Good morning, everyone, and welcome to those joining online to Challenger's market briefing on APRA's proposed capital standards for longevity products. I'm Mark Chen, Challenger's General Manager of Investor Relations. We're coming to you today from our Martin Place head office in Sydney. Before we begin, I would like to acknowledge the Gadigal people of the Eora Nation, the traditional custodians of the land on which we are hosting this event today, and pay my respects to both elders past and present. Today's briefing will be followed by a Q&A session that will only be open to analysts and investors. To ask a question, you'll need to have joined via the telephone. As a reminder, today's briefing is based on APRA's proposed capital standards issued last week. We are currently in consultation with APRA, with written submissions on these proposed reforms due by 17th of December. As such, there are certain subjects we will be unable to provide responses to, which the teams are working on, or they require Challenger Board or APRA approval. These are areas such as target ranges, risk appetite, asset allocation, and capital allocation. We will use the session to provide points of clarification of guidance, including the use of illustrative examples. Today's presentation will be provided by Managing Director and Chief Executive Officer Nick Hamilton, Chief Financial Officer Alex Bell, and our Chief Executive of Insurance, Anton Kapel. I'll now hand over to Nick to get us underway. Thank you, Mark, and good morning to everyone, and thank you for joining us. So, as Mark noted, I'm joined by Alex, CFO, and also Anton, Chief Executive Insurance, and as Mark noted, today is a specially arranged call to provide further details on the announced proposed changes to the capital standards. It would not be an understatement to say they represent the most important regulatory reform for providers of longevity and retirement products in a generation. We strongly welcome these proposed changes and recognize the significant role APRA, Treasury, and the government are playing to deliver reforms that will support the development of a retirement system aligned to the needs of Australia's self-funded retirement model. For Challenger, this will mean material change and opportunity, becoming a less capital-intensive, more financially resilient business that can even better support growth and innovation in retirement solutions. At our recent full-year results briefing, we presented this schematic to characterize the role reform of capital standards plays within the context of our broader strategy. As we've spoken about, we've been very focused on measures to ensure our financial strength and flexibility while engaging around regulatory reform. More broadly, we've significantly evolved our business, announcing new client and industry partnerships that position us to materially grow our customer base, capturing the long-term structural trend of retirement. Our ambition is to see the delivery of retirement plans for Australians at scale, which for many would include the building block of lifetime income to deliver improved financial confidence in retirement. We've achieved key financial metrics, including our ROE target, through a simplification of our business's operating model, which has allowed us to focus and reinvest to become a truly customer-centric business soon to be enabled by a new customer technology proposition. Our partnership with Accenture is turning those ambitions from design and development to delivery today. We have recognized the need to expand our asset origination capacity, which will underpin our long-term ability to deliver sustainable and attractive returns for our customers and shareholders, and we will continue to expand our investment management capacity as a priority. Reflecting on the priorities that APRA set out at the beginning of the consultation, removing disincentives to offer lifetime income products, maintaining financial resilience, and improving global alignment, we are confident these objectives will be met, and the potential benefits that we laid out in August, as seen on this slide, very much hold as we look ahead. Here, I will hand over to our CFO, Alex Bell, who will provide an overview of the illustrative impacts we expect to see for the business. Thank you, Nick, and good morning, everyone. Thank you for your time today to allow us to share our initial insights into APRA's proposed capital standard changes for longevity products and what they mean for Challenger and our investors. Anton and I will take you through the expected benefits through three lenses: the improvements we expect to capital resilience, the strategic optionality from excess capital, and the platform it creates for growth. But first, a few words on exactly what changes are proposed. APRA is moving towards a more principle-based approach to the determination of the illiquidity premium, which is central to how life insurers like Challenger value liabilities for long-duration products for capital purposes. Under the current standard, the illiquidity premium is set using a fixed formula based on a narrow reference index. The proposed standards introduce greater flexibility, allowing us to use a broader set of reference indices, including international benchmarks, and to apply a risk allowance that better reflects the actual risks of our portfolio. This change is significant. It means our capital requirements will be more closely aligned with the true risk profile of our assets and liabilities. The ability to use longer duration and more diversified indices supports better asset liability matching and enhances our risk sensitivity. For Challenger, this is a structural improvement, which does not compromise on policyholder protections. Our scale and experience in managing long-term liabilities, combined with our disciplined risk management, means we are uniquely positioned to benefit from these changes. Recognizing that the proposed standards are still draft and subject to consultation, any financial information provided on the following slides is indicative only. We have used the 30 June 2025 as a pro forma basis to illustrate expected movements. Before implementing the new capital standards, management will be undertaking a detailed review of the impacts once finalized, reassessing risk appetite where appropriate, and ensuring we meet all the additional risk controls in respect to the governance, reporting, and asset composition of our longevity product portfolio. I'll now pass to Anton to share some illustrative benefits of the improvements to capital resilience and how excess capital arises. Thanks, Alex. Good morning, everyone. The purpose of this slide is to demonstrate the fundamental change in resilience of the balance sheet under the proposed new standards. We have modeled a scenario based on COVID, using market movements from the 24 February 2020 to the 23 March 2020. Details of the scenario are set out in the appendix to the pack. The scenario has been modeled as an instantaneous shock with no allowance for management actions, and we have assumed that the starting balance sheet is the same, is identical under both current standards and proposed standards. Looking at the slide, you'll see two columns of results, the first being the actual position at 30 June 2025 under the current capital standards and how that would respond under the scenario, and then the second shaded column being a pro forma position applying the proposed standards. The top block of results shows the capital results under the actual market conditions at 30 June 2025. The second block of results shows the impact of that instantaneous market shock, and at the bottom, there are a couple of comments. So now, looking at what this slide demonstrates, under the current capital standards, you can see that there is a significant impact on CLC's capital metrics, with the PCA ratio dropping from 1.60 x to 1.28 x. The key driver of this fall in the PCA ratio is the drop in the capital base, which arises because the liability basis for capital is relatively static, and you can see on the slide, the liability only reduces by AUD 0.1 billion. Under the proposed standards, the liability valuation reflects market conditions and provides a material offset to the asset movement. Again, the slide shows that the movement under the proposed standards is AUD 1.0 billion. In terms of implications, while we are much better placed to cope with a stress event today than we were in 2020, the nature of the capital basis, the current capital basis, means that the balance sheet is put under stress, de-risking is likely to be required, and as a consequence, profits from any market recovery or a share of profits from any market recovery would be foregone. This dynamic fundamentally changes under the proposed capital standards. With limited impact on the PCA ratio from the market shock, the ratio only drops marginally from 1.77 to 1.74, which means there is no need to de-risk, and consequently, we would have full participation in any subsequent market recovery. Now, as shown on the earlier slide, we modeled the impact of the new capital standards as moving the PCA ratio from 1.60 x to 1.77 x. There are two effects, one, the impact on the capital base, and two, the impact on the PCA. Given the current tight credit spread environment, the application of the proposed standards has virtually no impact on the capital base, but it does result in a lower PCA, and hence, we generate an increase to the PCA ratio. Now, obviously, we will only transition once, which is expected to be on the 1st J uly 2026, but it is worth noting that the impact of the transition to the proposed standards is very dependent on the market conditions at the time of transition. In a more normal credit spread environment aligned to long-term averages, if we had a starting PCA ratio of 1.60 times and then applied the proposed capital standards, there would be a larger impact with a benefit to the capital base as well as the PCA. The benefit to the capital base would arise in a scenario where credit spreads were at more normal levels through the application of the higher illiquidity premium, which would benefit the capital base. We have estimated that in a normal credit spread environment, the benefit to the PCA ratio would be approximately 23 points. There's one further dynamic that I would like to call out. Before going into that, I just point out that further work is required on our side to confirm the impact of the proposed standards on CLC's target PCA range. Even with no change in risk appetite, it is possible that the range would change. We will also use these changes as an opportunity to review our risk appetite. Nevertheless, if the new target aligned to the 30 June 2025 actual PCA ratio of 1.60 times, that implies that a reduction in target capital base of AUD 400 million. As our capital base comprises both CET1 capital and AT1 and Tier 2 capital, approximately three-quarters of that reduction in target capital base would arise as excess CET1, and the balance would arise as excess AT1 and Tier 2. Now I'll hand back to Alex. Thanks, Anton. So now turning to our growth story. The proposed standards create a powerful platform for Challenger's future. Upon implementation, new business that we write will be materially less capital-intensive. APRA's proposed changes create a catalyst for product innovation and improved customer pricing that is critical as Australia's retirement income market continues to develop. With more efficient capital settings, we can invest in more fixed income assets, reducing capital intensity and freeing up capital to support growth. Our life investment assets are well-positioned for this transition. When the new standards take effect, we anticipate a shift in our asset allocation: greater investment in stable, spread-earning, high-quality fixed income, and a reduction in capital allocated to higher volatility growth assets. Importantly, Challenger's scale and experience mean we can leverage these changes to drive innovation and expand our market leadership. Ultimately, this platform for growth supports our ambition to deliver sustainable value for shareholders and narrowing the valuation gap to financial sector peers. Looking ahead, our focus is on disciplined execution and transparency with our stakeholders. Over the coming weeks, we will respond to APRA's consultation and conduct a thorough review of the changes, including impacts to our actuarial governance and risk appetite. Once finalized, we will take a structured approach to internal planning and implementation. We will assess our operational readiness and reporting requirements, ensuring we have the right systems and processes in place to support the new standards. A key priority is to review our investment strategy and the forward-looking impacts on our asset portfolio. The new capital framework will then be incorporated into our business planning and guidance metrics for FY27, and we will also review any appropriate changes to the normalized profit framework to improve transparency and clarity of performance reporting to shareholders. In closing, our strong capital discipline and active risk management will continue to focus on maximizing shareholder returns while maintaining robust protection for policyholders. So just a reminder of those three key messages. First, the proposed standards will materially reduce Challenger's capital and earnings volatility, especially during times of market stress. The reduced procyclicality means Challenger is less likely to be forced into asset sales or to take capital management actions, supporting long-term stability and investor confidence. Secondly, the initial excess capital released by the new standards gives Challenger flexibility to pursue growth opportunities or return equity components to shareholders in keeping with our capital allocation framework. Finally, the proposed standards create a meaningful platform for growth for Challenger and the retirement income market. The ability to write less capital-intensive new business is a catalyst for product innovation and improved customer pricing, critical steps in developing Australia's retirement income market. Nick, Anton, and I will now take any questions on points of clarification. Thanks, Alex. We'll now turn to Q&A. Just as a reminder, to ask a question, you will need to have registered to attend the briefing via the telephone. Given the limited amount of time that we have, can I please ask that you ask all your questions at the same time so that other callers have the chance to have a turn? As this presentation is on APRA's capital standards, can you please ensure that all your questions are in relation to this? And as mentioned earlier today, we're still in consultation over these proposed standards, so there will be certain areas where we potentially will not be able to respond. Operator, can we please turn to the first question? Thank you. Your first question comes from Freya Kong from Bank of America. Please go ahead. Hi. Thanks for the update and for taking the questions. I've got a couple of questions. Firstly, just to clarify, if credit spreads were to normalize to more normal levels after the 1st of July 2026 transition, would you also still get the benefit post-transition as the illiquidity premium would presumably rise? Is that the best way to think about it? And secondly, if it's on the growth assets you're looking to shift into fixed income, would it be fair to assume that this goes into higher-yielding credit to offset the impact on terms as much as possible? Thanks. What we might do is just start, Anton. Do you want to pick up the question? The first question, the simple answer is yes. Obviously, as credit spreads move, the basis is now responsive to movements in spreads. So yes, that benefit arises as spreads move. Freya, I might just take that second one. I think one of the challenges, one of the opportunities for us today is we're a week out from having received the proposed capital standards from APRA, and we wanted to get in front of the market as quickly as possible. If you can appreciate questions relating to the shape of asset allocation, the preferences that we take, form part of the next steps that Alex outlined. What we want you to hear is we understand the question and the point, but some of these ones are ones that just have to wait till we get the final standards, and then we'll come back to market soonest after that to give you more direction on it. In principle, what you did hear Alex say is that that directionally towards spread-based income, fixed income, credit, and the different flavors within that, all of which we've got a huge amount of experience originating and managing here at Challenger over 20-plus years. Thank you. Thank you. Your next question comes from Kieren Chidgey from UBS. Please go ahead. Morning, guys. I've got three questions. Just on the day-one benefit, the risk allowance, obviously, the way APRA has framed that is, I guess, the issue of 45% of a long-term spread. You're using 35 years of history, and credit spreads have tightened, obviously, over the last decade or two. So just interested in, I guess, why you're using such a long-term timeframe, and secondly, whether or not you think APRA has got scope to revisit that in the final consultation. So that's question one. Question two is just on the day-two benefits. I'm sure you've run scenarios of what the capital or CET1 benefit would be under 85% or 90% fixed income. Would you mind giving us some numbers around that? And then the final question's on your target capital ratios. You're pointing to a significant reduction in volatility day one, so whether or not that would substantiate a change in PCA range or CET1 range, or the numbers you've given are at the top end of your CET1 coverage? Would it be more appropriate to sit at the midpoint? And then secondly, how those targets would evolve in a higher fixed income mix over time? Yeah, thanks, Kieran. I'll hand the first one to Anton. Just to note that what we've put together, and really over the last six, seven days, is illustrative, and the numbers should be taken as illustrative. But to the point, Anton, on the look-back 35-year spread average, do you want to make some comments around that? Firstly, as Nick said, the results are illustrative. The choice of index is still under review, although, as you would have seen in our submission to the initial consultation from APRA, that was an index that we floated. So in terms of the period of time over which you set the risk allowance, yes, we have adopted a very long term. And again, that is for illustrative purposes. That specific period is under review. Then, maybe if I take the one. In terms of the day-two benefits, so you're absolutely right, Kieran. We are in the process of doing a number of models and scenarios, and we'll continue to do so through this consultation period. What we want you to hear today is that that transition to a more fixed income-based balance sheet is something that we will need to do carefully and over time, very mindful of the impact on shareholders, so that we will do it in a way that is commensurate with our capital allocation framework, as well as the nod to EPS guidance that we changed this year, so ensuring that that EPS accretion is part of the future story. And then really, really importantly, one of the things that's held Challenger back in the past is this idea that to the extent to which we are truly successful in what we do, that we will need to raise fresh equity to support that growth. And these standards take that sentiment away. We will be able to support our own growth in a truly organic way going forward and have that growth have a real platform to be able to support the very large wave of liabilities that we expect to receive as the retirement income market in Australia grows. Kieran, maybe just to close that one out, one of the things we did provide on slide nine was a bit of direction on the capital intensity by asset class in the current life investment assets at 30 June. What we've deliberately done is not shaded, other than in a single color, the growth asset allocation, because that is the piece of work that is very much underway right now within the asset allocation teams and the life team. Thanks. And just the target ratios? PCA range was the question. Yeah, so again, the PCA range itself is an outworking of how we think about our risk appetite, and so we'll start with the review of risk appetite first, which will then need to go to our board and have careful consideration, and so it is possible that the PCA ratio will change, and we'll keep people informed of that as soon as we can. All right. Thank you. So the next question comes from Siddharth from J.P. Morgan. Please go ahead. Good morning. My first question is actually just around what the impact would have been on the statutory ROE if these standards had been in place in the past. I think you highlight that one of the biggest benefits is that you wouldn't be a forced seller. I was just wondering, it's very hard for us on the outside to do these calculations, but I don't know if you've done it and tried to assess what it economically means for your business. I was hoping you could just help provide some context. I might start on that. When you think about the delta between the long-term normalized profit and the statutory profit, it is split between the asset experience and liability experience. So the liability experience has been a large number in the last three, four years as a result of AASB 17 and also new business strain, but that's once cash comes back to you. The asset experience, I think this is where what we've tried to show you on slide six is so powerful. I mean, the event most recently that was most damaging for shareholders was this COVID event at Challenger, which was a result of needing to liquidate assets at a point of market stress, and then secondly, needing to raise additional capital to come out of that environment. And so what you're seeing on that slide six is the quite extraordinary difference between what our balance sheet, the experience of our current balance sheet would have been in that environment, noting it's not the balance sheet we went into March 2020. But I might just say to Alex, or Anton, any other comments to that? No, I think that's spot on. I guess the other aspect that we will review over the coming months as the standards are finalized will be how we calculate the accounting illiquidity premium, recognizing that what APRA has prescribed here is proposed changes to the illiquidity premium for capital purposes. And so we'll provide further detail on that too, and that will impact the statutory outcome. I didn't feel that the question was really answered. Really, what I was asking was for the economic benefit over the last 15 years, if these standards had been responsive the way the new standards are being proposed. How much of it? Because, I mean, we don't really—I mean, I know you were a forecaster, but we don't know exactly what the alternative would have been because there's so many other factors that would have impacted the numbers. I'm just wondering if you have a view on how much higher your statutory profits over 15 years, let's say, would have been if these standards had been in place, just to give us an idea of the economic uplift that's there just from this particular issue. I think, honestly, it's probably dangerous to go back and do it as a bit of a history lesson. As Nick said, COVID's probably the best and most recent event where what you can infer is that the statutory losses that we had to crystallize as realized losses, we would not need to do under the new capital standards. And that provides just this fundamentally wonderful opportunity for Challenger and for the income market. Okay. No problem. Just a final question I had, similar to Kieran's question. You mentioned, Alex, that the decision on the PCA range is basically an outworking of your risk appetite. Just, I was hoping you could just help us flesh out exactly what goes into that. I mean, the risk appetite is the same. So, just the—I mean, the opportunities could be the same going forward. So, just to understand what goes into actually deciding that PCA range. Is it because you have a few different metrics you look at, and the PCA's just bringing those metrics into account? If you just help us understand how that is decided. Yeah, sure. So maybe I'll start, and then I'm sure Anton can add a couple of perspectives. So even if you just think about today, we have a risk appetite that says that we will hold a large amount of sort of liquid assets. We have a risk appetite that says we will hold a lot of absolute return funds. All those sorts of individual components of the risk appetite need to be reviewed because we won't need to hold as much capital-intensive liquid capital as an example. But don't you want to add anything? Yeah. Look, the target capital range is an outworking of some fairly complex modeling. And while we obviously have the tools and systems in place for the current capital standards, one specific implication of the new capital standards is the type of market events that put the most stress on the balance sheet will change. And so there's a fair bit of work we need to do on our side just to ensure that we are properly taking into account how the balance sheet responds in the new world before we settle on any of those parameters. Thank you. Your next question comes from Julian Braganza from Goldman Sachs. Please go ahead. Good morning, guys. Just have a couple of questions. Just the first one, is there anything that you're pushing for that could materially improve the outcome from here? Just from a capital perspective, I don't know, maybe reducing that risk allowance percentage, pushing for that to be reduced to maybe 35% and just to view the impacts. The second question, can you just confirm as well what spreads that the advance in liquidity premium kick in? It doesn't seem like it's a lot higher from there, but just want to confirm. And then the third thing is, can you also just maybe talk about the implications of the caps? So the 10% cap on unrated assets and the 15% cap on privately rated assets. Is that an opportunity or where you can't be positioned just on that? If you can, just for the ROE, just some comments just to follow up. Any implications on just given what we have on a fully optimized balance sheet, current settings of the business, what is the uplift based on resetting FY25 numbers on a fully optimized basis? Yeah, thanks. Thanks, Julian. I'll try and cover as many of those as possible. If I miss any, then let me know. We are absolutely delighted with where we've got to with the proposed changes at the moment with APRA. We will be making a response as requested as part of the consultation into December, but I would describe our observations from this point as pretty modest, suggested tweaks rather than anything fundamental from this stage. We're really, really happy with where they've got to. In terms of the implications for caps, that was another one of your questions. I mean, one of the reasons we haven't even got that in our table on the slide is that we don't see it as having any impact from where the balance sheet is today, so sort of no change from how we operate the balance sheet under the current standards. It's just too early to provide any direction in terms of where metrics will move. There's a process we will need to go through with our board and thinking about the FY27 budget and the guidance associated with that. We'll come back as soon as we can. And in terms of levels, obviously, the biggest benefit of the new standards is that capital resilience dynamic, and we get that from day one. We do get some sort of release of capital even at current extremely tight spreads. But as you point out, the capital base barely moves in the current spread environment because credit spreads are so tight. The exact point where that dynamic starts to cut over, I don't have those numbers on me, but it's clearly from the slide we showed. When you get back to normalized levels, where you're looking at maybe a 40-point increase in investment-grade spreads, you're getting quite a material benefit coming through at that level. Okay, great. Thanks so much for that. Thank you. The next question comes from Lafitani from MST Financial. Please go ahead. Hi, good morning. Thank you for the opportunity. Can I follow up on some of the reassessing the risk appetite questions? Can we get more specifically the timeline and order of things that you'll be considering? So does the day one impact the need to review the asset mix that all of the language used today, more fixed income, increased resilience, less volatility? So is the outcome at the end of reassessing the risk appetite really the adjustment in your CET1 target range of 0.8-1.2 times? And is there a scenario where that doesn't go down? Yeah, Laf, I think this sort of fits in this category of questions, which there's clearly things we could say right now, but it's just premature. We need to. We've had one week with the information. I think Anton really did say it, well, our models, and we've been building new models over the last couple of months to prepare for even the data and information we received over the last week. But the team need to do a lot of work. And you can imagine all this work also needs to come in front of the Challenger board. And that is a step that must happen. And with APRA discussions there, notwithstanding, it doesn't come into effect until 1 July. But we would be hopeful to be able to provide a lot more clarity well inside that timeframe. We just wanted to get in front of Mark with this information to sort of tell you how we're starting to think about the implications with a bit more veracity than we have been able to in the last couple of market updates. But I just maybe, Anton, if you wanted to add any other comments about the approach and the steps we're taking in your area? I'll just reiterate what Nick said, and the earlier point that I made, the nature of the sort of events that put the most pressure on our balance sheet will change as a result of these standards. We've been very exposed to mark-to-market movements in credit spreads, and that risk largely disappears. So as we think about the way the balance sheet responds under different stress events, we'll sort of finish that analysis and present information to the board and make decisions based on that. Can I clarify another way then? Are there three key movers here in relation to the capital requirements? So one is day one, which you've quite clearly detailed today. Day two would be the asset mix change, and that's not literally on day two, but over the course of a year or two, that asset mix in the book changing, and that will provide a second capital component. But there's really the third one, which is the reassessing of risk appetite and whether the band of that CET1 target range does move. And I'm not saying it will or won't. You guys are doing work, but that's the potential third bucket of capital changes that will occur in this overall change that is occurring. Yeah, Laf, I think that's right. I mean, I kind of put the day two and the reassessing risk appetite together, but I guess you could think of them as three things. Got it. And can I just squeeze one more in? So on the back of this, one of the motivations of this whole change is reducing the capital intensity, but the other is to spur innovation on the other side. And so are you thinking about the design of your products any differently? Is the industry moving faster now that these changes are more imminent? And are there other players looking to enter the market? Yeah, let me have a start at that one, and Anton, I'd like to add some comments. Yeah, APRA's objective here was to reduce the barriers to supply in anticipation that suppliers needed as we develop retirement plans for Australians. I think you will have seen the announcement we made a couple of weeks ago about building retirement planning into Iress Xplan, which is the predominant tool for Australian financial advisors, which today doesn't model lifetime income longevity risk as an advice risk, which under any scenario in retirement is one of the key risks that needs to be considered, so we are working as a business as we upgrade our technology, work with partners like Iress, the announcement we made a few months ago with MLC to really invigorate both the advice side, but also the delivery of integrated retirement plans and products into the market at scale. And so that, of course, is going to bring in competition. And we've said in our submissions that where you're a voice of one in a market, you would welcome more voices because it has a positive normalizing effect on what are really suitable products for a very large cohort of Australians that today aren't getting them. So I think we've been getting our posture right leading into this with the decisions we've made and the focuses that we've had in our business, and we just need to continue to execute that. At the same time, these capital standards mean that writing business at scale doesn't come with the questions that we had only 18 months ago about needing to raise capital because we will be able to support really material growth as part of it. So I think that hopefully gives you a bit of a sense of we're very positive about what this does for the market and the role we can play in that growing market. Yeah. And I guess one point to add, while I obviously can't speak for others in the market, through this whole process, a message from industry back to APRA and government was that the existing capital standards were a constraint on supply. And to my mind, the biggest driver of the reason why the current standards are a constraint is that dynamic that it creates effectively a high beta risk. If you're running an annuity business, the nature of the balance sheet you need to run to be able to offer attractive rates to customers makes it a high beta business, which doesn't suit the risk appetite of most of the insurance players in the Australian market. So the changes that APRA has proposed fundamentally change that. And so it should make it more attractive for others. Thank you. The next question comes from Simon Fitzgerald from Jefferies. Please go ahead. Hi there. Just thinking about day two effects again, and you did mention this, Alex, about the normalized capital growth. But over time, we should see the normalized profit and the statutory profit start to converge in terms of how much smaller the mark-to-markets will be. We've even been thinking about. I'm trying to work out myself whether there's any need for the normalized capital growth scenario after this in terms of the profit framework. Yeah, thanks, Simon. So part of the reason to sort of flag it today is that that's exactly the question we're asking ourselves internally in terms of what aspects of the normalized framework will still be fit for purpose and which ones we need to reassess. I guess one of the dynamics, unfortunately, that won't go away as a result of these changes is the differences that arise in AASB 17. And they do create today a difference between a normalized and statutory result and some volatility there that will be ongoing. But you're right in thinking about those asset movements and the realization of those. So we may still get unrealized movements creating deltas between those two, but critically, they should remain unrealized and not have to be realized in times of stress. Yeah, and the index that you're proposing to go with that was in the submission, the Bloomberg index. I'm just wondering what work that you may have done on how that correlates with your asset book of fixed income instruments. I mean, just given that the liability side is going to be based on that, is there anything you can talk to there? I'll try to pick that one up. Yeah, look, the rationale for the way I start was there are a number of factors feeding into that, the most important being just the breadth of that index and therefore it being fully representative of the investment or close to fully representative of the investment universe that we have access to back our liabilities. It's also a very sort of liquid index, and so it responds to sort of stress events much more appropriately than some other indices where the constituents may not be actively traded. So it is a good index, but as I said earlier, we're still going through the process of validating whether that is the exact index that we would use for our liabilities. That's right. Because you'll note that in the latest proposed version from APRA, they've actually suggested that you could use a single index or, in fact, a weighted average of up to three indices. So that's obviously something we'll work through just to understand which will sort of best reflect our own asset and liability profile. Okay. And one final question. I'm just trying to think about how changes in the risk-free rate might have implications here on the liability side in particular. Just if we get rate cuts at the size of the increase in the illiquidity premium, it'll get chewed up anyway, wouldn't it? No. The risk-free rate is sort of a floor. Yeah, the risk-free rate is just a base with the spread sort of sitting on top, so the level of risk-free doesn't really have a material impact. Okay. Thank you. Thank you. Your next question comes from Andrei Stadnik from MS. Please go ahead. Good morning. Can I ask my first question around the long-term spreads example, the 1.83 PCA? Did you mention that that assumes about 40 basis points wider spreads or higher spreads than at the moment? And would that additional six points of PCA to the 183 versus 177, would those additional six points, would that come through as all CET1 relief, or would that be a combination of CET1 and AT1/T2? First of all, sort of going back to, I think, the number is probably more like 46 rather than 40. So that was a movement in the way it's set from current levels of 83 to the long-term average of 129. So it's that sort of order of magnitude, 40-50-point increase in that particular index and then sort of corresponding adjustments in other spreads. So the second part of the question. Oh, capital base whether it's CET1 or. Yeah, so if spreads are wide enough that you start to get a capital base benefit, I'd say the benefit of the capital release starts to skew potentially a little more toward CET1, but it is still a mix of CET1 and AT1 and T2 instruments. Thank you. And look, my second question, I just want to understand slide six a little bit better in the sense that reference B, so the change in the capital base and liability impact, it's like there's a 10 times difference between the current standards and the proposed standards in the sense there's AUD 100 million impact on current standards and liabilities versus AUD 1 billion proposed. And how do we reconcile that versus slide five where the illiquidity premium currently is probably about 33%? On the new framework, it rises to up to 55%. So it just seems like that 33%-55% change isn't quite as big as the 10 times improvement in the liability impact outcome. So what are some of the other benefits that are driving that? No. So the key issue there is the way in which the risk allowance is framed. So currently, the standards are worded in terms of setting the illiquidity premium directly as a proportion of the spread. So another way of sort of wording that 33% is to say that there is a risk allowance of 67% of the spread. And that's the world we live in today. So as spreads increase, your risk allowance increases. And it increases by two-thirds of the change in spread. Under the proposed standard, the illiquidity premium is expressed as the spread less a static deduction, a static risk allowance deduction. So the risk allowance doesn't change as spreads widen. So in terms of the movement in spread, today you're only getting a benefit of 33% of the movement. Going forward, you get 100% benefit of movement in spread. Thank you. Thank you. Your next question comes from Marcus Barnard from Bell Potter. Please go ahead. Yeah. Good morning, and thanks for taking my question. I've got two questions, really. Firstly, on the AUD 2.8 billion of Prescribed Capital Amount, and just looking at your full year, I think talking to your team beforehand, it was suggested most of the benefit came through the Asset Risk Charge rather than the stress charge. But as we've seen with your slide six, a lot of the benefit comes in stress scenarios. So can you just give me an idea how much of the PCA change comes from the Asset Risk Charge and the combined stress charge? And the second question is on pricing, sort of following on a bit from last question. I mean, the spreads you have or the crediting rates on your annuity seem quite wide. I'm just interested if you have lower capital charges, how you will balance the benefit and pricing to higher crediting rates to policyholders or more profitability to shareholders. Thank you. Thanks, Marcus. Anton, do you want to take the next question? So in terms of the first question, the day one impact, the benefit that arises on day one does come through the PCA and specifically through the credit spread stress component of the Asset Risk Charge. So if the question was whether things arise in the Asset Risk Charge or the combined stress scenario adjustment, short answer, I don't know. The way in which the capital standards work, the sort of split between those two things is a little arbitrary in some senses. But if you just think about what they're trying to achieve, at the end of the day, you've got a series of shocks to the capital base, and that determines your PCA. The benefit arises because when you're applying shocks to the capital base in setting the PCA, you get more of an offset in the liability calculation in the proposed standards than you do in the current standards. Marcus, maybe just a second question on pricing. It sort of fits a bit in the category of some of the things that we want to come back on. Because what we absolutely believe from a customer perspective is there is the more macro benefit of opening up supply and competition that will lead to more product innovation, being able to move more quickly and partnerships, etc. And we do believe not only just because of these standards, but also scale, there should be potential for pricing benefits as well. We think we've been able to balance over the long term the right mix between shareholder and policyholder returns. And what these standards in the main do is ensure, and we won't change that position, but ensures the shareholder returns are materially strengthened. And you've heard our comments, whether it be at the full-year result about moving to EPS, the guidance, the capital allocation framework, and statements Alex has made today. We are also very conscious of the shareholder experience and return as well. So that's Alex, you want to add anything? No, that sounds good Alright, thank you. Thank you. Your next question is a follow-up from Freya Kong from Bank of America. Please go ahead. Oh, thanks for taking the follow-up. Can I just ask just on timing? When APRA's finalized rules come out, would that allow you to be able to look forward confidently on a pro forma basis and potentially make some capital management decisions then before implementation date, or would that be a bit too premature? Unfortunately, Freya, the answer in the question is also a little bit premature. We totally understand the question. We want to work through this consultation. We're working through the steps to implementation because there are steps beyond just the numeric changes that we've got to put through. There's a whole lot of work that needs to be done on our assumptions for the appointed actuary, etc. But we will be very mindful around shareholders as well through this period. And it's one week out. We've got time back in the market in February. And so we'd look forward to providing fulsome updates about those sorts of questions then. Okay. Thanks. And then just on how to think about the economic ROE evolution of your life business, I guess, from day one, potential target range review, and then day two. Can you walk us through sort of the moving path you envisage? Yeah, sure, Freya. I mean, I think that the things that we can say today are that we know that our earnings signature will be a lot less volatile moving forwards. And what that means is that it takes us from being quite a high beta stock today down to one that has a much lower cost of capital. And so that will be one of the considerations as we think about the ROE looking ahead. But yeah, we'll absolutely come back with a full suite of those metrics so that you can understand the interplay between them. Thank you. There are no further questions at this time. I'll now hand back over for any closing remarks. Thanks, operator. And thank you for everyone that's joined today. Both Irene and myself, we're available on the phones today should you have any further questions. And appreciate your interest in Challenger. Thank you very much.