Good morning, everybody, and welcome, both in room and online, to Challenger's 2021 Investor Day, which has become an integral part of our investor relations program. Welcome. Today's program is broken into two sessions with a quick break in between. For those of you online, we'll do our best to keep on schedule, and you'll receive a notification at the break when we're about to start again. There is also the ability to ask questions online, and so we're here to help. Please send through any questions you've got, or if you've got any technical difficulties, just let Mark or I know, and we'll help you out. For those of you in the room, just a matter of housekeeping, please flick your mobile phone onto silent. Today's presentation will be followed by a Q&A session. I'll now hand over Richard to get us underway. Thanks. Thanks a lot, Stu. Thanks, Stu. Good morning, everyone, welcome today. Whether you're joining us here in the room or online, it's great to have you here. I say certainly great to be able to do one of these again. The team and I are really looking forward to having the opportunity to share with you today an update on our business and on our plans for the future. I guess we're doubly glad to be able to do this given that it's been two years since we've been able to host an Investor Day. I guess those two years have been part of quite an eventful period for Challenger. The disruption to our retail distribution channel on the back of the Financial Services Royal Commission has been an important factor, as has the impact of COVID-19 on the group's balance sheet. The company's emerged well and strongly from these challenges in a strong position and has proven its resilience. We remain very strongly capitalized. Our strategy to diversify Life's revenue flows is working, and our best-in-class funds management business continues to be a standout with solid foundations for the next phase of growth. Our acquisition of the MyLife MyFinance Bank is an important part of this next phase. More broadly, our expanded product offering and distribution channels have increased our customer reach, and we're well-positioned to benefit from the stabilization we're seeing in the retail financial advice market and from partnering opportunities with institutions. We're committed to helping our customers create financial security for a better retirement, and the opportunities we see ahead to achieve this are exciting. I'm optimistic about Challenger's future. With that in mind, I wanted to start by sharing with you our refreshed corporate strategy. The strategy builds on the foundations of the core strategic pillars we've had in place for a number of years now, making it stronger and more relevant for the future as we look to further expand our offerings for retirees, including more directly and initially through our acquisition of the bank. Providing our customers with financial security for a better retirement remains at our strategic core as our purpose, and we serve this purpose with both guaranteed income products, such as lifetime annuities and term deposits, as well as funds management products that help our customers accumulate savings into retirement. We've added an explicit vision statement for each of our core stakeholder groups, for our customers, shareholders, employees, and the community to clarify what we're aiming for into the future. Reflecting on our commitment to build a more customer-centric business, the customer vision is ambitious: to provide one in five Australian retirees with improved financial outcomes as a consumer of Challenger's products by 2030. We want to provide middle-income Australians with confidence in retirement. These are the people who've worked hard to save for their retirement and deserve to enjoy this period with the confidence that their money will not only last but will underwrite their dignity in retirement, no matter how long they live. The scale of our ambition here is both bold and it's achievable. At the end of the decade, our goal is that Challenger will be synonymous with a secure retirement and that 20% of our retiree households will be using Challenger product to help provide them with the secure retirement that they deserve. I believe this is absolutely achievable, and the strategy we've evolved will move us forward towards this vision. At the same time, we're also focused on the impact we have on other stakeholders and have a clear vision for ensuring that we continue to make a positive contribution across all domains. For the community, we'll champion financial security for retirement by providing financial help and education, advocating for constructive public policies, and by leading by example with responsible business practices. For our employees, we'll bring together a diverse group of top talent inspired by our purpose, strong culture, and capabilities to deliver shared success. For our shareholders, we'll build resilient long-term shareholder value, leveraging the capabilities of the group to achieve compelling returns. These vision statements are ambitious and will be achieved through the execution of four strategic priorities. We'll broaden the way customers can access our products across multiple channels. We'll expand the range of products and services we offer to support a better retirement. We'll leverage the combined capabilities of the group, and we'll continue to strengthen the resilience and sustainability of our business. I'll share a little more on how we're going to deliver on these priorities in the near term after we hear from the rest of the team. Our strategy provides a clear, coherent, and unifying statement of who we are, where we're going, and how we're going to get there. It leverages our unique mix of capabilities that we bring together from funds management, life, and the bank. This slide illustrates how we'll be able to build a compelling proposition for customers as they plan for and live out their retirements. As the clear leader in retirement income, Challenger has a real opportunity to play a more meaningful role in the lives of our customers. As people work for and save for retirement, we can support them in building their wealth through our funds management business. This business offers high alpha capabilities across all asset classes, including equities, alternatives, real assets, and fixed income. Nick will provide an opportunity on how we bring best-in-class managers to our clients to help them to build their retirement savings. Once completed, the acquisition of MyLife MyFinance will provide us with a scalable digital banking platform, the opportunity to provide guaranteed term deposits, and the capability to develop more innovative solutions. Our head of banking transition, Michael Vardanega, will share more on this later. In retirement, as part of a balanced portfolio, our annuity products provide retirees with certainty as they age through guaranteed income and support for aged care costs. You'll hear more from this from Angela, including a deep dive into our evolving institutional offering. Continue to invest in and build on our strong track record of product innovation and development. Whether it be directly or through our partnerships, we'll bring retirement outcomes to middle Australians. These are people who've worked hard all their lives to save for retirement, and we see ourselves playing a bigger role in helping them achieve the financial security that we see they've earned. Recent years have been challenging, but we've emerged in a strong financial position, and we're well-placed to capture the growth from the long-term structural tailwinds that continue to drive our business forward. Our world-class superannuation system continues to mature as it benefits from a range of lasting underlying drivers that will see it maintain its strong growth trajectory for many years to come. Challenger's uniquely positioned in this market, and both of our businesses enjoy market-leading positions. We're the number one provider of guaranteed retirement income streams in Australia, and we're recognized by our customers for the peace of mind and the great service that we deliver them. Our funds management business is the fastest growing active funds manager in the country and its third largest. It's a standout performer among its peers, and it has many avenues of ongoing organic growth. The regulatory environment continues to be supportive for both our life and funds management businesses. They both benefit from a rising superannuation contribution rate, and the retirement income review released at the end of last year highlighted the need for better retirement solutions. The Retirement Income Covenant, which will require that super funds have strategies specific to the needs of their members in retirement, will also progress and is progressing with the government confirming its recent commitment that the covenant will be legislated to commence by 1 July 2022. While the distribution in the financial advice market has stabilized, the industry continues to evolve, and we're well-placed to benefit from the diversification strategy that we've implemented over the last couple of years. With the contributions from our Japanese partnership, strong growth in our institutional channel, and stabilization of the retail advice market, we're well-positioned to capture growth from the long-term structural tailwinds that continue to drive our business forward. The strategic acquisition of MyLife MyFinance will further broaden our business and accelerate our efforts to build direct relationships with our customers. This will support our strategy to ultimately be available to support our customers through whichever channels they prefer, be that their financial advisor, their super fund, or directly. Through the evolving market conditions that presented themselves before, during, and after the COVID-19 crisis, we've operated in a consistent fashion with our strong risk culture, and we've done this while maintaining our long-standing relative value approach to investing. We'll take you through our investment portfolio and the returns we're currently generating in more detail shortly. As you can see, our strategy to grow sees us building further on our already strong brand and customer franchise, a franchise built on our purpose of providing financial security for a better retirement. It's essential that we protect this valuable asset to underpin our long-term growth and our success. This is also, of course, essential from a shareholder perspective. It's important that we're able to grow in a way that can more readily accommodate significant market shocks without having to de-risk the investment portfolio in the face of such shocks. To support this, we're enhancing our capital settings, reflecting our commitment to maintain our strong capital position that we've established. Looking back to the end of January 2020, just before the pandemic began, we had a PCA ratio of about 1.45x. This was at the midpoint of our target range at the time. As the market sold off, our PCA ratio reached the bottom end of our range, requiring us to take steps to reposition our portfolio consistent with our risk management framework. Reflecting on this experience and on our growing customer franchise, we've enhanced our risk settings, we're now extending our PCA operating range to improve our ability to withstand periods of market volatility. This will provide a more stable experience for shareholders. We're extending our normal operating range to be 1.3 to 1.7x our Prudential capital amount, which shifts the upper end of the range, which was previously set at 1.6x. Moreover, we'll target to operate at a PCA ratio of around 1.6x, as we've done over the last year. Our new operating range provides us with increased flexibility during periods of market volatility and reduces the risk of having to lock in negative investment experience in response to significant market shocks. This is good for shareholders. It's consistent with our strategic priority to strengthen the resilience and sustainability of our business. It aligns with our purpose, which is all about financial security. Now naturally, the lower risk profile leads to a lower return. We've also reviewed our ROE target. In light of the desire to hold more capital, we've made the decision to lower this target. Going forward, our pre-tax ROE target will be the RBA cash rate plus 12%. This adjustment is the natural outworking of what will be, on average, higher levels of excess capital with our PCA ratio targeted to be at 1.6 rather than 1.45, being the middle of the previous range, and reflects an appropriate risk-return trade-off. Group ROE target is also consistent with current life ROE and the higher ROE in funds management, which is more than offsetting the corporate cost base and what will be a subscale bank for a period of time. As we've discussed previously, the ROE for FY 2021 will be lower than this target, reflecting the progressive redeployment of our cash and liquids balances over the year. With this capital now fully deployed, the new ROE target is achievable in the current environment, which of course reflects very narrow credit spreads. As conditions normalize, we would expect to be, and we do expect to be in a position to outperform this target. We have robust foundations in place, a clear strategy for growth with the experience, capabilities, and commitment of a team in place to deliver. Our executive team has a strong mix of long tenure leaders and newer members, bringing a rich mix of perspectives and skills to take us forward. We're very fortunate to last month have welcomed the newest member of our leadership team, Rachel Grimes, who's in the audience with us today. She's joined as our new Chief Financial Officer, and Rachel brings with her, I should say, an outstanding track record as a leader in her field. She joined us from Westpac, where she was most recently the 2IC to Westpac's CFO. Importantly, Rachel brings a genuine passion for our purpose, and I'm really delighted and excited to have her as part of the leadership team. We've also made some other significant changes to the team to ensure we're well organized to deliver our strategy and to utilize the strong capabilities from across the group. In November, Chris Plater moved into the newly created role of Chief Executive, Operations and Technology, reflecting the importance of these functions as strategic enablers for us. Chris's deep understanding of our business is a real strength here as we seek to drive an increased focus on deep and effective engagement with customers, advisors, and with our superannuation fund clients. Chris has been with Challenger for 18 years, the last four as the Chief Executive and Chief Investment Officer of our life business. Chris remains as the chief as the chair, I should say, of our Investment Committee, of the Life Company's Investment Committee, enabling us to continue to draw upon his deep investment expertise and insight. Complementing this change, we've streamlined our business line structure, combining our life distribution, our life and distribution product and marketing teams into one business with the focus and capabilities to drive strong commercial outcomes. Angela Murphy took on the role of Chief Executive of this new integrated life business in March, having previously led the larger of the two teams. Finally, Michael Vardanega has taken on the role in leading the transition project for the bank. This appointment reflects our very strong focus on ensuring efficient and effective integration processes in this regard and our commitment to delivering quickly on our strategic objectives. Michael's been with Challenger for 16 years and previously led our group corporate strategy function, as well as being our general counsel and company secretary. Of course, the executive team is only part of the story, and I'm incredibly proud of the broader team that we have here at Challenger. Our people are our most important asset, prioritizing employee wellbeing during the pandemic was a key part of our response. This has led to an opportunity to rethink our work practices as we go forward. From Challenger's perspective, flexible work is here to stay, and I must acknowledge the positivity and commitment from our employees as they've navigated this challenging period and embraced our new hybrid working approach. They told us that providing effective flexible work practices is something they value very highly, and it supports retention and productivity. I'm sure our approach during the pandemic has been an important part of the results we got from our recent employee engagement survey, which shows that we've maintained a very high overall sustainable engagement score at 85%. This is 1% higher than our result from 2019, and it's in line with the Willis Towers Watson Global High Performing Norm Benchmark. Challenger's strong risk culture was also reflected in these survey results. Our score for risk culture was 86%, which is four points above the global high performing norm and 10 percentage points higher than the Australian national norm. We've consistently performed well in this area, and it tells us that we're doing a good job and being successful in embedding strong risk culture across the business. Our diversity and inclusion outcome was also very pleasing at 94%. This is 12 full percentage points above the high-performing norm, and it reflects a strong focus that we've had in this area. Separately, we're once again recognized as an employer of choice for gender equality in the 2021 WGEA Workplace Gender Equality Report. These two outcomes, as well as others, reflect, among other things, the significant work that our own employees have done as part of our four internal networks focused on diversity and inclusion in areas of gender, sexuality, age, and culture, respectively. We've also made significant progress on a range of sustainability issues that support our purpose and business strategy more broadly. Last month, we launched a major research report on the employment experiences of older workers, a product of our community partnership with the peak body Council on the Ageing, or COTA, New South Wales. Enabling people to work for as long as they wish provides a range of benefits to both individuals and the economy, and it aligns and resonates strongly with our purpose by supporting the financial security of older Australians. The next phase of this partnership is the development of a program to support employers in this space, and I'm looking forward to Challenger engaging in this program when it's up and running later in the year. ESG is also an important area in our funds management business, and we were pleased to receive an A rating in the Principles for Responsible Investment 2020. We're embedding ESG across our funds management business and platform, and our positions on climate change and other really important ESG matters are now available on our website. Hopefully you can tell from my presentation this morning that I'm really proud of the position that our business is in. Of course, I've really only touched on an outline in some senses of why this is the case. I'm pleased to hand over to my colleagues to color things in a little and give you some more detail in key areas. Thanks. Thank you, Richard. Good morning, everyone. As many of you will know, I've led Life's distribution, product, and marketing capability for a number of years. As Richard noted, earlier this year, we took the opportunity to bring our distribution capability together with our investment capability into a single division. I feel privileged to be leading the business and am looking forward to sharing some insights with you today and giving you an update on our progress. The initiatives that we've undertaken over the past few years have increased the resilience of our business and created a solid platform from which we can grow. There are three broad areas that I'll cover today. First, I'll provide an update on our sales diversification strategy. I'll take a deep dive on our institutional business, looking at the client proposition and what this means for returns for Challenger shareholders. Finally, I'll provide an update on our investment portfolio, including some insight into the economics of new business, which reflects both current market conditions and our pricing. If I reflect back on our last Investor Day in June 2019, the impacts of the Royal Commission were still emerging. We were moving into a new Age Pension means testing regime, and we were very reliant on retail financial advice, and especially the major banks and advice hubs. At that time, I spoke about our strategies to expand our distribution channels and diversify our sales base, including engaging with more IFAs. I talked about partnering with profit-for-member funds and building greater customer demand through our brand, education, and more direct customer engagement. As anticipated at the time, the following 12 months were tough, but pleasingly, a number of our strategic initiatives are now starting to deliver results. While the retail advice industry, there's been significant adviser turnover and a reduction in overall adviser numbers, I'm pleased to report that we're starting to see a stabilization. You can see in the chart on the left, we expect FY 2021 retail sales, both term and lifetime, to deliver double-digit growth. Some of the initiatives that we've undertaken to improve our traction in the retail advice channel include implementing an end-to-end digital application process, which was a pain point for advisers. This has led to a circa 70% improvement in turnaround time from quote to application. It's reduced the support that our distribution team need to provide to advisors in originating an annuity, it's led to a 26% reduction in the number of applications requiring follow-up. We've also expanded our messaging. In addition to the product and technical benefits of a lifetime annuity, we know there are key points or events when advisors consider an annuity for their clients, and we've built new messaging around these moments. For example, this might be an inheritance, the sale of a business, or a downsizing. We also know that some advisors position their strategies around portfolio construction, so we've been developing messaging that aligns with this approach also. This means our distribution team can adapt their messaging to better meet the client and/or the advisor situation and approach. Following the Royal Commission, many advice licensees reviewed and tightened their processes around ongoing advice relationships. As a result of these reviews, some of their clients became direct customers of Challenger rather than continuing to be managed through an ongoing advice relationship. By July 2019, more than 6,000 customers had become direct Challenger customers in this way. Across financial years 2020 and 2021, we had approximately AUD 800 million of maturing annuities with direct customers. While not deliberately embarking on a direct-to-consumer business, we had a sizable direct customer base by default. We rapidly developed a customer service process to provide these direct customers with information and support around their maturity options. Through this work, we've gained insight into customer considerations at maturity and we've successfully retained the majority of direct customer maturing business over the last two years. Our forecast reinvestment rate for direct customers in financial year 2021 is almost 70%. We've also undertaken initiatives to educate customers directly on financial considerations for retirement to help them be advice ready. After commencing a Facebook pilot in July 2019, we quickly moved to an always-on approach in this channel given its success. From a standing start, we've captured over 13,000 customer leads who have opted in to hearing from Challenger around retirement. Nearly 20,000 consumers have completed our Retire with Confidence tool that helps retirees understand how long they might live, how long their money might last, what age pension they may be eligible for, and what impact an innovative retirement income stream, such as an annuity, might have. We undertook a significant revamp of our online customer portal and commenced a rollout with customers to support them in online engagement with us. The box in the middle of this slide shows some high-level results from independent research undertaken by Fifth Quadrant. Our net promoter scores and customer satisfaction results stand up extremely well against our peers, particularly given our business is predominantly B2B, and in that context, customer experience has traditionally been less of a focus for us. While these results reflect the ongoing efforts of our team to provide great service, they also reflect the nature of our products, which deliver certainty and confidence. As highlighted in the chart on the right, institutional sales have more than doubled since FY 2019, reflecting the increased focus on institutional partnerships as part of our sales diversification strategy. We've also successfully diversified the client base. Part of this success has been a refresh and relaunch of our Index Plus product, which has allowed us to provide a more attractive client proposition. Given the significant role institutional partnerships is playing for our business, I'll take a deep dive into this shortly. Our important partnership with MS Primary in Japan has also contributed to a more diverse sales mix with our reinsurance of MSP Japanese sales of both Australian and U.S. dollar annuities. Overall, our efforts over the last two years have helped us adapt to the disruption in the retail advice channel. We've built greater diversity and resilience in our sales. With our brand, thought leadership, and retirement capability, we are well positioned to grow. As I mentioned, a focus on institutional clients has been a key part of our strategy to diversify our sales. As you can see in the charts, our institutional business has been growing strongly with 33% CAGR over the last five years. I'm going to provide some more detail on this today so you understand our client offering and the returns shareholders can expect from this growth. The team who have innovated and evolved our institutional offer have done an incredible job over the last couple of years. In addition to the sales growth, we've achieved significant client diversification. In particular, our AUM across the profit for member funds sector has nearly doubled over the last year, benefiting from new relationships with a range of new clients. Whilst Index Plus has been building for some time, more recently, we're also seeing growth in institutional term annuity business. Term annuities represent sound relative value, and we've been positioning them in the institutional market as a viable alternative to term deposits and short-term fixed income instruments. These investments are usually shorter duration, particularly for an initial investment. However, clients typically roll the investment multiple times, and sometimes also extend the duration after becoming more familiar with the product and with Challenger. In this way, the effective average duration of the investments can extend beyond five years. This business also allows us to build relationships with key institutional clients. This understanding of and familiarity with our team and our capability is a solid foundation for a broader relationship, including the exploration of retirement solution partnerships as funds prepare for the Retirement Income Covenant. I'll share a case study shortly that shows how these relationships are evolving. I will now take you through our institutional toolkit and how we are positioning ourselves in the market. Our offering aims to provide institutional clients with access to the capability that sits within our life business. This includes investment and structuring skills, asset and liability management, and our intellectual property and thought leadership, especially around retirement income. Our institutional approach is solutions led. Most of our partners or prospective partners are in the business of developing and managing their own products or solutions. They are product manufacturers. In this institutional ecosystem, Challenger is an enabler, providing components for our clients' solutions, and this is what lies behind our approach. To meet the needs of sophisticated institutional investors, we must understand and work within their investment strategies and governance frameworks. We want to understand our clients with sufficient depth to know if and how our capability might make a difference for them. We have formalized our institutional offer into four broad pillars, two of which are investment focused and two of which are retirement focused. This solution spectrum is scalable because the capability is built broadly around our balance sheet. It allows us to engage on a wide range of topics, and with this broad relevance, we avoid being a binary service provider and can develop deepening engagement with our partners. From our experience, our investment-oriented solutions, such as beta and income, tend to have shorter lead times, and this complements the much longer lead time characteristics of our retirement solutions. I've touched on our four pillars and the ways we engage with the institutional market, but what are the capability components that sit under these pillars? As you can see here, we have numerous product solutions. Starting from the left, under beta solutions, we have Index Plus. At a high level, this is contractual alpha with zero fees and represents 2/3 of our institutional AUM. I'll explore Index Plus in more detail on the following slides, both from a client perspective and from a Challenger perspective. Under income solutions, we have term annuities, which provide a competitive spread relative to alternative fixed income investments such as term deposits and high-grade corporate bonds. Our institutional clients are increasingly considering term annuities for the purpose of cash flow, whether it be cash flow matching or more simply for yield. In relation to term deposits, Michael will cover our bank integration later this morning, but when we are ready, we have an institutional market to sell into, and term deposits will complement term annuities. Challenger is also able to assist other insurers by reinsuring components of their fixed term liabilities or longer term liabilities for fixed term periods. All of these investment-oriented solutions provide an opportunity for institutional clients to become more familiar with Challenger Life as a counterparty and with our term structures, including annuities. In relation to retirement solutions, retirement solution integration is a very big and key focus. Developing compelling and scalable retirement solutions is a focus for superannuation funds, particularly ahead of the Retirement Income Covenant. It's a significant focus for us working with them on a bespoke basis to explore retirement product design options, and where relevant, to understand how Challenger capabilities such as longevity protection, sequencing risk control, or contractual returns might be integrated within a fund's broader retirement proposition. Delivering these capabilities as a component or a building block that can be integrated seamlessly into a broader offer is a significant focus, as it will enable funds to offer differentiated and superior retirement outcomes for their members. Our retirement solution capability also includes non-account-based pensions, where superannuation funds in partnership with Challenger can offer their own guaranteed retirement income stream to members. Longevity swaps and lifetime reinsurance are also components of this capability. We've previously shared our activity in the U.K. market as a longevity swap provider. In addition to this, we also provide lifetime reinsurance capabilities to other life companies in the domestic market to help them de-risk their back books. Finally, our defined benefit solutions span buy-ins, buyouts, and successor fund transfers. The breadth of scope of our four pillars and the underlying capabilities allow us to normalize the concept of an annuity by expanding the context and the purpose for which they are used, including through integration in product design. Now let us take a look into our Index Plus capability. Index Plus harnesses many of the capabilities of Challenger Life. It's not a new product, but it's a capability that remains fresh as a result of continual improvements. In very simple terms, Index Plus provides clients contractual alpha above a pre-agreed benchmark, flexibility in relation to the term and index, the security of a life insurer and A-rated counterparty, and all of this with zero fees. The current environment for superannuation funds includes an intense focus and pressure on fees and performance. With the APRA Heatmap and the Your Super, Your Future, Your Super reforms, this focus and pressure is expected to continue. In this environment, an offer that provides guaranteed alpha with zero fees is compelling, and this context has been contributing to the ongoing interest in Index Plus. We believe Index Plus is well-positioned to continue to benefit from this thematic. How does the solution work from the client's point of view? It's an elegant and robust solution. Well, on a timeline, the steps from a client's perspective are shown on the right of this slide. Initially, the client invests into the fund, which invests into eligible assets. Under step two, Challenger Life receives the returns from the eligible assets and then pays the fund the agreed index plus the contractual excess return. Finally, the fund pays the investor the agreed index return plus the contractual excess return. Challenger Life effectively swaps the eligible asset returns with the client for an agreed index return plus a margin. As you can see here, the product is flexible and offers a range of indices. Current mandates include equity indices, inflation and CPI, government and treasury, and cash. More recently, the shift has been towards equity indices such as MSCI. Importantly, we hedge the underlying index, so we are not taking that risk. We've seen Index Plus from our client's point of view. How and why does the structure work and deliver returns for Challenger? Firstly, we've evolved it to enhance our initial guaranteed index return or GIR product, which was fixed term. We've evolved it into a daily liquid version. Now to an enhanced fixed-term version. We hedge the returns of the selected index. In effect, we swap the cash rate or BBSW, plus or minus a hedge margin for the selected index return. This means we earn the returns on the eligible assets, and we pay a cash rate and an agreed margin. This is very similar to a term annuity where we pay the cash rate plus a margin. The investment returns achieved in the trust depend on the eligible assets and how they are invested. As a result, the margin we pay the client above the pre-agreed index also varies based on the eligible assets selected. We have mandates with very high-grade government bonds, which do not consume much capital and which generate a moderate basis point return above the agreed index. Whereas the enhanced option invests in Challenger term annuities and generates a similar capital intensity and cash operating margin as term annuities. The enhanced option was introduced in June last year and is attracting the most interest from clients. The majority of Index Plus sales this year have been into the enhanced option. From Challenger's perspective, the margin and economics of this option are very similar to the economics on our term annuity business. Importantly, from an ROE perspective, all products meet our ROE target. I mentioned previously that our investment solutions can build the foundation for a broader relationship with our institutional clients. This is demonstrated in this case study of our first profit-for-member client to buy a term annuity. This is an example of our solutions-based approach and the way in which our four pillars provide for broad engagement with clients. In this example, the discussion started with Index Plus but shifted towards a pure interest rate instrument over a managed investment scheme to better fit with the fund's fixed income and cash strategy. The fund opted to invest in a term annuity as a new investment instrument. The relationship has now expanded to include discussions around retirement solutions as they prepare for the Retirement Income Covenant. Most major super funds are going through similar considerations as they consider options for retirement income that are desirable, scalable, and appropriate for their member demographics. I'm going to shift now to the investment side of the business. Since the onset of COVID-19, governments and central banks globally have responded with an unprecedented amount of fiscal and monetary stimulus to help support their economies. Consumer credit performance has shown resilience so far, with recovery in non-financial corporate fundamentals well underway, and this is reflected in a significant tightening in credit spreads. The swift actions of global central banks, including launching sizable bond purchase programs and setting up lending facilities, supported market confidence and provided a backstop for credit spreads that recovered much faster than in the aftermath of the GFC. Australian corporate and financial credit spreads look particularly tight, having retraced COVID-19 moves and tightened further. Domestic banking sector has experienced a significant rise in deposit inflows that, combined with the introduction of the Term Funding Facility in March last year, has led to a material shift in the composition of its funding base, with near zero issuance of senior unsecured bonds. By introducing a scarcity factor into the outstanding stock of bank paper, major bank spreads have compressed materially. This, in turn, has prompted buying of T2 securities and materially increased investor risk appetite in many other parts of the Australian corporate bond market. This makes challenging investment markets, but we still see pockets of value for Challenger Life. While it continues to evolve, there has been a consistency in our investment process and our investment governance over many years. We have an enduring focus on relative value, and risk management sits at the center of our approach. Our asset allocation framework remains constant despite the more challenging investment conditions. As a fundamental principle, we match cash flows to our liabilities and avoid taking any duration mismatch. Finally, we prefer to maintain a strong capital position with ROE discipline. This slide should be familiar to you, as Chris Plater has presented it many times. It's our chart showing prospective liquid market risk premiums across our key asset classes of investment grade credit, investment grade ABS, high yield credit, property, and listed equities. As a reminder, the light blue bar is Challenger's view of the historical long-term averages, the vertical red bar, the historical range, and the blue box, the normal trading range. The dark green square is where risk premiums were a year ago, and finally, the dark blue diamond is where they are today. These asset risk premiums are based on liquid indices and are in addition to the base interest rate, which is subdued. We would expect to outperform this premia in most asset classes using our capability to capture additional returns. Looking at the chart, in May last year, investment grade credit and investment grade ABS risk premia were elevated following the onset of COVID-19. Reflecting significant central bank action, we can see these premiums have contracted over the past year and are sitting at or below their long-term averages. The risk premia for high yield corporate credit is above where it was a year ago. This might seem counterintuitive, but the risk premia shown here reflects the net return after expected defaults, which we base on an external index. While credit spreads were elevated in 2020, so were expected defaults. Property risk premia are above average. This analysis is based on broad market indices and is therefore not a reflection of our more defensive book. This slide covers both an update on our current portfolio and our asset allocation for the year ahead. The asset allocation will be relatively steady year-on-year, with a very slight increase to debt and cash from property. With risk premia in investment-grade options below where they were a year ago, we see relative value remaining in sub-investment-grade asset-backed credit, private debt, and syndicated leverage loan markets, we'll be shifting some of our exposure out of investment-grade corporate credit into these sectors. The property portfolio continues to be a source of high-quality, long-term cash flows. More than 60% of our office portfolio rental income is from government entities, and over 60% of contracted leases have fixed or inflation-linked rental increases, making for an excellent source of cash flows to match our longer-term promises to customers. While the rent relief period has ended, COVID-19 has impacted our forward-looking leasing assumptions. The target allocation to alternatives equity and infrastructure is expected to remain relatively stable. Alternative investments provide uncorrelated returns and are an important source of diversification for the balance sheet, including providing liquidity in market downturns. In this slide, we've also provided a guide to the average capital intensity of each key asset category. An observation here is the capital intensity for the alternatives equity and infrastructure portfolio has increased materially, up from 30%-38%. The capital requirements include a stress test for equities that is calculated based on shocks to the trailing ASX 200 dividend yield. The method results in a larger impact when yields are low and a smaller impact when yields are high. It's designed to reduce the pro-cyclical nature of the asset risk charge by increasing the charge following a rise in equity prices and reducing it following market falls. The decline in dividend yields over 2020 has therefore resulted in a higher equity asset risk charge. This effect is not necessarily expected to persist over the longer term. I'd now like to spend some time looking at the economics we're generating on new business. The table provides a simple way of illustrating the returns we expect to generate for new business. Reading the table from left to right. In the first column, we have our asset allocation strategy for new business, which is in line with our GE estimate. In the second column, our total return expectations by asset class. This represents the total return we expect to make on each asset class. Next, we expect in aggregate to write new business at around 90 basis points over the prevailing cash rate. This reflects current pricing, which is down approximately 30 basis points from the start of the year. At current levels, this translates into a total funding cost of about 1% per annum. Next, the capital requirement based on current average capital intensities across the portfolio, as we provided in the previous slide, and a PCA ratio of 1.6x our preferred operating level, as Richard outlined earlier. Based on these enhanced capital settings, we expect new business to require total capital of around 20%. When we combine all this, we get a normalized return on asset capital of 11.6% at a portfolio level. Challenger Life has additional Tier 1 and Tier 2 instruments, which are effective sources of capital and currently represent 33% of the total capital base. Allowing for this, the portfolio is generating a return on CET1 capital of 15.3% before expenses or 11.8% after including Life's expense base. If I consider how this picture has changed since the Investor Day in 2019, there are a few key changes to highlight. First, the cash rate has declined from 150 basis points to ten basis points, leading to a decrease in ROE of around 1.4%. Second, we've increased our target PCA from 1.45x to 1.6x, which reduces our risk along with our ROE returns. The actual impact can be calculated from this table. Third, we're facing more challenging investment markets, particularly lower fixed income credit spreads that I referred to earlier. These have had a negative impact on ROE but have been partially offset by pricing initiatives undertaken across the year. Finally, as I mentioned, we're also seeing higher capital intensity on equities, as I described. Of course, rates and returns will vary. Returns improve as the business scales. This gives you an important insight into where we're riding with business presently and reflects the current investment conditions and pricing. As you can see from the front book economics slide, we expect fixed income returns of approximately 2.2%, which is above broader market expectations for fixed income. I thought I would provide some detail around how we generate the fixed income returns we do. Some people have questioned whether we generate these returns by taking additional risk. However, our regulatory standards and internal capital models require that the level of capital held reflects the underlying risk taken. When we take additional risk, we hold commensurately higher capital. The numerator might increase, but so does the denominator. We can only achieve a higher ROE through our investments to the extent that we identify and extract a superior risk-adjusted return. This is one of the reasons we have such a strong focus on relative value. As outlined in the three pillars at the bottom right of this slide, our fixed income capability includes investment capability and resource in the Challenger Life business, an independent and highly experienced credit risk team that reports up to our Chief Risk Officer, and a significant investment capability that sits in Challenger's funds management business or CPAM. This is a capability that is in demand in the broader market. The nature of our business means we know our liability profile. We've previously highlighted how, with long-dated liabilities, we can make long-term investments and extract any liquidity premium in doing so. Credit and liquidity premia contribute to our returns across our fixed income portfolio, and so there's overlap with the additional boxes at the top of this slide. The purpose of these additional boxes is to highlight both additional sources of return and our capability to originate and source investments where we can extract credit and liquidity premium. The three particular areas of capability that I'm focusing on today are private lending, securitization, and liquids. Challenger Life leverages CPAM's capability in private lending. Two important keys to success in private lending are scale and experience. Scale allows you to access deals directly rather than through intermediaries, driving better terms and economics. Experience means that you see more deals than your peers, and with long-standing relationships, you don't need to do a deal to see the next one. If I put some color on the scale and experience of our CPAM platform, the platform has lent over AUD 10 billion across corporate, real estate, and securitized markets, covering Challenger Life and external clients. In the past five years, CPAM has reviewed over 700 opportunities to a value of AUD 34 billion and has completed 212 deals with a value of AUD 6.6 billion. I think that is important because it shows you what is taken and what is left. We are the only active institutional private lender with pre-GFC experience in Australian private lending markets and have been continuously active for over 16 years. With an annualized loss rate on private lending of less than 5 basis points, including the GFC, and have delivered an IRR of 7.7% on originations since the GFC. In securitization, getting a solid understanding of the credit risk you're assuming can be difficult. Again, our team's scale, capability, and experience comes into its own. We conduct robust due diligence on opportunities, including site visits with individual file reviews, to establish the nature and the quality of the underlying credit. We get granular reporting that allows us to appropriately monitor experience over time. Because of our scale and long-standing relationships, we'll receive appropriate priority in oversubscribed issues. This is a solid capability for Challenger. It's one that's grown on the back of our balance sheet over time. There's a premium that comes with the insight and rigor that we can apply, and we leverage that to ensure our balance sheet continues to deliver strong returns. Finally, our liquid strategies. Liquidity is a really key consideration for our balance sheet management and something that is core to our focus. For a number of years, we've also been able to apply investment strategies that enable us to generate additional yields while facilitating our liquidity. We use these strategies over time as market opportunities appear and disappear, and we continue to evolve and explore these short-term investment strategies as the market changes and evolves. In summary, we apply a strong investment process and governance framework. We know our competitive advantage, and we're disciplined in applying it. Our involvement across public and private markets provides unique insights and unique opportunities. Our independent credit risk team ensures risk and return are properly calibrated. Our fixed income track record includes benign credit loss experience compared to both normalized assumptions and compared to market. With our long and strong track record, we're confident in our ability to consistently achieve good risk-adjusted returns. To wrap up, we've built increased diversity and resilience in our sales with an emerging direct customer base, stabilized retail channel, a growing institutional client base, and an important ongoing partnership with MSP. We are well-positioned to continue to grow with the growing retiree market. We expect our high-level asset allocation to remain relatively unchanged in the coming year, with some adjustments at a more granular level to take advantage of relative value opportunities. Through our significant investment capability and discipline, we are driving value from every component of our balance sheet. With a number of changes, including more conservative capital settings that provide greater shareholder protection from market downturns, the front book continues to provide solid returns on equity. Thank you. Thank you, Ange, and good morning, everyone. I'd like to now turn to the funds management business and provide you an update. Whilst, as Ange made comment, it's undoubtedly true that there's great uncertainty regarding whether it be the economic outlook or markets, we've been very pleased by the resilience of our funds management business over this time, how it operated through the aftermath of the 2020 market meltdown and the subsequent market recovery. By way of introduction, I joined Challenger at the back end of 2015, taking over leadership for Fidante Partners in Australia in 2016, and then in my current role, taking leadership of the CIP Asset Management or CPAM business through 2019. Active funds management is heavily dependent on human capital, and that is certainly true of our business. Today's funds management performance is an outworking of the execution of our strategy over a number of years. I'd like to firstly make a strong acknowledgment of the people in the business, both Fidante and CPAM, as well as our boutique partners, all of whom are critical to our success. Over the course of the presentation, I want to give you some perspectives about how we're thinking about the strategy for Fidante Partners and CPAM. How both have strong growth pathways if we keep executing on that strategy. In 2021, what I'm pleased to report is the quality of the execution against what we laid out in prior years. Today, I will talk about broadening of our investment management capability, leveraging our current distribution strength, as well as building out new pathways for growth, both here domestically and in select overseas markets. As a business, we have a team and momentum to deliver against that strategy to build a truly world-class multi-boutique platform in Fidante Partners and leading specialist investment manager in CIP Asset Management. At its core, we deliver high-quality specialist investment management, seeking to partner with our clients to provide an outstanding investment experience, and therein building our reputation as a trusted industry leader. Let me start with Fidante Partners. The multi-boutique platform at Fidante is all about balancing the needs of being both big and small at the same time, which translates as a focus on investment management and scale in everything else. Our managers' track records are powerful evidence of the benefits of focus. Our scale ensures we deliver institutional-grade support in all other facets, including the sales outcomes that we're enjoying today. The last year has seen a lot of progress being made in Fidante. An important part of our business is working with our boutiques on long-term business planning and succession management, which can include the recycling of equity. This year, we worked with Ardea to acquire additional equity in their business, taking our stake to just south of 50%. The transaction will see a portion of the equity recycled through the Ardea business, which will ensure alignment of key investment personnel and long-term stability. Fidante will concurrently maintain a high stake in this high-growth business. I would also call out the extensive work undertaken, as Richard noted, around ESG. Later, I'll discuss a key investment management partnership in this space. As important has been the work our teams have done with our boutiques to ensure they have robust institutional-grade ESG capability embedded. There is a real passion in the business about doing ESG right, which will be to the benefit of investors as well as employees and shareholders. The last two years have seen us evolve our model in Fidante to seek out global best-in-class partnerships, in addition to the more classic team lift out and build. I'll provide some more details on our partnerships as I go through the presentation. Over the long term, success managing a multi-boutique platform is about building sustainable scale, including diversification by boutique, which is a balance between mature stage managers and the earlier stage incubation managers. This year, we've made significant progress ensuring we have future resilience in the Fidante business. Turning to CIP Asset Management or CPAM. CPAM is our specialist in-house investment and solutions capability, which includes our real estate, fixed income, and solutions teams. As Angela just spoke of, CPAM plays an essential role for the life company, as well as being a highly regarded investment manager for third parties. As you may know, including what Angela said, Challenger is the largest fixed income manager, and CPAM Fixed Income is a very important part of our success. The platform for growth for our fixed income capability is significant and something, again, I will touch on in more detail later. In our real estate team, we've been pleased with the performance of our business, which operates both here and in Japan. Whilst domestically, the focus has been on managing through the impacts of COVID on our portfolio. I'm pleased to announce that our Japanese real estate business has recently won its first third-party mandate to manage Japanese real estate, which is a very exciting development. In funds management, we always recognize that the earliest wins are often the most important as they are the basis for future growth potential. Finally, in CPAM, it's worth me noting the significant progress we've made this year commercializing our investment solutions capability. Investment Solutions is a team of highly talented markets people formed over the last four to five years, which are able to partner with leading institutions, including in the profit-for-member sector, to deliver implementation, protection, and other bespoke capabilities. As Australian institutions build more internal investment capability, this team can add value to these clients meeting ever complex needs. Let me now discuss distribution. We have invested into and evolved our capability here significantly over the last three years. The stability and quality of resource we have in our team today is strong and a core reason for the success we are seeing domestically, which was recognized by Zenith naming Fidante Partners Distributor of the Year. We continue to see significant opportunity for us in Australia. However, we also recognize the need to diversify globally. As we selectively move offshore, we're focusing on markets where we can meet three preconditions of having the right product with the right market structure and the right sales capability. We believe we've identified that in Singapore, and this month, our new office opens there, adding to our existing presence in London and Tokyo. Success here will see us continuing to diversify by manager, client segment, and geography. On that front, we successfully launched a new UCITS fund for Ardea, which is currently being distributed in the U.K. and select European markets and will be the product platform for Southeast Asia. Our investment capability and distribution capability are enabled by an institutional-grade platform. This next year will see funds management make a number of investments to improve client technology. The investments will enable Fidante, in particular, to provide customers with better ways to access our funds online and via exchange in the form of ETFs. As the business grows globally, the platform is also needing to develop new skills and capability. This last year has seen us launch new fund structures overseas, as well as supporting new institutional offshore clients. Success on the platform is being able to deliver our investment funds and capability in as efficient a means as possible and in the form that clients want. This year will see us continue that investment. We're currently one of the fastest-growing active managers in multi-boutique platforms in Australia, and through this last period, we crossed the symbolically significant AUD 100 billion of funds under management. I'd like to note that we have grown our retail assets substantially this year and will add close to AUD 4 billion in retail FUM in 2021. As noted on the chart, our growth in fixed income has been a standout. Whereas with our equity flows, we get the benefit of the market over time, the growth in fixed income is a raw flow story. An area of focus for Fidante and CPAM has been the development of defensive income up to higher income capabilities, and this should continue to support our leading growth in this segment. We see the role of world-class differentiated income capability as a strategic strength of the business. Today in the market, we have nine differentiated strategies across our managers that target this defensive income, cash plus two, to higher income, cash plus eight category. This deliberate strategy of delivering high-quality income capability meets the opportunities that are presented by current demographic trends and current interest rate settings. With our domestic equity managers, we recognize that we have more limited institutional capability. However, that is not the case for any of our managers in retail, where we continue to prioritize growth, which provides diversification and better margin opportunities. Product development across our existing Fidante boutiques and CIP Asset Management has been and will continue to be an important driver of future growth for the business. Pleasingly, there are a number of new strategies from existing managers that are building their track records and reputation, and as well, new product ideas that are being developed across existing managers. A point also worth noting is that there are main segments or asset classes where we either do not have investment capability today or where we are earlier in our growth profile. One area, for example, where we see significant future opportunities is global equities, developed market, and emerging markets. Fidante will shortly announce a new emerging markets investment business. Emerging market equity is a globally applicable asset class, and whilst we see domestic opportunity, we are as excited by the global potential to grow a franchise. We have today several high-quality global equity options, and our ability to scale these capabilities over the medium term provides us also with significant scope. In Fidante, we have typically pursued a build approach characterized as the team lift out, where we identify investment excellence and commercial potential. However, we recognize that certain asset classes and segments make that approach either less likely to be successful or where investment compromise may be required. This leads me into an area of the Fidante platform that we have developed over the last three years, long-term global partnerships. In 2019, we announced our partnership with Ares Management, a business which undoubtedly has become more well-known recently in Australia. Ares is a world leader in global alternatives, has over AUD 200 billion under management, and an an investment team of over 500 people. That world-class expertise presents us an opportunity to bring Australian investors differentiated and difficult-to-replicate capability. We have designed and launched two new funds together, and early signs are extremely encouraging. Together, we own Ares Australia Management. Very recently, we announced our partnership with Impax Asset Management. Impax is a global leader in ESG and impact investing with credentials that well precede the hyperbolic growth in the segment more recently. Impax has over 25 years developed an approach that is globally recognized and market-leading. The partnership has seen us bring across the Impax Sustainable Leaders Fund, a global equity strategy that will form the starting point for more capability between ourselves and Impax in the Australian and New Zealand market. We've entered a partnership agreement with Nomura, Japan's leading investment trust manager. Our agreement here will see us bring two of their strategies into the domestic institutional market, and they will similarly work with us to explore opportunities to help export our capability into the Japanese trust market. These world-class investment managers are attracted to the strength of our distribution platform in the highly competitive Australian superannuation market. Let me now focus on CPAM's fixed income franchise, which manages circa AUD 16 billion today across mostly Australian credit and private lending markets and select global. Whilst the business manages significant assets for Challenger Life, as Ange has noted, since 2010, the team have been managing money for local and offshore institutions. The last four years has seen substantial progress made in positioning for broader third-party success and presenting us with considerable potential. As noted on the slides prior, there has been a lot of product development across the fixed income business, and none more so than in CIPAM. Over the last four years, the team have worked with institutional and high-net-worth partners to seed and launch a series of Australian credit funds across cash plus three, cash plus five, and cash plus eight segments. The development of three differentiated strategies has the potential to add significant value to our clients' portfolios and provides an opportunity for us to build a significant franchise. 2021 has been a very good year for the funds management business. With approximately AUD 3 billion in net flows in both the first and the second quarters, we did AUD 7 billion in the March quarter, and we're extremely pleased with the momentum that has continued through this quarter and the pipeline ahead. With our very strong position in the Australian market, we continue to invest into and make every effort to meet the needs of our clients and their customers. Today, our domestic institutional business has relationships that serve most Australian institutions, and in many cases, we enjoy multiple investment strategy relationships, which have been developed over an extended period of time. Our model, with its specialist investment management focus and alignment, makes us an excellent partner for meeting institutional client alpha needs. Our growth in retail has been an important and pleasing feature of our business, and we were ranked by Plan for Life as having the top net flows for 2020. We are servicing a record number of Australian advice groups in our retail business and continuing to broaden and deepen our coverage in the retail channel as a key plank of our strategy. There's an opportunity for us to remix our fund for managers closer to capacity, which is providing margin resilience, which is protecting us from fee compression. Domestically, we'll be launching more ETFs in the coming year. Our two fixed income ETFs have provided valuable experience across the broker channel and the self-directed investor channel. We continue to see the efficiency of the ETF structure as highly attractive to clients and their customers. The Australian high-net-worth and ultra-high-net-worth channel is growing quickly, and we are well-positioned to build out our business in this channel. We'll be adding more distribution resource to this channel to ensure we service their specific requirements. We're expanding our distribution efforts offshore, and whilst only a small contributor to overall fund today, we see considerable offshore opportunity in the years ahead. We have a strong pipeline of offshore clients today, and delivering on this is a priority for the business. As mentioned earlier, we're excited to announce we're opening a Singapore office, which will give us access to the burgeoning wealth market, which serves the Southeast Asian region. As you can see here, our focus is to build out a diversified platform, diversified by asset class, diversified by client segment, and diversified by investment manager. They're all sharing a common element of a focus on high alpha. Our platform is extremely strong today, and we're one of the fastest-growing funds group in the country. Continued execution of our strategy and a focus on meeting our clients' needs gives me confidence that we can continue our growth trajectory. Thank you, and I think I'll now pass back to Stuart. Great. Thanks, Nick. We're just going to take a quick 10-minute break. For those of you online, at 10:30 we'll recommence. You'll receive a message just before we start. Thank you. [Break] Good morning, welcome from the break, everyone. I know many of the faces in the room, I thought I might just give a little bit of background on myself to start. As Richard mentioned, I've been at Challenger for over 16 years. I spent a decade as general counsel and the last three leading the group strategy function, and that included the acquisition of MyLife MyFinance Bank. I'm now leading the transition integration process. It's really exciting to be here to be discussing this important strategic development for Challenger. We started work on the potential setup or acquisition of a banking business over two years ago. It's been really rewarding to work on the early formulation of the strategy and see that through to the acquisition of MLMF, and now working on setting up that business for its future success. Prior to the acquisition of MLMF, we scanned and due diligenced a number of different banking opportunities. In MLMF, we believe we've acquired something unique with a clean, contemporary, and scalable digital platform, free from legacy issues, providing Challenger with an accelerated entry into the term deposit market. The bank will open up new distribution pathways for Challenger, including a functional direct-to-consumer offering from the outset and the ability to leverage our existing distribution. We'll extend both our product and customer reach and help provide our customers with better retirement outcomes. Strategy will allow Challenger to play to its strengths in lending and fixed income as we look to broaden on the bank's lending portfolio. The returns delivered will become an important contributor to the group achieving its ROE target over time, acknowledging that it will take some time for the bank to scale. The bank strategy is firmly aligned with Challenger's purpose, which is to provide our customers with financial security for a better retirement. You can think of it as another tool in our toolkit for delivering great retirement outcomes. Let me explain how the bank contributes to each of the strategic priorities of our corporate strategy, which Richard presented earlier today. First priority being broadening customer access across multiple channels. The bank will open up new distribution channels, in particular accelerating Challenger's D2C capability. It will also enable access to a wider range of customers, including those in retirement and those approaching retirement. Next is expanding the range of financial products and services for a better retirement. Initially, this will be via a term deposit offering with broader tenors. CDs are a familiar product fit among Australian retirees and those approaching retirement, and they form a significant part of their wealth allocation. The term deposit market is significant at around AUD 1 trillion, and over time, the bank will provide further product innovation opportunities, always linked to Challenger's purpose. The next priority is leveraging the combined capabilities of the group. The bank will create synergies across the group by leveraging Challenger's leading retirement brand and strong focus on risk management. Finally, it's about strengthening the resilience and sustainability of Challenger. The bank will diversify Challenger's product offering. It will reduce reliance on the financial advice channel, and it will reduce the earnings and capital volatility of the group. As many of you know, the bank uses an historical cost accounting and capital framework as opposed to the fair value framework of the life company, which requires the life company to market its assets and liabilities. For a bank of the size of MyLife MyFinance, it is unique to find a platform which is so efficient and scalable. Catholic Super acquired MyLife MyFinance in 2016. Its intention was to provide a full suite of financial services to its superannuation members. In order to scale the business, Catholic Super realized it needed to invest in the business and implement a new core banking system. Over the past few years, the bank has embarked on a digital transformation program, implementing the cloud-based software-as-a-service version of Temenos Transact. Now, this is a leading banking system, contemporary and with a direct-to-customer capability. Chris will elaborate on that further this morning. We were very impressed with how the MLMF executive team delivered this transformation within budget and on time. Given Catholic Super's focus on making its merger with EquipSuper a success, they decided to sell MLMF and focus on their core superannuation offering. MLMF is a small and efficient bank with only AUD 133 million of savings and deposits and AUD 110 million of loans, mainly residential mortgages. The loan book is well seasoned and has very conservative leverage ratios. Its customers are right in Challenger's sweet spot with an average age of about 60 years. We're fortunate to be acquiring the business at this time, and we will be delivered a platform capable of supporting considerable growth. The transaction is progressing well. As you know, the acquisition of MLMF is subject to APRA approval under the Financial Sector Shareholdings Act. 2021 has been a pretty busy year for APRA, with lots of activity in the banking sector. While it's taking us a bit longer than we expected, we're now targeting completion by July. While we're yet to complete, we've made good progress in forming distribution partnerships and setting up the business for success under Challenger's ownership. This includes scoping the necessary technology requirements to support a multichannel distribution strategy. The MLMF team are scheduled to move into our Melbourne offices early in the financial year, and we've been working closely with them on the integration. We've made good progress in building the capability of the bank, particularly in the areas of lending, risk, and compliance. To support Challenger's ambitious growth strategy, we will look to increase the size of the team and capability across both Sydney and Melbourne. The bank will transition to the Challenger brand, leveraging our market leadership position in retirement incomes, ensuring it is strongly aligned to our purpose. We are operating within budget, with integration costs tracking to our original estimate of about AUD 8 million. The distribution strategy of the bank will be focused around building early momentum and scale via multiple channels, including an operational direct-to-consumer capability. To accelerate speed to market, we will commence marketing under the MLMF brand and look to transition to the Challenger brand during financial year 2022. We will prioritize those channels where we can leverage existing capability of the bank or build efficient distribution quickly. Over time, we will gain further customer insights to better meet their needs and to build greater customer loyalty. Our product offering will also evolve over time. Initially, we will retain the existing term deposit product offering with one month through to two-year tenors. However, we'll look to broaden out the tenors to five years and beyond over time and bring more compelling offers to our customers. I will now step you through the evolution of our distribution for each of these channels. Commencing with direct. The bank already has straight-through processing capability today. In the initial phases, direct distribution will be attracted via comparator sites such as Canstar and Mozo. Once a customer clicks through a link on a comparator site, they are taken into the bank's native system. These customers become direct customers of the bank and part of Challenger's ecosystem where we can get to know them better. Over time, we'll look to evolve the direct offering using these customer insights to broaden the ways in which we interact directly and meet their needs. Intermediated. Our intermediated distribution strategy will initially focus on retail brokers. These are online marketplaces which advisors, high net worths, and self-managed super funds can log into to access competitive TD offerings. Examples are Australian Money Market, CashWorks, and The Term Deposit Shop. These brokers effectively do the customer KYC and AML checks, and they aggregate daily payments on behalf of customers to a series of different banks on their platforms. There are a number of different operational models, ranging from delivery of aggregated customer data in CSV files through to open API solutions. We are currently exploring an open API solution with a major broker who have implemented a similar solution with another bank, which also uses the Temenos Transact system. This will be a highly efficient distribution platform. Over time, we'll also look to explore distribution through financial advice platforms, utilizing our existing relationships and highly regarded distribution capability and support services. Next, institutional. There is the capability to raise institutional money from wholesale brokers such as Curve Securities, who can raise shorter-term money from other ADIs and small institutions like councils. Much of the institutional distribution will be preserved for the existing clients of Challenger, comprising super funds, life companies, and multi-asset managers. Challenger has already had significant reverse inquiry from our clients, and we have a pipeline of interested institutions. The asset and lending strategy for the bank will be important to delivering returns to our shareholders. Our strategy will be centered around broadening the lending capability and embedding a strong risk management approach. The bank's balance sheet will be comprised solely of lending and other fixed income assets. The bank will seek to maximize ROE by looking for relative value opportunities. Underpinning this will be the strong capital and risk management practices that are engraved in Challenger's business. We expect capital outcomes for the TD business to be broadly similar to the term annuity business after factoring in asset mix, duration, and so on. In relation to liquidity, there are well-documented behaviors of deposit holders in terms of rolling over their term deposits. Term deposit business is sticky. Term deposits can often be rolled over three or more times. The bank will retain its existing retail lending capability, continuing to grow its residential mortgages, utilizing their current resources. The bank will diversify its forms of lending into corporate lending, commercial real estate, and asset-backed securities. These are all markets that Challenger's very familiar with and currently operates in. SME and asset finance will also be an important contributor to returns. Challenger's existing SME lending capability will be folded into the bank. This will include accounts receivables finance, and other forms of specialized finance. To close, the acquisition of MLMF is a highly strategic acquisition and a significant step in helping Challenger fulfill its corporate strategy. It provides the opportunity to significantly extend our customer and product offering. Adding a digital domestic banking capability to sit alongside the life and funds management operations will also further broaden ways in which we provide financial security for a better retirement. It will open up new distribution channels. In particular, it will accelerate Challenger's direct-to-consumer offering. MLMF provides a contemporary and scalable platform free from legacy, enabling speed to market and a platform for growth. We will continue to invest in its distribution and product offering. Whilst it will take some time, we are confident the bank's highly efficient digital offering, coupled with broad lending capability, will deliver significant growth and compelling returns for shareholders over time. I'll now hand over to Chris. Good morning, all. Thanks for your time this morning. It's great to be here today as Chief Executive of Operations and Technology. That's a role I took late last year as an opportunity to broaden my contribution to our business' success. Having spent the last four years leading our life business, I have a deep understanding of all the elements that need to come together for us to deliver for our customers. In fact, one of my final actions as CE of the life business was to document our core investment beliefs. These are the beliefs that underpin our investment decisions. One of these beliefs is the belief that our people drive our outcomes. We believe that to optimize outcomes, it's important we maintain strong risk culture and values, and that this must be supported by strong processes, governance, and incentives. It's a real privilege to be in a position to continue to support these ambitions, both in my ongoing role as Chair of our Life Investment Committee and in my role as CE of Operations and Technology. As you've seen today, our businesses have ambitious growth agendas. Being in a position to bridge the commercial and operational has been especially powerful as we explore some of the more innovative solutions. I believe that digital, modern ways of working will be critical for our success as an innovative, disciplined and customer-centric business. I also believe success requires strong strategic partnership with our business. This is why I was excited by that opportunity to lead the Operations and Technology function. Today, I'd like to talk briefly to our leading capabilities and how they will facilitate our growth strategy and talk about the bank integration and the platform it'll provide us. To put Operations and Technology in context of the overall business, our some 300 employees support the execution and delivery of our three businesses' objectives. We do this through the close working relationship of our Operations team, Technology, and our program office. We cover a wide range of activities, including investment administration, contact center, facilities, core infrastructure, digital, and project delivery. By providing strong strategic partnership to the three businesses, we support their growth and provide the foundations for an excellent customer experience. Our team has a proven track record of delivery. Our high reliable core operations are built on a legacy-free platform with a single customer register and administration system supporting our businesses. Over the recent past, we've supported the business through significant growth, not just in assets under management, but also in breadth with new jurisdictions such as Singapore, as Nick mentioned before, and also complexity with new trading strategies, for example, for Challenger Investment Solutions and Ardea. Our customer service is market leading. Angela referred to our overall satisfaction scores for contact center and administration services are 91%, and we have a net promoter score of 35%. Wealth Insights has also voted us the leading Australian wealth management call center for the last five years. The quality of our offering is also validated by the support of the Fidante boutiques that all utilize our platform, and they've also been tested by the disruptions of COVID-19. In a matter of weeks, we had essentially all staff and all activities operating remotely, including call center, investment administration, and all investment activities. This all occurred smoothly with no impact to our customers or to the running of our platform. We've continued to embrace modern ways of working with strong adoption of cloud-based collaboration tools including DocuSign, Webex, and Microsoft 365 Suite, now all deeply embedded in our day-to-day activities. We're in the final stages of a laptop rollout to all staff, further supporting our team's capacity to operate in new hybrid working environments, aiding productivity and engagement. We've implemented scaled Agile for nimble and disciplined project delivery. We have proven our execution capability. This year, we successfully upgraded our general ledger and our key HR platforms on time and on budget. This has allowed us to consolidate these core corporate platforms to a single scalable cloud-based solution. We also completed major upgrade to our InvestorOnline, now utilizing Azure Cloud, which enables rapid delivery. It will also support Challenger Life with its ongoing product innovation and customer centricity. We've built integrations to support annuities on major platforms, including CFS, Panorama, HUB24, Netwealth, as well as directly to a range of super funds, including both retail and profit for member. In funds management, we supported the business in its launch of new products, such as the ActiveX series of active ETFs. This proven execution capability is now being brought to bear on the bank integration. Michael has spoken to you about the business plan for MLMF. From an operating perspective, we're also well-positioned. The bank will provide a leading technology platform. MLMF has a legacy-free, scalable cloud-based technology platform. Its core banking platform, Temenos Transact, supports digital self-service and origination of the bank's product set, including mortgages. The bank also uses Indue to support payments across a range of platforms, including direct debit cards, direct entry, and BPAY. It will also soon support NPP, Australia's new payments platform. The bank will leverage our existing capabilities. Notably, it will utilize our investment management, client operations, call center, and marketing resources. MLMF staff will also relocate to our existing Challenger premises in Melbourne. We're geared for delivery of future innovations. As Michael has outlined, the integration is proceeding well. Our teams have been working closely together, assisted by our strongly aligned cultural values and purpose. The technology capabilities are in place for both the banking and investments platforms, and we are utilizing Agile processes to ensure nimble and disciplined delivery as we support the delivery of that bank's product strategy. Just to recap, operations and technology are important strategic partner to our business, supporting their growth. We have a track record of delivery and are well-positioned to expect operating leverage and capture and scale benefits. We have a leading banking technology platform that is legacy-free and highly scalable. Thanks again. Richard, I think it's going to wrap up now. Okay. Thanks a lot, Chris. Thank you. Before I close and then we move on to Q&A, I wanted to turn to our financial outlook and give you an update on where we're expecting to end for FY 2021, and then take a look forward into FY 2022 and provide some guidance there as well. Firstly, as we've previously announced, we expect to achieve a normalized net profit before tax outcome at the bottom end of our original guidance range being AUD 390 million-AUD 440 million for FY 2021. This reflects, among other things, the more challenging investment market conditions and in particular tighter credit spreads, relative to where we started the year. We expect Life's cash operating earnings margin, so our COE margin, to close FY 2021 at around 2.45% for the whole year. Furthermore, we expect that to be stable over the course of FY 2022. At the end of FY 2021, Life's PCA ratio is expected to be around 1.7x, which is at the top end of our extended PCA range. PCA ratio has benefited from significant positive investment experience over the course of the year, and also from the release of life risk capital in relation to our U.K. longevity reinsurance business. In Funds Management, we expect the quality of income to continue to improve with greater contribution coming from fund-based income, which will in turn support and expand the fund-based income margin as we head into FY 2022. Given the proximity to the end of our financial year, today we're issuing FY 2022 profit guidance, with a normalized net profit before tax expected to be within a range of AUD 430 million-AUD 480 million. Furthermore, the midpoint of this range represents our best estimate and would see us achieve our normalized ROE target being 12% above the RBA cash rate. As I said at the outset, we're in good shape and we have a clear strategy for growth. Let me close by expanding a little on the strategic priorities that we've focused on to achieve those growth ambitions in the immediate term. You can see that the customer is at the center of our strategy as we strive to build on the strong foundations that we've created and to reach more customers in more ways. Firstly, this means being available to customers through a broad range of distribution channels. The acquisition of MyLife MyFinance will support this strategy with a digital banking platform and a familiar product offering that provides a great basis for us to build on the direct channel in particular. Being a desirable partner for intermediaries remains a key element of our strategy, and this is an area where we have a very strong and proven track record. We have deep relationships with advisors, and we'll continue to enhance our processes and practices to ensure that we provide valued support and we're easy to do business with. For institutional partners, we'll continue to work with them in developing solutions for both their pre and post-retirement members. We'll maintain and grow our global funds management footprint. Nick has spoken to the investment we've made to date in Funds Management, which has really driven the success we've seen in that business over the course of this year. Our second focus area is on the range of products that we offer to support better outcomes in retirement. We believe that we can better meet our customers' retirement needs by broadening that range, term deposits providing the immediate opportunity to do this. Maximizing the value we create as a whole requires us to leverage the capabilities from across the group. The combination of product and distribution capabilities we have across our Funds Management, Life, and soon the Bank, create a very special opportunity to establish and to grow customer relationships. It also helps us retain and develop great talent and to develop the leaders of the future for our business. Finally, we'll be able to strengthen the resilience and sustainability of our business. We'll continue to advocate for government policy that supports better outcomes for retirees. Our superannuation system is world-class, yet most retirees still worry about running out of money. Our guaranteed products are a clear part of the solution, and we're excited about the role they can play as the system evolves to better address the unique challenges that confront members in retirement. We have an ambitious customer vision to provide one in five Australian retiree households with improved financial outcomes as consumers of Challenger products by 2030. We believe that we can provide older, middle-income Australians with a better retirement outcome through the financial security our capabilities put us in a unique position to be able to provide. Thank you for listening this morning. I hope you've got a real sense, and insight into the strength of our business, and our strategy, and our plans to build on the great Challenger franchise that you see before you today. That really concludes the formal part of our presentations. I invite you to join me, and I'll invite the other presenters up to the stage to join me for Q&A. To facilitate that, I'll pass back to Stu. All right. Great. Thanks, Richard. Just as a matter of protocol, we will take questions in the room first before turning to the online questions, which are starting to come in. If you are online, feel free to send them through. We've got some roving mics, so please raise your hand if you're in the room and you'd like to ask a question. Could I just remind you to state your name and the company you represent when asking a question? Thank you. Morning. It's Anthony Hu at CLSA. Can I just ask a question around your guidance, particularly around the COE margin, the life business. You guided 245 basis points. First half was 255, so that implies second half is quite a significant fall. Can you just talk through the drivers there, in terms of the expected benefit from the cash deployment versus the impact of the credit spreads impact, and then what the outlook is for 2022 in terms of those particular drivers? I might make a comment from a life perspective, then Richard, you might want to add something from group. I think there are a few contributors to the variation between COE margin in the first half and second half. One of them, on the positive side, would be deployment of cash, and that will feed into FY 2022 also. We've also talked about adjustment to our pricing that has occurred over FY 2021, but in particular in Q3. That is having an impact also. Of course, on the downside, we've had the tightening of credit spreads. In the first half, our investment opportunities between Q1 were stronger than they were in Q3. They're kind of the three broad comments I'd make, Richard I don't know if there's anything Yeah. Maybe just to say that looking forward, as we get the full benefit of that deployment. That's the basis on which we're expecting 245 as being the stabilized COE margin, and that's consistent with the new WE target we've said being the RBA cash rate plus 12%. Is the impact from the credit spreads, is that still ongoing? You expect it to further impact 2022? That's fully reflected in the guidance that we've provided there. Both where we are from an annuity pricing point of view and the prevailing level of credit spreads are all reflected in that guidance and our expectation of the COE margin. To the extent that conditions normalize a little, then that would represent some upside against that. Can I just maybe put it another way? In your 2022 guidance, are you assuming credit spreads stay as they are from here? Yes. That's broadly speaking true. Thank you. Kieren, Jarden. A couple of questions. I might just start on some of the numbers, Richard, you put on slide 49 around the second half 2021 mark to market gain. Just wondering if you can talk through sort of exactly what you're assuming over the month of June there. That seems like you're talking around AUD 325 million for second half. Yeah. Also sort of what that 150 life risk net capital release is, which jointly look like they sort of boost your book value by about AUD 0.60 a share. Yeah. Great, Kieren. Thanks. I'll grab all of that. Yes, the investment experience reflects everything up to the end of May, and then also what we know of the revaluations we'll have in the illiquid part of our portfolio during the month of June. It does exclude the more or less whole liquids part of the portfolio. To the extent there are movements in credit spreads, then that will create a little bit of a move from there. You have seen a strong performance from an investment experience perspective in the second half reflecting some revaluations on the illiquid part of the portfolio. That's the first thing. Kieren, to your question on the life risk capital release and the impact that that's had. We talked a little bit during the presentation or I mentioned a restructuring of one of our longevity swaps, which had the effect of releasing capital of AUD 150 million, which is then available obviously for redeployment and has contributed to where we've ended up at 1.7x PCA. That's also then effectively in the CET1 numbers that we'll finish the year at. The present value of that life risk book, which I think previously was about AUD 820 mil-. Yes. Give or take, that hasn't changed as a result of that in terms of the profit recognition moving forward? Just to be clear on that, the normalized profit emergence remains the same. All that's happened here is that, whereas previously, and across the book more broadly, there is significant collateral posted reflecting the extent to which these longevity swaps have kind of moved in the money for us. We've effectively, in relation to one of those transactions, monetized part of that, which was effectively a release of AUD 200 million of collateral, against which there's a AUD 50 million capital charge itself, so a net release of AUD 50 million in CET1. The important thing is that the earnings footprint of our business remains the same in a normalized sense going forward over the future. Thanks. Second question, just sort of looking further forward, I guess your capital position today is very strong, particularly with those gains and releases coming through this period. But you are sort of signaling a high level of sort of capital requirements around the business, lower ROE commensurate with that. How does that all influence how you think about the dividend policy as you look out two to three years from now? Yeah. Okay. Thanks, Kieren. Obviously, the dividend policy is a matter for the board ultimately. What I can say is that our policy remains to pay between 45% and 50% of normalized net profit after tax. We're in a strong position, being at around 1.7x our PCA ratio. We've got organic profit signature of the Life business and the funds management business, which now more than offsets our corporate cost base and the subscale bank. That gives us capacity to grow, and we're comfortable where the dividend policy is. Thanks. If I can just sneak in one last question for Angela. Go for it. Just keen on sort of if you can give us a little bit more color around the interactions you're having with institutions, industry funds around sort of the lead up to July next year and the introduction of SIPPs. What role do you think Challenger will actually play sort of when we see those products come to fruition? Yeah, absolutely. There's a lot of activity. I think it's fair to say it's something I've been signaling for a little while now. We've been talking about retirement income for a really long time, but we've been somewhat of a lone voice. More recently, I think there is so much more activity in this space. Most of the major super funds have someone who is responsible for retirement income now, and there's no doubt they've still got a lot of other competing priorities. We've had a lot of workshops, a lot of quite detailed discussions with a few funds. There's no doubt that a lot of them are quite progressed in their thinking around what that could look like. I would say there are no easy answers. We're really making a new market here. We're dealing with a new almost global phenomenon of an aging population and how you turn more significant savings than probably anybody in an everyday sense, an average Australian would have had and how you kind of turn that into an ongoing income stream. Different funds depend a little bit on their member demographics, et cetera. We've done series of different types of modeling to look at how can you consider best interest duty in relation to the different members in your cohort, different members in your fund. How can you cohort those members to try to come up with solutions that will fit across them? Unfortunately, it's obviously quite sensitive and we're not in a position to actually share it. There is a lot of activity working through how much of that ends up crystallizing. The big challenges, I would say, the themes that are coming through from funds is they want it to be scalable. I would say that on the whole, risk-averse is the wrong word, but they're wanting to know what their options would be if there isn't big take-up and those kinds of things. Look, I would say it's promising. It is an entirely new space and we're exploring new territory. Hi, it's Nigel Pittaway from Citi. Question on the margins more broadly. Previously, you've said you have a decent 12-month look-through on what the margins are going to be, with the main variance being hedge fund distributions. Obviously, what happened at third quarter has caused significant uncertainty on that. Can you sort of maybe give us the latest on that? Do you think you've got confidence now in looking forward 12 months into margins? What factors would move the margins from sort of top end to the bottom end of the range? Yeah, thanks for the question, Nigel. I think reflecting some of the uncertainty that you're referring to, we've tried to be even more transparent this time around with our guidance, and in particular, calling out that our best estimate for FY 2022 is in the middle of the guidance range that we provided today. It should tell you something quite precise around where we think we're going to end up, and that's both in terms of the normalized net profit before tax. We've clarified what that translates to in terms of a stabilized COE margin, and then also that will be a number that is consistent with our new ROE target. It remains the case that there are variables which can cause that number obviously to be different to the middle of the range, and that's why we have a AUD 50 million range. You've pointed out one of them, which is the distributions from our absolute return funds and then the real assets portfolio and equity and alternatives portfolio more broadly. We're still in a pandemic, whilst we have factored in higher vacancy rates, for example, in our property portfolio into that guidance, there's still some residual uncertainty around that as well. The middle of the range is where, at this point in time, we expect to be, but there is obviously scope for both outperformance and underperformance against that. Sure. It sounds like you have a reasonable degree of confidence that it's going to be somewhere within the range and that that 12-month look through you sort of had before is still relevant. Notwithstanding the variety of things that have been a feature of this year, we've still ended up within the range that we provided at the start of the year. We're deliberate about the size of that range to try and put something forward that we can be confident that we'll hit. Obviously, the only range you can be 100% confident you're going to hit is a very wide one indeed. There's no guarantees other than those associated with our lifetime CPI-indexed annuity streams. Yes, I think it's fair to say we have a reasonable degree of confidence that we'll end up in that range, Nigel. Thanks. Okay. Then maybe the second question is just on maturities. I mean, obviously, previously you were saying that you're reasonably confident that maturities were going to drop off, and that was going to help book growth moving forward. You've now written quite a few short-dated institutional annuities, which I believe have a one-year term, obviously that changes the pattern a bit. Can you sort of reflect in that, give us some sort of color on what you're expecting maturities now to do? I'm happy to pick that one up. You're absolutely right. If we were looking at the book and looking at maturities for FY 2021 and what we were expecting for FY 2022, we were expecting that maturity rate to come down slightly. We're now expecting it to be broadly in line with what we've seen for FY 2021. About similar given the new shorter tenor business that we've written over this year. Come down thereafter unless you write more short dated, is that fair assumption? Correct. Yes. Yeah. I think one comment I made during the Q3 update was that the tenor of the institutional business written in the third quarter was around 1.2 years. There's quite a lot of it. Obviously that can move the needle in terms of what has been for this year, a 27% maturity rate, and now what we expect to be similar levels into next year. Whereas, I think, Nigel, you put out a research report a while ago, quite reasonably putting that more like 22, and the new business has kind of moved the needle on that. Importantly, it being short-term duration in itself doesn't cast a shadow as to the maturity rates in subsequent years. We would still expect, insofar as the weighted average life of the business we are writing is lengthening, that over time, maturity rates will come down. Okay. Thank you. Hi. Lafitani from MST. My first question is in relation to the Retirement Income Covenant. It's a follow-up. Do you see any risk of it not getting through given the environment of resistance to any further superannuation change? Do you see any changes in the legislation from what's currently proposed? Laf, great question, and I think it's pretty topical given the comings and goings around this. I think there's always risk as to the government's ability to pass legislation, including in this area and including really sensible reforms. I would just echo the comments I made in the presentation that, and perhaps to elaborate, both the Treasurer and Jane Hume have reiterated multiple times in recent times their commitment to the Retirement Income Covenant. Moreover, Jane Hume has called it out, if you like, as being the next cab off the rank once the Your Future, Your Super reforms pass. It's probably not for me to speculate as to when those reforms will pass. My expectation is that we will have draft legislation for consultation over the course of the rest of this year, and that we're still on track for that to be legislated to come into effect on 1 July 2022. I would add to that, too. I'm not going to suggest for a second that the legislation won't help. I think there is a growing momentum in the super funds to address retirement income. In some ways, the anticipation of it has prompted that thinking. I do think there are some funds who won't necessarily need that to take action. Okay. Second question is in relation to funds management business. There has been some media speculation that part of it might be for sale. Is there some frustration from where you guys sit in terms of see-through value for what has been pointed out as one of the fastest growing businesses in Australia? Just a second component to that, could you talk about your existing capacity within that business at this point in time? I might pick up the first question. Yeah, sure. You can take the business related question. Yes, I'm aware, obviously, of the speculation there. My reflections would be the following, that this has been a standout performer as a business. The funds management business more broadly has made a massive contribution and is making a materially growing contribution to the group. You can also see from the strategy that I outlined today, the role that funds management plays in terms of that broadening of product sets and the way those product sets work together to deliver financial security for retirement. It's strategically important from that perspective. There are also, as we've talked about before and mentioned before, strong synergies which exist between various parts of the group, including shared operating costs. Angela talked about harnessing the capabilities of CIPAM, in particular, in the lending activities that the life company and our institutional partners undertake together effectively with CIPAM as the asset manager. All of that said, it's incumbent on the board to consider questions around what the right future for the business is. At a time when, if the company is trading at a level which is at a discount to what would be a sum of reasonably valued parts, then the board takes those sorts of questions very seriously. It has, and I would say that the dominant consideration at this point remains the synergies and strategic value of the funds management business overall. Okay, on capacity, the way you should think about it, I made the comment about Aussie equity managers in the institutional space. There's obviously less capacity there because we have grown those businesses very significantly. That doesn't mean that's the end of the road by any means. There's product development opportunities for those managers, a number of them are doing that. There's also the opportunities that retail present, where your average margin will be 3x what your institutional margin will be. Where there might be a capacity constraint there, a lot of our businesses in fixed income markets, which are clearly broader and deeper, and so we don't feel there's any constraints that are reasonable there. Then we create capacity on the platform. I mentioned product development, but also through formation of new boutiques or partnerships which we've added. Headline, it's more than double where we are today, but that doesn't account for necessarily new boutiques and new product development. Capacity doesn't feel a constraint other than what I mentioned in institutional and domestic equities. Squeeze in one more question in relation to the bank and the term deposits. It's a big change, right? Most term deposits are a year or less tenor. You guys are looking to expand to a five-year TD product. What research or discussions have you had with advisors so far in relation to product formulation, whether there'll be take-up in interest and the benefits of them doing TDs versus annuities? Good question. Firstly, one of the really interesting things around TDs is the behavioral elements behind, besides just the contracted terms. For example, a six-month TD might really have a behavioral life of two years or more because it gets rolled sort of several times. I also think TDs play a number of different roles in people's sort of wealth allocation. It could be the defensive part of their portfolio. It could be a place where people just park money for a period of time. Some of the markets that we're targeting here are actually a little bit broader as well. For example, in the broker space, in the high net worth space, people might place money across a number of different banks because they effectively want to diversify their risk, if you like. We have engaged with the financial advice platforms. It's fair to say, one of the things that has happened in post-COVID with the advent of the Term Funding Facility out of the RBA, the traditional banks have been sort of flush with liquidity and funding, if you like. Term deposits hasn't been the desired source of funding for a lot of the major banks, which means that they've really sort of dropped the rates quite significantly, and they're only offering around 20, 25-35 basis points for one year business. You can imagine that there'd be quite a bit of interest for a more compelling offer by Challenger. Hi, it's Andy Chuk from Macquarie. Just the first question on the ROE target. The implied second half, 2021 ROE is about 10.7%. Can you sort of clarify between two targets, which is 12.1? Is that an average for the whole year or is that an exit rate? The new target being 12% above the RBA cash rate, is a target from this point forward. It's consistent with the earnings guidance we've given, with the center of the range there being our best estimate, and it's designed to sort of apply from the start of FY 2022 onwards. As we've previously explained, primarily due to the slow deployment of cash and liquids over the course of the year, it's always been our expectation that we would underperform our ROE target, and that's also true of the new target. If we were applying the new target to FY 2021, then we would come in slightly under that reflecting that slow deployment. I guess what I can say is that the new target applies from the start of this next financial year, and that our central estimate for the year is consistent with meeting that target. Perhaps just to reiterate, that it does reflect to the questions earlier, the current credit spread environment. To the extent that it has a very tight environment as our risk premiums more broadly. To the extent that investment market conditions normalize, either because some of the private sector crowding out of credit creation by the central bank eases somewhat, then that normalization would be supportive of outperforming the target. Great. Thanks for that. The next question is just around note four on slide 49, just around restructure of the two longevity transactions. Can I just confirm when the period that was done? Do you want to make any other comments on those transactions? This is the restructure of the life risk, you mean? Yeah, I think you're referring to the restructure of the Life current risk transactions. Yeah. The restructure, well, it took some time. Obviously, it was in gestation for a little while, but it's quite recent. We've only just completed that transaction kind of in the last few weeks, actually. Fantastic. Just one quick one, last one from me, please. Could I just confirm for the rental abatement in FY 2021, what's the latest expectations for that? Has that moved? There's really no material update on that from where we updated the market at our first half. You'll recall that when we started the year, we were expecting AUD 22 million of abatements. We updated the market at the half that we expected that to be somewhere between AUD 10 million and AUD 12 million, and there's no material update to give in relation to where that's going to end. Great. Thanks. That's all for me. Pleasure. Without permission from Jamie Morrison, a couple of questions, if I can. Just first just on just the opportunity from the Retirement Income Covenant. My observation is that it seemed like a couple of years ago, it was much more in the forefront of your thinking in terms of your strategy, whereas it seems today like it's been very much de-emphasized as the other opportunities in the bank and of the opportunities that might be there in the wholesale life channel. Is that a fair reflection of how you see the opportunities going forward? Maybe I'll just make the strategic observation to start with, Sid, and then Angie can comment further on the opportunity in the space more broadly. Our activity with intermediaries and with institutions as part of that, so both advisors and institutions, remains absolutely central to our strategy. We are saying that we're broadening our distribution activities out. We want to access customers, which include the members of officer accumulation funds who will be our partners in providing retirement income solutions. Those customers, we want to expand our access to customers into other channels, including direct channels and initially by virtue of the acquisition of the bank. Whilst our strategy sees us broadening out the way we access customers, in some ways, we're doubling down on our commitment to the intermediated channels. The formation of partnerships with major super funds is a very important part of that strategy. We see the Retirement Income Covenant as an important enabler in that regard. Do you want to add to the comment? I think it's not almost either/or. It's still important, but there's another big end which is captured in that broader strategy. Okay, fair enough. Okay, thank you. Maybe just a question on the bank then. You mentioned that the bank obviously won't be reaching the group ROE targets at the moment. Could you comment on how much scale you think you need to actually get there? How much capital needs to be invested to get to scale and to hit those ROE targets? Yes. I think we've previously stated in terms of the number of sales, broadly around AUD 600 million of sales will get us to sort of break-even point. I think you can probably take that and extrapolate from that to work out once we're achieving our ROE target. It will take time. The bank presently is making modest loss. I talked about the fact that we need to sort of still build out more capability, whether that's around lending and risk management. That's why we're saying that we're not expecting a material impact on earnings for FY 2022 of the group overall. It could take a few financial reporting periods before the bank's at scale and contributing to the group ROE in a material way. Okay, thank you. Just a final question, if I can. Just on slide 24, where you talk about your front book economics being able to get an 11.8% return on CET1 after expenses. If we tax that and we allocate corporate costs, that seems to drop that number to, on my calculations, something like a 7% normalized return after tax. How does that compare with your cost of capital? What do you think your cost of capital is? Does that actually cover it? Well, I think there's a bit of a group aspect to that. You might prefer to comment, Richard. Yeah, thanks, Sid. I suppose in some ways it's not for me to tell the market what our cost of capital is. The market formulates and reflects that back to us. It is incumbent on us to have a view around that. What I would say, Sid, is that I think that a 12% plus the RBA cash rate, pre-tax ROE is in excess of our cost of capital, and that the settings of the business, particularly when you consider the reduced risk that we are embedding in the earnings profile by virtue of our shift in capital settings from, if you like, 1.45x PCA on average to 1.6x PCA on average, when you take account of the fact that that translates to roughly a 2% shift in what one should expect in terms of a sensible risk return trade-off. I still feel that's an attractive return on equity and one which is in excess of our cost of capital. There's also group versus Life. Yeah, good point. Thank you. Within that, of course, we've got a growing funds management business which is more than offsetting corporate costs going forward and more than compensating for the subscale bank. Thanks, Ange and everyone. Hi. Hey, James. Hi, James Brticevich here from Credit Suisse. Just a couple of questions on annuity pricing and term deposit pricing. You talked to some positive pricing initiatives that are underway, but when you look in the market, it seems like you're still pricing term annuities 100 basis point premium to term deposits. Is there more work you could do on that front? Have you tested the elasticity of demand there to see if there's a volume trade-off? I guess maybe a follow-up on the bank, just term deposit pricing, can that be kind of lower than term annuity pricing, given you're not trying to win share away from the TD market? I'll make a couple of comments on term annuities first and then maybe pass to you, Michael. Yes, look, it is an imprecise science trying to look at the elasticity. One of the things that I would say is the toughest competition is not from the majors. Whilst the banks might be positioning at kind of 25 basis points, that is definitely not where the neobanks and other players are. Our distribution team would definitely find we can find some pretty exciting deals and even sometimes from those big banks, too, there will be specials pricing that will be very significantly above what might be advertised. We really try to apply very strong pricing discipline. Obviously, we take into account that competitive position, we come back to that ROE. It's a big backbone in our business. So long as we feel we can make those ROEs, that will be where we price. In relation to the TD business, I mentioned in the presentation that there's obviously nuances and differences between the life capital rules and bank rules. Essentially, when we take into account asset mix and duration and things like that, we're expecting the outcomes to be sort of broadly similar from a capital perspective. The bank's initially at scale. If you assume the bank's at scale and we're looking to price at ROE, I would say in terms of our capacity to pay, our capacity to pay is similar to sort of on term annuities. Where we ultimately end up paying, I think it's a bit too early for us to tell that because it's going to be dependent on competitive dynamics, the efficiency of distribution, and so forth, and general diversification. These are all still open questions. I think we want to be able to do some price experimentation. I think actually that's a really exciting thing about the bank strategies that's going to allow us to do that. Thank you. Just one more question on the capital. You've increased your capital target, targeting to operate at 1.6 rather than 1.45. From a CET1 perspective, how much of that increase is going to come from CET1 versus the hybrids? Do you have a new target for CET1, which I think was previously 0.8 to 1.1x? Okay, great question and quite a nuanced one as well. What James Brticevic is asking about there is the composition of our excess capital above the minimums. Bearing in mind that these ranges, be it the revised and extended PCA range we talked about, 1.3-1.7, then also a corresponding, if you like, CET1 range. These are outworkings of our risk management framework and in particular, our internal capital adequacy assessment process, which is a statutory document. That's just an important context because there are really two constraints from a strategic point of view, the prudential capital amount, then that amount of the prudential capital amount, which can be comprised of hybrid capital, so additional Tier 1 and Tier 2 capital. You're right to ask that question. What I would say is that all of our surplus capital really needs to be in the form of common equity Tier 1, because what it is essentially designed to do is create a shock absorber, so that when you have a market shock, you can remain above the statutory minimum. The first question is which one is constraining? Then we take our excess capital from there. I think, James, to answer your question directly then, your second question on what this corresponds to for a CET1 ratio, you can say that that's 0.8 to 1.2. In both cases, there's 40% of the PCA as a surplus capital. That's in reference to a minimum PCA of 1.3 or a minimum common equity Tier 1 ratio of 0.8. Viraj Mathur from Citi. Just one question on that same topic of capital. Richard, you alluded there earlier that there is a de-risking of your earnings as a result of moving to a higher capital target. Yeah. Just wondering if I could delve into that a little bit further and just sort of get a view of your thoughts on how much of a buffer does that now give you so that if you were to reenter a sort of March 2020 situation or a similar market drawdown, how much? I think it's a really interesting question. Is there a perfect buffer to have? It really depends on. You've got to answer that question looking through the windscreen rather than the rearview mirror in some ways. Yes, we have learned from the COVID-19 related shock. That's certainly informed our calibration of our new target for capital. There's always a shock that would be big enough to bring us down to the lower end of the range. You can sort of do the math on it in terms of looking at what our potential capital amount is and then multiplying that by effectively the 0.15 that we're increasing it by. We provide sensitivities on the asset shocks that means we can sustain further. I do think it makes a very material difference to our ability to withstand those shocks, and I do think that that will deliver a more stable shareholder experience. It's more consistent with our purpose, which revolves around financial security. I think the return trade-off is a reasonable one in that context. Just quickly, how exactly do you, I think you said you expect a 2 percentage point reduction in the cost of equities? Just wondering how you came to that? Sorry to ask that one again. Did you say you expected there should be a 2 percentage point reduction in the cost of capital as a result? What I said was that if you, and actually you can sort of do this by running the numbers through the front book economics slide that Angela's presentation presents. If you look at that, two different is from the change capital settings, and that is in the order of 2%. You can think about that as the primary driver of the shift in the target. That said, Ange pointed to a number of other factors and a number of other things that are moving around there, most notably the very tight credit spread environment we're in. Thank you. Hi, it's Oliver Ansted from Optar Capital. There is some fairly influential view building by influential economists about this inflation problem coming. Can you talk a bit about how you see, if that were to happen, how you see your business reacting, not just from the point of view of sort of CapEx and the pricing of, I suppose, pricing and appetite to go term? I mean, is that something we haven't really seen in recent memory, but just curious to see what your thoughts are on that. Yeah. Ange, you might want to make some comment about what that might mean for the demand of some of your business products. Well, I think it's a common refrain within the advice community in some ways, no doubt that more significant returns make that equation easier for advisors anyway, and we expect that to flow through into our product. Having said that, we've been innovating quite a lot as well. Looking at what are those drivers of demands, how can we position, explain, and innovate the product to continue to be relevant in an ongoing lower risk environment. I don't know, Richard, whether on the group side or from an investment perspective. Yeah, maybe one overlay I'd make to that on the demand for products which can explicitly hedge for inflation. This is in some ways my favorite point, that inflation is not a risk because people don't expect it to be there. In some ways, the inflation risk is the risk that it just ends up in a vastly different place to where we all expected it. We are in kind of an unprecedented environment in terms of the expansion of global central bank balance sheets, and we're seeing the murmurings of what that might mean from a risk point of view. Now, for retirees, and I would say for advisors and more broadly investees, there is perhaps something of a complacency and just an expectation, and it's been this sleeper risk that retirees aren't particularly focused on. It's a really key risk in retirement, the risk that your cost of living expands at a greater rate than your assets can keep up with that. There is something unique about our ability to provide explicitly inflation-linked lifetime income streams, which become increasingly relevant if there are concerns around inflation. I do think that could materially move the needle in terms of demand for the product. An upward sloping yield curve, to Angela's point, makes it easier to sell some of the term product as well. The only other thing I'd point out is that, and perhaps a reminder that our ROE target is the cash rate plus a 12% margin. To the extent that we do have inflation and therefore correspondingly higher interest rates, that will flow through into a higher target that we would expect to be able to meet. The other thing I do think is quite interesting, one of the things we've seen with our new RBA cash linked option on the annuity is we still have advisors hedging their own risk. They will often, with one client, allocate some to a CPI linked and some to a rate linked product, which was not something we necessarily expected. Thanks, Oliver. Great. We might move to some questions online, just thanks for sending them through. If your question has already been asked, I don't intend to re-ask it. That said, there is one here from a retail investor, which I think we should give them the credit of asking it, which we've partly covered, that's in relation to dividend. Just what's your expectations on? Again, Stu, thanks for your question. That's obviously a matter for the board, what I can say is that our policy for dividends is that we will pay out and continue to pay out between 45% and 50% of normalized net profit after tax. Great. Thank you. The next question comes from summons assume in relation to these in terms of pricing and rollover In some ways, I think the presentation looked through the front book economics, and that front book economics was based on where we're pricing at the moment, which is about 30 basis points lower than where it was at the beginning of the year. We have already had one institutional roll, obviously not a roll of money that came in in Q3, but roll from a previous year of institutional money since that pricing adjustment. That was encouraging. Our FY 2022 guidance, to be very clear is, as Richard's indicated previously, it's based on investment conditions as we currently see them and pricing as we currently see it. Thanks, Angela. The next question comes from Matt Dunger and from Bank of America Merrill Lynch. There's two questions, Matt, that have already been answered, so I'll focus on what hasn't. The first is a component in relation to the Challenger Life margins and specifically direct origination. Could you just talk a little bit more about fixed income yields and the benefit you get from direct origination and how that factors into your earnings? Yeah. I think, interestingly, there's a couple of ways within which we benefit through that direct origination. One of them is literally just the deals we are able to do. I think one of the statistics from the private lending side of CIPAM is about a third of them we are bilateral. We are a primary. It's the size and scale of what the opportunities we're able to see in the market. There is also when you are the only kind of counterparty in those deals and you are dealing direct, you're able to drive the economics in a different way from when you're participating more broadly. I think a big part of what drives our economics is actually our ability to better understand and properly assess and select the underlying credit. When I was talking about credit spreads, one of the things that the team has seen in the market is that the relative compression has been lower in sub-investment grade. When you go into that sub-investment grade, that's when it is really important that you're selecting the best quality and that you've got good assessment of that underlying credit. I think that is where our team are really strong. We're the independent credit team. We're the experience. Joe has managed to gather AUD 1 billion worth of deposits over 2020. Yeah, it's a good observation and probably a point I would have referenced myself in the answer actually, is that there is evidence out there that others have been able to scale. Similar to the comments that I made earlier, the bank is currently making a modest loss. We need from Andrei Stadnik at Morgan Stanley. The first question is in relation to the earnings in the funds management business and the profit margin. Andrei notes that Janus Henderson has a profit margin to AUM before tax of around 21 basis points and Challenger's is quite a bit lower at around 7. What do we attribute this to? I don't think you're making an apples-for-apples comparison there with Janus Henderson, nonetheless. The mix of the business will be an important part of it. The boutique model is one where it sees us own a minority of the equity and take other cost lines. It is not an integrated end-to-end funds management business. It is a very contemporary model. It is probably one of the reasons we're able to attract and retain the type of talent that we have on that platform to raise the funds that we're able to raise. There is a necessary trade-off there. The other thing I'd note in our business in the last five years particularly, is a significant transition to fund-based income from transaction-based income. We, in the past, had obviously lower levels of fund, but we were delivering quite high transaction fees in certain parts of the business. We are trying to move the business to more fund-based income, and we are seeing that materially come through the business today. Thanks, Nick. Andrei's second question is in relation to the net interest margin that the bank could generate and how it compares to the life company at 2.5%, where majors are producing NIMs of sort of 1.6% to 2%. What do we attribute that difference to and what does it mean in relation to ROE between the bank and the life company? Look, given that we are yet to complete, we're not going to be giving guidance or forecast out on NIM just yet. I'll just make a couple of observations. Ultimately, we're going to be targeting, once the business achieves scale, our ROE target, which we stated today. The other observation I make is you're starting with a really small balance sheet, and it takes a while to actually sort of build up the asset base there because you're going to be lots of small slices of different deals to get a diversified portfolio. It'll take a few reporting periods before you get to a steady state asset base, and therefore you're going to get a NIM that really sort of makes sense in a comparison sense. Thanks, Michael. Andrei Stadnik, I'd also remind you the capital bases are quite different between the bank and the Life as well, which does feed into that as well. The next question comes from Shaun Ler at Morningstar. Just thinking back to the third quarter and pricing of institutional business taking longer than retail, what have you done in relation to your business to ensure that it reflects current pricing and you're achieving asset and liability mismatching in relation to the institutional business? A couple of things. I just want to make sure. I'll answer the question, but I'm not sure I fully understood it, so you can give me some feedback, Stu, if I've missed the point. With the institutional business, I'm not so sure that it's just the lead time. It's almost more we have been really trying to build new partnerships in that institutional channel. Partly for that more investments related business, but also building those deeper relationships for retirement style business. We look at what is the lifetime value of a customer in that context. I think the credit spread movement that we had happened over the course of FY 2021 was unprecedented in terms of the velocity and speed with which it happened. It was really more in that context of how quickly do we pass on such significant changes rather than a change in policy more broadly. Being mid-conversation with a couple of those big partners, it was really a balance of how quickly we passed that on. We made a decision to both originate that business or create those relationships and adjust the pricing in terms of moving forward. Thank you. Shaun's next question is in relation to term annuities and term deposits. Can you just provide some color on crossover between term annuities and term deposits? Are they sold to different customer cohorts? Are they an alternative? How will you package them going forward? Do you want me to grab that, Ange? I'm happy for you, yeah. You can comment. You've done a bit of talking. Look, as we prepared our investment case for this, it's obviously something that we looked closely at, and the short answer is yes and no. The two products at some point overlap. You can get a term annuity and a TD that economically perform very similar for the consumer. There are some important differences. There's advantages with TDs around being a very familiar product, being able to distribute perhaps with lesser advice requirements and distribute through different channels. There'll be many customers that are purely looking for the economic outcome that TD really makes sense for. Equally, there are some unique features of term annuities that may make them more appropriate for customers. Some of those are, for example, if you're really trying to manage your income needs, you might want some of your capital being returned progressively as opposed to a full bullet repayment that typically happens with a TD at the end. Transferring money from superannuation straight into a term annuity is a much simpler process. If you want to keep your money in super, you need to have some sort of TD wrapper sitting above the TD itself. There's also, the big topic that we discussed earlier was obviously inflation, and annuities can provide some inflation protection as well. Yes, we do see the potential for there to be some overlap. We also see natural sort of segmentation of the market. It was in definitely our minds in building the investment case that we wanted to see this to be incremental growth over and above what you would see to be any overlap of product. I think the area, Michael, where this would be so much easier is the customers I talked about that are no longer in active advice relationships. When they come to a maturity, a term annuity is less familiar. Even customers who have term annuities, often a lot of those customers have really just gone on the recommendation of their advisor. We all know that a term deposit is a much more familiar concept in the market. There's a real difference here. Yeah, I agree with that. That's sort of reflected in the relative size of the term deposit market, which is close to AUD 1 trillion. That's partly that familiarity and the ability to go direct is why this is a core part of the strategy going forward. Maybe one further point that I'll add on that one as well is that we have talked about the different channels that the TD can go down, and the broker channel you may recall that I mentioned does in part service advisors. Our research shows that they're a very different type of advisor that would go onto the major platforms. I describe them almost like a self-directed advisor. They're the ones that really want to shop around and use different offerings to get the best deals, as opposed to ones that are just looking for the convenience of a major platform to help them provide all their services. Certainly one of the things that we come up against in selling term annuities in the retail channel is just the different advice requirements in relation to them. The complexity around a term annuity, it's typically classified by the licensee in a different kind of bracket of complexity of advice that's required. Paying for that advice fee is typically much more significant for a term annuity than it would be on a term deposit. Great. Thanks. The next question comes from Tim Morrison at Allan Gray. Can you just give us a bit of color on the sub-investment grade, where you'll be deploying capital into it in the coming year? Yes, sure. I think as I mentioned that relative value, the places where I think we're seeing There are two aspects. One is where is the pickup greatest, and then the other is just where is there sufficient depth in the market, and we have to consider both of those. I would say quite simply, it's been quite strong in ABS. That's true both domestically and globally. It's probably been the time for us to call one out. Great. Thanks, Angela. The next question is from Vidur Raghuraman. Can you please give me just a little bit more detail on asset and liability matching? Also, given that you have written business at higher cash rates, does it mean you have a higher ROE on your back book than your front book? Well. ROE question. Yeah. Asset liability matching, though? Yeah, absolutely. I think we have spoken about this quite a lot before, but a very big part of our investment process is matching the liabilities that we have from. The term of the liabilities with the term of our cash flow and ensuring we're not carrying duration risk. That can either be through the purchase of assets like property that have got long-term leases, delivering cash flows that meet those longer term liabilities. We can also use hedging to manage some of that duration risk as well, if needed. The very simple principle is making sure the returns that we're generating on the assets are lined up with and matching the tenor of the liabilities that we have. In terms of the ROE question, yes, technically, the ROE target applying at the time of writing the business is the one that you would think about. That said, as we've clarified to the market in the first half, and actually at the start of the year, that the gradual deployment from a cash liquids portfolio would result in us underperforming against the ROE target that we had enforced during FY 2021 and then going forward for FY 2022. The new business which we write, as demonstrated on the front book economics slide, is consistent with that target. Moreover, that the outcomes for the group in aggregate, as reflected in our earnings guidance, is also consistent with the new target. A follow-up from Vid. Thanks for following straight up. Is it too simplistic to think that higher interest rates just leads to higher earnings? Well, thanks, Vid, for the question. The reason why we've got an ROE target linked to the cash rate is precisely that. We essentially, on the balance sheet, harvest the spread between assets and liabilities, but the shareholder capital that sits behind that benefits both from that spread and from the prevailing base rates. We reflect that reality in the ROE target itself, which is a very big part of the reason why, over the last decade, as interest rates have continuously decreased, the ROEs that are generated on balance sheets like ours have likewise come down. Great. The next question from Andrew Buncombe at Macquarie. Appreciating no major change in asset allocation in FY 2022, over the medium term, is it reasonable to expect the business could return to a pre-COVID investment asset mix? Well, it's a great question. I'll make some comments, but Richard, you may want to add something at the end. Look, it's fair to say we have an ongoing asset allocation review process. We are always looking at relative value, and so obviously, where pockets of relative value change, we would be looking to update our asset allocation. In terms, I guess, of the degree of risk, obviously, that's somewhat dependent on capital. We have set new kind of settings or targets in relation to that capital. Any change to the asset allocation that had capital implications, we would obviously need to be revisiting that. Yeah. That's the point I would've made, is that the asset allocation is in part a function of how much capital we've got as a percentage of the total asset portfolio. That in conjunction with the fact that we want to operate at 1.6x our prudential capital amount, effectively sets a limit on how much risk there can be in the portfolio. Therefore, that will constrain the extent to which we can be in growth assets or something that's in credit, for example. All of that said, the capital structure is one at the moment that supports that ROE target, and as we look forward, we're not expecting material changes to the current asset allocation settings as we get through FY 2022. Great. We're right up on time. One final question here from Shaun Ler at Morningstar. Just given the QSuper product, could you just help me understand why a super fund would work with Challenger when they can create a retirement product themselves? Great question, and I'll be honest, one that I anticipated. That and maybe even Magellan, because we've seen a little bit of activity in the market. I have to say, look, overall, we so welcome any of this innovation because we've been saying for quite some time, and I do truly believe this, I think our greatest competition is the status quo. Most Australian retirees are sitting with a retirement proposition that looks not dissimilar to what they had in accumulation. I do think there are sufficient challenges in retirement just to warrant something that goes beyond that. I think any activity in the market and innovation in that space adds to the voices and to the consideration of maybe this needs to be different. QSuper are a very unique super fund, and actually, our team have been chatting with Ben Hillier and the team at QSuper as they've worked on that product. We have good relationships in with QSuper. They're unique in the sense that they have QInsure, so they actually have an insurance license. They were able to use that within their product development. I don't think there'd be many other superannuation funds that would be in that position. Nonetheless, it's great to see what they've brought to market. The feedback we have had there is it was really challenging even with that capability. They worked on that product over a quite extended period of time and meeting those best interest duties and the things we talked about with the wide number of stakeholders that you need to get across for a new product proposition. It's fair to say we're watching with interest how it goes. Do you want to make any observations on the types of risks that that product takes versus a product, for example? Is there any difference? Yeah. Well, it is quite different. One of the things, and it's a little bit like your comment in some ways as well, Rich, in relation to inflation, it's protecting for those risks when you haven't seen them is maybe one of the hard things, but it is more self-annuitization rather than guaranteed. There is no guarantee over a lifetime payment there. It is a pooled product. There are some other, obviously, we've done a pretty deep dive. How does it compare to ours? One of the things we will be quite interested in is in terms of voluntary withdrawal, it's quite restrictive. For six months you can rethink that investment, but beyond that, there is no voluntary withdrawal. We certainly have found that within the retail space, that ability to withdraw capital is something that advisors and customers are really interested in. Again, it's another great thing in terms of having that out in the market. We can compare what's seen as attractive. Yes, it's not a guaranteed product in the way that ours is. It's really quite different. Great. I'll hand back to Rich in a moment to close, but just a reminder for those in the room, there's some sandwiches at the end here, and the executive team are here and willing to interact with you. I'll hand back to Richard to close today's session. Right. Actually, well, I might do that from here. Listen, I guess really just a final minute thank you for a great discussion today. It is always a treat, actually, to put in front of you the executive team more broadly who have been with me for a long period of time and have been part of this journey over a long period of time. I hope that through the discussion today, you have gained some insight into the resilience and strength of the franchise, but also the exciting opportunities that are in front of us. I look forward to engaging with you all next time we have the opportunity to do this. Cheers. I am online, happy to help. Thank you. I should have said as well, there are sandwiches as well we have got. If those who want to stick around, we can chat further.