Half Year 2026 QBE Insurance Group Ltd Earnings Call

August 13, 2026

Operator: Good day, and thank you for standing by. Welcome to QBE H1 2026 Results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Group Chief Executive Officer, Andrew Horton. Please go ahead.

Operator: Good day, and thank you for standing by. Welcome to QBE Half Year 2026 Results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Group Chief Executive Officer, Andrew Horton. Please go ahead.

Speaker #1: Good day, and thank you for standing by. Welcome to the QBE Half Year 2026 Results. At this time, all participants are in a listen-only mode.

Speaker #1: After this speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press *11 on your telephone keypad.

Speaker #1: You will then hear an automated message advising that your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to hand the conference over to your first speaker today, Group Chief Executive Officer Andrew Horton. Please go ahead.

Speaker #2: Good morning, everyone. Thanks for joining us today. I'm here with Chris Kallouri, our Group CFO, and we'll spend the next half hour taking you through what is another strong result for QBE.

Andrew Horton: Good morning, everyone. Thanks for joining us today. I am here with Chris Killourhy, our Group CFO, and we will spend the next half hour taking you through what is another strong result for QBE. Momentum in the business is positive, and we are on track for another year of sustainable growth, resilient performance, and excellent returns. Before we begin, I will start by acknowledging the traditional owners of the many lands on which we meet today. For me, this is the Gadigal lands of the Eora Nation, and recognize their continuing connection to land, waters, and culture. I pay my respects to elders, past and present, and extend this respect to any First Nations people joining us today. Starting on slide 4 with a snapshot of our results. H1 performance was consistent with all our key guidance and targets for 2026.

Speaker #2: Momentum in the business is positive, and we're on track for another year of sustainable growth, resilient performance, and excellent returns. Before we begin, I'll start by acknowledging the Traditional Owners of the many lands on which we meet today. For me, this is the Gadigal lands of the Eora Nation, and I recognize their continuing connection to land, waters, and culture.

Speaker #2: I pay my respects to Elders past and present, and extend this respect to any First Nations people joining us today. Starting on slide 4 with a snapshot of our result.

Speaker #2: First-half performance was consistent with all our key guidance and targets for 2026. We launched our medium-term guidance in February, based around an outlook of durable mid-single-digit premium growth and confidence in sustaining returns in the 15% plus range.

Andrew Horton: We launched our medium-term guidance in February based around an outlook of durable mid-single-digit premium growth and confidence in sustaining returns in the 15%+ range. For H1, returns were excellent, with a group ROE of almost 18%, representing strength across underwriting and investments. Headline gross written premium growth of 6% was in line with the prior period and consistent with our full-year guidance. Underlying growth was closer to 7%, noting the modest remaining impact from non-core exits. We have executed well on our growth plans, driving high-quality growth in our key focus areas. Our combined ratio of 92.8% is in line with our outlook for a full-year result of around 92.5%, representing the stability and predictability we strive for. This included favorable prior year development plus better than expected catastrophe costs, which underscore the actions we have taken to build resilience.

Speaker #2: For the first half, returns were excellent, with the group ROE of almost 18%, representing strength across underwriting and investments. Headline gross written premium growth of 6% was in line with the prior period and consistent with our full-year guidance.

Speaker #2: Underlying growth was closer to 7%, noting the modest remaining impact from non-core exits. We've executed well on our growth plans, driving high-quality growth in our key focus areas.

Speaker #2: Our combined ratio of 92.8% is in line with our outlook for a full-year result of around 92.5%, representing the stability and predictability we strive for.

Speaker #2: This included favorable prior-year development, plus better-than-expected catastrophe costs, which underscore the actions we've taken to build resilience. We delivered another exceptional half for investment income—at around $830 million, this represented an annualized return of almost 5%, and growth of 5% on the prior period.

Andrew Horton: We delivered another exceptional half for investment income at around AUD 830 million. This represented an annualized return of almost 5% and growth of 5% on the prior period. Our adjusted net profit was just over AUD 1 billion at 4%, and we announced an interim dividend of AUD 0.33, up 6% on the prior period. Disciplined capital management is a core pillar of our strategy, and our balance sheet remains very strong. We completed our first share buyback in several years in April, and we will continue to use active capital management to drive value for shareholders. Let us turn to slide 5. I want to open with this slide, which outlines the industry's attractive long-term outlook. The role of commercial P&C has never been more critical. 2026 will mark another year in which a range of global events and structural trends have reinforced a heightened awareness of risk among businesses.

Speaker #2: Our adjusted net profit was just over $1 billion at 4%, and we announced an interim dividend of $0.33, up 6% on the prior period.

Speaker #2: Disciplined capital management is a core pillar of our strategy, and our balance sheet remains very strong. We completed our first share buyback in several years in April, and will continue to use active capital management to drive value for shareholders.

Speaker #2: Let's turn to slide 5. I want to open with this slide, which outlines the industry's attractive long-term outlook. The role of commercial P&C has never been more critical.

Speaker #2: In 2026, we'll mark another year in which a range of global events and structural trends have reinforced a heightened awareness of risk among businesses.

Speaker #2: Operational resilience is the key objective for our customers, who place value not only on capacity, but also insight, expertise, and long-term partnership. These comments are equally evident in discussions surrounding the phenomenal investment in global infrastructure, electrification, energy security, data centers, and healthcare.

Andrew Horton: Operational resilience is the key objective for our customers, who place value on capacity, but also insight, expertise, and long-term partnership. These comments are equally evident surrounding the phenomenal investment in global infrastructure, electrification, energy security, data centers, and healthcare. Continued capital investment across these sectors is creating a growing need for specialized insurance solutions. As pricing and claims sophistication have improved across the industry, competitive advantage is increasingly shifting towards those with superior risk expertise, scale, and diversification. We are uniquely placed in this regard. We combine breadth, diversification, and expertise with presence and ability to connect capital to risk across all major insurance and reinsurance markets globally. This underpins our ability to deliver durable growth while sustaining attractive margins and returns through the cycle. Turning to slide 6.

Speaker #2: Continued capital investment across these sectors is creating a growing need for specialized insurance solutions. As pricing and claims sophistication have improved across the industry, competitive advantage is increasingly shifting toward those with superior risk expertise, scale, and diversification.

Speaker #2: We are uniquely placed in this regard. We combine breadth, diversification, and expertise, with the presence and ability to connect capital to risk across all major insurance and reinsurance markets globally.

Speaker #2: This underpins our ability to deliver durable growth while sustaining attractive margins and returns through the cycle. Turning to slide 6, this year we're proud to celebrate our 140th anniversary—a remarkable milestone that reflects the adaptability, relevance, and resilience of our business.

Andrew Horton: This year, we are proud to celebrate our 140th anniversary, a remarkable milestone that reflects the adaptability, relevance, and resilience of our business. This is a significant milestone for any organization, but particularly so in commercial P&C, where relatively few companies have stood the test of time and supported customers through generations of economic and social change. It is also a unique success story in the Australian context. Very few Australian businesses have successfully expanded internationally and built the scale, reach, and diversification that we have today. This slide recaps the journey we have been on more recently. With a series of remedial and foundational portfolio optimization initiatives now behind us, we enter this next chapter from a position of strength. Our focus is now firmly on driving high quality, capital efficient growth while maintaining strong returns for shareholders. This will include accelerating efficiency through our technology and AI initiatives.

Speaker #2: This is a significant milestone for any organization, but particularly so in commercial P&C, where relatively few companies have stood the test of time and supported customers through generations of economic and social change.

Speaker #2: It's also a unique success story in the Australian context. Very few Australian businesses have successfully expanded internationally and built the scale, reach, and diversification that we have today.

Speaker #2: This slide recaps the journey we've been on more recently. With a series of remedial and foundational portfolio optimization initiatives now behind us, we enter this next chapter from a position of strength.

Speaker #2: Our focus is now firmly on driving high-quality, capital-efficient growth while maintaining strong returns for shareholders. This will include accelerating efficiency through our technology and AI initiatives.

Speaker #2: To give you some examples, in March we launched Aurora, a fully automated lead algorithmic underwriting capability, cutting quote-to-bind from days to under 10 minutes in our British Marine P&I portfolio.

Andrew Horton: To give you some examples, in March, we launched Aurora, a fully automated lead algorithmic underwriting capability, cutting quote to bind from days to under 10 minutes in our British Marine P&I portfolio. Expanding the capability across other UK commercial portfolios in the coming months. In European Motor, we have deployed AI through our claims function. We expect around 25,000 claims will be handled by AI in the coming year. We are processing over 100 claims daily across 600 claims attributes captured at greater than 94% accuracy. Finally, in our Asian Marine book, our AI solutions have led to an 86% reduction in cycle time for claims processing. Over the medium term, we aim to at least double the scale of production agents across underwriting and claims, each compressing loss ratios, accelerating claims outcomes, and improving pricing position. Let us move to slide 7, which unpacks our growth for the period.

Speaker #2: We are expanding the capability across other UK commercial portfolios in the coming months. In European Motor, we've deployed AI through our claims function and expect that around 25,000 claims will be handled by AI in the coming year.

Speaker #2: And we're processing over 100 claims daily across 600 claims attributes, captured at greater than 94% accuracy. Finally, in our Asian Marine book, our AI solutions have led to an 88% reduction in cycle time for claims processing.

Speaker #2: Over the medium term, we aim to at least double the scale of production agents across underwriting and claims, each compressing loss ratios, accelerating claims outcomes, and improving our pricing position.

Speaker #2: So, let's move to slide 7, which unpacks our growth for the period. This half, we extended our track record of sustainable volume growth, which we believe remains a key differentiator in the local market.

Andrew Horton: This H1, we extended our track record of sustainable volume growth, which we believe remains a key differentiator in the local market. Headline ex-rate growth of 6% leaves us well-positioned to deliver a full year outcome in the mid-single digits. This growth, once again, is underpinned by the breadth and diversification of our global business. This is also reinforced by the diversity of our distribution model. We can often access the same risk through multiple channels, including the open market, facilities, reinsurance, third parties, and digital platforms. This provides flexibility to not only pursue growth but allocate our capital where risk-adjusted returns are most attractive. Today, the industry narrative surrounding growth is overly focused on softening premium rates. We think this overlooks three important factors. Premium rate adequacy is attractive across the vast majority of lines.

Speaker #2: Headline x-rate growth of 6% leaves us well positioned to deliver a full-year outcome in the mid-single digits. This growth, once again, is underpinned by the breadth and diversification of our global business.

Speaker #2: This is also reinforced by the diversity of our distribution model. We can often access the same risk through multiple channels, including the open market, facilities, reinsurance, third parties, and digital platforms.

Speaker #2: This provides flexibility to not only pursue growth, but also allocate our capital where risk-adjusted returns are most attractive. Today, the industry narrative surrounding growth is overly focused on softening premium rates.

Speaker #2: We think this overlooks three important factors. Premium rate adequacy is attractive across the vast majority of lines. A portfolio as diverse as ours is operating across multiple product and market cycles simultaneously.

Andrew Horton: A portfolio as diverse as ours is operating across multiple product and market cycles simultaneously, and there are structural growth opportunities across sectors, including infrastructure, cyber, facilities, data centers, and energy. I think this is clear in our growth this period, which was driven by many focus areas for the group. Our cyber proposition is now well established with key partners and complements many of our existing strengths and relationships. We are likely to end the year with cyber premiums around AUD 600 million, and with industry premiums expected to double or triple in the next few years, cyber can comfortably grow whilst remaining a relatively small part of our portfolio. QBE Re and QPS have maintained strong momentum, which I will touch on shortly. We saw excellent growth across many Lloyd's portfolios this H1, particularly across marine and political lines, where developments in the Middle East created opportunities.

Speaker #2: And there are structural growth opportunities across sectors, including infrastructure, cyber, facilities, data centers, and energy. I think this is clear in our growth this period, which was driven by many focus areas for the group.

Speaker #2: Our cyber proposition is now well established with key partners and complements many of our existing strengths and relationships. We're likely to end the year with cyber premiums around $600 million, and with industry premiums expected to double or triple in the next few years, cyber can comfortably grow while remaining a relatively small part of our portfolio.

Speaker #2: QBE and QPS have maintained strong momentum, which I'll touch on shortly. We saw excellent growth across many Lloyd's portfolios this half, particularly across marine and political lines, where developments in the Middle East created opportunities.

Speaker #2: Finally, in North America, we've combined the adjacencies discussed previously into a single segment here. This is a mix of more mature businesses, including specialty casualty and construction, alongside more recent builds in specialty healthcare and environmental.

Andrew Horton: Finally, in North America, we have combined the adjacencies discussed previously into a single segment here. This is a mix of more mature businesses, including specialty casualty and construction, alongside more recent builds in specialty healthcare and environmental. Collectively, these segments will contribute approximately AUD 600 million in premium this year, continue to deliver strong growth while broadening the reach of our franchise. Moving to segments we did not grow. We spoke in our Q1 update about an intentional reduction in A&H. While rates were up significantly, we did not target new business whilst we focused on restoring margin. Also in North America last year, we stopped writing a workers' comp program no longer aligned with our service-led strategy. The A&H volumes and this workers' comp program had a disproportionate impact on the H1. Finally, within large standalone property, we have been more selective given current dynamics.

Speaker #2: Collectively, these segments will contribute approximately $600 million in premium this year, continuing to deliver strong growth while broadening the reach of our franchise.

Speaker #2: Moving to segments we didn’t grow. We spoke in our first quarter update about an intentional reduction in A&H, while rates were up significantly. We didn’t target new business, whilst we’re focused on restoring margin.

Speaker #2: Also, in North America last year, we stopped writing a workers' comp program, as it was no longer aligned with our service-led strategy. The A&H volumes and this workers' comp program had a disproportionate impact on the first half.

Speaker #2: Finally, within large standalone property, we've been more selective given current dynamics. While there are still attractive opportunities in property, given the diversification of our business, there's really no pressure to chase the more competitive pockets of the market.

Andrew Horton: While there are still attractive opportunities in property, given the diversification of our business, we are under no pressure to chase the more competitive pockets of the market. Moving on to slide 8. This slide shows the evolution of our portfolio mix. The three key shifts in recent years have been the decline in standalone property exposure, which we have spoken at length about; a desire to build the profile of our reinsurance business, QBE Re; and the growth in our facilities business, QBE Portfolio Solutions. We thought we would share some color on these two segments today. QBE Re has grown well from around 10% of group to around 15% and is now a AUD 4 billion business for us.

Speaker #2: So, moving on to slide 8. This slide shows the evolution of our portfolio mix. The three key shifts in recent years have been the decline in standalone property exposure, which we've spoken at length about; a desire to build the profile of our reinsurance business, QBE; and the growth in our facilities business, QBE Portfolio Solutions.

Speaker #2: We thought we'd share some color on these two segments today. QBE has grown well, from around 10% of the group to around 15%, and is now a $4 billion business for us.

Speaker #2: It gives us access to a material profit pool within the wider industry, and, importantly, we look to participate in ways that complement our insurance business.

Andrew Horton: It gives us access to a material profit pool within the wider industry, and importantly, we look to participate in ways that complement our insurance business, expanding our regional footprint and adding important diversification. It is often a much more effective pathway to enter a new market through partnership with a leading carrier, as opposed to building a new insurance offering. We have focused on building better balance in the portfolio, striving for roughly even balance across property, specialty, and casualty. You can see the extent to which we have reduced property exposure in recent years. We have also shifted toward more proportional profit share or quota share business rather than excess of loss. This is now the majority of what we do and ultimately reduces volatility, generating more stable earnings.

Speaker #2: Expanding our regional footprint and adding important diversification. It's often a much more effective pathway to enter a new market through partnership with a leading carrier, as opposed to building a new insurance offering.

Speaker #2: We've focused on building better balance in the portfolio, striving for roughly even balance across property, specialty, and casualty. And you can see the extent to which we've reduced property exposure in recent years.

Speaker #2: We've also shifted toward more proportional profit share, or quota share, business rather than excess of loss. This is now the majority of what we do, and ultimately reduces volatility, generating more stable earnings.

Speaker #2: Much of the industry reinsurance rate commentary is geared around what is happening in property excess of loss rates, with a general focus on North America.

Andrew Horton: Much of the industry reinsurance rate commentary is geared around what is happening in property excess of loss rates with a general focus on North America. This is a relatively small part of our book. To highlight this point, we expect rate for QBE Re to be roughly flat this year after cumulative rate increases of around 65% since 2017. Our market position is attractive. Beyond the four major reinsurers, we stand out as having capability across most products, strong representation in all key hubs, and have a one to two notch credit rating advantage relative to many non-major reinsurers. Our strategy is centered around becoming more relevant to a fewer number of strategic partners, building deeper relationships, and offering valuable panel diversification. Moving to QPS. In 2026, we will have gross written premium of around AUD 1.8 billion in our portfolio solutions business.

Speaker #2: This is a relatively small part of our book, and to highlight this point, we expect the rate for QBE to be roughly flat this year, after cumulative rate increases of around 65% since 2017.

Speaker #2: Our market position is attractive. Beyond the four major reinsurers, we stand out as having capability across most products, strong representation in all key hubs, and a one- to two-notch credit rating advantage relative to many non-major reinsurers.

Speaker #2: Our strategy is centered around becoming more relevant to a fewer number of strategic partners, building deeper relationships, and offering valuable panel diversification. Moving to Q2.

Speaker #2: In 2026, we'll have a growth rate and premium of around $1.8 billion in our portfolio solutions business. This represents broker facilities, where we provide a pre-committed level of capacity to a clearly defined broker portfolio.

Andrew Horton: This represents broker facilities, where we provide a pre-committed level of capacity to a clearly defined broker portfolio. It also includes certain MGAs and platforms which we support. These facilities are sometimes spoken about as market trackers, but the products are more sophisticated. We are the lead partner on many of our facilities. We work closely with the broker to co-design the facility, and as a lead, get to define the terms, structure, and establish how and when the capacity attaches. We are a clear market leader in this space and have participated right throughout the journey. We believe the segment has matured and expect a continued structural shift toward facilities which offer more efficient placement for brokers and customers, can reduce costs for customers, and in our experience, have delivered attractive returns. Particularly in syndicated or layered markets, there can be significant inefficiencies in needing to engage multiple follow markets.

Speaker #2: It also includes certain MGAs and platforms which we support. These facilities are sometimes referred to as market trackers, but the products are more sophisticated.

Speaker #2: We are the lead partner on many of our facilities. We work closely with the broker to co-design the facility and, as a lead, get to define the terms and structure, as well as establish how and when the capacity attaches.

Speaker #2: With a clear market leader in this space, and having participated right throughout the journey, we believe the segment has matured and expect to continue a structural shift toward facilities which offer more efficient placement for brokers and customers, can reduce costs for customers, and in our experience have delivered attractive returns.

Speaker #2: Particularly in syndicated or layered markets, there can be significant inefficiencies in needing to engage multiple follow markets. Importantly, the underwriter's role remains unchanged—defining the risk, price, and terms is still critical, although many follow markets contribute little to this process.

Andrew Horton: Importantly, the underwriter's role remains unchanged. Defining the risk, price, and terms is still critical, although many follow markets contribute little to this process. The final point to note is the access to data we get in taking lead roles. We now see pricing, claims, and terms data for a broad cohort of business. In the age of LLMs, this gives us valuable insights for our open market underwriting. In both instances, QBE Re and QPS, performance has been very strong. This reflects the balance and diversification we have built, where particularly for QPS, a facility by definition is highly diversified, which gets further enhanced through participation in multiple facilities. For instance, some target specialist niches such as cyber, marine, and political violence, while others capture structural growth opportunities in construction, parametric insurance, and AI liability. Turning to slide 9 on capital. Our approach to capital allocation is outlined here.

Speaker #2: The final point to note is the access to data we get in taking lead roles. We now see pricing, claims, and terms data for a broad cohort of business, and in the age of LLMs, this gives us valuable insights for our open market underwriting.

Speaker #2: In both instances, QBE and QPS, performance has been very strong. This reflects the balance and diversification we've built, where, particularly for QPS, our facility by definition is highly diversified, which gets further enhanced through participation in multiple facilities.

Speaker #2: For instance, some target specialist niches such as cyber, marine, and political violence, while others capture structural growth opportunities in construction, parametric insurance, and AI liability.

Speaker #2: Turning to slide 9 on capital. Our approach to capital allocation is outlined here. We'll always hold a preference to grow the business, provided returns clear our hurdle rate.

Andrew Horton: We will always hold a preference to grow the business provided returns clear our hurdle rate. This is the case for the vast majority of our portfolio today. We have a dependable 40% to 60% dividend payout ratio and remain committed to returning any excess capital beyond the dividend. This was reinforced with our first buyback in several years, which we completed successfully in April. This slide lists some of the actions we have taken to improve capital efficiency this year, which is a key focus for us moving forward. We have a series of initiatives which we think can drive real value as we work toward a more capital light model. In February, we spoke about the launch of our first sidecar attaching to the QBE Re casualty portfolio, plus the addition of a cat bond into our group property program.

Speaker #2: This is the case for the vast majority of our portfolio today. We have a dependable 40–60% dividend payout ratio, and remain committed to returning any excess capital beyond the dividend.

Speaker #2: This was reinforced with our first buyback in several years, which we completed successfully in April. This slide lists some of the actions we've taken to improve capital efficiency this year, which is a key focus for us moving forward.

Speaker #2: We have a series of initiatives which we think can drive real value as we work toward a more capital-light model. In February, we spoke about the launch of our first sidecar, attaching to the QBE casualty portfolio, plus the addition of a cap bond into our group property program.

Speaker #2: These initiatives not only support capital efficiency, but also our cost of capital and earnings stability. We also spoke in February about the sale of our trade credit and surety business.

Andrew Horton: These initiatives not only support capital efficiency, but also our cost of capital and earning stability. We also spoke in February about the sale of our trade credit and surety business. This was a capital-intensive business, which was quite correlated with macro cycles. The transaction is on track to close in the H2. This morning, we have also agreed terms to a loss portfolio transfer for over AUD 1 billion of reserves. The transaction covers North America and international reserves associated with segments we have exited, which will drive a release of capital. Collectively, these actions will have a positive and meaningful impact on our capital efficiency plus enhanced returns. With that, I will pass over to Chris.

Speaker #2: This was a capital-intensive business, which was quite correlated with macro cycles. The transaction is on track to close in the second half. And this morning, we've also agreed terms to a loss portfolio transfer for over $1 billion of reserves.

Speaker #2: The transaction covers North America and international reserves associated with segments we've exited, which will drive a release of capital. Collectively, these actions will have a positive and meaningful impact on our capital efficiency, plus enhanced returns.

Speaker #2: With that, I'll pass over to Chris.

Speaker #3: Thank you, Angie, and good morning, everyone. We've made a positive start to 2026 and delivered an excellent set of results, culminating in a very strong return on equity of 17.7%.

Chris Killourhy: Thank you, Andrew, and good morning, everyone. We have made a positive start to 2026 and delivered an excellent set of results, culminating in a very strong return on equity of 17.7%. These results reflect the continued benefit of actions taken to improve portfolio quality, build cat resilience, strengthen reserves, optimize capital allocation, and drive greater efficiency across the group. While there is more work to do, I am confident the business is well positioned to continue delivering sustainable growth and industry-leading performance through the cycle. Turning first to the result on slide 11. Gross written premium grew 6% to $15 billion. The combined ratio was 92.8%, in line with the prior period, and on course to deliver our 92.5% outlook. The result was supported by cat resilience, the positive runoff of prior year reserves, and robust current year underwriting performance.

Speaker #3: These results reflect the continued benefit of actions taken to improve portfolio quality, build capital resilience, strengthen reserves, optimize capital allocation, and drive greater efficiency across the Group.

Speaker #3: While there is more work to do, I'm confident the business is well positioned to continue delivering sustainable growth and industry-leading performance through the cycle.

Speaker #3: Turning first to the result on slide 11. Growth rate and premium grew 6% to $15 billion, the combined ratio was 92.8%, in line with the prior period and on course to deliver our 92.5% outlook.

Speaker #3: The result was supported by cap resilience, the positive runoff of prior year reserves, and robust current-year underwriting performance. Investment income was around $830 million, implying a return of 4.6% on an annualized basis.

Chris Killourhy: Investment income was around $830 million, implying a return of 4.6% on an annualized basis. The net impact from ALM activities has been broadly neutral, and our tax rate was 25%, consistent with our natural tax rate. Profit for the H1 was up at around $1 billion. That is an increase of 4% on the prior year. As mentioned, return on equity was an excellent 17.7%, comfortably above our medium-term guidance of 15% plus. Our capital position remains very strong with a PCA multiple of 1.82 times, and the dividend of 33 Australian cents per share equates to a H1 payout ratio of around 33%. Consistent with prior years, our distribution is a little lower in the H1, and we will true this up with the final dividend at the end of the year. Turning now to growth on slide 12. Premium growth has been solid.

Speaker #3: The net impact from LLM activities has been broadly neutral, and our tax rate was 25%, consistent with our natural tax rate. Profit for the half was up at around $1 billion—that’s an increase of 4% on the prior year. As mentioned, return on equity was an excellent 17.7%, comfortably above our medium-term guidance of 15% plus.

Speaker #3: Our capital position remains very strong, with a PCA multiple of 1.82 times, and the dividend of 33 Australian cents per share equates to a first-half payout ratio of around 33%.

Speaker #3: Consistent with prior years, our distribution is a little lower in the first half, and we will true this up with the final dividend at the end of the year.

Speaker #3: Turning now to growth on slide 12. Premium growth has been solid. Group GWP growth of 6% was broadly consistent with the prior period and in line with outlook.

Chris Killourhy: Group GWP growth of 6% was broadly consistent with the prior period and in line with outlook. The ex-rate growth of 6% has been delivered at a time where we also pulled capacity back in areas where returns did not justify the deployment of capital. As Andrew touched on, at this time, growth does continue to be weighted towards the Northern Hemisphere, highlighting the strength of our global brand and driven by strong contributions from crop, QBE Re, QBE Portfolio Solutions, our Lloyd's portfolios, cyber, and adjacencies in North America. These are all portfolios where we continue to see attractive opportunities and strong returns. Here in Australia, although aggregate GWP has remained broadly stable, we saw positive momentum in CTP and consumer, supported by distribution initiatives launched in 2025, alongside continued growth in the direct channel.

Speaker #3: The X-rate growth of 6% has been delivered at a time when we also pulled capacity back in areas where returns did not justify the deployment of capital.

Speaker #3: As Andrew touched on, at this time, growth does continue to be weighted towards the Northern Hemisphere, highlighting the strength of our global brand and driven by strong contributions from Crop, QBE, Portfolio Solutions, our Lloyd's portfolios, Cyber, and adjacencies in North America.

Speaker #3: These are all portfolios where we continue to see attractive opportunities and strong returns. Here in Australia, although aggregate GWP has remained broadly stable, we saw positive momentum in CTP and consumer, supported by distribution initiatives launched in 2025, alongside continued growth in the direct channel.

Speaker #3: In North America, crop delivered particularly strong growth of 17%, which we will come back to in more detail shortly. Excluding crop, given the exited workers' comp program referenced by Andrew, alongside a temporary contraction in NH volumes, GWP reduced by 12%.

Chris Killourhy: In North America, crop delivered particularly strong growth of 17%, which we will come back to in more detail shortly. Excluding crop, given the exited workers' comp program referenced by Andrew, alongside a temporary contraction in A&H volumes, GWP reduced by 12%. Adjusting for the exited program and non-core business, North America GWP remained broadly stable against the prior half. Turning now to pricing. Overall, premium rate adequacy across the group remains strong, with the majority of our portfolio being premium adequate or better. Premium rates are broadly stable and the majority of the move from 2% in the prior period can be explained by property. Excluding commercial property in our Lloyd's business, premium rates increased by around 3%. While many Lloyd's portfolios are more stable versus the prior period, rates and commercial property are down further following another strong year for profitability.

Speaker #3: Adjusting for the exited program, a non-core business, North America GWP remained broadly stable against the prior half. Turning now to pricing, overall premium rate adequacy across the group remains strong, with the majority of our portfolio being premium adequate or better.

Speaker #3: Premium rates have been broadly stable, and the majority of the move from 2% in the prior period can be explained by property. Excluding commercial property in our Lloyd's business, premium rates increased by around 3%.

Speaker #3: While many Lloyd's portfolios are more stable versus the prior period, rates in commercial property are down further, following another strong year for profitability. But as Andrew mentioned, we're being selective in how we participate in certain property markets, and where pricing heads into 2027 will be a key area of focus, and depend a lot on cat activity over the coming months.

Chris Killourhy: As Andrew mentioned, we are being selective in how we participate in certain property markets, and where pricing heads into 2027 will be a key area of focus and depend a lot on CAT activity over the coming months. I am going to turn now to slide 13 to talk about the group's underwriting performance. Underwriting performance remains solid with a combined ratio of 92.8%. Catastrophe costs were around AUD 450 million, that is comfortably below allowance, and around AUD 30 million less than the prior period. That is another resilient outcome in a half, which includes a AUD 75 million impact associated with conflict in the Middle East. The impact from the Middle East relates primarily to political lines, property exposure in neighboring regions, and includes IBNR. The result also includes favorable prior year development around AUD 110 million. That is modestly higher than the prior period.

Speaker #3: I'm going to turn now to slide 13 to talk about the group's underwriting performance. Underwriting performance remains solid, with a combined ratio of 92.8%.

Speaker #3: Capacity costs were around $450 million—that's comfortably below allowance and around $30 million less than the prior period. That's another resilient outcome, in a half which includes a $75 million impact associated with conflict in the Middle East.

Speaker #3: The impact from the Middle East relates primarily to political lines and property exposure in neighboring regions, and includes IBNR. The result also includes favorable prior year development of around $110 million, which is modestly higher than the prior period, and reflects our consistent and prudent reserving strategy, where we look to hold long-tail reserving assumptions for at least three years before recognizing any good news.

Chris Killourhy: And reflects our consistent and prudent reserving strategy where we look to hold long tail reserving assumptions for at least three years before recognizing any good news. Whilst this does drive a negative bias on the current year, it should contribute to more consistent prior releases as the approach matures. The ex-CAT claims ratio was relatively stable versus the prior period. The ex-CAT continues to absorb industry-wide claims inflation impacting A&H and referenced in February. With only two quarters of experience, it is clear that claims inflation remains elevated. Though ultimately it is too early to make a definitive decision for the year, we have assumed limited improvements on the 2025 full year combined operating ratio at the half. Regardless of where 2026 ends, it is clear that another round of material price increases across the industry is required into 2027.

Speaker #3: While this does introduce a negative bias in the current year, it should contribute to more consistent prior year releases as the approach matures. The X cap claims ratio was relatively stable compared to the prior period.

Speaker #3: The X cap continues to absorb industry-wide claims inflation impacting ANH, as referenced in February. With only two quarters of experience, it's clear that claims inflation remains elevated.

Speaker #3: Though ultimately it's too early to make a definitive decision for the year, we've assumed limited improvements on the 2025 full-year combined operating ratio at the half.

Speaker #3: Regardless of where 2026 ends, it's clear that another round of material price increases across the industry is required into 2027. Under ASB 17, we do take an onerous contract provision in the first half.

Chris Killourhy: Under AASB 17, we do take an onerous contract provision in the H1. Essentially, this pulls forward an expected full year loss into the half and does serve to inflate our H1 combined ratio. The ex-CAT ratio has also absorbed broader impacts associated with the Middle East. I mentioned the CAT allowance of AUD 75 million earlier, but a H1 result also includes around AUD 50 million of associated large losses. As Andrew referenced, we have seen meaningful growth in certain Lloyd's portfolios, where particularly in marine war markets, premium rating has shifted materially. We are a market leader and have responded to support our customers and partners. We do anticipate meaningful earnings from this business in the H2, which will lead to a more balanced Middle East picture by the full year. Diversification remains at the heart of our strategy to deliver resilient and predictable outcomes.

Speaker #3: Essentially, this pulls forward an expected full-year loss into the half, and does serve to inflate our H1 combined ratio. The X cap ratio has also absorbed broader impacts associated with the Middle East.

Speaker #3: I mentioned the cap allowance of $75 million earlier, but a half-year result also includes around $50 million of associated large losses.

Speaker #3: As Andrew referenced, we've seen meaningful growth in certain Lloyd's portfolios, particularly in marine war markets, where premium rating has shifted materially. We're a market leader and have responded to support our customers and partners.

Speaker #3: We do anticipate meaningful earnings from this business in the second half, which will lead to a more balanced Middle East picture by the full year.

Speaker #3: Diversification remains at the heart of our strategy to deliver resilient and predictable outcomes. And it's worth pausing to reflect on the various favorable and unfavorable movements across components of the claims ratio.

Chris Killourhy: It is worth pausing to reflect on the various favorable and unfavorable movements across components of the claims ratio, including ex-CAT, CAT, and prior year development. Some variance across these metrics is inevitable, and it is important to assess them collectively rather than placing too much emphasis on any single component. I am going to turn now to expenses. The group expense ratio was 12.4% compared to 12.1% in the prior half. This increase was driven by investment spend in support of our transformation agenda, lower TEFL credits associated with the Australia CTP business, and increased weighting to a higher expense ratio AusPac business as a result of the strengthening Australian dollar. From a headcount perspective, however, we saw an increase of just 1%, and that was driven by international, where we continue to support growth. We expect the full year expense ratio to trend lower over H2.

Speaker #3: Including X cap, cap, and prior year development. Some variance across these metrics is inevitable, and it's important to assess them collectively, rather than placing too much emphasis on any single component.

Speaker #3: I'm going to turn now to expenses. The group expense ratio was 12.4%, compared to 12.1% in the prior half. This increase was driven by investment spend in support of our transformation agenda, lower TEPL credits associated with the Australia CTP business, and an increased weighting to a higher expense ratio OSPAC business as a result of the strengthening Australian dollar.

Speaker #3: From a headcount perspective, however, we saw an increase of just 1%, and that was driven by International, where we continue to support growth. We expect the full-year expense ratio to trend lower over H2.

Speaker #3: I'm going to move now to slide 14, as I'd like to touch on cap resilience, as cap performance has again been a feature of this half's result.

Chris Killourhy: I am going to move now to slide 14, as I would like to touch on CAT resilience. The CAT performance has again been a feature of this half's result. CAT was below allowance in H1, continuing the trend of CAT tracking comfortably below allowance over the past three years. This slide shows our probable maximum loss, or PML, a proxy for CAT exposure, which has now reduced by around 11% since 2023. This contrasts with premium growth of nearly 20% over the same period. We have been able to grow meaningfully whilst reducing catastrophe exposure. Notwithstanding the PML reduction, we have maintained our CAT allowance steady, which continues to be set at around the 80th percentile. Although it is not an exact science, mathematically, this implies that our allowance should be adequate eight out of 10 years, and indeed, recent experience would seem to support this.

Speaker #3: Cap was below allowance in the first half, continuing the trend of cap tracking comfortably below allowance over the past three years. This slide shows our probable maximum loss, or PML, approximately for cap exposure, which has now reduced by around 11% since 2023.

Speaker #3: This contrasts with premium growth of nearly 20% over the same period. We've been able to grow meaningfully whilst reducing catastrophe exposure. Notwithstanding the PML reduction, we've maintained our cap allowance steady, which continues to be set at around the 80th percentile.

Speaker #3: Although it's not an exact science mathematically, this implies that our allowance should be adequate eight out of ten years, and indeed, reason and experience would seem to support this.

Speaker #3: We believe, therefore, that our CAP performance in part reflects a structural improvement in our portfolio, rather than purely a cyclical outcome. Our business model is underpinned by a deliberate strategy of portfolio balance, and we place the same value on earnings generated through CAP resilience as we do any other dollar generated in the P&L.

Chris Killourhy: We believe, therefore, that our CAT performance in part reflects a structural improvement in our portfolio rather than purely a cyclical outcome. Our business model is underpinned by deliberate strategy of portfolio balance, and we place the same value on earnings generated through CAT resilience as we do any other dollar generated in the P&L. The slide also highlights that our maximum event retention has reduced 40% in two years, and that is as a result of a reduction in the attachment point for our main CAT reinsurance program. I wanted to put these retentions now in some context. In the US, it would now take a $75 billion East Coast hurricane to reach our $250, sorry, our $240 million maximum retention. In the past 10 years, we have seen only one event, Hurricane Ian in 2022, that would have hit this level.

Speaker #3: The slide also highlights that our maximum event retention has reduced 40% in two years, and that's as a result of a reduction in the attachment point for our main cap reinsurance program.

Speaker #3: I wanted to put these retentions now in some context. In the US, it would now take a $75 billion East Coast hurricane to reach our $240 million maximum retention.

Speaker #3: In the past 10 years, we've seen only one event, hurricane in in 2022, that would have hit this level. Indeed, at that size, we're taking north of a one in 10 year event.

Chris Killourhy: Indeed, at that size, we are taking north of a one in 10 year event. For events in Europe or Australia, the likelihood is even more remote. I am now going to turn to our divisional updates in slide 15. North America delivered a combined ratio of 97.3%. That is broadly in line with the prior half. There are a few ups and downs that I would like to take a moment to unpack. The commercial portfolio continued to perform well, and the crop current year result was broadly steady at 94%. The performance of specialty, however, was of course impacted by A&H. Rate increases were strong in the high single digits, underpinned by A&H at over 20%, aviation at over 10%, and specialty casualty at 8%, with construction and healthcare only a fraction behind this. Catastrophe costs in North America were materially below allowance and better than the prior year.

Speaker #3: For events in Europe or Australia, the likelihood is even more remote. I am now going to turn to our divisional updates and slide 15. North America delivered a combined ratio of 97.3%.

Speaker #3: That's broadly in line with the prior half, but there are a few ups and downs that I'd like to take a moment to unpack.

Speaker #3: The commercial portfolio continued to perform well, and the crop current-year result was broadly steady at 94%. The performance of specialty, however, was of course impacted by accident and health.

Speaker #3: Rate increases were strong, in the high single digits, underpinned by ANH at over 20%, aviation at over 10%, and specialty casualty at 8%, with construction and healthcare only a fraction behind this.

Speaker #3: Catastrophe costs in North America were materially below allowance and better than the prior year. PYD has been favorable, evidencing the strength of reserves, and is largely attributable to releases from crop and a number of commercial and specialty short-tail portfolios.

Chris Killourhy: PYD has been favorable, evidencing the strength of reserves, and is largely attributable to releases from crop and a number of commercial and specialty short tail portfolios. Moving to international, it has been another solid half for this business. That is despite allowances for the situation in the Middle East, with a combined ratio improving 1 point to 91.6%. Growth momentum remains impressive, with ex-rate growth around 11%. Rate overall was modestly negative, really driven by Lloyd's portfolios referenced earlier, which were down mid-single digits. Most other segments, however, were broadly flat, and importantly, across international, terms and conditions are stable and rate adequacy remains attractive. International has benefited from CAT running below allowance, and this has broadly offset some reserve strengthening in our energy portfolio and certain liability classes across Europe.

Speaker #3: Moving to International, it's been another solid half for this business. That's despite allowances for the situation in the Middle East, with the combined ratio improving 1 point to 91.6%.

Speaker #3: Growth momentum remains impressive, with X-ray growth around 11%, and rate overall was modestly negative, really driven by Lloyd's portfolios referenced earlier, which were down mid single digits.

Speaker #3: Most other segments, however, were broadly flat. Importantly, across International, terms and conditions are stable and rate adequacy remains attractive. International has benefited from cat running below allowance, and this has broadly offset some reserve strengthening in our energy portfolio and certain liability classes across Europe.

Speaker #3: On the topic of European liability, the loss portfolio transfer announced today will address a portfolio which has had persistent strengthening over several years. Finally, on Australia Pacific.

Chris Killourhy: On the topic of European liability, the lost portfolio transfer announced today will address a portfolio which has had persistent strengthening over several years. Finally, on Australia Pacific, GWP was broadly stable compared with the prior period, as was rate, which strengthened in the 2% to 3% range. We are pleased with the underwriting result, demonstrating resilience in what was another heavy CAT half, with significant bushfires in January and numerous storm and flooding events. Favorable prior year development continued, with releases in short tail commercial alongside CTP and LMI. I am going to turn now to slide 16 to say a little bit more on crop. It feels an opportune time for an update on our crop business. It has been roughly 2 years since we reset our strategy.

Speaker #3: GWP was broadly stable compared with the prior period, as was rate, which strengthened in the 2% to 3% range. We're pleased with the underwriting result, demonstrating resilience in what was another heavy cat half, with significant bushfires in January and numerous storm and flooding events.

Speaker #3: Favorable prior-year development continued, with releases in short-tail commercial, alongside CTP and LMI. I'm going to turn now to slide 16 to say a little bit more on crop.

Speaker #3: It feels like an opportune time for an update on our crop business. It's been roughly two years since we reset our strategy. Starting with growth, while GWP growth has been very strong, this highlights the impact from product extensions alongside a more modest level of organic growth in the core MPCI book.

Chris Killourhy: Starting with growth, while GWP growth has been very strong, this highlights the impact from product extensions alongside a more modest level of organic growth in the core MPCI book. Product extensions are a relatively new feature which allow farmers to increase revenue protection up to 95% from typical levels of around 75%. While product extensions have been calibrated to favorable economics, and indeed performed reasonably well in recent years, it remains a new product, and given our priority of managing uncertainty, we have chosen to cede the majority of growth to the Federal Fund. Going forward, we expect product extension uptake to moderate and for overall GWP growth to revert to more normal levels. Exposure across our priority versus non-priority states has now shifted materially, an important change given that the de-risk states had weighed on performance in recent years.

Speaker #3: Product extensions are a relatively new feature, which allow farmers to increase revenue protection up to 95% from typical levels of around 75%. While product extensions have been calibrated to favorable economics, and indeed performed reasonably well in recent years, it remains a new product and, given our priority of managing uncertainty, we've chosen to cede the majority of growth to the federal fund.

Speaker #3: Going forward, we expect product extension uptake to moderate and for overall GWP growth to revert to more normal levels. Exposure across our priority versus non-priority states has now shifted materially.

Speaker #3: An important change, given that the de-risk states had weighed on performance in recent years. This change has been driven not only by managing gross exposure, but also by increasing our cession of non-priority states to the federal fund.

Chris Killourhy: This change has been driven by not only managing growth exposure, but also by increasing our session of non-priority states to the Federal Fund. This, alongside the product extension strategy, gives a steady increase in sessions you can see in the chart, and ultimately why crop net insurance revenue growth has lagged GWP growth. We expect cessions to the US fund to remain more stable from here, with modest reductions to third-party reinsurers in 2027, resulting in net insurance growth that should begin to mirror or even outstrip GWP growth. We have also reduced our exposure to private products. These products are ancillary purchases, like hail coverage sold alongside the MPCI policy. The business tends to be less profitable, and you can see today we write 40% more MPCI per AUD of hail. The overall portfolio today is materially different to the one we were managing just a few years ago.

Speaker #3: This, alongside the product extension strategy, gives a steady increase in sessions you can see in the chart, and ultimately why crop net insurance revenue growth has lagged GWP growth.

Speaker #3: We expect sessions to the US fund to remain more stable from here, with modest reductions to third-party reinsurers in 2027, resulting in net insurance growth that should begin to mirror or even outstrip GWP growth.

Speaker #3: We've also reduced our exposure to private products. These products are ancillary purchases, like hail coverage sold alongside the MPCI policy. The business tends to be less profitable, and you can see today we write 40% more MPCI per dollar of hail.

Speaker #3: The overall portfolio today is materially different from the one we were managing just a few years ago. These actions have increased our confidence in achieving plan and have reduced the level of downside risk.

Chris Killourhy: These actions have improved our confidence in achieving plan and reduced the level of downside risk. Turning now to our investment result on slide 17. Investment performance remains solid, with a return of around AUD 830 million in the H1. This is despite elevated geopolitical and macro uncertainty. Risk assets have returned around 7.2% on an annualized basis, while fixed income returned around 4% in the half. The core fixed income portfolio exited the period at around 4.1%, while futures markets currently imply the fixed income yield will exit 2026 at around 4.3%. Total duration remains steady at around 2.5 years. Risk asset returns have been resilient, supported by strong returns across equities and infrastructure assets. We do have a very modest private credit portfolio, which delivered a positive return and is well-diversified with highly conservative lending.

Speaker #3: Turning now to our investment result on slide 17. Investment performance remains solid, with a return of around $830 million in the first half.

Speaker #3: This is despite elevated geopolitical and macro uncertainty. Risk assets have returned around 7.2% on an annualized basis, while fixed income returned around 4% in the half.

Speaker #3: The core fixed income portfolio exited the period at around 4.1%, while futures markets currently imply the fixed income yield will exit 2026 at around 4.3%.

Speaker #3: And total duration remains steady at around 2.5 years. Risk asset returns have been resilient, supported by strong returns across equities and infrastructure assets. We do have a very modest private credit portfolio, which delivered a positive return and is well diversified, with highly conservative lending.

Speaker #3: Funds under management increased 2% to $36.6 billion, while asset mix has remained unchanged, with high-quality core fixed income representing 85% of the portfolio.

Chris Killourhy: Funds under management increased 2% to AUD 36.6 billion, while asset mix has remained unchanged, with high-quality core fixed income representing 85% of the portfolio. Moving now to our key theme of balance sheet and capital management on slide 18. It was pleasing to complete our first buyback in several years, returning AUD 450 million to shareholders. Hopefully, this reinforces our recent statements about a highly disciplined and transparent approach to capital allocation. Our APRA PCA multiple was 1.82x at the end of the H1, or 1.78x when you adjust for the interim dividend. In the H2, the sale of our trade credit and surety business is expected to complete at an anticipated pre-tax gain on sale of around AUD 70 million.

Speaker #3: Moving now to our key theme of balance sheet and capital management on slide 18. It was pleasing to complete our first buyback in several years, returning $450 million to shareholders.

Speaker #3: Hopefully, this reinforces our recent statements about a highly disciplined and transparent approach to capital allocation. Our APRA PCA multiple was 1.82 times at the end of the first half, and 1.78 times when you adjust for the interim dividend.

Speaker #3: In the second half, the sale of our trade credit and surety business is expected to complete, at an anticipated pre-tax gain on sale of around $70 million.

Speaker #3: We also announced a reinsurance transaction this morning, including a loss portfolio transfer covering around $1.6 billion of reserves relating to exited US middle market and workers' comp portfolios, not in prior transactions, in addition to a European liability book.

Chris Killourhy: We also announced a reinsurance transaction this morning, including a lost portfolio transfer covering around AUD 1.6 billion of reserves relating to exited US middle market and workers' comp portfolios, not in prior transactions, in addition to a European liability book. The day one cost of the reinsurance transaction is similar to the gain on sale from trade credit, around AUD 80 million pre-tax, and we booked in the restructuring line of the P&L. In addition to reducing reserve uncertainty, this gives rise to an immediate PCA benefit of around 2 points. The ongoing impact of the transaction is not material. The modest amount of foregone investment income is partially offset by claims discounting benefit, and the broader implications of reinvesting that capital into more productive opportunities is also supportive for returns. I'll pause here and hand back to Andrew.

Speaker #3: The day one cost of the reinsurance transaction is similar to the gain on sale from trade credit, around $80 million pre-tax, and we booked it in the restructuring line of the P&L.

Speaker #3: In addition to reducing reserve uncertainty, this gives rise to an immediate PCA benefit of around 2 points. The ongoing impact of the transaction is not material.

Speaker #3: The modest amount of foregone investment income is partially offset by claims discounting benefit. And the broader implications of reinvesting that capital into more productive opportunities is also supportive for returns.

Speaker #3: I'll pause here and hand back to Andrew. Thanks, Chris. No changes to note on our outlook. We're on track to achieve constant currency gross written premium growth around the mid-single digits.

Andrew Horton: Thanks, Chris. No changes to note on our outlook. We're on track to achieve constant currency growth, written premium growth around the mid-single digits. We continue to target a group combined ratio around 92.5%. As you analyze today's result, we suspect some will adjust our H1 combined ratio for favorable CAT and PYD. We made some comments this morning as to why I wouldn't necessarily follow that approach. Nonetheless, we provided a simple bridge here to our guidance touching on the issues Chris noted earlier. Our H1 ex-CAT was a little overstated by the A&H onerous contract provision, and we think the Middle East impacts in H1 reflected many claims where we see a benefit from material marine war premium in the H2.

Speaker #3: We continue to target a group combined ratio of around 92.5%. As you analyze today's results, we suspect some will adjust our first half combined ratio for favorable CAT and PYD.

Speaker #3: We've made some comments this morning as to why we wouldn't necessarily follow that approach, but nonetheless, we provided a simple bridge here to our guidance, touching on the issues Chris noted earlier.

Speaker #3: Our first half XCAT was a little overstated by the ANH onerous contract provision, and we think the Middle East impacts in half one reflected many claims. We see a benefit from material marine war premium in the second half.

Speaker #3: And finally, we see improvement in underwriting across a number of cells in half two, and we are focused on driving a lower expense ratio. Our medium-term guidance also remains unchanged, where we expect ongoing mid-single-digit growth and returns in the 15%+ range.

Andrew Horton: Finally, we see improvement in underwriting across a number of cells in H2 and are focused on driving a lower expense ratio. Our medium-term guidance also remains unchanged. We expect ongoing mid-single digit growth and returns in the 15% plus range. As we said in February, underpinning this outlook is a view that investment returns track above 3%, which implies an outlook of reasonably stable combined ratio. We will hold our usual Q3 update on 27 November and look forward to discussing H2 performance then. With that, I want to thank you for joining us. I will pass back to the operator for Q&A.

Speaker #3: As we said in February, underpinning this outlook is a view that investment returns track above 3%, which implies an outlook of a reasonably stable combined ratio.

Speaker #3: We'll hold our usual third quarter update on November 27th and look forward to discussing second-half performance then. With that, I want to thank you for joining us, and I'll pass back to the operator for Q&A.

Speaker #1: Thank you. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced.

Operator: Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To ensure that we go through all the questions, please have two questions only. If you have more questions, please re-queue. Just a moment for our first question, please. First, we have Andrei Stadnik from RBC. Please go ahead.

Speaker #1: To ensure that we go through all the questions, please have two questions only. If you have more questions, please re-queue. Just a moment for our first question, please.

Speaker #1: First, we have Andre Stanick from RBC. Please go ahead.

Andrei Stadnik: Good morning. Thank you for taking questions, and well done on a solid result. Can I ask, firstly, just around the capital. Just in terms of the 6 percentage points of capital you are highlighting, the relief that should come through going forward, does that equate about AUD 750 million? Is that something you potentially could seek to return to investors in early 2027?

Speaker #2: Good morning. Thank you for taking questions, and well done on a solid result. Can I ask firstly, just around the capital, in terms of the six percentage points of capital you're highlighting—the relief that should come through going forward—does that equate to about $750 million in Australian dollars?

Speaker #2: And is that something you could potentially seek to return to investors in early 2027?

Speaker #3: John, talk about the six points you've made.

Andrew Horton: Do you want to talk about the 6 points it is made up?

Speaker #2: Yeah, I mean, the six points, as we've highlighted, are a combination of benefits you get from the LPT, from the account bond that we're looking at at the moment.

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

Speaker #2: I think, though, in terms of how we look at returning to investors, we've sort of articulated our capital strategy as: the first thing that we will look to do with it is support sustainable growth.

Speaker #2: But I think, as we said a few times, as and when that is still above our target range, we will continue to look for ways to redistribute that, whether that's through buybacks or other levers.

Speaker #3: Yeah, I mean, I think we're incredibly consistent on that. So we tend to look at the capital at the end of the year, probably with the November board, see what the plan for 2027 is going to look like, see what the profitability for 2026 is going to look like, and then see where our capital position is. As Chris said, any excess, our aim is to return it.

Andrew Horton: Yeah. I think we're incredibly consistent on that. We tend to look at the capital, Andre, at the end of the year, probably with the November board. See what the plan for 2027 is going to look like, see what profitability for 2026 is going to look like, and then see where our capital position is. As Chris said, any excess, our aim is to return it.

Speaker #2: And just to double-check, that's $750 million in Aussie dollar terms. Is that a reasonable number?

Andrei Stadnik: I did just double check. That AUD 750 million in Aussie dollar terms, is that a reasonable number?

Speaker #3: What, six points?

Andrew Horton: What, 6 points?

Chris Killourhy: The six points, that sounds a touch high, but I can just confirm the number.

Speaker #2: The six points, it's going to be—it's going to be, yeah, it's going to be—that sounds like a touch high, but we can just confirm the number.

Andrew Horton: Yeah. Testing your mental arithmetic at this point.

Speaker #3: Yeah, testing your mental arithmetic at this point.

Chris Killourhy: Yeah.

Speaker #2: Yeah, all good, thank you. Okay, and then my second question.

Andrei Stadnik: All good. Thank you. My second question.

Operator: Sorry. Next question is Nigel Pittaway. Please go ahead.

Speaker #1: Sorry. Next question is from Nigel Pittaway. Please go ahead.

Speaker #4: Oh, good morning, guys. First question is on QBE. I mean, you're saying you've got about $4 billion of premium now. I think there's been comments that there's a target for $6 billion by 2030.

Nigel Pittaway: Good morning, guys. First question is on QBE Re. You are saying you have got about AUD 4 billion of premium now. I think there has been sort of comments that there is a target for AUD 6 billion by 2030. My question was, first of all, is that an aspirational target or sort of one that you think there is a good chance of achieving? Just also maybe whilst you are sort of answering that, can you comment on terms and conditions and how you are feeling about those and how that would influence any sort of move towards that growth target?

Speaker #4: So, my question was, first of all, is that an aspirational target or one that you think there's a good chance of achieving?

Speaker #4: And just also, maybe whilst you're sort of answering that, can you comment on terms and conditions and how you're feeling about those, and how that would influence any sort of move towards that growth target?

Speaker #3: Yeah, Nigel, thanks for that. Yeah, that is our aim. We believe, from the position we've got in reinsurance, and the depth of customers we have, and the breadth of the portfolio, that the $6 billion is an achievable target.

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

Speaker #3: By 2030—but it's sort of linked to the second one. If all markets completely fell off a cliff between now and then, we'd obviously focus on profitability over growth.

Speaker #3: At this point in time, we can see a way to do it. We've talked about how property excess of loss has been under a lot of pressure in the first half of this year, but everything else is looking okay.

Speaker #3: So, definitely driving towards a larger QBE business. And $6 billion sort of puts it into the first division of the Premiership of reinsurers, and that's where we want to be.

Speaker #2: I think, on the point of terms and conditions, although, as Andrew said, we have seen pressure coming through on rates, what we haven't seen is it translating into challenges on attachment points or broader terms and conditions.

Chris Killourhy: I think on the point of terms and conditions, although as Andrew said, we have seen pressure coming through on rates. What we have not seen is it translating into challenges on attachment points or broader terms and conditions.

Speaker #4: Okay, thank you for that. Secondly, just on the crop, there’s about 8.1% of PYD, I understand. What sort of drove that?

Nigel Pittaway: Okay. Thank you for that. Secondly, just on the crop, there is about 8.1% of PYD, I understand. What sort of drove that?

Speaker #3: We just saw returns improve from the position we took towards the end of last year. Now, we have been aiming for being slightly more conservative in our reserving, so we don't actually see the reverse of that—of seeing the returns deteriorate.

Andrew Horton: We just saw returns improve from the position we took towards the end of last year. Now we have been aiming for being slightly more conservative in our reserving, so we do not actually see the reverse of that, of seeing the returns deteriorate. We had a good return when we announced the full year. It looks like we held a little back because we did not want to see any deterioration from there, but we saw the return continue to improve in Q1.

Speaker #3: We had a good return when we announced the full year, and it looks as though we held a little back, because we didn't want to see any deterioration from there, but we saw the return continue to improve in the first quarter.

Speaker #4: Okay. And then maybe just finally, I mean, what caught you by surprise on A&H? And given that, you say you've got to go again in terms of pricing.

Nigel Pittaway: Okay. Then maybe just finally, what caught you by surprise on A&H, given that you say you have got to go again in terms of pricing?

Speaker #3: Yes, so what we had last year was—I think we did try to flag that, Nigel, at the end of the year—was where we thought we weren't getting enough rate to cover the claims inflation.

Andrew Horton: Yes. What we had last year was, I think we did try to flag that, Nigel, at the end of the year, was where we thought we were not getting enough rate to cover the claims inflation. What we saw was claims inflation coming through mainly towards the end of Q3 and Q4 last year. A lot of the business had already been quoted at that point, so we were quoting based on what we had seen. Then when those claims came through, we saw that they were greater than the 20% we were putting through, probably nearer 30%. Therefore, we have a catch-up position in 2026. You also have, to some extent, rate caps, and you have to renew some business because it is in the admitted market there. That constrained what we could do. This year, we believe we will be able to catch up.

Speaker #3: So what we saw was claims inflation coming through mainly towards the end of the third and fourth quarter last year. A lot of the business had already been quoted at that point.

Speaker #3: So, we were quoting based on what we'd seen. And then, when those claims came through, we saw that they were greater than the 20% we were putting through—probably nearer 30%.

Speaker #3: And therefore, we have a catch-up position in 2026. You also have, to some extent, rate caps, and you have to renew some business because in the admitted market there.

Speaker #3: So that constrained what we could do. This year, we believe we'll be able to catch up. The whole market is in a similar boat.

Andrew Horton: The whole market is in a similar boat. Not that that makes us feel any better when a business is not performing well, but it means the market is definitely moving as one in 2026.

Speaker #3: Not that that makes us feel any better when a business isn't performing well, but it means the market is definitely moving as one in 2026.

Speaker #1: Thank you very much. Next, we have Andre Sandek from RBC for his second question.

Operator: Thank you very much. Next, we have Andrei Stadnik from RBC for his second question.

Speaker #5: Thanks so much for that. Look, my second question—can I just ask about broker-led facilities? That business has grown amazingly well in the past few years.

Andrei Stadnik: Thanks so much for that. My second question. Can I just ask around broker-led facilities? That business has grown amazingly well in the past few years. Feels like it's 30% compound or maybe better. Going forward, should we be thinking low teens growth? Is there any color you can give on profitability of that business relative to the rest of the book?

Speaker #5: It feels like it’s 30% compound, or maybe better. Going forward, should we be thinking low-teens growth? And is there any color you can give on the profitability of that business relative to the rest of the book?

Speaker #3: So, on the first one, that's a great question. We believe there are going to be more. We've seen how the major brokers are all creating them.

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

Speaker #3: So we saw one major broker start much earlier, about a decade ago, and then others have done that as well. So we are expecting others to follow suit.

Speaker #3: We've also seen over the years that the percentage going into them has actually grown. So the broker facilities tended to start at about 10% of the overall placement, and now some are getting closer to 30%.

Speaker #3: So there's been growth in two elements: more brokers doing it, and the percentage going up. But also, within our QPS portfolio, we do portfolios of MGAs, and we're seeing more of that happening.

Speaker #3: So, we do see more growth. It's going to be very hard—and great—to say whether it's going to continue at 30% or not.

Andrew Horton: It's going to be very hard, Andrei, to say whether it's going to continue at 30% or not. I guess I would be surprised if it grows at that level. Being a market leader in it, we are seen as a good place to start when brokers are thinking of doing them. Good growth going forwards. From a profitability point of view, they do act a bit like an enhanced market tracker. If the Lloyd's market is performing well in total, the facilities are performing well. They've performed, I would say, in the 80s combined ratio, over the time we have been on them.

Speaker #3: I guess I would be surprised if it grows at that level. But being a market leader in it, we are seen as a good place to start when brokers are thinking of doing them.

Speaker #3: So, good growth going forward. From a profitability point of view, they do act a bit like an enhanced market tracker. So, if the Lloyd's market is performing well in total, the facilities are performing well.

Speaker #3: So they performed, I would say, in the 80s combined ratio over the time we have been on them.

Speaker #4: Thanks so much.

Andrei Stadnik: Thank you so much.

Speaker #1: Thank you. Just a moment for our next question, please. Next, we have Andrew Bunkham from Macquarie.

Operator: Thank you. Just a moment for our next question, please. Next, we have Andrew Buncombe from Macquarie.

Speaker #4: Hi, guys. Thanks for taking my questions. Just the first one from me: some of your global competitors have been quite vocal about growth in global data center facilities.

Andrew Buncombe: Hi, guys. Thanks for taking my questions. Just the first one from me. Some of your global competitors have been quite vocal about growth in global data center facilities. Can you just talk to how you are approaching those risks? Also, are they going through your QPS portfolio or are they separate? Thanks.

Speaker #4: Can you just talk to how you're approaching those risks? But also, are they going through your key QPS portfolio, or are they separate? Thanks.

Speaker #3: Okay, that's a good question. So, yes, there's been a lot of talk about data centers and the opportunity. We touched on it, I think, at the end of last year.

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

Speaker #3: So, what we're doing is, we already write some through our current underwriting teams across the globe within QBE. What we have decided to do is appoint someone to coordinate our approach to them.

Speaker #3: So Jamie Thompson, who's actually based in London, has been with the company quite a long time. He has been coordinating our data center approach, where we can offer lines across multiple products to this data center opportunity.

Speaker #3: So it's a more joined-up approach of leveraging our expertise. So I think this is a great opportunity—wherever data centers are cropping up, we will be able to grow with that.

Speaker #3: It’s very hard to determine exactly how much premium is going to take place within it, but we see it as a great opportunity because it lends itself to our global footprint and the breadth of our product expertise.

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

Speaker #3: QPS will definitely be writing lines on it because it writes a portfolio of business. So within QPS, it will write it as well. And the great beauty about QPS is it ends up having relatively small limits over many, many different things.

Speaker #3: So, we will end up having that doubling-up impact, just as we do in all our other lines of business.

Speaker #4: Great. And then my other question was just in relation to the FY26 combined ratio guidance. Your first half accident year combined ratio for crop was a touch lower than the normal approach.

Andrew Buncombe: Great. My other one was just in relation to the FY 2026 combined ratio guidance. Your H1 accident year combined ratio for crop was a touch lower than the normal approach. Can you help us think about how or what assumptions you are making for combined operating ratios in the North American crop business inside of your group guidance? Thanks.

Speaker #4: Can you help us think about what assumptions you're making for combined operating ratios in the North American crop business within your group guidance?

Speaker #4: Thanks.

Speaker #3: Yeah, I mean, I'll hand over to Chris, but I think it was only a touch lower than where it was. We're happy with the new strategy we put in place over the past couple of years.

Andrew Horton: Yeah. I will hand over to Chris, but I think it was only a touch lower than where it was. We are happy with the new strategy we put in place over the past couple of years, and we saw how that came to fruition in the 2025 results. The aim is not to make a major move in it.

Speaker #3: And we saw how that came to fruition in the 2025 results. The aim isn't to make a major move in it. Yeah, we're not looking to make any major change.

Chris Killourhy: That is right. We are not looking to make any major change. I think we quoted earlier that the combined ratio is around about 94%. It is still early days. It is quite a H2 business, but we have not had at this stage. Our view remains pretty positive on how that portfolio is performing as we get early views on planting conditions.

Speaker #3: I think we quoted earlier that the combined ratio was around 94%. It's still early days. It's quite a second-half business, but at this stage our view remains pretty positive on how that portfolio is performing, as we get early views on planting conditions.

Andrew Buncombe: Thank you.

Speaker #4: Thank you.

Speaker #1: Thank you. Next, we have Sidharth Parameswaran from JP Morgan. Please go ahead.

Operator: Thank you. Next, we have Siddharth Parameswaran from JPMorgan. Please go ahead.

Speaker #5: Good morning, gentlemen. I was hoping I could just get a comment around two things. Firstly, just inflation—just how that has been tracking versus what you were saying before.

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

Speaker #5: I think that last comment that I remember was that there was inflation that was above rate, and maybe if you could just comment, maybe geographically and also particularly around some of the key classes like property and liability.

Speaker #3: Can I have a go?

Chris Killourhy: Do you want to have a go? Well, I think we saw that rate for the H1 has come in around about half a point. I think we expect for the full year, that remains our view for the full year. I think, as you say, Sid, as we look now, inflation is tracking a little above where rate is, but we are not really seeing that translate through to sort of a material impact on our outlook really, or in terms of our underlying performance. I think, as we discussed in the past, the challenge for us with rates and inflation, of course, it does have some impact, but it is really just one lever in our much broader suite.

Speaker #5: Yeah. Look, I think we saw that rate for the half has come in at around about half a point. I think we expect, for the full year, that remains our view for the full year.

Speaker #5: I think, as you say, Sid, as we look now, inflation is tracking a little above where rate is. But we're not really seeing that translate through to a material impact on our outlook, really, or in terms of our underlying performance.

Speaker #5: I think, as we discussed in the past, the challenge for us with rates and inflation, of course, does have some impact, but it's really just one lever in our much broader suite.

Speaker #5: I think the key line, as others have called out, has been property around the globe, where we are seeing rate coming off—actually coming off—and therefore materially below where we see inflation.

Chris Killourhy: I think the key line, as others have called out, has been property around the globe, where we are seeing rate coming off, and actually coming off and therefore materially below where we see inflation. This is a portfolio that has been particularly adequate for a long period of time. We have seen significant rate increases. We are not really seeing that rate inflation dynamic translate into a sort of a drag on performance over the H1.

Speaker #5: But this is a portfolio that has been particularly adequate for a long period of time. We've seen significant rate increases, so we're not really seeing that rate inflation dynamic translate into a drag on performance over the first half.

Speaker #5: Okay. If I could just ask a second question, particularly about the strength of buffers then—as you said, rate over inflation—mathematically, things would be getting worse, at least on your loss ratios.

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

Speaker #5: I think you made the comment that you always start reserving a lot of your action years very conservatively, and you start releasing after three years, presumably.

Speaker #5: Given that the rate is below inflation, the buffers would be reducing. I was hoping you could just comment, firstly, on sustainability.

Speaker #5: We see some very large releases from Australia in particular. Are those sustainable? Maybe if you could just give us some comment on anything you could point to—paid-to-incurred ratios, or anything which might help us gain confidence that the reserving releases can continue.

Speaker #3: Yeah. I mean, look, I think what we have seen over the past few years is our IBNR-to-case ratios have been increasing fairly consistently over the last few years.

Chris Killourhy: Yeah. I mean, look, I think what we have seen over the past few years is our IBNR to case ratios have been increasing fairly consistently over the last few years. This is actually what we would expect as we change the reserving philosophy to holding on to ultimates for a period of 3 years before we release on the long tail lines. We have seen, again, at the half this year, that we have again seen that the ratio of IBNR to case has increased again. Some of that is also just down to mix as opposed to being purely where we are setting the strength. I think, yeah, the point we are making is the moment for our ex-CAT is kind of a one-way test. When we see bad news, we are reflecting it straight away.

Speaker #3: But that's exactly what we'd expect as we change the reserving philosophy to holding on to ultimates for a period of three years before we release on the long-tail lines.

Speaker #3: We have seen again at the half this year that we've again seen that the ratio of IBNR to case has increased again. But some of that is also just down to mix, as opposed to being purely kind of where we're setting the strength.

Speaker #3: But I think, yeah, the point we're making is, at the moment, for our XCAT, it's kind of a one-way test. When we see bad news, we're reflecting it straight away.

Speaker #3: And where we're seeing good news, we're holding on to it for a period of three years. Some of what you're seeing in the release for the first half has really just been the math of that excess that we're holding on to flowing through.

Chris Killourhy: Where we are seeing good news, we are holding onto it for a period of 3 years. Some of what you are seeing in the release of the H1 has really just been the maps of that excess that we are holding on to flowing through. In terms of the part of the extent to which the shift between rates and inflation is kind of eroding that is really something we take into account at the time of planning and at the time of sort of setting the allowances. So it is not as if we take any less prudent approach because of what we are seeing in rates of inflation versus what we would have done otherwise. I do not think you should be interpreting rates of inflation having an impact on our ability to see prior releases in the future.

Speaker #3: In terms of the extent to which the shift between rates and inflation is kind of eroding that, yeah, that's really something we take into account at the time of planning, and at the time of sort of setting the allowances.

Speaker #3: So it's not as if we take any less prudent approach because of what we're seeing in rates of inflation, versus what we would have done otherwise.

Speaker #3: So, I don't think you should be interpreting rate and inflation as having an impact on our ability to see prior releases in the future.

Speaker #1: Thank you. Just a moment for our next question, please. Next, we have Karen Chutney from UBS. Please go ahead.

Operator: Thank you. Just a moment for our next question, please. Next we have Carron Chitney from UBS. Please go ahead.

Speaker #5: Good morning, Andrew and Chris. First question is just on the US. If we take our crop and even if we adjust for your onerous provision on accident and health, it does look like the first half combined ratio is still over 100% across the rest of the US portfolio.

Carron Chitney: Morning, Andrew and Chris. First question is just on the US. If we take out crop and even if we adjust for your onerous provision on A&H, it does look like the H1 combined ratio is still over 100% across the rest of the US portfolio. Just interested in what's still driving that outcome and where you see combined ratios ex-crop moving in the US over the medium term.

Kieran Chidgey: Morning, Andrew and Chris. First question is just on the US. If we take out crop and even if we adjust for your onerous provision on A&H, it does look like the H1 combined ratio is still over 100% across the rest of the US portfolio. Just interested in what's still driving that outcome and where you see combined ratios ex-crop moving in the US over the medium term.

Speaker #5: I'm just interested in what's still driving that outcome and where you see combined ratios ex-crop moving in the US over the medium term.

Speaker #3: Yeah, so I think that's a really good question. If you look at the business, crop has performed well in the first half. Our commercial business has performed well, and we've had some challenges within the specialty portfolio.

Chris Killourhy: Yeah. I think it's a really good question. If you look at the business, crop has performed well in the H1. Our commercial business performed well, and we've had some challenges within the specialty portfolio, of which A&H is one. We've also had some challenges within financial lines within that, particularly within transaction liability, where there've been a lot more claims in the H1 in that business line. You probably, if we unpacked it, you'd have two businesses performing well and achieving the return and one business over 100%, giving the overall position in the US.

Speaker #3: Of which ANH is one. We've also had some challenges within financial lines, particularly within transaction liability, where there have been a lot more claims in the first half in that business line.

Speaker #3: So, you're probably—if we unpacked it—you'd have two businesses performing well and achieving the return, and one business over 100%, giving the overall position in the US.

Speaker #3: So, answering the question—yes, I have confidence in us getting to a lower combined ratio than close to 97.5, and in achieving the 15% return on capital.

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

Speaker #3: It probably won't achieve the combined ratios of the OSPAT business and International because it's a less capital-intensive business. But we've got to continue to focus on improving that ANH, which is a Gen 1 issue.

Speaker #3: So, we had to give an update as we get closer to the end of the year—do we believe we've got ahead of inflation on that?

Speaker #3: And also improving parts of the Financial Lines business. We definitely need to improve those.

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

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

Speaker #5: The sort of action on ANH—you pushed up price, but obviously a lot of that chunk of business moved elsewhere. Just giving you, premium there is down.

Speaker #5: Do you envisage the same thing happening if you continue to sort of try and push price ahead of market? It sort of feels like you are trying to go ahead of the market on rate, but the size of that book—which is quite big outside crop within the residual of your US portfolio—might continue to shrink.

Speaker #3: I think the difference this year is the fact that the feedback from the market is they've all recognized the problem. So, I don't think it will shrink if we move the rate, because everybody else has to do the same.

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

Speaker #3: We can obviously see from some announcements the performance of their medical stop-loss businesses, which are not dramatically different from ours. And the feedback from the broker community and clients is the market is going to move together because we all need the rate.

Speaker #3: So I think that's different from last year, where we may have picked it up, although we couldn't move quickly enough. We may have picked it up sooner than some others in the market.

Speaker #1: Thank you. Next, we have Freya Kong from Bank of America.

Operator: Thank you. Next we have Freya Kong from Bank of America.

Speaker #6: Hi. Thanks for taking our questions. On your broker facilities, it's very helpful for driving growth, but I'm just wondering what your ability to maintain underwriting discipline and oversight is.

Freya Kong: Hi, thanks for taking our questions. On your broker facilities, it is very helpful for driving growth, but I am just wondering what your ability to maintain underwriting discipline and oversight is. Would you be worried about not being able to shield the business and facilities against a broader market downturn from here?

Speaker #6: Would you be worried about not being able to shield the business and facilities against a broader market downturn from here?

Speaker #3: Yeah, so I think it's a really good question on the broker facilities. So I think, in our position as leading on some of them, we can dictate what is in and what isn't to some extent.

Andrew Horton: Yes. I think it's a really good question on the broker facilities. I think, in our position as leading on some of them, we can dictate what is in and what isn't to some extent. Obviously, if we dictated too much wasn't in, they don't actually work as an efficiency mechanism. There is some control around who we follow, what lines of business are in, and we can see the data coming through. I think that gives us enough control on them. The other element is they are a balance of a number of things, so they're not all operating in a similar way. The MGAs are definitely different. The facilities that we're writing through Lloyd's may have different elements in them. There's balance within them in total. I think we can react.

Speaker #3: Obviously, if we dictate it too much, it doesn't actually work as an efficiency mechanism. So there is some control around who we follow, what lines of business we're in.

Speaker #3: And we can see the data coming through, so I think that gives us enough control on them. The other element is, there are a balance of a number of things.

Speaker #3: So, they're not all operating in a similar way. The MGAs are definitely different. The facilities that we're writing through Lloyd's may have different elements in them.

Speaker #3: So there's balance within them in total. So I think we can react; we could, in a nuclear option, come off them if we wanted to.

Andrew Horton: We could, in a nuclear option, come off them if we wanted to, but we believe these are fundamentally really good for the market and we want to support them. They're making the market more efficient. It's giving a benefit to the customer. The brokers are very aligned to us, so it's in the broker's interest as well for these not to become unprofitable because the whole thing will collapse. There is a massive alignment, I think, within the market, from the customer through to the broker to us, to ensure they continue to work. I feel pretty good about them in they're diversified themselves and they're diversified between them.

Speaker #3: But we believe these are fundamentally really good for the market, and we want to support them. They're making the market more efficient. It's giving a benefit to the customer.

Speaker #3: And the brokers are very aligned with us, so it's in the brokers' interest as well for these not to become unprofitable, because the whole thing would collapse.

Speaker #3: So there's a massive alignment, I think, within the market—from the customer, through the broker, to us—to ensure they continue to work. So I feel pretty good about them; they're diversified in themselves, and they're diversified between them.

Speaker #6: Okay, thank you. And then, second question, just on the rise of sophisticated AI models like Mythos, which are putting corporates and governments on high alert regarding cybersecurity.

Freya Kong: Okay. Thank you. Then second question, just on the rise of these sophisticated AI models like Mistral, which are putting corporates and governments in high alert on cybersecurity, how has this affected your risk appetite for cyber?

Speaker #6: How has this affected your risk appetite for cyber?

Speaker #3: For cyber business, or our own cybersecurity?

Andrew Horton: For cyber business or our own cybersecurity?

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

Speaker #6: Cyber business. And I guess you've had the market leader, Beasley, saying that they're concerned about the backdrop and seeing rating levels as no longer adequate in some places.

Speaker #3: So, what we have seen in the first half is that the growth in our cyber business in the US has been less than our growth in our cyber business outside the US.

Andrew Horton: What we have seen in the H1 is that the growth in our cyber business in the US has been less than our growth in our cyber business outside the US, mainly due to that comment that the rating environment and capacity in the US seems to be greater. From an AI point of view, our aim is to continue to cover our clients, obviously be as vigilant as possible, and we believe the relative AI may make clients both respond to the vulnerabilities more quickly and also the bad actors attack the vulnerabilities more quickly. The jury's out on how that works. Key is having balance in the portfolio, not too much of it. Good reinsurance program. So having a stop-loss program against it, having all those elements so if things deteriorate, it has a limited impact on the overall group results.

Speaker #3: Mainly due to that comment that the rating environment and capacity in the U.S. seems to be greater. From an AI point of view, our aim is to continue to cover our clients.

Speaker #3: Obviously, we are as vigilant as possible. And we believe that, relatively, AI may cause clients to both respond to vulnerabilities more quickly and also allow bad actors to attack those vulnerabilities more quickly.

Speaker #3: So the jury is out on how that works. The key is having balance in the portfolio—not too much of it—and a good reinsurance program. So, having a stop-loss program against it, having all those elements.

Speaker #3: So, if things deteriorate, it has a limited impact on the overall group results. So, obviously, thinking it through, do we need to adjust product on the back of it?

Andrew Horton: Obviously thinking it through, do we need to adjust product on the back of it? So far, we're comfortable where we are.

Speaker #3: So far, we're comfortable where we are.

Speaker #1: Thank you. Just a moment for our next question, please. Next, we have Blake Dawson from Jordan Group. Please go ahead.

Operator: Thank you. Just a moment for our next question, please. Next we have Blake O'Gorman from Jarden. Please go ahead.

Speaker #7: Hi, guys. Thanks for taking my call and questions. So, I'm just looking at slide 7 in the pack. It's really useful—I appreciate that.

Blake O'Gorman: Hi guys. Thanks for taking my call and questions. I am just looking at slide 7 in the pack. It is really useful. I appreciate that. Just trying to get an idea on growth looking forward by lines from what you can see in terms of rate today. I want to get a better idea of which lines of businesses you think you are going to target for growth over the next 12 months to help support that single digit volume growth, kind of target while still seeing positive mix to shape your margin as well.

Blake Dowsett: Hi guys. Thanks for taking my call and questions. I am just looking at slide 7 in the pack. It is really useful. I appreciate that. Just trying to get an idea on growth looking forward by lines from what you can see in terms of rate today. I want to get a better idea of which lines of businesses you think you are going to target for growth over the next 12 months to help support that single digit volume growth, kind of target while still seeing positive mix to shape your margin as well.

Speaker #7: I'm just trying to get an idea on growth looking forward by product line—from what you can see in terms of rate today. I want to get a better idea of which lines of business you think you're going to target for growth over the next 12 months to help support that mid-single-digit volume growth.

Speaker #7: ...kind of target, while still seeing positive mix to shape your margin as well.

Speaker #3: So the sort of easy ones—if anything's easy—the easy ones are continuing where we've actually grown of late. So, we talked about QBE with the aspiration of $6 billion.

Andrew Horton: The easy ones, if anything is easy, the easy ones are continuing.

Blake O'Gorman: Yeah

Blake Dowsett: Yeah

Andrew Horton: Where we have actually grown of late. We talked about QBE Re with its aspiration of AUD 6 billion. We talked about the portfolio solutions where we think more brokers will come up with them, and there will be opportunities within the MGA world. Talk about cyber, despite the issue in the US, our portfolio is relatively small, so we can grow from there. The crop business, now we have it in a good position. The drive forward will be to add crop business that actually improves the overall net premiums we are retaining, rather than this supplemental product where we have reinsured most of it out. Those are the relatively straightforward ones that we can actually see growth into the foreseeable future. What we are also trying to do is leveraging our position through distribution.

Speaker #3: We talk about the portfolio solutions, where we think more brokers will come up with them, and there'll be opportunities within the MGA world. Talking about cyber, despite the issue in the US, our portfolio is relatively small.

Speaker #3: So we can grow from there. And the crop business, now we have it in a good position. The drive forward will be to add crop business that actually improves the overall net premiums we're retaining, rather than this supplemental product where we've reinsured most of it out.

Speaker #3: So those are the relatively straightforward ones where we can actually see growth into the foreseeable future. What we're also trying to do is leverage our position through distribution.

Speaker #3: We talked about this before, about building deeper relationships with fewer distribution partners. And that gives us potential growth across a wider swathe of business.

Andrew Horton: We talked about this before, about building deeper relationships with newer distribution partners, and that gives us potential growth across a wider swathe of business. A great example of this is we are focused very much on our top seven distributors, our top seven brokers in 2026 and beyond, and we have seen greater growth with them on average than we have with the smaller broker partners. We want to continue to do that because that gives us an opportunity of working closely with them. Where do they see opportunities? Where do we see opportunities? Aligning our appetite and expertise and growing with them. That has been a change over the past two to three years as we have had a group head of distribution getting us to focus on that. That is quite broad. I do not know whether, Chris, you have anything to add.

Speaker #3: So a great example of this is we're focused very much on our top seven distributors – our top seven brokers – in 2020, 2026 and beyond.

Speaker #3: And we've seen greater growth with them, on average, than we have with the smaller broker partners. So we want to continue to do that because it gives us an opportunity to work closely with them.

Speaker #3: Where do they see opportunities? Where do we see opportunities? Aligning our appetite and expertise, and growing with them. And that's been a change over the past two to three years, as we've had a Group Head of Distribution getting us to focus on that.

Speaker #3: So that's quite broad. I don't know whether, Chris, you have anything to add.

Speaker #2: Yeah, the only thing I'd add is, and I hope you do find that chart helpful showing where we're growing in contracting. But if we sort of look around the world—in North America, and Australia-Pacific—if we sort of think about that rate inflation dynamic, we're kind of seeing in those regions that rates and inflation are really, largely sort of offsetting each other.

Blake O'Gorman: Yeah, the only thing I would add is, and I hope you do find that chart helpful, showing where we are growing and contracting.

Chris Killourhy: Yeah, the only thing I would add is, and I hope you do find that chart helpful, showing where we are growing and contracting.

Andrew Horton: Yeah

Blake Dowsett: Yeah

Chris Killourhy: But if we look around the world in North America and Australia Pacific, if we think about that rate inflation dynamic, we are seeing in those regions that rates and inflation are really largely offsetting each other. We are not seeing a material contraction there. The one part of our business where we do see rate being below inflation is international, but international is absolutely the business where, in the aggregate, the adequacy is by far the strongest.

Speaker #2: We're not seeing a material contraction there. The one part of our business where we do see rates being below inflation is international.

Speaker #2: But international is absolutely the business where, in the aggregate, the adequacy is by far the strongest. So, we do still see plenty of opportunities around.

Andrew Horton: Yeah

Blake Dowsett: Yeah

Chris Killourhy: So we do see still plenty of opportunities around. And just one thing I would add, and we touched a little bit on this in February, is the majority of our business is still premium adequate or better.

Speaker #2: And just sort of one thing I would add—and we touched a little bit on this in February—is that the majority of our business is still premium adequate or better.

Andrew Horton: Yeah.

Chris Killourhy: In terms of lines where you

Blake Dowsett: In terms of lines where you

Speaker #7: In terms of lines where you—sorry, go on then, Andrew.

Andrew Horton: Go on. You go.

Chris Killourhy: Sorry, go on then, Andrew.

Blake Dowsett: Sorry, go on then, Andrew.

Speaker #3: No, I was just going to say I wanted to add one other thing, which is the modernization programs we have in place, particularly here in the OSPAT business.

Andrew Horton: No, I was just going to say, I wanted to add one other thing.

Chris Killourhy: I was just going to.

Blake Dowsett: I was just going to.

Chris Killourhy: One other thing, which is the modernization programs we have in place, particularly here in the AusPac business. We've had our first launch of that this year, and that ultimately is going to make us move more quickly in this market, which will make us easier to do business with and gives us an opportunity to grow. Sorry, you were going to add something.

Speaker #3: So we've had our first launch of that this year, and that ultimately is going to make us move more quickly in this market, which would make us easier to do business with and gives us an opportunity to grow.

Speaker #3: Sorry, you were going to add something.

Speaker #7: Understood. Yeah, no, I was just going to touch on the food side as well—just areas where you're thinking of shrinking going forward. Obviously, moving away from workers' comp in the US has been signaled, and it looks like there's some shrinkage in property as well.

Blake O'Gorman: Yeah, no, I was just going to add the third side as well, just areas where you're thinking of shrinking going forward. Obviously, living wage and workers' comp in the US has been signaled, and it looks like there's some shrinkage in property as well. Your peers are talking to walking away from property business because of rate adequacy as well. I'm just trying to get a feel for where those lines are.

Blake Dowsett: Yeah, no, I was just going to add the third side as well, just areas where you're thinking of shrinking going forward. Obviously, living wage and workers' comp in the US has been signaled, and it looks like there's some shrinkage in property as well. Your peers are talking to walking away from property business because of rate adequacy as well. I'm just trying to get a feel for where those lines are.

Speaker #7: And it appears they're talking about walking away from property business because of rate adequacy as well. I'm just trying to get a feel for where those lines are.

Speaker #3: Yeah. I mean, I think definitely property will be down if rates continue as they are going forward. In total, there are certain areas which are fine, but overall, I could see property continue to reduce.

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

Speaker #3: We could see some of the Lloyd's business continue to reduce if the rate pressure in some of the lines isn't that great. But most are not falling a lot at this point, other than property.

Speaker #3: Most lines are not falling a lot, so it could be in a stable position. So, I haven't got a lot of ideas of where we're going to reduce. Probably, it's going to be very similar to where we are currently reducing.

Speaker #1: Thank you. Next, we have Andrew Adams from Barrenjoey.

Operator: Thank you. Next, we have Andrew Adams from Barrenjoey.

Speaker #8: Hi, guys. Just first one on the expense ratio: we did have a target of 12% in '26 and lower in the outer years. Is that still the case?

Andrew Adams: Hey, guys. Just first one on the expense ratio. We did have a target of 12% in 2026 and lower in outer years. Is that still the case?

Speaker #3: Yeah. Look, I think 12% remains absolutely our target. We're going to be working towards getting either there or very close to there by the end of the year.

Chris Killourhy: Yeah, look, I think 12% remains absolutely our target. We're going to be working towards getting either there or very close to there by the end of the year. At the H1, the expense ratio we're printing we recognize is higher than that. There's been a little bit of AUD movement that has impacted that. So we get a bit of an FX impact. There's an impact from a capital point of view on CTP business. Also just the continued investment spend. But the guidance we gave around targeting at 12% for the end of 2026 remains our target. Whether we'll get there exactly, we'll see over the H2.

Speaker #3: In the first half, the expense ratio we're reporting—as we recognize—is higher than that. There's been a little bit of Australian dollar movement that has impacted this.

Speaker #3: So, we get a bit of an FX impact. There’s an impact from the Tapple point of view on CTP business, and also just the continued investment spend.

Speaker #3: But the guidance we gave around targeting 12% for the end of '26 remains our target. Whether we’ll get there exactly, we’ll see over the second half.

Andrew Adams: Sorry, for the end of 2026 or for all of 2026? I interpret it as in 2026. Are you saying an exit rate 12?

Speaker #8: Sorry, for the end of '26 or for all of '26? I interpret it as in '26. Are you saying an exit rate of 12?

Speaker #3: No, in '26. So, for the full year, our target remains 12%. As I say, whether we get there, we'll see over the remainder of the second half.

Chris Killourhy: No, in 2026. So for the full year, our target remains.

Chris Killourhy: Yeah

Andrew Adams: Yeah

Chris Killourhy: 12%. As I say, whether we get there, we will see over the remainder of the H2.

Speaker #8: Yeah, cool. And then just on, I guess, on reserves and the points we make on the three years, etc., can you give us a bit more color on International?

Andrew Adams: Yeah, cool. Then just on, I guess, on reserves and the points we make on the three years, et cetera. Can you give us a bit more color on International? I guess we are still getting central estimate top-ups. Just what is driving that? Are we getting some reserve releases but they are being offset by top-ups elsewhere, so net top-up? It still feels like the reserve releases I am getting are just short tail and a bit of Aussie CTP. Just a bit of color on what is going on in International. Also, you mentioned on the call some of the problem children go to the LPT, so just maybe a bit more detail on what is going into the LPT.

Speaker #8: I guess we're still getting central estimate top-ups. So, just what's driving that? Are we getting some reserve releases, but they're being offset by top-ups elsewhere?

Speaker #8: So, net top-up, it still feels like the reserve releases I'm getting are just short-tail and a bit of Aussie CTP. So just a bit of color on what's going on in International, and then also, you mentioned on the core, some of the problem child's go to the LPT.

Speaker #8: So just maybe a bit more detail on what's going into the LPT.

Speaker #3: Yeah. I mean, look, I think in terms of your point on reserving, I think you're right. We do see some portfolios where strengthening is coming through.

Chris Killourhy: Yeah, look, I think in terms of your point on reserving, I think we

Chris Killourhy: You are right. We do see some portfolios where strengthening is coming through. International, in particular, is where we have seen those come through over the H1. I guess the point of us building up this more resilient approach to reserving means that we can take the opportunity to strengthen portfolios of reserves where we think that is the right thing to do. In the aggregate, as you can see, Andrew, we have had overall a reserve reduction. I guess the bit that you cannot see within the headline number is we absolutely have had releases on long-tail portfolios as well. It is just that in the aggregate, some long tail has come down, and then we have taken the opportunity to strengthen elsewhere.

Speaker #3: International, in particular, is where we've seen those come through over the first half. But I guess the point of us building up this more resilient approach to reserving means that we can take the opportunity to strengthen portfolios of reserves where we think that's the right thing to do.

Speaker #3: But in the aggregate, as you can see, Andrew, we have had, overall, a reserve reduction. But I guess the bit that you can't see within the headline number is we absolutely have had releases on long-tail portfolios as well.

Speaker #3: But it's just that, in the aggregate, we've sort of—some long tail has come down, and then we've taken the opportunity to strengthen elsewhere.

Speaker #3: What we have in the LPT, we've announced today, is several portfolios where we have just seen too much prior-year coming through over a sustained period, and it just made sense for us to take that noise out of the result once and for all.

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

Speaker #3: But I guess the main point to your question is we absolutely are seeing releases on long-tail portfolios, but we're also seeing long-tail portfolios where we just want to take the opportunity to improve the strength, improve the robustness of where we're holding the numbers.

Speaker #1: Thank you very much. Our next question comes from Julian Braganza from Goldman Sachs. Please go ahead.

Operator: Thank you very much. Our next question comes from Julian Braganza from Goldman Sachs. Please go ahead.

Speaker #9: Good morning, guys. Just following up on the LPT conversation. How much of the adverse PYD and International that we've seen, I guess, over the last five years would that have theoretically covered?

Julian Braganza: Good morning, guys. Just following up on the LPT conversation. How much of the adverse PYD in international that we have seen, I guess, over the last five years, would that have theoretically covered? Just want to understand that point. Also, I guess, what accident years does the LPT relate to? Just want to be particular on that. Also, is this the end of the kind of remediation program in terms of LPTs? Just want to understand those three parts of that question, please. Thanks.

Speaker #9: I just want to understand that point. And also, I guess, which accident years does the LPT relate to? I just want to be clear on that.

Speaker #9: And also, is this the end of the kind of remediation program in terms of LPTs? Just want to understand those three parts of that question, please.

Speaker #9: Thanks.

Speaker #3: That's good. So is it the end of the remediation program? Always hope it is. Our aim isn't to write business that we've been put into an LPT at some point in the future.

Andrew Horton: That is good. Is it the end of the remediation program? Always hope it is. Our aim is not to write business that we have been put into an LPT at some point in the future. Casualty reserves, if you look at the volatility of our P&L, it generally is driven by the current year underwriting investments and our long-tail reserves. I would never say never to doing an LPT at some point in the future because there may be the opportunity to release capital and just take them off our balance sheet, and there is that arbitrage opportunity from somebody else who can manage it better than us from a capital efficiency and investments and so on point of view. It is not the aim to create these reserves.

Speaker #3: But casualty reserves—if you look at the volatility of our P&L—it generally is driven by the current year underwriting, investments, and our long-tail reserves.

Speaker #3: So, I'd never say never to doing an LPT at some point in the future, because there may be the opportunity to release capital and just take them off our balance sheet.

Speaker #3: And there is that arbitrage opportunity for somebody else who can manage it better than us from a capital efficiency and investments point of view.

Speaker #3: So, it's not the aim to create these reserves. It's interesting—the second question about which underwriting years—because these LPTs are slightly unusual in that they have an element of current underwriting on them, don't they, Chris?

Andrew Horton: It's interesting, the second question about which underwriting years, because these LPTs are slightly unusual in that they have an element of current underwriting on them, don't they, Chris?

Speaker #9: Yeah. Look, I think that's an important point. I mean, we probably won't share exactly the sort of dollar numbers of PYD they've driven in the past, but I guess what has been true is they've been consistent drivers of prior year development over a sustained period.

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

Speaker #9: I think, to Andrew's point, these are different from some of the LPTs we've done in the past, in that these are now portfolios where we've made a decision and announced an intention to exit from each of the portfolios included within.

Speaker #9: So, in some ways, this is just a way of accelerating the certainty we get from exiting portfolios onto the result today. To Andrew's point, we don't feel that LPTs should be a way of managing reserves.

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

Speaker #9: But where we've got an opportunity to just bring finality on portfolios we're intending to move away from, it's just, I think, tidier to get them done.

Speaker #9: Got it. But just to be very clear, it doesn't include any of the recent accident years. It's all.

Julian Braganza: Got it. But just to be very clear, it doesn't include any of the recent accident years. It's all-

Speaker #3: No, no, that's what I'm saying. It does do that for some. So, when you're—because when you pull out of something, you have it up to the current day.

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

Speaker #3: So it does have some recent accident years. So yes, it does—that's what I was saying. So it's a business that was still being written.

Speaker #3: And we've decided to stop it. So it goes up to the current moment.

Speaker #9: Yeah, and exactly as Andrew says, not only does it include the current accident years, but because there's also an element of unearned premium on some of this business, we've also included the unearned component as well to bring absolute finality.

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

Speaker #9: Okay, got it. No, that's clear. And then, just on the previous commentary on rates versus inflation, the maths of it would suggest your ability to maintain the same level of resilience in your current accident year reserving estimates would naturally, over time, reduce.

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

Speaker #9: I just want to get comfortable that, as we sit today and given your outlook, are you still able to maintain that same level of strength and resilience in your current accident year estimates?

Speaker #9: We can't see that on our side. You're talking to rate adequacy, but I just want to understand the current accident year estimate resilience, and how you're thinking about that—given rates are coming off and there is still claims inflation in the system.

Speaker #9: Thanks.

Speaker #3: So a simple premise from my point of view: if you're going to put resilience into your reserves, you've got to do it at all points, whatever happens in the rating environment or inflation environment.

Andrew Horton: Simple premise from my point of view. If you're going to put resilience into your reserves, you've got to do it at all points, whatever happened in the rating environment or inflation environment. Yes, that would be the aim to do it. How we will try to hold the current accident year loss ratios is through improving lines of business that aren't performing to the level we'd like. There's more than just the rate in inflation. There's the churn in the portfolio. Some businesses are performing incredibly well, so let's grow those as well as we could, should, and some just aren't performing as well as they should, and let's improve those. To maintain a similar combined ratio going forwards, we have to be very active in the management of the balance in the portfolio.

Speaker #3: So yes, that would be the aim—to do it. How we'll try to hold the current accident year loss ratios is through improving lines of business that aren't performing to the level we'd like.

Speaker #3: So there's more than just the rate and inflation. There's the churn in the portfolio. Some businesses are performing incredibly well, so let's grow those as well as we could or should.

Speaker #3: And some just aren't performing as well as they should, so let's improve those. To maintain a similar combined ratio going forward, we have to be very active in the management of the balance in the portfolio.

Speaker #3: Which means we can counter the view of a pure mathematical model of rate and inflation. And of course, a pure mathematical model of rate of inflation is that the inflation number has so many elements in it.

Andrew Horton: Which means we can counter the view of a pure mathematical model of rate and inflation. The pure mathematical model of rate and inflation is that inflation number has so many elements in it. Talk about A&H, where A&H inflation is 30%. Some portfolios don't have any inflation at this point in time. They're not all sitting there at three, and this is very much an averaging. So we can beat the average by not redoing the portfolio that's generating the average now and changing the shape of the portfolio going forwards. Look, and where that prudence comes from of holding onto the alternates for three years, that's our reserving philosophy. It's not something that's cycle-dependent, that we have that philosophy in certain parts of the cycle, but we change it in other parts.

Speaker #3: We talked about A and H, where A and H inflation is 30%. Some portfolios don't have any inflation at this point in time. That'll all sit in—that are all sitting there at three.

Speaker #3: And this is very much an averaging. So we can beat the average by not redoing the portfolio that's generating the average now, and changing the shape of the portfolio going forward.

Speaker #9: Yeah. Look, where that prudence comes from, the holding of the ultimate for three years, that's our reserving philosophy. It's not something that's kind of cycle dependent that we have that philosophy in certain parts of the cycle, but we change it in other parts.

Chris Killourhy: Look, and where that prudence comes from of holding onto the alternates for three years, that's our reserving philosophy. It's not something that's cycle-dependent, that we have that philosophy in certain parts of the cycle, but we change it in other parts.

Speaker #9: So the approach of the resilience being there at the end of the year should be the same.

Andrew Horton: The approach of the resilience being there at the end of the year should be the same.

Chris Killourhy: The approach of the resilience being there at the end of the year should be the same.

Speaker #1: Thank you. Thank you for all the questions. This concludes our Q&A session. I will now hand back to Andrew.

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

Speaker #3: No, well, thank you for joining us today. And thank you for those questions. I hope to see some of you at the next week or so.

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

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Half Year 2026 QBE Insurance Group Ltd Earnings Call

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