Aviva (LSE:AV.) Q2 2026 Earnings Call

0:00 Okay. Good morning, everyone, and thank you for joining us today for our half year results presentation. I'm gonna start by sharing a few key highlights before Charlotte takes you through the results in more detail. Then we'll cover why we are so confident in Aviva's long term potential. And as always, we will open for questions. So let me begin with the key messages. Aviva has delivered another excellent performance in in our first half of twenty twenty six, once again extending our track record of strong profitable growth. We continue to accelerate towards 75% capital light, unlocking the potential of Direct Line and building further momentum in our number one wealth business.

0:46 All of this underpins our confidence in delivering the ambitious three year targets. And diversified model the is a key enabler for long term success, which is why I am equally confident in our ability to sustain strong earnings growth well beyond 2028. Now let's get to the results. As you can see, it's been a great first half. Operating profit is up 24% with strong double digit growth in operating earnings per share. And we are driving higher returns with IFRS return on equity above 20%. For shareholders, we completed the latest share buyback last month. And today, we are announcing an interim dividend of 14p per share, up 7%.

1:38 We are also stepping up for our 25,000,000 customers. We're serving more of their needs than ever and delivering a fantastic customer experience. These results reflect strong delivery right across our business and our excellent progress on Direct Line. Behind every number in these results is a colleague making a difference for customers. I've been really fortunate to work with many talented teams throughout my career, and I genuinely believe that Aviva has the best people in the industry. Because we are the leading player, we attract and retain some of the best talent. And I'd like to thank the team for their commitment, skill and hard work and for everything that they do to deliver for our customers and shareholders every single day.

2:31 Turning now to our track record. Over the last few years, we have transformed Aviva. Year after year, we have delivered consistent growth, stronger profitability and higher returns. And we have exceeded two full sets of targets along the way. Today's results build on that track record and keep us firmly on course to deliver our three year targets and create value well beyond them. So before I hand over to Charlotte, let me pause on why we are so confident about Aviva's potential. The answer is simple. It's the strength of our model. We have a diversified range of businesses with leading positions in attractive markets. That gives us earnings resilience and plenty of growth opportunities, which no other UK insurer can match.

3:21 And as we continue to shift towards capital light, we are generating even stronger returns. We have a real customer advantage with a leading franchise in UK financial services, the number one trusted brand, and a broad range of products that meet customer needs. That means we have a real opportunity to do more for our customers who already choose Aviva. We have scale with game changing amounts of proprietary data and strong technology and digital foundations. And this means we have a significant AI opportunity where we are already making progress. These are powerful strengths in their own right, but what really matters is how they come together. That's why we are so confident in Aviva's opportunity ahead, and I'll come back to share more on how we are thinking about that a bit later.

4:14 But first, let me hand over to Charlotte to take you through the results in more detail. Thanks, Amanda, and good morning, everyone. The first half of twenty twenty six was strong for Aviva once again as we continue our growth momentum. Operating profit was up 24% to £1,300,000,000, which translates to an operating EPS growth of 10% and an IFRS return on equity of 20.3%. Cash remittances were up 47% to £1,500,000,000. Our solvency ratio of a 176% is towards the top end of our working range, and we expect it to be in the high one eighties by the end of the year.

5:01 Underlying operating capital generation increased 14% to £812,000,000. And within the businesses, our general insurance combined ratio improved 1.3 points to 93.3%. And wealth net flows were up 32% to 7,600,000,000. I'll now unpack the results in a bit more detail business by business, starting with general insurance. In The UK and Ireland, premiums grew 42% to £5,900,000,000. Now a large component of this was the addition of Direct Line, reported as part of UK personal lines where we saw premiums nearly double in size. And we've made great progress on the integration and performance turnaround of Direct Line.

5:52 Written margins are improving, and we have returned to policy growth in Motor PCW. Commercial Lines trading in q two was a clear improvement on q one. We traded well in a tough environment with strong April renewals. Premiums were down just 1% in the discrete quarter. Now let me give you a little more color. Mid market is up 1% year to date, benefiting from high retention, which is close to 90%, and strong new business. Digital improved on q one, but is still a little lower than last year. And we continue to take deliberate portfolio actions on certain MGAs. Probitas, which we are rebranding to Aviva Syndicates, continues to grow, largely driven by the nine new classes that we have launched in Lloyd's since the acquisition.

6:45 And in GCS more broadly, Q3 trading was significantly improved, though as expected, year to date premiums are lower as conditions remain competitive. In terms of profitability, The UK and Ireland combined ratio is a strong 93.4%. This is a 1.1 improvement, reflecting the earn through of pricing discipline along with some favorable weather and prior year development. Overall, operating profit for The UK and Ireland grew 50% to £643,000,000. Premiums in Canada were up 3% in constant currency. Within this, personal lines were up four percent as we secured pricing increases across property and auto despite lower volumes due to the impact of portfolio actions taken in Alberta during the second half of twenty twenty five.

7:44 We also continue to make good progress with the partnership that we announced last year with President's Choice Insurance. Commercial Lines grew 2% due to some scheme wins within GCS, which more than offset the softer rating environment. And the undiscounted core was almost two points better, reflecting better weather experience compared with the elevated cat activity in the previous year. So first half operating profit was up 22% to GBP $262,000,000. And we continue to invest in our technology and our supply chain through a combination of insourcing and deepening partnerships to increase performance. Now while first half weather experience was favorable, you'll have seen in in the news since the end of June, there have been a lot of there have been a number of weather events across Canada.

8:39 And although it's still early days, we now expect to be above our weather budget for the quarter. That said, q three is typically the more active cat season, and so it's built into our expectations. Now looking at the group overall, we've made fantastic progress improving our headline undiscounted core by more than two points over the last two years, and we're on track for our full year 2026 guidance. Now I want to take a moment to unpack our core development and outlook for you. Structurally, we expect favorable PYD going forward, driven by the IFRS risk adjustment and maintaining balance sheet strength.

9:28 So taking these in turn, firstly, the risk adjustment increases the reserve amount through underlying core and subsequently unwinds through PYD. Now while these effects largely net off in the headline core, they contribute both to a favorable PYD and a structurally higher underlying core by around one to two points. Secondly, in terms of balance sheet strength, we reserve to best estimate, but that is still a range. So given ongoing uncertainty from inflationary dynamics to geopolitical tensions and, of course, the addition of Direct Line, we are reserving towards the upper end of this best estimate range, and we have maintained this strength over the period.

10:18 But by maintaining balance sheet strength, favorable PYD is expected to come. On top of these recycling effects, in the first half of twenty twenty six, there has also been some favorable experience on prior year claims and weather, benefiting the headline core. And the underlying core was negatively impacted by some large losses and other one off effects. Our strong pricing, growing operating leverage, significant Direct Line opportunities and robust balance sheet give us confidence in the outlook. Now moving to Insurance, Wealth and Retirement, starting with Wealth, where we are the largest player in The UK and have reached over £260,000,000,000 of assets.

11:08 Net flows increased by an excellent 32% to £7,600,000,000, representing 7% of opening AUM on an annual basis. This was driven by strong performance across the board. Workplace net flows up 36% with continued regular contribution of more than £1,000,000,000 each month. We're also onboarding new schemes, including £1,500,000,000 from the first of the Mercer schemes. Our adviser platform performed strongly with net flows up 17%, including high demand for the onshore bond that we launched last year. And in Direct Wealth, our customer base grew by almost a third to nearly 120,000 customers, with strong growth coming from across Aviva's existing customer base.

12:01 AUM in our Direct business is up 14% to 5,000,000,000, and we continue to invest in developing this proposition to drive organic growth. Overall, Wealth operating profit was up 34%, with our operating margin improving by point seven basis points as the business grows. We have the benefit of a leading scale sorry, leading scale, lifetime offerings and customer opportunities, and we are fully on track to meet our ambition of GBP $280,000,000 of operating profit by 2027. Now moving to our Insurance businesses, starting with Health. In force premiums were up 5%, and we maintained a low 90s core.

12:50 Operating profit was up 28% to £37,000,000. Now the market has been affected by slowing growth, driven by the SME and consumer challenge channels. Life Lives growth is down from about 6.5% back in 2023 to less than 2% in the first quarter of this year. And as a result of this, we now expect operating profit to be around GBP 90,000,000 for 2026. So despite continued double digit profit growth over the last three years, this will fall slightly short of our aim to reach GBP 100,000,000 this year. We continue to see Health as a critical part of our customer proposition with long term growth drivers.

13:41 In Protection, sales up 1% with stronger performance in Group Protection. Margins have also improved by 40 basis points as we focus on delivering value. Protection operating profit was 14% lower, driven by adverse experience variances and investment in the business. And lastly, we're making further investments across both these businesses. For example, we're pleased to launch we were pleased to launch our new well-being proposition, which is a combined health and protection solution for large corporates with SME to come later this year. In Retirement, we wrote £1,100,000,000 of BPA in a less active and more competitive market.

14:30 Trading has been positive since the end of June, and year to date volumes are now £1,900,000,000. At the half year, we achieved an IRR of 18%, well above our low teens guidance, supported by our pricing discipline and mix of smaller schemes with higher returns. This business has also been written at relatively low capital strain, and we have provided some color on the IRR calculations in the appendix to the slides. Individual Annuity sales were up 11% to GBP $865,000,000, supported by the launch of our new Guaranteed Fixed Income Plan last year. Operating profit was up 2% as we benefited from higher CSM releases and asset optimization.

15:22 We remain active in retirement and will continue to be disciplined in the competitive environment. Now turning to costs and efficiency. The ratios have improved across the group due to acquisitions, growth in the business and our focus on efficiency. For example, our cost asset ratio in IWR has improved by more than four basis points over the last twelve months alone, demonstrating strong operating leverage. We are seeing benefits from the modernization programs as well as greater use of digital customer service. And we continue to invest in growth and productivity initiatives that will deliver real impact across the group, including, of course, the use of AI and automation.

16:10 We expect this investment to improve operating leverage and unlock significant long term value from our existing customer base and extensive data assets. Now our consistent capital allocation framework is a critical part of what we do to optimize our diversified group. This slide, I come back to at each result as it summarizes how we think about our performance and financial strength and what that means for how we use capital. We are continuing to build sustainable growth in earnings and cash and maintain balance sheet strength. This is allowing us to grow the regular dividends and invest in the business for growth and efficiency.

16:55 And we are returning capital to shareholders with our latest share buyback recently completed. Nothing's new here, but it's important that you can see we do this exceptionally well. Now one of the advantages of the model is we have built sorry, is that we have sorry, one of the advantages of the model we have built is proactive balance sheet management. At full year 2025, our shareholder cover ratio was 180%. In the first half, operating capital generation added nine points, a little higher than normal because of the lower capital strain on BPA, some benign weather and, of course, the benefits from Direct Line.

17:42 It also includes about one point of management actions. Nonoperating items reduce solvency by around three points, comprising one point from integration and restructuring and two from market movements. After debt actions, the dividend and buyback, our half year cover ratio is 176. Now looking forward, we're confident in reaching high 180s by the end of the year, subject, of course, to market movements. And this guidance includes the benefit of at least seven additional points or £350,000,000 from the expected Direct Line capital synergies. Now Amanda will speak about AI again shortly, but I wanted to talk briefly about this in the context of investing in the business.

18:32 Our business as usual change investment is £450,000,000 each year across the group for growth, customer and efficiency. And we're allocating increasing amounts of this budget towards AI, taking a disciplined approach by applying strict return thresholds, monitoring costs and focusing on the opportunities that can be scaled across the group. We aim to unlock benefits quickly in key areas and deploy these savings by either reinvesting them in new opportunities, factoring them into trading decisions, or realizing them in the bottom line. There's significant potential here, which we are really well placed to unlock.

19:19 So before I hand back to Amanda, let me close with the outlook. I've already shared some of the details, so let me just pick up on a few points here. The Direct Line integration is going really well, and we expect cost synergies to reach £130,000,000 this year, which will flow through fully next year. Wealth momentum continues with the next material transfer of Mercer Master Trust assets expected in Q4. Now group operating profit in the first half was strong, and the second half will continue to benefit from many of the same drivers. But of course, that needs to be balanced against some of the other effects, including the cat impacts in Canada.

20:05 So as a result, we expect full year operating EPS to be around 11%, slightly above the 2026 guidance we gave you last year and broadly in line with current market estimates. So to conclude, this is a business that is performing strongly. Our people are engaged and focused, giving me great confidence in the trajectory towards our 2028 targets. And with the opportunities that Amanda will cover now, I am equally confident in our sustained longer term growth. And with that, back to you, Amanda. Okay. Thanks, Charlotte. So these results are testament to everything that we have delivered over the last six years, executing our clear strategy, delivering year on year and accelerating with targeted M and A.

21:00 And that is why we are on such a strong trajectory and why I want to focus now on where we go from here. So we think about Aviva's future across two horizons. The first is our three year targets. We have real confidence in these as we unlock material benefits from Direct Line and drive strong organic growth across the group. The second horizon is over the longer term. Here, we see clear upside from serving even more customer needs, Aviva's AI opportunity, and our material growth platforms. So let me take you through each of these horizons in turn, starting with our three year targets.

21:46 Realizing the benefits from Direct Line is a critical part of our plans. For customers, we continue to deliver excellent service, and we are pleased with the retention levels that we are seeing. On the people front, we officially welcomed 8,000 Direct Line employees as Aviva colleagues as we completed the TUPE process, and we continue to rightsize and strengthen the combined business as the integration progresses. We have transferred almost £5,000,000,000 of assets to Aviva investors, improving the investment returns and reducing external fees. And we have moved to a single claims function, realizing the benefits of shared capabilities, data, and scale.

22:33 So we are well on track for all of our synergy ambitions. We have already delivered 100,000,000 of run rate cost synergies and £150,000,000 of capital synergies and £40,000,000 of annual claims cost savings, and there is more to come in the second half. Turning now to Direct Line Motor Performance. Beyond the integration, Owen and the team are doing a fantastic job here. We were not happy with margins on day one, so we took immediate action on rate. We also rolled out Aviva's pricing models and combined datasets, and the results are clear. Written combined ratios have improved by more than 10 points, and Direct Line is an important contributor to the strength of today's Personal Lines result.

23:28 We have accelerated the rollout of Direct Line Motor Brand on all four major comparison websites. Policies here have increased almost tenfold over the last twelve months to around half a million without weakening the broader book. Overall, PCW new business share is now at the highest ever level. Aviva already had first class capabilities across pricing, underwriting, distribution, and claims. This turnaround is all about embedding that experience at scale. So Direct Line is supporting our capital light strategy, strengthening our position in a key market, and delivering material shareholder value.

24:15 It's a great example of how we are taking a disciplined approach to m and a. But it's not just about Direct Line. Organic growth is another driver of our current three year targets, and wealth is a great example here. Doug and the team have doubled the profit since 2019. And as you heard earlier from Charlotte, momentum is stronger than ever. We delivered £7,600,000,000 of net flows, which is up more than 30% driven by all parts of the business. To put that into perspective, it's almost as much as our full year net flows in 2023. And over the last twelve months, we have grown by almost 300,000 customers across workplace, advice, and direct.

25:03 All of this is down to our strategic progress and targeted investment across the board. Enhancing our master trust proposition in workplace is why we are now the exclusive partner for Mercer. This will bring £8,000,000,000 worth of assets. In AVVIZER platform, our onshore bond has attracted £700,000,000 of flows since its launch. In direct wealth, over 70% of sales are to our existing customers. And in succession wealth, over £3,000,000,000 of advice assets are now on Aviva's platform and even more value coming through referrals. So we are well set to deliver continued strong profitable growth on track for our £280,000,000 profit ambition in 2027.

25:54 And we will tell you a lot more about our organic opportunity in wealth at our in focus session in October. Now let's conclude the first horizon by looking at the progression of our portfolio. Four years ago, our earnings mix was evenly split. Today, we are 70% capital light, and returns have doubled over the same period. By capturing the benefits of Direct Line and continuing to grow organically, we are on track to reach 75% by the end of twenty twenty eight. That means faster growth, less capital deployed, and better returns. Now let me move to the second horizon, our longer term growth beyond 2028.

26:41 There is still so much more potential to unlock at Aviva. First, our customer advantage is unique, and we can serve more of our customers' lifetime financial needs than any other insurer. Second, we are transforming with AI, and with our scale and data, we have a material opportunity. And third, our capital light focus is unchanged. We have attractive long term growth platforms with significant headroom to go after. And with our scale and customer reach, range of growth options, and disciplined capital allocation, the value of these three opportunities is amplified by our diversified model. Now let me take you through each opportunity in more detail, starting with our customer advantage.

27:33 We have more than 25,000,000 customers with a leading franchise in UK financial services and products to meet across needs across a lifetime. That enables us to deepen relationships and create more value over the longer term. We also have strong presence across corporate and SMEs. In fact, one in three large UK corporates already hold a policy with Aviva. So we have the customers, the products, the brand, and the experience. And together, that creates a customer opportunity that no one else can match, and we are already unlocking that opportunity. Back in '22, we had 4,700,000 multiproduct customers. Today, we have over 7,000,000.

28:21 Nearly half of all the new policies sold today are to existing customers. That is up six percentage points and well above the natural share that we would expect from scale alone. This is not cross selling for the sake of it. It is about offering the right products to the right customers at the right time, and the benefits are clear. Multiproduct customers have lower acquisition costs and higher retention and engagement, so they are a powerful driver of future growth. Now let me touch on how we are serving even more customer needs. Customer expectations are rising, so we are accelerating to stay ahead.

29:09 We are meeting customers wherever they want across any channel. We already have a clear advantage as the leading PCW insurer, and we believe that AI led distribution will be an important channel in the future. And that is why we are an early mover here. We are enhancing our ability to target and predict our customer needs. With our single view of customer data and our AI capabilities, we can do this even more effectively than ever. And we are using MyAviva as the front door to everything that we offer, leveraging AI to provide a seamless experience and more meaningful engagement with our customers. Getting this right means we can genuinely be a lifetime partner for our customers.

30:03 Turning now to the second opportunity of transforming with artificial intelligence. Our opportunity here is greater than for most insurers, and the reasons are clear. As you just heard, we have millions of customers, a trusted brand, and a breadth of distribution. Our scale means that we can invest, innovate, and redeploy across the group. We have huge volumes of proprietary data, which is the most critical asset to actually transform with AI. This is an advantage that cannot be replicated and one that will widen over time. We have also been investing in technology. So our IT and digital estates are in a good place, and we have been using AI and machine learning to drive commercial impact for over a decade now.

30:54 UK Personal Lines is a great example. We have used AI in our pricing models to deliver over £200,000,000 of run rate benefits here. That is on top of a £100,000,000 of claims cost savings previously mentioned. And we can rapidly build on our expertise as we move into the next phase of AI, now with generative and agentic. So these are all important moats and competitive advantages when it comes to transforming with AI. And we have clear plans to capture the opportunity across the full value chain. We are building on years of investment. Now it is about embedding AI within our journeys, decision making, and day to day activities.

31:41 And this is the next step towards our vision for Aviva. As Charlotte said, we are taking a disciplined approach with four opportunities that cut across the whole group. And as you can see, the transformation is already well underway, aiming to drive material revenue and efficiency benefits and better customer outcomes. Every year, we have over 15,000,000 customer inquiries, and most of them are handled by our people. So later this year, we are launching our AI virtual assistant to help customers with many of their queries. In protection, we have halved the number of the amount of time it takes to review each case in medical underwriting with near perfect accuracy.

32:30 This is improving response time for customers, but helping also our teams to handle more cases. In claims, we are building a voice enabled AI claims agent that will automatically route more than half of our motor calls in personal lines, and it will always be on serving customers twenty four seven. And all colleagues have AI productivity tools. We are now rolling out Claude co work to our most senior leaders because we know that we need to lead from the top. And in wealth, we are using AgenTic AI to automatically sorry, to automate quality assurance. This will save 50% of time for our back office teams.

33:16 Most importantly, it's a capability that we can reuse across IWR and beyond. And it's not just individual customers. We are using AI in commercial lines to reduce the time it takes to generate quotes from days to hours, which is driving higher conversion. So whilst it's still early days, our momentum is clear. These benefits are a strong indicator of the value that we will create for our customers, our colleagues, and our shareholders. Now before I talk through our long term growth platforms, which is the third opportunity, let me explain why we are so confident in the underlying growth of The UK market. I haven't been in business here for over three hundred and twenty five years. We do know The UK very well.

34:03 Put simply, our markets are underpinned by clear structural growth drivers that give us real confidence in the longer term. Let me give you an example. Almost 1,000,000 people will retire every year over the next decade, yet many are not financially prepared. That creates a huge need for retirement guidance, advice, and income. And we are seeing supportive regulatory developments here too. Potential reforms to pensions and auto enrollment would be a further set of tailwinds for workplace. These are just a couple of examples in wealth and retirement. It's the same story on the protection gap, health care needs, and under insurance. These customer needs are significant, and they are only set to grow. And when you look at the broader markets, the scale of what lies ahead is compelling.

34:55 We have material growth platforms in our portfolio. Take Wealth. Today, the market profit pool is around £3,000,000,000, shown by the white line on the chart. That is already significant. But in ten years' time, it will more than triple to £10,000,000,000, shown by the blue bar. That is exactly the kind of opportunity that we are going after. Across our five growth platforms, the profit pool will grow to more than a £100,000,000,000 over the next decade. This is a huge opportunity to drive profitable growth for years to come, and we are well positioned to capitalize. So let me bring this to life with a few examples across UK Wealth, UK General Insurance, GCS, and Canada.

35:41 Beyond 2028, wealth remains a highly attractive, fast growing market. There are nearly £3,000,000,000,000 worth of assets today, growing at double digits. We are already the number one player with £260,000,000,000 in assets, almost 6,000,000 customers, and leading positions in workplace and adviser platform. And our competitive advantages of scale, corporate relationships, lifetime offerings, and in house investment solutions set us apart. Not to mention our mass affluent opportunity with over £1,000,000,000,000 worth of investable assets held by Aviva customers. And there is plenty of growth headroom with opportunities such as master trust, targeted support, and direct wealth.

36:29 So our organic growth opportunity is substantial, and that is exactly what we are going after. Turning to UK General Insurance, where we are the clear market leader. With the addition of Direct Line, we now have standout positions in personal lines, and we are a top commercial lines player. With our scale, diversified product and distribution mix, and unique data advantage, we are well positioned to outperform through the cycle. Yet there are still clear opportunities across the portfolio, and we have the leadership and talent to capitalize on these. Take the new specialty businesses, pet, rescue, and SME direct. Collectively, they are equivalent to the size of the home market, yet our share is only mid single digits.

37:17 Now with Aviva's capabilities and the capacity to invest, we can take all three to the next level. At the same time, we are staying ahead of emerging track trends with a strong innovation track record. We are a first mover on AI distribution. And as autonomous vehicles roll out over the longer term, our in house repair network and leading commercial proposition will be key differentiators. So our strategy here is simple, extend the leadership in our core positions while doubling down on the new growth avenues. Turning to Global Corporate and Specialty. This market covers over £500,000,000,000 of premiums globally, and we are a relatively small player today, which means our headroom is significant.

38:06 What excites me most is not simply the market opportunity, it's the model that we have built. We combine strong businesses in The UK and Canada with our growing Lloyd's platform. Together, they help us serve more clients, deepen the broker relationships, and leverage it Aviva's brand and shared capabilities. And this model is already in action. We are expanding in Lloyd's under our new Aviva Syndicates brand and using our dual platform to create capabilities to share those One Aviva growth opportunities. More recently, we strengthened our access to The US commercial lines market with onshore presence. And we are doing this in a controlled manner, focused only on areas where we have strong underwriting expertise.

38:53 For us, GCS is not just about participating in a growing market. It's about actively scaling our differentiated platform. And finally, on our opportunity in Canada. The fundamentals of the economy are attractive, and we are one of just two players with a truly national presence, which gives us significant potential. In Personal Lines, we already have partnerships with two top Canadian brands, and our most recent partnership with President's Choice gives us direct access to over 20,000,000 customers. In Commercial Lines, we are still underweight in small business, so we are now deploying first class digital trading capabilities from our UK business. We have also benefited from shared learnings and claims, saving almost $600 per repair across 50 auto centers.

39:46 And we continue to expand our regional presence, particularly in attractive areas like Quebec. Canada is an essential part of the group, an attractive market, a fantastic business, and it has an exciting future. So I hope that has given you a sense of just how much lies ahead. Let me conclude with Aviva's compelling investment case. We are unlocking the full potential of the Direct Line acquisition. We have unrivaled customer reach with our leading franchise. Our AI opportunity is significant given our scale and game changing amounts of data. We have capital like growth platforms in attractive markets with strong momentum and a clear right to win.

40:34 And our diverse range of businesses delivers high quality and resilient earnings. And it's for all these reasons that we have absolute confidence in our current targets and full conviction in sustaining strong earnings growth beyond them. Thank you for listening, and let's move to your questions. Thank you for joining us on a Friday for the Q and A. If you can state your name and the company that you work for that would be great. So we'll start with Andrew Baker. Hi, thank you for taking my questions. This is Andrew Baker, Goldman Sachs. First one, just on U. K. Personal lines. Are you able to give an update on the pricing versus claims inflation trends you're seeing in motor and home? And can I just confirm the comment on, I think it's slide 10, on policy count growth, is that for direct line only or is that sort of Aviva Personal Lines as total?

41:45 And then secondly, on the forward looking PYD guidance, did you think are you able to give a sense for the 26 combined ratio targets included a PYD assumption? And it feels like this is a bit of change in messaging versus the past. I guess, what led to this change in messaging and why now? Thank you. Okay. Thanks, Andrew. So first of all, the usual update, I guess, on Personal Lines rating. So inflation is sort of mid single digits, which I think is sort of unchanged since where we were at the end of the first But as we did last year, we are pricing we have been pricing ahead. So if we take you back to the end of twenty twenty five when you had the Pearsonham data was showing that the the market was down on new business rates by 11%, and we were up one. If we take it to the half year, the market was is saying about 3.6 on rate up on on motor, and we were up six.

42:45 So, you know, I think what you're seeing here is our strong rating discipline. But also, we we have you know, we're very, very confident about the technical rating strength within the book on the basis of the solar repair network. The rates are starting to harden, but also the benefit of all the different distribution and the brands that we have. I don't know whether you want the home numbers as well. I mean, on home, to the end of last year, Pearsonham data was showing minus 12% for the market. Aviva was flat. Hutch at the half year, the market is flat and Aviva is up four. Again, strength. One thing I would add here, sort of Owen talks about this way more articulately than I do, is what we are really seeing is the benefit now of the huge amount of data that we have. So when you've got twice the amount of data, the insights, the sophistication that you can put into the pricing, the benefit is really there. So we're able to make really good pricing decisions and exposure decisions around the vehicles that we want to ride, where we want to ride. So that I think that, that is also we are also starting to see it's sort of unquantifiable, I guess, in the numbers, but we're definitely starting to see that as an advantage.

43:53 I think on Slide 10, we were talking about Direct Line, but Charlotte will clarify On the forward looking PYD. Yes. So I suppose when we set the targets or the guidance for combined ratio for 2026. We very much set it at the overall level, so, you know, with with all components in it. And at at that point, I suppose, I think, you know, we're we're clear that that that within that, we made no fundamental assumptions on on PYD. However, what's important to understand is what I explained in my remarks earlier, is the interaction between the underlying and the overall caused by both the risk adjustment effect and the fact that our reserving is towards the top end of of a best estimate range.

44:48 So those but those those do off set, you know, so as we build risk adjustment, which is, you know, one one to two points, let's let's call it one and a half, something like that, that that unwinds then through through current. So you've got to look at the two together. It's it's somewhat of a wash, but it's it is a structural positive to PYD if you're only applying your lens to PYD. And then if you're only applying your lens to underlying, you say, well, why is it you know, it's got a bit of that rebuild in it. And it's the same with the balance sheet resilience. We are we are constantly making sure that the best estimate is, you know, because of the uncertainty that I explained earlier around the world and with Direct Line, it's at at the sort of cautious end of that best estimate, and that is being replenished.

45:43 So what I don't want you to think is that the private year development that we're seeing this time is a release of reserves. There is an element of that coming through, but at the same time, we're rebuilding the resilience. Now on top of that, you actually get claims experience can be different to what you reserve at. And that, I, you know, I can't predict what that is going to be. So there's an element of PYD that is completely, you know, it comes when it comes depending on the actual experience. So I suppose I would say I'm keen for you to understand that properly keen for you to understand an element of it as recycling and and therefore a wash. And if the risk adjustment is one to two points and you sort of take that as a I don't know, a point and a half, there's probably another bit.

46:36 I don't know if it's as much as a point, but there's another bit that is that build and re re recycle coming through as well. On top of that, then there can always be PYD that's up or down that that you you don't predict. And then, of course, there's weather. Farooq, just behind you, Andrew. Sorry, Andrew. Farooq Hanif from JPMorgan. Just wanted to clarify something on a comment you made on large losses in the underlying loss ratio. Are you able to sort of quantify that? Obviously, there's a bit of deterioration in loss ratio in Ireland and Canada and in The UK on top of the direct line effect. So I just wanted to understand whether we can model that going forward.

47:26 Secondly, you don't mention international in your long term view in the slides. And I think we're all aware there's quite a lot of SCR invested in international. So I'm wondering if you're able to or willing to comment on what you view as the future of that. And I know there's something going on potentially in India. So I was wondering whether you can talk about that a little bit. And then kind of very last point, asset optimization, you mentioned it in the bulk annuity line. I mean other companies are mentioning it a lot more and making a big thing out of it. What do you think of that? What can you tell us about your view on that as a source of investment margin? Okay. So look, I think on large losses, as you rightly picked up, I referred to it.

48:14 So if we unpack that a little bit. In Canada, we saw large losses in SME, mostly property, and we saw some in GCS that were property as well. I would say that they specific idiosyncratic. When we see large losses, we always go back and look at the underwriting quality. But we are here for our customers and when large losses come, they come. So that they were quite a lot higher year on year in Canada, the large loss amount. In in The UK, there are a couple of things going on. So there are large losses again that were a little higher than long term averages.

49:00 They were a little bit higher than long term averages last year, though, so the turnaround is is less marked. I think it's it's, you know, maybe just a bit fraction of of points. Again, though, you know, they are idiosyncratic in nature, and and they were both commercial lines and personal lines. So there's quite a well publicized fire at a steel factory, for example. So again, they are idiosyncratic in nature and no particular concerns. I also referred to a one off. So there is an intangible asset that we've written off from the balance sheet following a project that we we discontinued. And that's that's, you know, about 0.6 points. So those are kind of like the drivers of what's happening in the underlying that is large loss or specific balance sheet write off items.

49:54 Other movement in underlying is trading and managing margin, obviously. That was the first question. The second question on international. Look, we classify outside of the core markets because that is how we see it. We manage them for value, certainly not for growth. You're right that in India, we now own 100%, and that was triggered by there was a regulatory change over there that enabled foreign participation at a 100%. We took advantage of that. That gives us clearly more strategic optionality, but there's there's there's no other update to say on that or on China at this point.

50:42 And then on asset optimization, we did have we see very much our job to to get the right assets in place at the beginning. And we see it as being an underlying activity to continue to work on the back book and and look at asset opportunities as as they come up. So yes, there was a a relatively modest, but but, you know, important piece of asset optimization that came through this time, but we don't classify that as management action. It is what we do, and it's about getting the right the right mix at the beginning and then then managing it on an ongoing basis. So we we don't have the same sort of headlines that some present. But that doesn't say we're not all over the asset optimization.

51:39 It's just a different treatment. I hope we go to Andrew. It's Andrew Crean, Autonomous. Could you do a couple of things? Firstly, fill us in on what's happening in rates in U. K. Commercial and then Canada personal and commercial? And then secondly, you seem very bullish on wealth, both near term and long term. Can you give us a sense of well on track? Is that a euphemism for likely to beat two eighty? And longer term, if you are that if you do feel there's that much of an opportunity, can you catch up in direct D2C platforms, or does that take M and A?

52:26 Okay. Thanks, Andrew. So rates in commercial lines. So what what we're seeing here is that let me just try to find the right page here. So it obviously depends by line of business. So what we have seen in in the mid market, which is around sort of 60% of the SME segment, was that that's up by about 1%. That's benefited by higher retention. So I guess what you're seeing here is the inflationary provisions within the commercial lines portfolio basically meeting, you know, meet flattening. It is up it was offsetting the flat rate. So it's it's sort of flat rate. There is some decrease in SME where we have traded traded better than than sorry. Not not traded as well. Sorry. I'm all over the place here. I'm just trying to find the right page so I give you the actual right numbers.

53:22 But but but actually, the inflation is mid single digits. Inflation provisions are covering that for the vast majority of the product. In terms of the rating strengths, the rating strengths are strong across virtually all of the product lines. So we're seeing price effect in mid market is about minus three, but the the rate strength is, you know, over a 100. We're seeing pricing pricing in motor and digital down by sort of mid single digits. Again, you know, we are covering that covering inflation in the the rating on that. And then on the GCS, the I mean, it's there's about 20 different product lines, so hard to give it all. But in essence, every product line apart from property and professional indemnity, the rate strength is over a 100%. I've made a right pig's ear of that. But I hopefully, you've managed to get the broad sense of that because there's so many different numbers. And I'm not in it looking at Jason to make sure that I haven't misrepresented anything there. But it's that's pretty much the the case.

54:29 In terms of Canada, so on Canada, we are personal lines is still we're still carrying good rate in Canada on personal lines, so that is sort of about 10% in the first half and on yeah. 10% in the first half on motor. And not team, can you just help me here? Which page is this on? Respected to monitor. Is it 82? Yeah. Okay. Got it. Right. So on on on personal lines, it's it's that 1010% in motor. I'll come back to home in a second. In SME in Canada, the the rate is about five percent down on SME, 3% on GCS, and in total, down about 4%. But, again, most of those product lines are covered by the inflation linked provisions.

55:21 So on Home, the rate outlook is 7% is what we are carrying on rate for 7%, and that includes indexation. Does that make sense? 6% in auto, sorry, and seven property. If you've got any of that, you'll have done really well because that is so complicated. If you want any clarification, I can clarify. I've now got it in front of me. IWR. I oh, sorry. Yeah. Wealth Wealth profit. Yes. IWR. So on on yeah. We are very bullish on wealth. And why why is why is so? It's because in workplace, if we think about the there's a billion pounds of regular contributions coming through on Workplace, which is just the sort of standard. The retention levels on the scheme is about 95 on existing schemes is 95%, and we're continuing to win business on a regular basis, and we've got the Mercer the Mercer stuff coming through. So when we say we're likely to beat, I'm looking at the team and saying, you know, we are we we can see the line to the $2.82 80,000,000. And, you know, we've put a lot of investment, obviously, into this business over the last the last number of years, and that that investment does has peaked.

56:40 And now we'll we're looking to see how we how we take that forward from there post 2028. More to follow in the in the session that we do in October. On the catch up on direct wealth. So, look, I think here, the way that we're looking at this is that the target the the the information that's come from targeted support, the early days that that we we've sought the approval of the FCA to do pension in the early stages of targeted support. So people who are in old pension products putting them into new pension products, and then people who are under saving into their pension, how do we target them? The early days, and it is very, very early days because we only started that in in sort of in May, are really, really encouraging with more people responding to that than they would do through the normal marketing campaign.

57:29 So we feel very confident in our ability to be able to connect our existing businesses, our workplace customers through to our direct wealth proposition. And the you know, we talked about the direct wealth sales coming primarily from Aviva customers. That's not just from IWR customers. It's coming from motor customers. It's coming from home customers, and it's it's also obviously coming from other wealth customers. So we believe that through, you know, using targeted support, My using the technology and using AI and the opportunities that we have there, we believe that we can continue to organically grow that business without the need to do m and a. Abid? Morning. It's Abid Assain from Premier Liberum. I've got three questions, I think. The first one is on GI margins. If I normalize the margins for the reserve releases and the weather impacts for this year and last year, I think there's almost a two percentage points deterioration in the margin.

58:30 And outside of large losses, I think that might be the mix effect, the impact of Direct Line, which I think was on a lower margin business. So just want to sort of check that is the case. Or are you doing something else in terms of optimizing for the bottom line and perhaps relaxing your criteria on the margin side? So just any color on that. And then the second one, just coming back to the BPA IRR, thanks for the new disclosure. It's helpful to see the 18% IRR. But just on the lifetime IRR, I suspect it's higher than that. And peers are now quantifying management actions of sort of CHF 400 to 500,000,000. I think I used to put in around sort of CHF 100,000,000 to CHF 200,000,000 for yourselves. So there is a big delta opening up between yourselves and peers. So just wondering if you have plans to address that over the medium to long term.

59:23 And then just finally on AI, it looks like it's now more deeply embedded in the business. Just wondering what sort of guardrails do you have in place? I've heard of teams burning through tokens over a weekend relative to the annual budget, burning the annual budget in a weekend. So just wondering how do you ensure that this is a net positive to the bottom line? And what sort of guardrails do you have? Okay. Let me start with the first So two, look, on GI margin, I mean, if I take UK, which I think is where your focus is, underlying core changed by about 1.6 points. If I don't repeat all the stuff I talked about in terms of the the assets and and the large losses, then there's probably a residual of that 1.6 is probably a little under a point of movement.

1:00:26 I would say that is manageable margin compression as you would expect as we trade sensibly in in softer market and because softer markets and because we've got good rate adequacy, we can afford to to to do that. I think the Direct Line business improvement, I mean, this time last year, we had no Direct Line in the half year. We it came onto the books. We were clear that we weren't totally happy with it, and we've been taking actions. So some of that is earning through. But compared to a year ago when we had no direct line with a business that we're still working on, you can imagine that that's had a little effect on the margin as well. So all of that is is is actively managed, you know, underwriting discipline, but but, you know, you've got to trade in in the market. And where we are in the cycle, you're gonna see a little bit of margin compression, but we can we can afford that. So that's that one. On the the the BPA metric and the rationale we've given here, we just wanted to be completely clear on how we do it.

1:01:35 It's it is 18 that we've given for the half year number. It's it's a it's a lifetime IRR. It has no management actions assumed. So if we do have management actions, that will give us some potential upside. And I suppose given, you know, the the this year, we talk I think in the walk on the solvency, I talk about there probably being about three points still to come from management actions, and we've we've got about, you know, a 100 million already in the the first half. So management actions are expected to come, but they're not reflected within in the the methodology. I'd also say that and I think I said it in the opening remarks, but just just for emphasis.

1:02:22 The first half was characterized by, you know, small deals, which have a higher margin. The strain was was lower as well. As we look at what's moved us to the 1.9 where we are now, there's some bigger deals in there. So you'd expect that IRR to come back down as we head towards the year because that's the nature of the trading we're doing, but still above the the the the low sorry, the low teens. So, you know, 18 coming down a bit, but but but still above the hurdle. And we just wanted to be really transparent on how we do it and give you an illustration because it came up quite a lot before and, you know, there's a lot of different types of numbers out there in the market.

1:03:09 So now armed with our transparency, maybe you can ask others about it. And on the on the AI being deeply embedded, yes, I mean, yes, obviously, it is and has been for a very, very long time. I think you were specifically talking about token usage and apart, obviously, from having to restrict Charlotte's usage of Claude, which she's become obsessed with. We are we are monitoring the cost in exactly the same way as we are monitoring all of the other costs within the business, and we don't we don't we we definitely see this. You're absolutely right. There is a definite benefit from AI in terms of revenue and also efficiency, but there's also a cost to AI. And and, you know, everybody talks about the first two and not about not about the third one. We are very, very active looking at all of those three levers. And hopefully, with what we've shown you, you've seen that, you know, of all the projects, of everything that we're doing, we're looking at the ROI, we're looking at when the returns, and then we're seeing, okay, well, what would be the future cost for us to be able to run these models? And, know, we've already got that in many respects with the machine learning models that the teams are using for for pricing.

1:04:21 I'm sorry, Aviva. Did you actually ask for guidance on the management actions as well, Yeah. So for for this year, we we we've done about a 100 at half year. I've guided to the three points sort of the second year that translates to about, you know, another, yeah, another 150 or so. So it's gonna be a bit more than the 200 guidance. As you go forward, I would still slot into the model 200 for the moment. Obviously, some years are higher. Last year was particularly high, for instance. And but that order of magnitude as we work through balance opportunities.

1:05:12 And Nassib? Nassib Amher from UBS. So firstly, on the 11% EPS CAGR, excluding direct line and share buybacks, it's about 7%. I just wanted to unpack that on where that's coming from in terms of the businesses. And and the background for the question is, I feel like BPA's health retirement has is seeing headwinds. So about 50% of your business is seeing headwinds. So where do you get the underlying 7% over the plan period? If you can break that down. Secondly, coming back to the risk adjustment, I was looking at the disclosure in the in the pack where or over the first half, I think it's only 20,000,000 of release net of reinsurance, and you're guiding to one to two points, which is 70 to one forty. So is the first half kind of a one off low release?

1:06:01 And then finally, on the best estimate range, can you give us a percentage range on is it kind of 5% above the midpoint of the range that you're talking about, Charlotte? Any color on that, that would be helpful. Thanks. Okay. So so look, the the guidance that we've given on the 11% towards the target, as you say, is split two from the share count reduction, two from the Direct Line synergies, and another seven from underlying growth. And, you know, we would expect as we as we move to, you know, more capital light that, you know, that's that's that's supporting supporting some of that. I think sorry. My thing glitching now. I think in terms of this half year, you've got, you know, you've got higher share count coming in after we issued for the direct line. You've then got a little bit of movement coming from the buyback that we've done. So there's there's it it it's hard to show the same split in this first half.

1:07:09 You know, as over the second half, the share count will remain stable and and and that that effect will be smoother. But but what what I mean, I've got a bunch of different analysis that show exactly where the EPS development is coming from in this period. And, you know, it it is coming from the benefits of turning around Direct Line. It's coming from, you know, the benefits of of the the the improved performance in in health and wealth. So it is across across the group. And and so I suppose I I'm not gonna give you a a specific break down, but it it it has got all those components. But if you think about the opportunities so I think you mentioned there that there were headwinds in BPA health and retirement. Now don't confuse the fact that that we're not gonna hit the 100,000,000 on health as the the sort of headwinds. The actual profit trading performance is really strong in health, and we see real opportunity for health for to continue to grow. So, you know, I I think health is still a growth engine within the business.

1:08:17 On retirement, really strong growth in individual annuities, really strong growth in equity release, less capital strain on the on the bulks business, but still the opportunity to write business. And that is not going to be an impact for the three year targets, you know, the the amount of bulks volume that that we write. And as Charlotte said, there's really strong momentum in wealth. And even post the 2028 period, we feel really confident that with GCS, with health, with Canada, with UKGI, with the turnaround of Direct Line, and layer on top of that the benefit of the customer advantage and the AI opportunity, like, we are very confident. That that was the reason that we wanted to talk today about the post 2028 because we could see that, you know, investors were asking us, okay. We get the app up to 2028.

1:09:06 But post 2028, what what what is there? And we think there's lots. Right? So we we are very, very confident about that. Sorry to interrupt you. No. That's alright. But but you know, and and I would say combination of margin expansion and top line growth, and and, you know, that's across the different areas. So margin expansion is definitely direct line. It's definitely, you know, all of the work we're doing in operational leverage. And then top line examples would be, well, wealth, GCS, those those areas. So I think it's a good quality mix, but we don't we don't button it all because it's a diversified group, and we're looking for the opportunities, and we we we move accordingly. I think your risk adjustment number is just wrong, So why don't we take that offline? It's a it's it's about a point and a half for this first half, so you must be reading the disclosures.

1:09:56 So if they're not clear, then we'll we'll we'll help help you through that. So maybe talk talk about that afterwards. And then I think best estimate again, it's a best estimate. So I'm certainly not gonna give you another percentage other than a sort of best estimate. However, you know, what I said earlier was if you think about how it's going to build and unwind, if it's, you know, between one to two points for the risk adjustment, let's call that one and a half. Let's say it's just under a point for the build of reserve and and unwind of that. But I'm not going to give you another confidence level statistics like the one we have for risk adjustment for the best estimate. Kailesh Mistry, Bank of America. Two questions. Just on Slide 16, you talk about improvement in the distribution ratio.

1:10:52 Obviously, we can sort of factor in the improvement from the direct line synergies, etcetera. But can you talk a little bit about how you're thinking about the benefits from AI, etcetera, and how we should think about building that into the distribution ratio? The second question is on Amanda's point about multi holding multiproduct holding customers. I think you said there were 7,000,000 at the moment. Number one, I guess, where do you expect that to go over a couple of years? And what is the average number of products each of those customers hold currently? And again, what is realistic to what is realistic going forward there?

1:11:37 And again, how does that then factor into the sort of distribution ratio, given your comments about lower acquisition costs, etcetera? Thank you. Do want to pick up the first one, Charlotte? I'll pick up the second one. Yeah. I mean, I'm not going to give you a specific number. I mean, I think that the reality of it is all the work that we're doing on that are helping, whether it's the claims activity or the virtual assistant type, they were all helping with the acquisition cost and enabling the cost base we have today to go further. And Owen in particular is completely relentlessly focused on on on that ratio in the in the in the in the personal line side. And and and if you take the commercial line side, some of that work we're doing on AI that is really connecting us brilliantly with the broker, broker, really spotting which brokers give us the the the the business and and and really working through that. All of that combined is is going to eat away at that cost of of acquisition.

1:12:41 So, you know, internally, we're we're measuring measuring that, that, but but I'm I'm not not gonna gonna give you a specific guidance. But those will be the the drivers of of what improves that. Okay. And then on the multiproduct holdings. So if if we think about The UK, 22,000,000 customers. So we've got 4,700,000 we had 4,700,000 multiproduct customers in 2022. That's increased to 7,200,000 today, which does include the impact of acquisition. And it would so it would be it would have moved from £4,700,000 to £5,600,000 excluding Direct Line, so to just give you that number. 46% of new sales are to existing customers. So I think that sort of stresses the importance.

1:13:26 And just to give you the flavor here. So for a multiproduct coding customer, the cost per acquisition is 30% lower. So, you know, that I guess that shows just how efficient the marketing spend is there because, obviously, we know a lot about those customers, and therefore, it's very targeted in the way that we that we we speak to them. We also have, you know, better better retention rates. So the retention rate is about 1.7 points higher than if you're a non multiproduct holding customer. And then they engage more, so they're 2.8 times more engaged on the My Aviva app than a single product customer. I mean, I literally could go on all day because there are lots of these brilliant customer stuff. But if I, you know, go back to the example of the 70% of direct wealth sales coming from existing customers, just imagine and we haven't really turned that on massively yet. If we when we turn up the dial on that, it's, you know, it's all there. And there are things today like in the PCW, motivating even if that customer doesn't say that they are a multi that they hold a pension with us. Owen is able he knows that because of our single view of customer, and he's able to give a a pricing benefit to that customer because we know that that customer will be will be more loyal.

1:14:44 In terms of the outlook, look, I think setting an outlook is not the right thing to do because what you're not seeing in these numbers is actually the number of customers that are moving from two to three and three to four, which is actually quite quite something. So the number of customers with three plus products has moved from 1,600,000 in the half one of of twenty five to 2,400,000 in the 500,000 of '26. Some of that is direct line, obviously. And the customers with three plus more products over that same period has grown by 4% from 1,700,000 to one one point six million to 1,700,000. So we're definitely seeing that it's not just customers moving from one to two. You know, that's nice. It's when they start moving from two to three and three to four, and this is the power of the model. And, you know, that is something which I would say we're only in the foothills of. Like, it's so exciting.

1:15:40 And AI opens up that opportunity even more. And I think your point was where you're gonna see that coming through in the expense ratio. Well, I think you'll it coming through in retention. You'll definitely see it coming through in the cost to serve. So because, you know, that that that that acquisition cost will reduce. But I think, you know, I think there's the there's the benefit here of what do we trade, what do we take into the bottom line, and what do we reinvest to be able to underwrite more business. And I think that's that's, you know, those are the opportunities. We've got optionality. Right? I mean, that's that's the benefit of of of the diverse model. So very excited about that. I think I answered all the points there. James? Thanks. It's James Shuck from Citi. I had three questions, please.

1:16:32 Just on the PYD point, I understand the recycling between the risk adjustment in the sort of attritional and then the PYD. But sort of at a state level, there's kind of nothing really to see there on that kind of view. On the 11% target you have across the whole of the three years, therefore, is the kind of expectations if now we're going be looking at two to three points of total PYD, is that incremental, incremental, or was that already in that 11% target across the three years? Secondly, the walk on The UK GI was really helpful, the underlying combined ratio. Could you just repeat the same thing for Canada as well, please? And then finally, just anything you can give on very, very most recent motor pricing in The UK would be very helpful. Thank you.

1:17:23 Okay. So the EPS development of 11% is so to this well, to the extent that the the risk adjustment recycles, it's it's awash. To the extent that the reserve the reserve strength is retained, it's also awash. So those two are neutral. Right? So they're not driving growth in EPS. I'm not assuming that in that cycle, I'm gonna do something different and start releasing more reserves than than I'm building.

1:18:10 So there isn't an assumption built into the EPS development that is from PYD because those two things are awash. The there would like, there will be natural PYD and there will be natural weather, and we have to manage that in the round in order to because those are volatile items that I don't know how they're going to emerge. Now clearly, we have weather loadings, and we have large loss expectations all based on long term averages. But to the extent that things move outside of the range, then that is something that because we've got the diversified business that we would be expect to manage. But there isn't an assumption that there is a PYD kicker to drive that 11% development because I'm intending to keep the balance sheet resilience stable.

1:19:05 And beyond that, PYD could emerge in either direction. What we're trying to get across is just that you can structurally allow for the PYD because it it is there and it's offsetting in current. When you kind of go through one lens or the other, you need to keep in mind the natural offset that appears in the other lens. What was the second question? It was about the walk on GIC core for Canada. Okay. I'll go shall I do the motor pricing? Yeah. Do that one. So I I so I think I said I answered Andrew's question just around we are or I think it was yeah. It was Andrew. A 6% we are rating 6% up on motor today and 3%. I think you were asking what's the most recent data.

1:19:55 So look look, I think we don't have, like, the the the actual pounders for the for the market. We know that we're continuing to be disciplined. But I think what's what you've seen is that the ONS and the AVVI data is showing that the market is, you know, is steadily is steadily walking up. And I think you've heard others say that in their in their results. And we are clearly, you know, using our data advantage, our approved repair and network advantage and the fact that we have got very strong technical strength to be able to trade our way through that. So, you know, hopefully, that answers that. But I don't have any more updated actual data than that, James. Yeah. So in in Canada, there the the the it's 2.6 points underlying worse this time than than last time. I'm sure that's the same numbers you've got. The large losses, though, are a good portion of that.

1:20:47 So the reserving movement's relatively neutral. They but the large losses are are bigger quite considerably than they were this time last year. So and then below that, there'll be a little bit of that margin movement, but it's it's it's relatively minor. Looks like that's it. We've exhausted you. Think it was I think it was my answer on late that did it. I'm definitely I've been known. Mean, everybody's head must be spinning. Hopefully, you did get everything you needed there. So look, thank you very, very much for coming in on a Friday morning. It's air conditioned. That's gotta be a good thing. We we really, really appreciate that. And, obviously, follow-up with any other questions to the with the IR team. I'll wish Charlotte a day. Thank you very much.

1:21:38 Thank you.