder than Suncorp seemed to be indicating yesterday. That obviously is still pretty subdued. What is your sort of feeling as to why that growth is quite subdued at a system level?

Speaker #2: Yesterday—I mean, that obviously is still pretty subdued. What's your sort of feeling as to why that growth is quite subdued at a system level?

Speaker #1: I mean, that's a whole lot to unpack under that, isn't there? But I mean, that's population growth, new builds, apartment living, the way we live.

Nick Hawkins: There's a whole lot to unpack under that, isn't there? That's population growth, new builds, apartment living, the way we live. I think the sort of the building stock that is. It sounds like Suncorp said something similar. That's sort of roughly what we see across that market, probably for the next year or two.

Speaker #1: I think that the sort of the building stock—I mean, that's sort of, I mean, it sounds like Suncorp said something similar. That's sort of roughly what we see across that market.

Speaker #1: Probably for the next year or two.

Speaker #2: Yeah. So, okay. So you think it's a pretty ongoing level of system growth, so unlikely to change in the mid-term.

Nigel Pittaway: Yeah. So, okay. You think it's a pretty ongoing level of system growth.

Nick Hawkins: Yeah

Nigel Pittaway: unlikely to change.

Speaker #1: Yeah. Are you thinking upside or downside on that? Sorry, I mean, I would have thought that's relatively modest.

Nick Hawkins: Yeah. Are you thinking upside or downside on that? I would have thought that's relatively modest.

Nigel Pittaway: Well, it does not sound great, but it is just obviously, it seems to be where it is at, right?

Speaker #2: Well, it doesn't sound great, but obviously, it seems to be where it's at, right?

Nick Hawkins: Yeah.

Speaker #1: Yeah.

Speaker #2: Yeah, all right, all right. And so, in that kind of environment, how do you get 8% growth at the top of your target range?

Nigel Pittaway: Yeah. All right. In that kind of environment, how do you get 8% growth at the top of your target range? What would that require?

Speaker #2: What would that require?

Nick Hawkins: It is NZI doing slightly better. See what the pricing for property. It is slightly better in motor, probably. I think it is at the margins in a few different places, would be what I would say.

Speaker #1: It's NZI doing slightly better. It's, let's see, with the pricing for property, it's slightly better in motor probably. I think it's at the margins in a few different places, would be what I'd say.

Speaker #2: Right. So, I mean, it sounds a bit unlikely, but we think it's too realistic.

Nigel Pittaway: Right. It sounds a bit unlikely, but

Nick Hawkins: Well-

Nigel Pittaway: if it's at all realistic.

Speaker #1: Well, I mean, the only thing—I mean, that's why we showed you the quarter-on-quarter. I mean, that's quite a positive slide—that quarter-on-quarter-on-quarter, what we're delivering on our direct retail businesses, which is 60% of our company.

Nick Hawkins: The only thing, that's why we showed you the quarter on quarter. That's quite a positive slide, that quarter on quarter on quarter on quarter, what we're delivering on our direct Retail Insurance Australia businesses, which is 60% of our company. We've got a range there. We've got a range for a reason, and I'm not guiding everyone to the top of the range, but I can see a scenario where that's delivered. I'm not saying that's where I want you to go. That'd be my commentary.

Speaker #1: And so, I mean, we've got a range there. We've got a range for a reason, and I'm not guiding everyone to the top of the range.

Speaker #1: But I can see a scenario where that's delivered. I'm not saying that's where I want you to go—that would be my commentary.

Speaker #2: Okay. Fair enough. And then maybe just also just on the reinsurance, obviously it's covered a little bit on that already. But obviously now you are sort of there with the quota share.

Nigel Pittaway: Okay, fair enough. Then maybe just, also just on the reinsurance, obviously you've covered a little bit on that already, but obviously now you are there with the quota share at 35%. Is this the long term now? Is this 35% where you feel you'll be for a while?

Speaker #2: It's 35%. I mean, is this the long term now? Is this 35% where you feel you'll be for a while?

Speaker #1: Well, hey, we're not looking, Nigel, we're not looking to make any changes to that.

Nick Hawkins: Hey, we're not looking-

Nigel Pittaway: Or should we be thinking about

Nick Hawkins: Nigel, we are not looking to make any changes to that.

Speaker #2: Yeah.

Nigel Pittaway: Yeah.

Speaker #1: Never say never, but it's not on the agenda at the moment. Let's leave it at that.

Nick Hawkins: Never say never, but it is not on the agenda at the moment. Let us leave it at that.

Speaker #2: All right. Thank you.

Nigel Pittaway: All right. Thank you.

Speaker #3: Thank you. There are no further questions at this time. I'll now hand back to Nick.

Operator: Thank you. There are no further questions at this time. I will now hand back to Nick.

Speaker #1: I don't know. It's a busy day for everyone. Hey, thanks everyone. Thanks for participating—those in the room and those that have participated online. I mean, the key message we want to leave you with is we've sort of got this.

Nick Hawkins: I know it is a busy day for everyone. Thanks everyone for participating, those in the room and those that have participated online. The key message we want to leave you with is we have got this. We have invested heavily. Technology platforms are really starting to deliver. We are getting some productivity efficiency. We are getting great customer metrics in our retail businesses. We have got that slide we have talked about a lot today around genuine momentum in our direct retail businesses with our flagship brands really creating growth. We really see that as a pretty exciting opportunity for us over the next couple of years. Profits and margins are strong, and we really see outlook very positive. That is the message that we want to leave you with today. Thanks again for being here, and enjoy the rest of your day.

Speaker #1: We've invested heavily. Technology platforms are really starting to deliver. We're getting some productivity and efficiency. We're getting great customer metrics. In our retail businesses, we've got that slide.

Speaker #1: I mean, we've talked a lot today about the genuine momentum in our direct retail businesses with our flagship brands—really creating growth. And we see that as a pretty exciting opportunity for us over the next couple of years.

Speaker #1: Profits and margins are strong, and we really see the outlook as very positive. So that's sort of the message that we want everyone to take away. We want to leave you with that today.

Speaker #1: Thanks again for being here, and enjoy the rest of your day.

Speaker #4: As you said, it was like fire around the brim—burning solid, burning cinder, burning rim. Like stars burning holes right through the dark, cooking fire like saltwater to my eyes.