Good morning, everyone, and welcome to Helia Group's 2022 Investor Day. I'm Paul O'Sullivan, Helia Group's Head of Investor Relations. Today's event will include presentations from Pauline Blight-Johnston, Chief Executive Officer and Managing Director, Michael Cant, Chief Financial Officer, and members of the senior leadership team. We will start the day with an introduction from Pauline, followed by an overview of the marketplace and our strategy. We will then move to underwriting and risk management, followed by a financial overview by Michael, and we'll conclude with an outlook and wrap-up by Pauline. You will note in the agenda that we have allowed three dedicated Q&A sessions. Hence, I would ask participants to hold any questions you have until an allocated session. Before we commence, I need to make you aware that on the call today, there may be a discussion of forward-looking statements. Forward-looking statements are based on management's current expectations and assumptions, which are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially from those in the forward-looking statements due to global, political, economic, business, competitive, market, regulatory, and other factors and risks. Helia Group has provided a 2022 update and medium-term outlook in an ASX release today and will not be providing any commentary regarding Helia Group's first half 2022 financial results, which we expect to issue to the Australian Stock Exchange prior to the market opening on Wednesday the third of August. Now it's my pleasure to hand over to our CEO, Pauline Blight-Johnston. Pauline. Thank you, Paul, and welcome everybody, and thank you for joining us here today. Before we commence, I'd just like to pay my respects to the traditional owners of the land on which we're meeting, the Gadigal people of the Eora Nation, and pay my respects to their elders, past, present, and emerging, and to any Aboriginal or Torres Strait Islanders people here today. As I said, thank you for joining us. We are delighted to be hosting our first Investor Day and to be meeting with many of you in person, for me, in person for the first time in two years in this role. It's great that we can all come together today, and that those of you who are online can also join us online. We would like to make this interactive. It is a chance for us to have a conversation and so please, whether you're in the room or online, please take that opportunity. As Paul said, we'll have some dedicated question and answer sessions. I will ask if you can hold your questions to those sessions so that we can make sure we get through the content today. When those sessions come up, please don't hold back 'cause we wanna make sure that we're addressing the issues that are important to you. Today, we see it as a real opportunity to share with you the market opportunity we see and the role that Genworth plays in Australian society. The reason we get up every day is to help get Australians into homes. It's something that excites us. It's something that we, as a team, are passionate about. Coincidentally as well, we think it creates a pretty good business opportunity too. It's clearly an opportunity that is underserved in Australia and creates a real opportunity for growth in our business, in our organization. We do know that LMI is somewhat, sometimes a bit of an arcane business, sometimes a little bit of an acquired taste, and sometimes can appear a bit confusing. It's a unique business, and we have few peers in the market. As well as talking to you today about the big picture and the business opportunity we see, we will spend some time again going through some of the technical underpinnings of our business, how we manage risk, what the risks are, and how we account for that, and how our financials look. I apologize to some of you if some of you are all over that already, but in our experience, it never hurts to spend some time on that, because it is something that can be a little bit daunting from the outside. Fortunately, I have some excellent speakers here today who understand that very well and will make it all very understandable. We also, no doubt, will spend a little bit of time on the economic situation that we're in today. I think in particular, given that we are steering into a different economic environment from the one we've been in for the last couple of years, it's particularly important that you get an opportunity to understand the risks in our business and the way our financials may play out in different environments. Take the opportunity to ask. As we do look forward, I think the thing that we need to remember, and that I keep reminding our team about, is that we are an insurance company. We exist to pay claims, and paying claims is actually a good thing in our business. If we didn't pay claims, we wouldn't have a business. To be honest, if we didn't pay more claims than we've paid in the last 18 months, you'd have to wonder about the value proposition of LMI. Now, of course, we don't want to pay too many claims, and we don't want to pay the wrong claims. For us, it's all about making sure we set our business up to be there for those who need us, and when they need us, but that we can appropriately manage the risk and price for that. You'll hear today about how we're doing that. Many of you have heard me say when I joined this business two years ago, it really struck me the opportunity to make a real difference to Australia, and that if we nailed that opportunity, what an opportunity that would give us for our business growth. The fundamentals of this business are all there. The technical underpinning, the capital base, the market, the opportunity for growth. I have to say two years in, I'm only more convinced of that. I'm really proud of the progress we've made along that journey so far, and I'm really pleased today that you're gonna get a chance to hear about some of that and to meet some of the people who are delivering it, because I can tell you it's not an individual sport. Moving forward, we've recently, I guess, had another look at why we exist and re-articulated our purpose and made a very subtle changes. Essentially, we have committed as a business that the reason we exist is to accelerate financial well-being through homeownership. We understand that the reality of owning a home has financial and emotional benefits for many people, and that we can make a real difference to individuals doing that. As I said, it also creates a fantastic business opportunity because it is arguably an enormous need in Australia that is becoming increasingly underserved over time. What we've tried to pull together today is, I guess, a summary of what that means for us as a business and how that translates into a business opportunity. I'm gonna give you a quick overview of the key features we think of our business in an introduction, and then I'll hand over to members of the team to go into more detail. When you think about this business, really we need to think about it from the highest level. We are Australia's leading LMI provider. We've been in the market the longest, we have the largest market share, and we think we do it better than the others. We're addressing, as I said, a very large and growing addressable market. In Australia, it takes on average over 11 years to save 20% for a deposit. That means that there is a massive market out there that is underserved and looking for solutions, and that is growing exponentially. We have a unique position. We have a unique appetite and capability to take residential property risk that few others have. That gives us an opportunity to address that market in a way that can facilitate profitable growth. We have the benefit of the legacy we have, is we do that coming from a position of great capital strength and with our back book generating enough releases of capital to not only fund our new business, but to fund innovation and to also fund shareholder returns. A little-known secret is we have one of the best TSRs in the financial services sector since we've listed in 2014. We're actually number two only to Macquarie in our TSR over that time period. We think we've hidden our light under a bushel for a little bit too long on that, so we'll be sharing some of those details with you today as well. Now, a little bit, introducing the team that's gonna be talking to you today, and I have the exec team with me here today. Over the last couple of years, as you'll know, we've made some changes to our executive team. We've really focused on creating the optimal blend between deep technical understanding and history in this business, which is an absolute essential. You cannot run a business like ours without really understanding the risks and having it in your bones. We've got a blend in our team of people that just have this in their bones, and some new people who've come with some different perspectives for how to talk differently to customers perhaps, and what's possible from a technology perspective. Today you'll be hearing from Michael Cant, our CFO, and Andy Cormack, our CRO. Both have enormous technical expertise in both mortgages and in insurance. You'll also be hearing from Lisa Griffin, our Chief Commercial Officer of New Ventures, who comes to us with a passion for the customer and a vision for how we can do things differently. Also in the room today, we have Jeremy Francis, our new Chief Operating Officer, who has brought a very new approach to technology to our business and really challenged us on how we can become more agile and much more modern. We also have in the room Connor O'Dowd, our Chief Actuary, if we have any questions, as well as the rest of our leadership team. Please take the opportunity to interact with them over morning tea and to ask any questions of anybody. Now I'm gonna go through the, at a very high level, the key aspects about what we believe our investment proposition is. As I said, then the rest of the team will take it back to the next level. We are Australia's leading LMI provider, and we can measure that on a number of different measures. Clearly, we are the market leader for market share, and we have the largest book. Now, in insurance, the largest book creates competitive advantage because it gives us data. Data is what we use to assess risk, to price risk, and to be able to more finely understand the risk than our competitors. It's more than just size. We think we're pretty good at what we do. We think that we can really, over the, particularly over the last couple of years, really differentiate the proposition we're providing by spending time really understanding the emotional journey of buying a home. When we show up to our lender customers, we're having very different conversations with them around how we can help them grow their book rather than just, "This is how much the risk management's gonna cost you." You can see that coming through our net promoter score on the bottom right there, and we're really proud of that score. Plus 75 is a phenomenal score in anyone's books, and you can see the growth over the last few years as we've really focused on understanding our lenders and understanding their borrowers, as well as improving our operations. It's all underpinned by our historical journey, which is quite unique. We were established in 1965 by the Australian government because the government saw a need. Now we'll come back to that later because that need still exists and the government still sees it. As a result of that, we were the first LMI provider in Australia. We have the longest history. We've had a number of different ownership structures through our life, and for part of our journey, we were owned as part of a global specialist mortgage insurance business. Again, that provided, I think, more expertise and the new unique opportunity to learn about mortgage insurance globally. In fact, we got our chief risk officer courtesy of that relationship, who has had deep experience all around the world in mortgage insurance. More recently, as you all know, GFI sold down their shares. We obviously IPO'd in 2014. We were partially listed, and about 12 months ago, GFI sold the rest of their shares. For us, that couldn't have come at a better time. As much as it was wonderful having access to the global knowledge base that we did have access to, and continue to, we have friends still in GFI. For us, the opportunity to chart our own course and to become much more borrower-centric, lender-centric, and really build a business that meets the needs of Australians in a uniquely Australian way, has really created a new opportunity for us to have a different conversation with the lenders and is resonating. We think that's a part of what's behind our recent success that you'll see that in the marketplace. Now that we are fully in charge of our destiny, we've had the chance to think about how, who we wanna be when we grow up and how we better address this market opportunity. As I said, the market opportunity is large. Just a few stats here. You will have heard all of these before, I'm sure. When you look at it on one page, it's pretty stark. Since 2010, house prices have increased 70% in Australia. Income levels are up 16%. The affordability gap is growing. The time, as I said earlier, to save a 20% deposit on average in Australia is 11.4 years. In Sydney, it's 15 years. Interestingly, it was 11.4 years, as we said, in March this year, I believe. Twelve months before that, it was 10.5 years. Twelve months before that, it was nine years. This is growing exponentially. We know the bank of mum and dad is trying to step in to solve the problem. Depending how you look at it, potentially the fifth largest bank in the country, again, showing there is a massive need here for corporate solutions. We see over 1 million new home buyers every year, and 38% of those are first home buyers. That defines the market opportunity for us. To make the most of this opportunity, though, we need to think differently. LMI has traditionally been a fairly staid business, and it's largely misunderstood. We need to think about our role as not selling LMI insurance, but taking residential property risk to help people get into homes. As we've been doing that creates new opportunities. I talk to our team all the time about an analogy with the music industry. People don't want vinyl records anymore. Well, some of them do, but not enough of them. Our job is to get music into people's homes. We need to embrace things like Spotify and whatever else is coming next because we have a capability around getting music into people's homes, not necessarily printing vinyl records. That's the way we think about it. We have a capability around taking residential property risk to help people get into homes and to maximize the value of those homes for them. How else can we deploy that capability going forward? How can we do it in a way that is naturally more attractive to today's home buyers? The LMI product that we sell today is, other than the two innovations we've introduced in the last 18 months, completely unchanged from the product that we used to try to sell to our parents or that our parents bought. We know that the needs of today's home buyers are changing. Expectations of today's thirty-somethings are very different from the expectations of home buyers in their fifties. That's what we're focused on. How do we make this product make sense? Because actually, when you look at it, as much as we've looked at complements and alternative ways to do this, we keep coming back to the fact that the LMI product is incredibly efficient and effective at what it does. We just need to talk about it better, and we need to get that message out better. That's what underpins our strategy, and many of you have seen this before. We talk about enhance, evolve, and extend. What does enhance mean? Enhance means do what we do better. It means write LMI better. Right, be more efficient in our operations, and we've been moving to an agile back office and really focusing on our internal efficiencies. We've been doing that. It means helping customers with speed to yes. Our lender customers, you know the game they're all playing is speed to yes. We need to be a real partner in that and up the support we give them in that regard. It means helping them to access more of the home lending market to win. We've really focused on that over the last couple of years, and that's what underpins, to be honest, our success in the recent CBA tender. It was the fact that we could show up and have a conversation with CBA about how we could help them to be more successful in home lending. Because ultimately, as much as we provide great risk management to them, they do have a balance sheet. They could do that themselves. The reason they wanna partner with us is, yes, for risk management, but over and above it, because of the work that we're doing helping them extend their market. That sort of morphs into our second strategic pillar of evolve. As I said before, the LMI product is largely misunderstood. We know that when it's raised with borrowers, typically there's a very negative response. The reality is, most borrowers, the most sensible financial decision they could make is to pay LMI and get into their home two years earlier because the payback period on the LMI premium is very short in a normal property cycle. Yet that's not the way it's perceived. We need to think, we can't just say, you know, as we all know that, Beta technology was better video technology than VHS, but VHS won out. Sometimes you need to meet the market. You can't just tell them they're wrong. Part of what we're spending our time doing is really understanding the emotional journey of buying a home, how and when LMI is introduced to that, and how we can make that work more naturally with the way that people are thinking about their home ownership journey. Our family assistance products that we've launched, which is not groundbreaking. We didn't change the engine in any way. We just changed the use case and the way we speak to people about it, is a great example of that, and Lisa will talk more about that. Beyond that, we're looking at our extend pillar is what I was talking about before, saying, "How else can we package up our residential property risk capability to help people enjoy the emotional and financial benefits of home ownership?" It doesn't always need to be necessarily in an LMI insurance construct. There are other ways we can do that, and our example there is the investment we've made in OwnHome, which is a fractionalized debt platform, which is helping people crowdsource the deposit. As we see new business models springing up to help people deal with this problem of homeownership all around the world, things like rent to buy, things like build to rent. There's a role for us that we believe in facilitating some of those new home access opportunities. In fact, I've just spent time offshore looking at how other people around the world are solving this homeownership problem and seeing if there's anything relevant for us to bring back here. Lisa will talk more about that. The big advantage, of course, is we have the capital to do it. Now, I've spent a lot of time in a lot of businesses that need to transform, and the challenge is capital. This business is very fortunate that we have a very strong capital base. We are well capitalized, arguably over-capitalized. But that provides us with the opportunity to not only fund our new business intrinsically, but also to innovate and to grow, and also to provide returns to shareholders. We're very proud of our track record, and we do have a track record of managing our capital well for our shareholders' benefits. Our current share price, I hate to think what it is today, again, for the last few days, but it is less than AUD 2.57, unfortunately. Over the time since we've listed, we've paid back over 100% of our share price in dividends. We've also paid AUD 710 million in capital return over that period. That's what's creating those TSRs that I talked about before. As I said, the capital is self-sustaining. It provides us the money that we need to move the business forward. In our last reported results, we're sitting with capital at AUD 341 million above the top end of our board-approved target range. Now, you will know that about a month or so ago, we clarified our board-approved target range and issued a new range of 1.4-1.6 x PCA. That is intended to be a range that we will operate within. We've had a history of operating above the top end of our board-approved target range. That's not the way we want to run the business going forward. In clarifying that range, it's our intent to get back within it, and we think it'll take us about two years to get there. Which means that AUD 341 million we expect to be coming out to shareholders over the next couple of years. As I've hinted and teased, I can't conclude my session without putting this slide up. As a result of all of that, we are delivering great returns, and I think sometimes it's a little bit unnoticed. Sometimes we don't shout our praises as well as I think we probably could. Our TSR since we've listed is second only to Macquarie Bank over that period. We're really proud of that, and we think that if we continue to do what we're doing, we see no reason that we can't continue to deliver excellent TSR for our shareholders. That peer group is all the listed banks and general insurers. Just finally, a word about how we do this. We are a long-term business. We write contracts that will last for 30 years, and what we write is trust. We promise that we'll be there to pay. That means that for us, ESG is critically important to everything we do because we need to have a foundation of trust for the long term in our business, and we need to grow our business for the long term and make it sustainable for the long term. Over the last 12 months, we have reframed what sustainability means to us. We don't want sustainability to be lip service. We want it to actually be really relevant to us and to our business. As a result of that, we've really narrowed it down to three core principles that we think really matter to our business. The first is driving financial wellbeing and housing access. That's clearly about providing our product, providing it well, and providing it at a sustainable and accessible cost. It's more than that. It's about the education we're doing. It's about helping people understand the options available to them and making sure that people make informed decisions and the right decision for them. As a result of that, we've really invested a lot over the last 18 months, or certainly the last 12 months, in broker education materials, in borrower education materials to help people understand the value of LMI and what their alternatives are, and when LMI isn't the right answer for them. Our second pillar is around climate change, and that's because, as I said, we write 30-year contracts. Actually in some cases, we write more than 30-year contracts. We are a business that needs to think about what's going on in the future. Now, while we don't primarily insure the property value, we do insure land value. It's really important to us to understand both the physical and the transitional risks of that associated with climate change, and particularly which towns and which areas are going to become less popular over time. We've invested a lot in that. We have a data analytics team that spends a lot of their time on this, and we work in partnership with our lenders, and it's actually one of our services that's very much valued, particularly by our smaller lenders, going and talking to them about what we're seeing in different postcodes around Australia. In fact, as many of you will know, climate change is actually not about postcodes. You've got to be much more granular than that. Often it comes down to which side of the street. We're having those conversations with our lenders, which are highly valued. Finally, of course, we need to demonstrate good corporate citizenship. Our business is based on trust. The only thing we sell is a promise. We need to be exemplary across all aspects of corporate citizenship to underline that trust that we need to create. That's sort of the overview of really where we're focused as a business. I'm going to spend a little bit of time talking about our marketplace before I hand over to the rest of the team. We're switching gears a little bit. As I mentioned, we are the leading player in what we believe is a very attractive and growing market and a rational market. To be honest, having spent most of my career in insurance, it's a lovely, refreshing change to be in a rational market. I'm sure many of you have followed other sectors of insurance. First of all, just a quick refresher on LMI, and I'm sure nobody in this room needs to know this, but we do need to keep saying it because we are somewhat misunderstood. As we know, LMI insures the lender, not the borrower, but creates borrower benefit. The borrower benefit is access to credit because it creates the confidence in the lender to lend to the borrower. It enables the borrower to get into a home with a 5% deposit instead of a 20% deposit. Our contract is with the lender. The lender pays us the premium, then passes that cost on to the borrower. The borrower typically doesn't have the cash to pay that fee, because of course, that's why they need the LMI, because they don't have the deposit. That gets capitalized into the loan value and paid off over the life of the loan. Typical cost is 1%-2% of the loan value. Now, coming back to my earlier point there about the payback period, you can see in a property market that's growing, I don't know, on average 4% a year over the long term, that payback period's pretty quick, and particularly when you think the people are geared up. What that means for their payback period. Access to housing as well as giving them, getting them in earlier, has financial benefit for most individuals, but it also has significant emotional benefit and lifestyle benefit. We've come to understand that over time. It's really interesting. I talked about some of the borrower research that we did. About 12 months ago, we undertook a really detailed human-centered design piece of work. As I said, we don't interact primarily with the borrower, and so historically, we really hadn't spent a lot of time understanding them. Then what we realized was it's the borrower that feeds the system. The borrower puts the money into a system that creates the growth in the industry. The better we understand them, the better we can support our lenders and the better we can grow. We undertook this piece of work, and we sat in individuals' kitchen tables and spent two-hour interviews with some experts who are expert at interviewing them. A number of us got to be flies on the wall in that process. I actually sat incognito at a kitchen table while an expert interviewer interviewed some of the recent borrowers about their home buying journey. It's a fascinating exercise. You realize how much of an ivory tower we live in in the world that we live in. We think we've made things simple for people, but people who don't live in a financial world and have to tackle these challenges, it's really daunting for them. Nine out of ten people, when you got to LMI, effectively just went, "Oh, my goodness, the devil's work. Nasty tax the bank threw on me at the last minute just to cover their own risk management. Why should I need to pay?" Occasionally, we struck people, and actually, it was the interview that I was in, that this lady just lit up and said, "Oh, my goodness, the best money I've ever spent in my life. Don't tell the insurance company. I would have paid twice as much." I'm sitting there going, "I know." But she said, "Exactly what I said. It cost me AUD 25,000. I got into my house two years earlier, and the house went up by AUD 50,000 over that period." No-brainer. Move on. Now that for us was where the gold is, right? It says that there is a This is not, we don't need to be embarrassed about this proposition. It is good, and we are doing good in the world, and there is opportunity, but we need to get that message out, and we need to resonate better with individuals. As I said, home ownership is a massive issue in Australia. We know that. It's an issue that attracts a lot of government attention, and rightly so. It's one of the great levelers in society. After having spent last week in New York, I have to say where the gap between the haves and the have-nots is escalating at the moment, that's not a situation that I want in Australia. I think it's excellent the government is focused as focused as they are on home ownership because we know home ownership is one of the great levers that we have to pull that creates much more financial well-being for our people. We have seen over recent times the government being more active in this regard. That's largely because, despite our best efforts, there was too big a gap growing. We spent a lot of time working with the government to try to make sure that we're optimizing the value of their spend. We actually, we've interacted with both sides of Parliament, and we share data information with them to try to have them focus their efforts on the segments that we will never be able to serve. 'Cause ultimately, that's where we want taxpayer money going. We want the taxpayer money going in the areas where private enterprise isn't the solution. We have seen an increase in the First Home Loan Deposit Scheme. Obviously, that's not necessarily our favorite scheme going around town, but it does play a need. It does serve a need, and it also validates the category, which is quite helpful to us in many ways. We've been working with the government, as I said, about how jointly they can help us, and there are some things that they can do to free up some of the complexities and friction that exist around our business, that will help us get more individuals into homes, but also how we can help them and how we can help get more Australians into homes. The other thing I think is often not well understood is the central place of home ownership in the Australian economy. It's such a large store of wealth in the Australian economy, and the government is very attuned to that. Whilst we do see periods of house price volatility and no doubt are about to be going through one very soon, a unique feature of the Australian housing market is that those periods of volatility don't tend to be very long-lived because wherever possible, the government is very aware of the impact that has. Even though people can't spend their bathroom or their patio to go and buy a beer or go and buy groceries, people's sense of wealth is largely driven by their home value. The amount they spend in the economy is impacted by their sense of wealth. It has quite a strong economic flow on in Australia, and the government's very aware of that. We know that they will be, within reason, trying to make sure that the housing role in the economy stays strong. Moving on. Looking at the market in aggregate, our market ultimately will grow in line with housing commitments. Housing commitments we know, that's on the left-hand chart, have been growing very strongly over recent times, and particularly over the last couple of years. Now, the LMI market hasn't kept pace over the last 10 years, and particularly that was because of this period about 2014 - 2019, where you can see the LMI industry went backwards despite new housing loan commitments growing. That was largely as a result of the speed bumps that came into lending that APRA introduced during that period that resulted in a decline in high LVR lending. There was less business coming through the LMI market. We now believe that we've hit a reset on that point, that APRA's achieved the reset they're after. From this point onwards, we expect that the LMI market growth will grow again in line with housing loan commitments, which we expect, clearly to grow over the long term in Australia, particularly as, migration comes back. Any growth beyond that, as I said, anything we do beyond that to help this. The work that I was talking about helping the product resonate better and help it become more attractive product will, obviously, make that picture even more attractive. In this market that we do expect to grow, we do have the leading position. I've said it multiple times and I will keep coming back to it. Clearly on the right-hand side, we do have the highest market share. But more importantly than that, we have really strong customer relationships. Clearly, we, as everybody knows, we've just renewed our relationship with Australia's largest lender for another three years. That process, I'm sure you've all been involved in tender processes before. You tend to have a couple of tenders that are light touch, and then every now and then they have a really good hard look at their arrangements. We went through a really good hard look one. That really forced us to think about what is our value add and CBA to think about what is our value add. I think as a result of that, it's really reset the relationship for the next, I hope, medium to long term. We understand better what they need. They understand better what we're providing. I'm hoping that that sets us up for, as I said, quite a strong long-term relationship. Beyond that, we then interact with three of the regionals. We're their primary provider, and I am really excited to announce as of this morning that we now have all of BOQ's business, including the ME business that was announced to the market this morning. We have renewed, and perhaps Lisa will come to this later. We've renewed a large number of our lenders won over the last 12 months, and I think we've seen a real turning point in our business around our success rate on not only renewals, but winning new customers. That's coming from our ability to talk to the lenders about what it is that matters to them. Whilst we have the market-leading position, the thing that actually excites me the most about this slide are the gray lines, because whilst we don't have everybody, then there's more opportunity for us. As we're showing up differently and providing something worth paying for, we genuinely believe there's opportunity for us to grow this list. Then just as I finish up, a quick word on the market. Many of you will know I've spent a lot of time in other lines of insurance that are fundamentally much more, I would say, much less rational than the market that we are in at the moment. While we always like to think we're better than our competitors, the reality is we have a small number of competitors, all of whom are good, and it is good to be in a market with good competitors. Particularly when you're an insurance market, which as we know is one of the few industries where you don't know your cost of goods sold at the time you sell the product. Rational competitors are critical because it's really easy for a new entrant to sometimes convince themselves that the cost of goods sold is a lot lower than what it really is, and that can mess the market up for quite long periods of time. I would say, for me, it's been a real pleasure coming into this market, having some competitors that I respect that know what they're doing. The outcome of that is, as you can see, over the long period from 2014 when records are available, the industry's returned a 10.2% return on equity, and that was, don't forget, during the difficult mining years as well. We've got all the mining losses in that, and we still had 10.2% across the industry on average. Whereas an industry over the same period, we've returned a 27% loss ratio. Now, on one level, that looks good. For me, from a customer perspective, I don't like the look of that and I would like to get that loss ratio up, and people look at me and go, "I thought you understood the math of our business." The reason I'd like to get that loss ratio up is because that really comes down to value exchange between us and the customer. The reason it's sitting where it is is not because the industry is making it like bandits, because we've all seen some lines of business with very low loss ratios that have become the focus of the ACCC. It's actually because it's an incredibly capital intensive product, and a large proportion of the premium that gets paid goes to servicing capital. Part of what we are doing as we evolve the product is all of our innovations are slightly more capital efficient than the previous version. That's about trying to get that loss ratio up without sacrificing our profit margin so that we've got a better value exchange between us and the end customer, because ultimately that's better for the industry in the long run. In the short term, at least it means, as I said, we are in a rational industry. We are in an insurance business. There's no two ways about that. We wouldn't exist if the future could be predicted with certainty. We only exist because there is volatility in the world, and that does mean, as I know you've all experienced, that we will not be earning 10.2% in any one year. We'll either be above it or below it. I know sometimes you need to. That can be a little bit of a challenge in our business. We need to remember that over the long term, this is what the industry is delivering and there will be some ups and downs around that. Clearly over the next few years, we expect to be entering a higher claims period than what we've been in for the last few years. Ultimately, that's good for us because our recent loss ratio has been well below 27%, and the value in our product is paying claims. We're well-positioned for that period. As you know, we've taken the opportunity to ensure that we have a strong capital base and a strong reserving base, so we are well-positioned. We've also come through a period of very benign experience and high house price appreciation that's created a very big buffer in our book. Yes, we do expect the next couple of years probably not to deliver. Well, I think it would be extraordinary if we delivered the profit that we delivered in the last 12 months. Over the long term, we're very comfortable about the way we're positioned and the profitability in the book, and Michael will talk more about that and why we have comfort around that. Before we get onto all of those financial details that I'm sure everybody is waiting with bated breath for, Lisa is going to spend a little bit of time elaborating on our strategy and the market opportunity that we see. I just want to introduce to you Lisa Griffin, our Chief Commercial Officer of New Ventures. Thanks, Pauline, and good morning, everyone. As Pauline mentioned, I've just started. I started 14 months ago at Genworth. I have 25 years' experience in banking, wealth, and general insurance. The reason I joined Genworth is because I see great opportunity in the business. I must say, as a homeowner myself, but more importantly, as a parent, the purpose of Genworth resonates very much for me personally. In this section, I'm just gonna talk you through a little more detail on the strategy. In layman's speak, it's just what we're focused on, so what are our key priorities, why we see value in those priorities, and more importantly, progress to date, why we think that the strategy is being validated by the work that we're doing. I'm just gonna turn to page 19 for those of you who are on virtually. As Pauline mentioned, our purpose is to help people accelerate financial security through homeownership now and for the future. I think you all know we've got a 50-year history solely focused really on LMI, and we know that LMI plays a critical role in getting people into homes sooner. Pauline's just mentioned, we know that, but some of our customers and borrowers maybe don't know that. Our purpose continues to reflect this as our kind of stick to our knitting, our critical role of the core business. But as LMI, but it has been broadened very subtly as a way of accommodating potentially new solutions into the future. Very subtle, but it's very deliberate. Importantly, our goal is to continue to maintain this leadership position as a specialist LMI provider, but at the same time, positioning the business for success over the medium to longer term. As Pauline mentioned, that means us being continuously focused on improving the core LMI business and showing up differently, not just for our lending customers and for our brokers, but for borrowers as well. Proactively working with lenders to understand their needs and to deliver a seamless experience every time. Our vision is to become the leading choice for flexible homeownership solutions, and we wanna make more of a difference, not just for lenders, borrowers, and other partners, but for borrowers as well. I'm just turning to page 20 now and hopefully, you now have memorized this, so I won't go into detail. I think the most important point here is the whole business is now focused and aligned on the three core pillars of our business or of our strategy: enhance, evolve, and extend. As Pauline's mentioned, we see opportunities across each of these three pillars. For enhance, our aim is to be a partner of choice, which means running all parts of the business better and working with our lending customers to deliver seamless experiences every time. Importantly, it means proactively working with them to address pain points as they come up and address them quickly. We believe this renewed approach is already paying dividends, and it's differentiating us from our competitors. Evolve, as Pauline has mentioned, is about making the LMI product more accessible to today's homeowners, ensuring that the product speaks to them more naturally. Pauline talks about, and we have, this has resonated with us as well. There's no point selling vinyl records to a Spotify customer. Continuously rethinking the core LMI construct, which is really elegant actually in its solution. I never thought that I would say that. Really tailoring it for the new needs of this new generation. We've talked a little bit about it. We are committed to exploring alternative pathways and experimenting with lenders and partners to set the business up for the medium and longer term. That doesn't mean departing too far from our core, but we do see opportunity in alternative home access solutions. As Pauline has mentioned, we're very aware of, in different jurisdictions, the different approaches that are being trialed with some success. We are holding ourselves to making sure that this complements the core business and positions it well. It's not a distraction. It's aligned to the purpose very much. Now, turning to page 21, the key enablers for success. We believe our strategy is underpinned by a number of these interrelated key enablers. Really, simply put, these are the reasons that we believe we will win in the core business, and combined they differentiate us from our competitors. We've talked about it a little bit before. We want to become, and we believe we are the partner of choice. We are showing up differently and we're redefining our working relationships with our customers. I'll go into a little detail in a minute, but I think the recent renewals and certainly the feedback that we're getting from our customers suggests we've got really strong momentum here. That's because we're listening to the customer pain points and working to address them. Customer-led. Pauline's talked about this. I think, you know, it's been easy for us to just think about our customer as the lender, but it's also on us as the manufacturer of this product to think about the borrower. The work that we did last year around the human-centered design research, which I must say was a little uncomfortable to watch, has provided us with a raft of opportunities for us to continue to improve the basic construct of LMI to deliver greater value for our customers, lending customers and borrowers. Of course, Pauline's talked about the expertise that we have in mortgage and property risk, and part of being a great partner of choice is making sure that we're leveraging that expertise and tailoring it to the needs that they're seeing emerging in their businesses. Likewise, really using the data and insights that we've built up over a 50-year history to add value and to create that value exchange for our lending customers. Lastly, Pauline has mentioned, you know, in the modern world, an agile digital platform will enable these seamless interactions and customer experience to make sure that we can reflect the changes in the mortgage industry quickly. Turning now to page 22. I think as Pauline has rightly mentioned, we're pretty proud of the success that we've had in the market over the past 12-18 months. You've all heard about CBA and Pauline has just mentioned it, but importantly, we've won others as they've come up for renewal. We believe these recent renewals are a good proof point and that we're making traction, and that they demonstrate that the focus on our strategy is playing out. We do have positions across all segments of the market, including the non-majors and non-ADIs, and in continuing this broad exposure across all three categories remains a focus for us. Pleasingly, 81% of GWP is now being locked in through these most recent renewals for the next three years. Again, I'll say it, in our minds, the feedback we've received, and because of our relationship management work, we're receiving it all of the time, but especially during this renewal process, validates our strategy and approach. Our customers are acknowledging that we're showing up differently and that we're genuinely customer-led, but more importantly, front-footed with ideas and solutions. I think we've lost count of the amount of times we've started to hear that Genworth is genuinely doing something differently. We're not resting on our laurels, so it is a good motivator for us all internally. Turning now to page 23. Improving the efficiency and competitiveness of our core LMI is how we talk about Enhance. Our focus here is on reducing pain points and streamlining our service offering across the full value chain. The trajectory of our NPS since 2018, again, is another proof point, and I guess it reflects the focus on addressing these customer issues as they emerge through the ongoing feedback loops. Customer complaints data and sitting down and having honest conversations with our customers. In recent years, this feedback has also led to a number of improvements in our interactions. We're focused on speed to yes and delegated underwriting authorities, effectively giving the pen to the lenders with appropriate risk management and assurances on our side, increasing our auto decisioning through our auto decisioning tool, and obviously the digital API integration Pauline’s talked about, and I've talked about too, the enhancements or the evolutions of the product. When we talk about Evolve on page 24, we sort of talk about reimagining LMI for a new generation of customers. We are committed to implementing product enhancements and innovations as we see them come up. Our first notable product enhancement was the launch of monthly premiums in 2020. This addresses this portability issue of our end borrowers and the customer need. Importantly, we followed that up with two further proof points in 2021. Both have come from the human-centered design research that was completed last year. Pauline has mentioned market education and sort of updated collateral, and that might seem, sort of, ho-hum, not very interesting. But I can attest to the fact that having sat down and watched every interview that we conducted last year with customers, it was very sobering within the first couple to realize that the common theme was many borrowers didn't realize that they, in fact, were not protected by LMI. There was this basic misunderstanding of what the product was and why they would be taking it. The other insight we had was that many brokers and lenders positioned this as a product or an option of last resort, as opposed to positioning it as the benefits that it might provide. As Pauline mentioned, having sat through many of those sobering conversations, the one that stuck with us was the after the event. In retrospect, had I not bought and opted for LMI, I'd still be saving for my deposit, and in actual fact, I'd be in more backslide. Now, again, really sobering, but hugely motivating in terms of how. That's on us. How do we start to educate not just the lenders and the brokers? Many, many of the brokers are actually selling this really well, but many were not. how do we make sure that we're updating our collateral for the end borrower so that they can be informed through their decision-making process? That's meant things like an options deposit options calculator that just give the customers and borrowers a choice, improve sales support material in more common language, and really focus marketing to continue to move LMI, the repositioning of that holistic proposition. Pauline's mentioned the family assistance product. Again, we're very open to the fact that innovation can come from sometimes just small tweaks to the basic construct of a product, and we believe that's obviously the first place for us to start before going on and taking on the world. What more can we do around this LMI construct? This instance, it's just a clean, simple, no-fuss way for parents to help children into home ownership as opposed to, something like a guarantee, where our research has also shown us, guarantees might be a good solution at the time. Though the sense of obligation that the poor children have to go and turn up to dinner every Sunday night to the parents and all the other emotional baggage that goes with this, is not so great after the event. In fact, many parents are concerned about the exposures that they might have ongoing. This is just a nice, no-fuss way using LMI, but paying it up front for a 15% discount that a parent, mom and dad or friend can help with getting into home loans sooner. To date, 12 of our lenders have taken that up, and we continue to have great interest in that product now and as we go through renewals. Importantly, we're just at the beginning, so we see other opportunities. As we think about the enhancements, we are working 12 months or planning 12 months ahead so that we've got a continuous pipeline of what we think we need to implement with feedback from customers to ensure that we're prioritizing the things that make the most sense for them. Turning lastly to page 25, we talk about Extend, which I'm sure people wonder what that is. I guess it's just, again, exploring adjacent growth opportunities that make sense for us. If we talk about our expertise in mortgage and property risk, where are there opportunities, given the stats and the market overview that Pauline's provided, for us to move into complementary, and diversified offerings? We're ultimately committed to building a range of pathways to home ownership, but leveraging those strengths. Not venturing too far from core, and we don't believe we have to venture too far from core, to find more opportunities. We know there's a lot of activity in the market, both here and overseas, particularly in home access solutions. Pauline mentioned them earlier, whether they're rent to buy, whether it's fractional ownership, other shared equity schemes or deposit gap loans. A lot of these models we acknowledge are very early, and they're still being tested and evolving. We do believe we have a unique role to play because of how we play currently in the market, and a unique set of capabilities and expertise to participate in a deliberate way. We sort of feel like rather than watching that play out, we're better to get in and experiment in a deliberate and focused way. As Pauline mentioned, OwnHome is our first foray into this space. Late last year, we became a strategic investor in a company called OwnHome with a 25.1% equity share. Now they're an interesting company. The founder started in 2017 or 2018, and his motivation was because he had two adult daughters in their twenties and was worried about how he would ever help them get into home. He's developing, or we're developing a deposit gap funding solution that enables co-investment to fund a 20% deposit. Deposit contributions can be provided by family and friends or from a pool of external investors. The contributions are structured as an investment, with investors getting interest returns over the term. We've built or Osco has built since that time, they built a most technology-first, really impressive technology platform which fractionalizes debt, as Pauline's mentioned. We see great value not just in the solution, but in the technology and how that might be applied, for other solutions. A very, very small Genworth team is working alongside Osco with ambitions for a formal launch in the next 12 months. I must say, there's not just the great benefit from building this solution together, but we also are seeing great benefit in learning from a startup with that innovative mindset around getting things done and getting them done quickly. Of course, within the existing frame, we're continuing to scan the market and prioritize next best opportunities. There's lots and lots of great ideas, but we're spending, you know, we're spending quite a lot of time being very discerning around sorting wheat from chaff at the moment. We have a strong pipeline of next best opportunities that we'll work through. Before I pass on to Paul, who will curate Q&A, I just wanted to do a quick summary of this strategy section. We have a clear, simple strategy focused on improving and growing the core business at the same time as diversifying revenue to position us successfully over the medium to longer term. The whole organization is aligned to that strategy. We've got proof points now along each of those three pillars of enhance, evolve, and extend, demonstrating the momentum and just demonstrating the focus of first things first, getting basics right and moving from there. In keeping with our commitment to show up differently for lenders, brokers, and borrowers, we've defined the next phase of work across the three pillars for implementation over the next 12 months. On that note, I hand to you, Paul. The questions. Thanks very much, Lisa. Today we have our first dedicated sessions. I'd ask all of our presenters today just to come up to the stage. There are three mechanisms today to get questions across to our broader team. Firstly, we have obviously people in the room, so we'll be going to those questions first. For those in the room, if you could announce your name and your organization, that'd be great before you go on through your question. The second opportunity is we actually have those joining virtually today. We have people who could actually ask a question via the phone, and there'll be a moderator conducting that for those who have dialed in. Finally, for those who are online, we also have the capacity to ask questions via online as well, which I can actually read out to our presenters and get those questions asked as well. Lucy, for those in the room, will actually have the microphone. We've got a roving mic, which she'll bring over to you to ask the question. Now I'll just hand it over to you. As I said, the day will be at its best, obviously, if we can get some questions in the room and obviously make the most of the management team's time, and similarly, we can make the most of your time as well. Now I hand over any questions in the room. Good morning. Andrew Martin from Peak Investment Partners. With the your NPS scores, which look terrific, I was just wondering who you're surveying. Is it the lenders, the borrowers or the brokers? A great question. We survey our lenders as our direct customers. To be fair, B2B NPS scores are typically higher than B2C NPS scores. I think what's important to us is the relativity of how they've moved. They are wonderfully high, and we're very happy with that, but I think the much more important thing is how they've moved, because it is a B2B NPS score, which are typically higher than B2C scores. Thank you. While I've got the mic, just one more. On, you've got a slide with your key enablers for success, and one of those is data and insights. I was just wondering whether you have any examples of insights discovered in the data that you've been able to well, value add from. Andy is our champion in that area, and for our Chief Risk Officer, he spends a lot of time on the front line with our customers, which many people may not expect. I'm gonna actually pass to Andy and get him to talk a little bit about some of the insights that he's been discussing with customers from our data. Yeah. Thank you for the question. There's many examples where we use our data and insight over those 50 years to help our customers, and one of the things we talked about earlier was climate risk. Partnering with some climate specialists to provide physical risk on a property by property basis for our lenders has been really valuable to them to A, understand the risk, but also to understand, you know, the level of underinsurance potentially in the market, and how they are adapting their way to go to market with their customers around physical risk and education for the borrowers in some of those climate related areas. That's just an example of it. Yeah. We've done a lot of work on geographic risk as well. And particularly in, you've heard a lot about sea change and tree change environments, as well as other geographies. We've also done a lot of work on debt to income. On the first one, on geographic risk, we work very closely with our lenders. Some of them may be more specific state-based, and we can share the experience of the geographic risk as they look to expand, particularly as they expand in the broker space. The other piece that we've done a lot on, and I'll cover that later, is around sort of debt to income and borrower leverage, which is clearly hugely important to the market at the moment, given interest rates rising. We've worked tirelessly with them well before APRA's views on DTI came out and actually introduced to the market much tighter debt to income measures at the beginning of 2021. Proactively getting out there with our customers to help them really with the resilience of their lending books. They're just examples how we use our data. Simon Fitzgerald here from Jefferies. My first question actually extends on from what you just mentioned ago about the DTIs. Pauline, you also described the slide seven as rather stark. Particularly that first component of the slide, which shows the prices versus the income. It doesn't really point a very encouraging picture for high LVR loans in the future. I'm wondering what your sort of business looks like in an environment where higher loan-to-value ratio loans are actually coming back. Your question is about the volume growth of the industry or the performance of. Volume growth for high LVR loans, particularly. Yeah. I'm not sure that I agree with the premise that doesn't paint a picture for the growth in high LVR. I think what it means is that we are seeing people need to access high LVR to get into the property market. We see that with responsible lending, of course, that was pulled back following the Royal Commission. But given where we are now, it feels like it's in a more normalized setting. But the need for it will continue to grow and probably grow largely in line with housing commitments, going forward. We don't see any decline in the growth. I think the trick is, the serviceability, particularly in the environment that we're going into. As we've said, we are expecting going forward that we will enter a higher claims period than we've certainly been for the last 18 months. That's absolutely fine. In fact, that would be good for our business. We're prepared for it, we're ready for it. I think that the need for the high LVR is just gonna continue. Okay. Andrew. Yeah. Look, I think when we saw that falloff in there, it was really from some exuberant lending. There was a lot of lending in investor, a huge amount in interest only. Again, it was a good measure to bring that market back down for you know the resilience of the market. What we'll and I'll show later is the portfolio as a whole is really in a nice sweet spot now. It's really focused on owner-occupied and first home buyers, and that's where we see you know the opportunity to really grow and grow safely in this upcoming climate. Just one last question as well. In terms of your GWP in 2021, what component of that is still some of the legacy Westpac and Macquarie business in that? Very little. Really nothing in a couple of top ups, but very, very little in Westpac and Macquarie. There is NAB. A little bit of NAB in it, but not a lot. By the time that 2021. It was November 2020, the bulk of that GWP ran off. Really, 2021 doesn't have a lot of that in it either. Understood. Thank you. Thank you. Thanks for the opportunity this morning. Michael Carmody from Centennial Asset Management. Maybe a question for Lisa, but you can choose among yourselves who wants to answer the question. Lisa, you've sort of outlined the evolve and extend initiatives today. How quickly do you think we might see some market share expansion as a result of those strategies? Do you think investors might see some of that in the next 12 months, or is that too premature? I might take that one first and then pass to Lisa. You need to remember our business is a B2B business with a significant sales effort. These contracts, particularly the big ones, will take a number of years. Absolutely. You need to work in with renewal cycles, and you also need to have spent a lot of time building capability, differentiation and relationships. It's not an overnight thing. However, as the team know, I am very, very focused on demonstrating the momentum in this area. We set ourselves an objective to win two more this year. We've already won one. We got MA business, and we are pushing hard. What we would like to see is continued delivery. Realistically, it's, you know, these contracts typically are 3-5 years, so it will take time to see the proof points. If we see a nice trajectory that shows continued momentum, we'll be very happy. Do you wanna add? Yeah. Without giving too much, I guess to the extent, when I first joined 14 months ago, the first thing I said to myself was, "God, I wish someone had started this a couple of years earlier." I think that just talks to the fact that it takes a little while to build out 'cause they're new. That's okay, we've got to start, and we absolutely are starting, and we're trying to leave, you know, in three years' time, be in a much better position than where we are across those three pillars. Very committed, but focused in what we're doing. Siddharth Parameswaran from J.P. Morgan. Pauline, you mentioned that from here you thought that the growth in your business or at least in the system would be similar to the growth in home lending. Just wondering if there's any risk at all from the federal government's Home Guarantee Scheme and whether I think that was extended, and if you could just comment on the change in government as well, whether there's any changes to the environment that have come from their policies on housing affordability and risk to LMI. Yeah, you're absolutely spot on. I know Paul doesn't like me saying it, but competing against your government guarantee that's issued for free is pretty tough. The positives, of course, are that it is a limited scheme. It only applies to certain individuals. There's a cap on the number. There's a cap on the volume. We understand the segment of our market that that will likely impact. We still see there's plenty of room for us for growth. To be honest, the fact that the government felt like it needed to intervene was because the industry hadn't done enough. The dialogue that we are in with government is, we know we need to do more, and we are doing more. Basically, we're stronger together. If this scheme grows too fast and impacts our ability to invest in the future and to invest in future innovation, that's ultimately going to be counterproductive. They're very aware of that, they understand that, and they're working with us on it. Yes, it will impact some of our existing core LMI product, but that's also why we're focused on diversification. We may have not pulled it out enough in the talking that we were doing earlier, but really what's underpinning all of our strategy is an awareness of the need to diversify our revenue streams away from a reliance on one large lender but also away from just the pure LMI construct because it is, you know. Things can happen. The more that we provide different access to pathways, the more we are immune from the government expanding that scheme, for example. Just, I mean, just for quantum in terms of size, because I mean, you did make the point that you thought that LMI would grow in line with lending volumes. Just, I mean, how large is this? Yeah. Look, it's not immaterial. That's fair. It's not immaterial, but it is the smaller value loans. It's the smaller value premiums. The industry as a whole wrote 176,000 LMI premiums, policies last year. 50,000 is obviously a large proportion of that, but a large number of those, the single parent ones, those people would likely never have come into the LMI industry anyway. Probably talking maybe 25,000 that may have come into the LMI industry at a time, and they were the lower value premiums. We'll notice it, but it's not insurmountable. Okay, great. Just a second question, if I can. Just around CBA, just that contract and the decisions that are made as to, you know, what loans are put into CBA's own risk pool as opposed to being insured by yourselves. Could you just comment on what controls you have on what goes in? Yeah, of course. Now the CBA low deposit program, I'm not sure everybody knows about that, but it means that CBA keep a certain number of the less risky over 80% loans, themselves. They charge a fee for doing that, which is equal to what the LMI premium would be, and they keep it on books. The genius that invented that system is now in our team. Michael's now thinking, "Oh, I wonder if that was such a great idea." Look, at the end of the day, it's all about risk selection for us. As I say, CBA do choose the better risks to put into that pool. That's absolutely fine because we know they're doing it. We have a very active dialogue with them around what percentage of the risk is going into that pool and the characteristics of it, so that we can price properly the characteristics of the risk that we currently get as well. There are controls around how regularly we monitor that, and there are agreements around what happens to price if that changes because they understand that we've got to add a price to the risk that we receive. I think we'll take one more question from the room, and then we'll pass on to the moderator. Moderator, with one more question, and then we'll pass over to you. Hi, it's Andy Chuk from Macquarie. Just the first question's around the three customer renewals in the half. Can I just confirm how long those contracts run for? I think two of them are for three years and one's for five years. Is that correct? Yes. Increasingly, we're trying to engage with our customers around longer-term renewals 'cause it's better for their business to have a certainty, and it's clearly obviously advantageous for our business. Fantastic. Just one more around the normalization of claims in FY 23. What historical period should we be looking at to compare that normalization to? It's really, as you know, in our business, it's hard to pick any period that is entirely normal. I think the best thing to think about is an average over a, say, 10-year period. Look, Michael will also give you much more information about that when he breaks down how the different book years are behaving and what we're seeing in the different book years. Okay. Moderator, I'll now pass it over to you to see if there's any questions on the telephone line, please. Thank you. There are no phone questions at this time. Okay. Well, that concludes the first of our Q&A sessions today. Thank you very much to the panel. It's now my pleasure to pass over to Andrew Cormack, who's our Chief Risk Officer. Andy will be walking through underwriting and risk management. Again, we'll have a Q&A session straight following Andy's session. Andy, over to you. Thank you everybody. A couple of warm-up questions for me first, so it's very helpful. Good morning, everybody. I'm Andrew Cormack. I'm the Genworth Chief Risk Officer. Just by way of introduction, I just wanted to give you a little bit of background to me. I've been with Genworth, and Pauline alluded to, for a long time. I've been here 23 years. I was in the European LMI business for Genworth for 16, notably as the CFO for a few years, and for the last eight years of that, as the Chief Risk Officer. I've been here in Australia for about seven years, coming up to seven years, and all of those as Chief Risk Officer. I bring a lot of experience to the role. In particular, I've lived through the GFC. I've also been a historian really of some of the crashes that we've seen and the causes of those, particularly the nineties crash in Europe in particular, and also here in Australia. I've had access to over 10 different markets in terms of the products and the underwriting criteria for each of those. I hope that I can bring that experience to bear here in Australia. I'm gonna start on page 28. Sort of setting the scene really. We've seen an incredibly strong post-COVID recovery really supported by low interest rates and a lot of government stimulus. We clearly see the economy changing, the cycle changing. Global inflation, both on the demand and the supply side, but also interest rates, rising to counter that. We saw the U.S. market raise rates, 75 basis points overnight. We will see, and we are starting to see house prices moderating. We have been conscious of this cycle change for a long period of time. We have been proactively looking at that from a strong portfolio perspective and really focusing on that resilience, to that changing cycle. I'm gonna talk a little bit about our strong underwriting settings, that we've had in place for a long period of time. Pauline alluded to the substantial house price buffers that we've seen on our portfolio, so we can talk about that across our portfolio. I will talk about other diversities in our portfolio, particularly the seasoning of our portfolio, and Michael will allude to the performance of those over time, in his section. I'll also talk about the proactive learning of lessons from particularly the GFC, but also for the mining crash for us here in Australia, to how we've looked at, you know, underweighting certain key risks over time. All of that comes from a very good starting pace. We talked about the buffers on house prices, but also the low delinquency levels and the strong reserves, and Michael will cover out the strong reserving position in his section in particular. I'll start with sort of the underwriting model as much as anything. The key thing is we strongly align our credit risk frameworks and policies, working very closely with our lender customers. The business model really falls into two sort of camps. There's the delegated underwriting model authority. That's about 80% of our business in 2021. We have the flow underwriting, where we have a dedicated team underwriting systems where we underwrite 20% of the business for new business. On the delegated side, we have a lot of strong controls in place, working very closely with our lenders. We have a very strong input to the DUA policy. We look to align that policy to the lender. The good news on the alignment, the alignment's very strong, I think following responsible lending, as well as following the Royal Commission findings back in sort of 2018. We continually look to work with that lender, but we try to get out of the way of the lender. Once we agree the policy, we let the lender freely run the DUA policy. That doesn't mean we sit and forget. We continue to have senior level discussions. I have a broad network across the market, and we talk about all the issues in the market, and we try to do that early. I seek counsel from them, and they seek counsel from me in terms of, you know, a great example is the DTI policy, what should we be doing? What's the market doing? What should we be doing on serviceability? We've just had a conversation on that and how we change that in a changing interest rate environment, as an example. Under the DUA policy, we still have rights. If there was a material change in the DUA policy with any of the lenders, we still have the right to approve that. They notify us of non-material changes, and we have very significant and regular conversations, both on the operational side with Jeremy, as well as the risk side, and also the product and partnership side. We work very closely with Strachan Taylor and Shawn on the products and policy side as well. On the flow side, we underwrite those cases. They typically come from smaller lenders, but we also within the flow side, take DUA exceptions. Even with our 80% of the lenders that provide DUA, if there's exceptions to that policy, they come through and we underwrite them. That's outside of that policy agreed with them. At the back end, we look at quality assurance. We do lender audits, origination files, through the process, through the life of it. We also ultimately underwrite at claim stage. The intention though is not to deny claims. We want to find problems early, create that preventative loop so that we fix any issues, before it comes anywhere near claim stage. We do have the right on claims to deny, but we have a very high claim paying ratio. What I'm trying to demonstrate in this slide is that any good risk management and any good business learns from lessons from the past, learns from what we learned through the GFC and mining, and really to proactively get ahead of the cycle and changes to policy. The first part of the table sort of demonstrates where we've been focused over time in terms of certain areas there, and I'm gonna really focus on what we've been focused on over the last two or three years. That's really around product. I mentioned earlier in the Q&A about our the exuberance in the market around investor interest only cashout refi. We tightened that area ahead of the market, and then the market and APRA came in to change those settings. We've been very focused on geography, again, learning the lessons from mining. We have policies, and procedures and an appetite and underwriting policy for mining postcodes for metro units, as well as more recently looking at regional hot markets. The sea/tree change examples. Now, fortunately, in the sea/tree change, the Noosas, the Byrons of the world, we really don't have many LMI policies, but we've looked to that very extensively. In some other areas, we do look at supply and demand on a very granular level, to see where markets are not sustainable. We do expect house prices to fall nationally to some degree. What we want to be able to protect is against where it falls, more noticeably because it's not sustainable or there's supply and demand dynamics. The other big area that we've focused on a lot is affordability. That's really on the input side in terms of serviceability. We've seen significant improvements in the verification of income, the verification of expenses, the calculations for serviceability. We've seen the buffer rates rise to 3% versus 2.5%, which is in November 2021 as a market. We've also seen changes in net surplus after serviceability. We've also seen significant increase in DTIs, i.e., an output measure. Notwithstanding the serviceability, we've seen caps from lenders both on the output side, so where they're limiting the amount of debt relative to income. That's been a real progression throughout 2021 and has been accelerated since APRA made the changes in November 2021. The other piece is we have an active dialogue on geographies, as I said, and postcodes. The next few slides are really just to sort of give you a sense of the diversity of our portfolio. On the left-hand side, you can see the map of Australia with our portfolio in force, the 1.1 million loans that we've insured. We're nationally diverse with a very strong presence in the capital cities. Capital cities is about 70% of our business. If you included the Gold Coast, Sunshine Coast, the major towns, you could add at least another 10 points to that in sort of the broader markets. Regionally, we're 30% if you include them in that space. On the right-hand side, you can see a chart which shows the seasoning of our portfolio, the vintages of our portfolio. The top line shows the original LVR on average. And the next line below shows the effect of LVR. Even in 2021, where we've seen 22% house price growth, on average over that book, it's been 11%. And if you go back in the books, it's been substantial. Our effective LVR on our portfolio is 46%. That shows, you know, there's a resilience in the portfolio. From the national diversification, there's a resilience from the effective LVR on that portfolio. The vulnerabilities, and I'll talk a little bit about those, are obviously clearly in the last couple of years, particularly around affordability, and I'll come to that later. Even in those two book years, we've seen, you know, in excess of the 2020 book has probably got 20% plus house price growth on there. That's nationally dispersed. In some areas, much stronger house price growth, which will provide a buffer for when house prices do fall. We'll talk about that. The next slide really sort of shows our risk in force as being fairly consistent when you take it at this level. We've sort of shown in the left-hand side the impact on the mining in terms of our risk in force. On the right-hand side, you look at the claims paid by year. The mining has been a big drag on our loss ratio. To Pauline's point, without mining, our loss ratios would be much more superior. We need to learn from those lessons, and we are learning from those lessons. I think we are seeing that mining has a long tail, but today it's declining and the number of delinquencies but also the number of claims have come down substantially. We're largely through mining. Mining has been improving, but it's structurally weak. We do still look at mining as a structurally weak, highly cyclically volatile, even though the market itself is booming at the moment. But again, learning those lessons from the past are very important to us to see where we are in that cycle, even in mining. This national growth in house prices has been significant for us. Where we saw negative equity outside of mining, but in maybe more regional Queensland than WA, that's really supported those markets. We've seen the level of negative equity really come down given the growth that we've seen there. As I said earlier, we do look at tightening our controls on a regional basis. That's one of our key lessons learned. The next one. Again, how we've managed the higher risk segments. On the left-hand side, we talk about our new insurance written by book year, going back to 2008. Some of the lessons we learned from the GFC, you'll see at the top is we don't write over 95 LVR lending. We haven't been writing that for a long time. what we've also seen is a reduction in the sort of over 90 business. Now that business over 90 has been selectively reduced. It hasn't been just an axe, it's been more of a scalpel approach to what we've seen on there. That's really looking at certain areas. Investor is one of the areas that we saw performance poorly in in bad times. Investor performs pretty well in good times. In bad times, it performs much, much worse. That's the experience I've had globally. We have seen a reduction there selectively on over 90. We've seen a reduction over 90 for some of those geographies I talked about. Working very closely with our lenders, collaboratively, whether it's the biggest lender in town or whether it's our other lenders, they largely adopt our geographic lists. We help them with that, and the experience and data that we talked about. We are significantly underweight investor. There may be opportunities to grow in that space, but generally, we've been underweight in that space. Interest-only is negligible now. Part of that was our own interaction, but also the market price for investor loans and interest only. Up to about three or four years ago, they were priced the same as owner-occupied. What we've seen is now, lenders and borrowers make the choice to go P&I, principal plus interest over interest only because there's a difference in rate. That's been very helpful in terms of doing that. If you look at the right-hand side, that really comes through. You can see there's very little in terms of interest only and lower levels of investor. What you can see over the last three or four book years is it's really in our sweet spot, which is in first home buyers or owner occupied principal plus interest loans. Again, all of that provides a level of resilience as we come into this cycle, which is incredibly important to us. It's, as we saw in mining, small parts of our portfolio can cause us some pain. We have to be conscious of the heightened risks in our portfolio. I think the lesson learned from here and also from my time in Europe is to get ahead of it, to get proactive. The other lesson is work with your lenders. Create the networks. We create the networks not just at the CRO level, but at the operational level, at the risk level, across the organization because it's super important that you have those relationships and you can pull those levers. The next slide talks really around some of the credit attributes. They've been pretty stable over time. Notwithstanding the credit attributes have changed, or the credit methodology has changed. Australia lagged the market globally on a positive credit bureau or comprehensive credit bureau. It's now caught up, and the last three or four years. Three years or so has had comprehensive credit data, which is much richer than just negative credit information. The chart on the left really shows the way that we look at average credit scores versus better than average or below average. We limit and we have policy limits on what below average credit scores do. The reason for that is the performance is very different. It's sort of elliptical below a certain credit score. On the right-hand side, I just wanna talk a little about our DTI. DTI is about half. What we're showing here is the DTI greater than six. That's where the debt of a borrower is over six times their income. What we've seen there is in the Royal Commission times and the responsible lending, we saw a tightening of DTI. We saw a very high floor rate for interest, like 7.25% floor rates. We saw a real tightening from 2015 onwards in the leverage of debt to income. The last couple of years, and this is one of the vulnerabilities that we've been managing very proactively with lenders, is we started to see a weakening in there. That was really driven by the APRA rules of changing from a fixed floor to having this variable buffer of 250 basis points at the same time as interest rates fell. We actively campaigned both to the regulator but also to our customers to insist on DTI caps, insist on DTI concentration limits, debt to income concentration limits. But also to work on serviceability is the things that you need to do on haircuts on income or a better view on expenses or surpluses to take into consideration. What I can say is that is now turning substantially in this year. These are based on loans insured from applications, which takes the time to go from applications to insured. That number's coming down substantially. Every CRO I talk to has a DTI concentration measure over four times and over six times, and they're all looking to really bring that down. That could be an area of vulnerability, which is why we tackled it so hard and aggressively with our lenders. Again, even if you look at that with 20/20, there's 20%-30% house price appreciation in those books. That's one of the areas that we've really been focusing on as we change. Again, DTI there is only half the level of what it was in the really old books. Now, the really old books have benefited from income growth and huge house price appreciation. Again, we think that vulnerability is probably capped at about a year of portfolios. Talking to lenders, that's where the vulnerability is, probably capped at one book year or so. Delinquencies. I mentioned earlier that we've got really current low level of delinquencies. The chart on the left really sort of lays out new delinquencies. That's what goes into the hopper. That's really new delinquencies are a really good sign of where the economy is. Because if people are struggling with employment affordability, that's where new delinquencies pop up. Positively, new delinquencies, the dark blue bar, have been coming down over time. I think that's a combination of a lot of things. It's not just the economy, 'cause the economy hasn't been spectacular over all of those years. I think it's also been on some of the underwriting policies that we've implemented there, working with our lenders and also working with our lenders on the loss mitigation side too. Active delinquencies have stabilized, and the difference between all these numbers is sort of the cures or the claims that we pay out. Active delinquencies have been pretty stable over time in terms of the number. Notwithstanding, the book has been growing a little bit in this time period. In the recent years, 2021, we've actually seen a reduction in those, I think largely supported by improved borrower finances and house price appreciation, the government's stimulus. Now, we do expect that to increase in the current environment, but we're coming from an extremely low base, which is very helpful. Michael will talk a lot more about some of the strengthening that we've done in our reserves to counter some of those countercyclical sort of moves going forward. On the right-hand side, the portfolio delinquency rate has risen a little bit, notwithstanding that the delinquencies have been stable to falling. That's really down to more the denominator of that. What we've seen in the denominator is we've seen a lot of cancellations coming through our portfolio. They're the loans that go away. It's really more the denominators falling. We've seen a lot of cancellations in the last couple of years largely driven by a lot of equity and people refinancing from high LVR to low LVR. We also personally took up a lot of work with the operations team to cancel old portfolios that we believed were dead and the customer hadn't told us about those loans going delinquency. Again, working with our partners like PEXA on the refinance side, we create digital solutions to actually verify that these loans had actually changed from CBA to a different lender and therefore canceled. That's really brought down our denominator in terms of our insurance in force. That's why the numerators, even though that was coming down, the denominator was coming down by more, and that's why the delinquency rate looks like it's slightly risen, but it's actually because of that reason. Now, as a risk guy, you love your analytical history because that's very important to us. Now, it doesn't mean that the any stress in the future is gonna be representative of the past, but you can learn a lot of things from that. This chart really just shows the Australian history from 1993 to 2022. And within that, there's probably two or three Noticeable aspects. Right at the left-hand side, you'll see the 1993 crash, which was the 1990s crash that I certainly experienced or historically in the U.K.. And it was a little bit later in Europe and a little bit later again in Australia. High unemployment, but not really much in terms of house price growth drops. Not really a house price depreciation, more of an unemployment issue. The GFC is sort of in the middle of that, where we saw, you know, unemployment move from 4%-6%, and we saw a trough with house prices. The trough of house prices were very short-lived, and they were not that deep. We probably lost 10% house price depreciation in that time period, and it was over no more than about a year. The last trough that we've really seen in the right-hand side of that is APRA's changes to the speed bumps. This exuberance I talked about earlier, probably in 2017 and 2018, which saw some of the volume falloff that we saw in the charts. Again, we saw about a 10% drop in house prices, over about a 12 to maybe a little bit longer, 15-month period. What you can see is there's quite a lot of volatility in there, both up and down in the market. When I reflect on that, I do reflect on this variable rate nature of our market. I think Pauline alluded to it earlier. As interest rates rise, things start to fall. When things get tough, interest rates come back down again to support the housing market and the economy. What we've seen is some volatility, but what we're seeing is it's been relatively short-lived. The RBA has used mechanisms to allow for stimulus, monetary stimulus at the right time. In some sense, rising the interest rates at the present moment provides more ammunition later in the cycle above and beyond quantitative easing. That's something I think to think through. Unemployment drives delinquency, so the ability not to pay drives delinquency. House prices really drive how many of those delinquents, to some degree, along with unemployment, go to claim and to what severity. As we see in the right-hand chart, unemployment's at 3.9%. House prices have grown by 20%-40% over the last couple of years. There's a lot of resilience in the portfolio for the times that are changing, which puts us in a good stead. We're not resting on our laurels. We will continue to look at how we can continue to manage the portfolio with our customers. I'll just finish with sort of our risk outlook. We do expect rising interest rates, and we're seeing them now, but we expect them to continue on. That will naturally moderate house prices because of affordability. You've seen it in the chart before, and we expect that to continue through 2022 and 2023. That we do expect to lead to more normal levels of delinquency and claims. We do believe we're in a fairly strong position with the portfolio, given the diversity, the seasoning, the controls over the portfolio, the quality of the portfolio, and some of the things that came into the market, whether it's comprehensive credit reporting, self-regulation, the Royal Commission findings. We will continue to be very diligent with our lender customers to look at these areas because it does make a difference. I think the final point I'll finish on, before questions is we do have a very strong balance sheet. Pauline's alluded to it, Michael will cover it later, so I won't steal his thunder, to withstand that changing economic cycle. As we've already talked about, our business is about paying claims, and that's what we will continue to do, across the cycle. Thank you. I'll hand it back to you, Paul. Thanks very much, Andy. Now we have the second of the dedicated Q&A sessions that we had allocated for the day. Hopefully you all found that session useful. We get a lot of questions on the back book that this business has had over time and how the front book may be different to the back book. Hopefully, that's given you some good insight. So again, we'll go for questions in the room first. For those on the telephone line, for the moderator, just please follow the moderator's instructions. Again, for those who are actually online virtually, please feel free to submit a question which will be read out to submit to management. Now I'll just pass over to any questions in the room. Yeah. Hi, Nathan Zaia from Morningstar. Andrew, I just had a question on delinquencies over time. Can you provide any detail around the differences between investors versus owner-occupiers in Australia, like over history? Yeah. Look, Australia's followed a similar pattern to my global experience. Investors in good times can be quite benign and actually can perform better on delinquency rates and even loss ratios. In bad times, they typically don't. Our experience in mining, for instance, investors were four times worse than owner-occupied. There's lots of reasons for that. There's a willingness to pay when you're in negative equity is less 'cause it's not your home, it's only your investment property. There's a reliance on rental income as an income source. What we've seen over time here and in other markets is we don't just rely on rental income, we rely on some level of income from the borrower itself 'cause it adds some level, again, a level of resilience to the portfolio. Again, the higher the LVR, typically an investor, maybe the more speculative nature of it or the less you've got invested in it. That's why, again, we've limited it to 90%, because the performance of under 90% is much better than the performance over 90%. You gave the examples of like mining areas, but let's say now Sydney or Melbourne. I know we've had strong housing markets for a while, but. Yeah. There hasn't been a difference historically or? Again, if you take the metro areas, we've seen typically very similar performance on the investor as well as the owner-occupied. We did see some issues in the GFC around that. The other issue in the investor space is really more the early indicators. We saw issues on occupancy, particularly in some of the metro areas. We saw rents falling, and so it was more not necessarily the performance of that portfolio. We've started to see that come through. The early indicators of stress in that space. Okay. Do you see differences in how banks are assessing the expenditure and income, like across your own customers, applications that come to Genworth, and how do you deal with that, I guess? Yeah. Look, the Royal Commission made it much more consistent, but there's still nuances with the lenders. They do take haircuts on income for investor properties now, which is, I think, sensible for non-occupancy, if you like. Again, they typically look at areas and try to link the geo-risk of that. So some metro areas for units, they have tighter restrictions, and we do the same, whether it's LVR or whether it's income haircuts and so forth because of supply and demand and occupancy. Okay. Thanks. Thanks. Brett Le Mesurier from Perpetual. Andy, you put a slide up with the risk in force against the claims paid by year, and obviously there's a big disconnect between the two. I'd be interested in seeing what the premium chart looked like and whether that more closely reflected the risk in force or the claims paid. Do you know? Could you give us a sense of that? We'll cover it later in Michael's section around what I call the eras of the portfolio. We have a pre-GFC era and so forth, and so we'll show the relative profitability of those eras. If we could leave it to then. Well, I'm actually not interested in the eras. It's more the type of risk. The point of my question is really, are you pricing for the particular risks that you're seeing, or is one group of risks subsidizing another? We price for some variables, Brett. Higher LVR, for example, is one where the price does vary. We have reasonable price differences between investor and owner-occupied to reflect the risk. Some postcodes there are loadings, so mining is an area where we do, but they're certainly not loaded anywhere near what that risk experience we've seen. There is a known, you know, within the portfolio, a known cross subsidy. You know, our national lenders expect us to be insuring nationally. We manage that risk through a combination of a modest price loading. If we loaded those areas for the real risk, it would be prohibitive. The other way we do it is we put additional underwriting controls. Our willingness to write business in those areas, we would require a higher credit score, all other things being equal than we would in a metro area. We also place limits on those higher risk areas so that they're never getting more than a very small part of the portfolio. Because of the dynamic and that our lenders expect us to operate nationally, we use price a little bit for those areas, but we use other factors more to ensure that it never becomes a significant part of the portfolio. It's fair to conclude that lenders have some control over your pricing. No, I wouldn't. Well, no lenders don't have the control of the pricing. I would say that, adding to what Michael has said, we are in an exclusive LMI contract largely marketed with the lenders, which does change the dynamics to some extent. In the U.S., for example, when LMI is sold, policy by policy, loan by loan, then you get a much more risk-based, premium structure. Ours is to some extent community-based. There is some risk factors in there, but it's not complete. That's why it comes down to managing an insurance portfolio that's cross-subsidization. All comes down to portfolio management. We spend a lot of our time portfolio management, making sure we're getting the right mix of business because you're right, that does ultimately drive the profitability of the mix of the business as much as anything else, and so we watch that very carefully. Siddharth Parameswaran from J.P. Morgan. Just a question around your pricing by lender. Is it consistent? I mean, you mentioned different rating factors. Are they consistent across all the lenders? The structure of our pricing is the same. Or the level- The level is different. The level is different. That comes down to largely the risks they attract and their portfolio mix. Yep. Okay. Just to be clear, so something like the CBA contract where you said that you acknowledge that there's adverse selection going on that would have a higher loading. Absolutely. Yeah. Okay, great. Thank you. Just a second question about where you've grown in the last year or so. I presume, firstly, the lending in the last year would be the most concern going forward, given that I presume a lot of the lending in the last few years, the years before, would have seen a lot of house price appreciation. If you just comment on if there's any nuances about where you have grown in the last. You're spot on. We expect the 2022 book year on average to have a higher claim rate than the 2020 book year, for example. That's fine. That's what our business is all about, and our business is about absorbing volatility, and we do have a few book years that we expect to behave quite well that will all mingle together that will get a good balance. You'll notice in the first quarter update that we provided also in our full year results, that our GWP towards the end of 2021 was not as strong as what we had seen going back twelve months before that. That to us is a good thing. If the 2022 book year is likely to be a higher claim rate book year, then it's nice that it's not gonna be our biggest book year as well, and that's part of managing your portfolio mix over time. We have seen volumes pull back a little bit from the peaks that we saw in late 2020 and early 2021, and that's a good thing for our portfolio in aggregate. The actual mix, as I said, we watch that very, very carefully because of the cross subsidies we know exist in the portfolio, and we're very comfortable with the quality that we're seeing come through. Okay. Just a final question for me. Just in terms of the risk going forward, you know, I mean, as I look at LMI, there's three risks. There's, you know, higher interest rates, unemployment, and house price reductions. Just if you could just comment on, you know, which of those three is of most concern for you, if as we go forward, what should we look out for? Yeah, I'll make some comments, then I'll pass to Andy to add to that. Very simplistically, we see unemployment drives the number of claims and house price appreciation drives the size of those claims. Interest rates can have some impact, but they tend to be secondary to unemployment. And particularly if interest rates, increased interest rates are driven by increased inflation and accompanied by wage growth, it tends to moderate the impact of the interest rate increase. Primarily, we would say that unemployment and house price appreciation are our two primary focus areas. If unemployment stays strong as we are seeing so far, then the house price appreciation is largely an academic issue, or house price depreciation is largely an academic issue because people are continuing to pay their mortgages. I'll pass to Andy. Yeah, just one thing really to add. Look, the short-term impact of interest rates rising is house prices falling. The midterm risk is that that creates issues on consumer sentiment, economic activity slows down, and then that ultimately feeds into unemployment. Then that's where we would see the claims. If there's a moderation in house prices and interest rates get to more of a sustainable level, and that's the real short-term impact and there isn't a longer midterm impact, that's good. That helps everybody. It's, you know, houses become more affordable and so forth. It's really the more the connection of how long does it go for? Does it change the economic outlook? Ultimately, does that feed into unemployment? That's where we'll see, you know, more claims come through. We do run a lot of sensitivities to all of this, and some of those Michael will talk to later in the presentation. All right. Thanks for the questions in the room. I'll just pass over to the moderator to see if there are any questions on the call, on the telephone line, please. Thank you. Your first question comes from Andrew Lyons with Goldman Sachs. Please go ahead. Well, thanks and good morning. Andy, just a question around your slide 34. Can you perhaps just talk about how the credit score of your high DTI policies compare to the broader book? Perhaps what are some of the features of these high DTI policies that provide some offset, I guess, from a risk perspective? It's a bit mixed actually, Andrew. We often see higher DTIs in sort of the Sydney, Melbourne metro area just because of the cost of affordability. But we typically see better sort of SEIFA demographics and higher credit scores. Actually, credit scores can actually be higher in some of these higher DTI spaces, which actually creates some level of resilience. Now, there are some more socially, demographically weaker areas which we typically see lower credit scores. But in those areas, we also see lower house prices and lower loan sizes. It's a bit of a mixed bag, but we do try to correlate, you know, the edges of that, where we see those two things coming together. That's great. Appreciated. Just a second one on your slide 37. I'm sorry if I did miss this, but just you note heightened status on geolocation risk. Can you just give a little bit more detail on that, please? Yeah. Look, we've done a lot of work relatively over the last sort of six months or so to look at where geographically we think markets are more unstable. Or not unstable, unsustainably high. We've seen some of these sea- and tree-change areas, for instance, have 60% house price growth in the last two years. And that's not sustainable, we believe, but we don't have LMI policies there. It's typically, I think, cashed up retirees that move into Noosa and Byron. That's good news. We don't have a huge exposure in those spaces. But we do see, you know, other regions. We see the metro areas are pretty good. We see the main metro towns, the Wollongongs, the Newcastles of the world have much more sustainability. We see where there's a commuter belt or more rural, they're the areas where we've seen very high house prices. We've looked to try to rein in sort of LVR and restrictions on underwriting with our lenders. That's how granular we get on that side. Mining, we talked a lot about mining. Mining's actually been a recovering market, and the housing prices in mining are probably less than two-thirds the peak that we saw in the crash. The issue with mining is it's structurally weak, single-town dependent, commodities are very volatile. We keep a watching brief on mining, and we try to Michael's point, reduce volume there, because we can't price for that risk through the cycle, through underwriting and through concentration risks. That's why we believe there's a heightened risk in some geographies. But not really in the metro areas. You saw the claim profile, where we've seen, you know, very good performance in the New South Wales and Victoria's, and that really falls into Sydney. Melbourne is doing very well. There'll be pockets for anything that we see going forward. Thank you. There are no further phone questions at this time. Thank you, operator. We do actually have one question online, but what I'll do is actually I'll hold that question and we'll do it as part of the next Q&A because it's actually relevant to an area that Michael's going to go through. For those online, we're actually gonna have a break now for morning tea. We should be back approximately 10:50 A.M., slightly afterwards. Don't wanna get between fund manager and their coffee, and so everyone can have a bit of a break. For those online, we'll be back at 10:50 A.M. For those in the room, please join us outside. We've got the whole management team here as well, and so you can grab a drink and grab some food. Thank you everyone for joining us again, and hopefully you are all fed and watered and ready for another session. One of the people who's spoken less today than he ever would usually has been Michael to date. You're now about to get your fill of Michael Cant, our CFO, for walking through the financials and some of the key drivers for the business. Michael, I'd like to hand it over to you. Thanks, Paul, and welcome everyone. It's a pleasure to be here and to hopefully give you a bit better of an understanding for both some of the drivers in our financials, but also more of an understanding of the dynamics and some of the things that will influence our financial results going forward. As Paul explained, I am gonna spend a little bit of time on a few of the slides, just trying to explain exactly how the revenue and claims work in our business. It is a specialist business. Some of you will be familiar with it, but others may not. I'm gonna take a little bit of time in the presentation to make sure I draw that out because I think understanding that is really important in terms of understanding how the performance of our business will translate into the financials in the years ahead. I'm also gonna spend a little bit of time looking at the profitability of different cohorts. It's not a view that you see naturally in our accounts, 'cause our accounts are the combination of results of all the different years we've written in the past. It's a really insightful way of looking at it at our business because the profitability does vary significantly by cohort, and that's a function of both the economic cycle, the pricing at the time, but also the underwriting settings at the time. I've got a few slides that will hopefully give you a feel for that. Before jumping in, though, I did wanna just start with a few overarching observations. I mean, the last two years, and I've only been in the business nine months, but the last two years have been unprecedented, I think, in terms of the pace and the severity of some of the issues that have impacted our business, both good and bad. Not just our business, but the entire sort of banking and lending sector. I mean, we had in March 2020, the COVID was at its peak crisis when, you know, the prevailing view was that the world was going to custard, unemployment was going to double digits, home prices were gonna fall significantly. You know, as a consequence, we took steps in our reserving and financial position then on what looked a pretty dire outlook, in the business as it did across most of the financial sector. As it turned out, the ensuing 18 or 24 months actually turned out to be a pretty boom time for mortgage lending, credit, housing market and the Australian economy more generally. Really, in the last 3 months, we've gone from what appeared an extraordinary benign and booming environment to one where we all knew that interest rates were going to rise, but the pace and the steepness at which that has happened, the fact that inflation is now back on the agenda when it realistically hasn't been in our country for more than 20 years, again, is striking in the speed at which that's happened. I think, you know, if you look at that environment, you know, we have managed that and navigated that, I think particularly well, and I feel comfortable that we're well-placed for the next 12 months. Our capital, as you'll see later, is in an unquestionably strong position, and we still have scope for continuing returns. The performance and the profit in recent years has been particularly strong. Most importantly, as you heard from Andy, and you'll hopefully get a feel for me, we believe the business is very well positioned to cope and not just cope, but to actually perform well in what is undoubtedly gonna be a more challenging environment going forward. I'm gonna start with the revenue side of our business. We receive predominantly almost exclusively single premium revenue in the nature of a gross written premium at the time that the loan is written, and that premium is intended to cover potential claims and losses for the entirety of the loan. Given that profile, it's clearly not appropriate to recognize all the premium as revenue up front. Rather, we do that via a mechanism we describe as the earnings curve. Now, the earnings curve, and you'll see it on the chart there, and that demonstrates the proportion of premium. So for every AUD 100 of premium, you can see the proportion of that that is recognized over the curve. It is a curve that goes over 12 years. The pattern reflects the expected incidence of claims that are incurred. As you can see from the chart, the majority of the premium, in line with the timing of what we expect the majority of claims, is recognized from about years 2 through to year 5. I should also note, for those of you that have been covering Genworth for a long period, you will know that we have progressively lengthened that earnings curve over the last four or five years, and I think we now stand at around an average duration on the earnings curve of around four years. Which is up quite significantly from where we were five years ago. I will touch on that a little bit later when I talk about some of the other slides because it does impact the dynamic of the future emergence of unearned premium. The other aspect of this slide that I did wanna talk about was cancellations, because they've been a significant feature in our business for the last 12 months. When we set the earnings curve, we do allow for a normal and expected level of cancellations, and that's one of the reasons that you see the earnings curve tail off over time, because a lot of the business cancels either through refinancing or selling a property. The other reason the earnings curve tails off is because over the medium and longer term, you get house price appreciation, and so there's much more equity in the property. For both those reasons, you're seeing a tailing off in the earnings curve over time. When we get either a particularly low or a particularly high level of cancellations, and in the last 18 months we've had high cancellations because the amount of refinancing activity in the market has been extraordinarily strong, and that means as people are refinancing from one bank to another the LMI policy is canceled. That's fundamentally good for us economically. We recognize the earnings immediately. We release the capital on that loan, and we're also off risk, and so there'll be no claims paid on that. Economically, it's a really positive thing for our business when we have high cancellations. But it does introduce some, what I call, volatility into our earnings or net earned premium that wouldn't normally be there. Normally, our net earned premiums are very predictable. They're a function of what we've written in the past five years. You have a curve of how that's going to be recognized, and you've got a pretty predictable pattern of net earned premium. That is supplemented when we have unusually high levels of cancellations, which we have in the last 12 months, and I think we commented in our full year results that that contributed approximately an additional AUD 75 million into last year's revenue through effectively accelerating and bringing forward of revenue from future years. The other dynamic of the earnings curve is that it means over time, if your business is growing, you should build up an increasing stock of unearned premium. Certainly that's been the case in our business over the last three or four years, and you've seen there a steady and progressive growth in unearned premium, notwithstanding the fact that we've had high cancellations in that last 12 months. If we hadn't had the cancellations, our stock of unearned premium would be even higher. The big driver of that growth in the unearned premium reserve in the last couple of years was the very high levels of business that we wrote in 2020 and 2021, which I think Pauline shared in the some of the charts from a market perspective, and certainly we participated in that strongly and had two very, very strong years of gross written premium. You can see in the pie chart on the right that our stock of GWP is dominated by the last two years. Those two years were the highest that we'd ever written in terms of GWP, but also because the way the earnings curve works, the vast majority of revenue on those books of business are yet to be recognized. A very significant contributor to what we think is the underlying prospects in the business going forward. We did get some questions earlier on pricing, so some of this may be a quick recap of what I meant, but we price on a function of both the type of loan. Our pricing for investor loans is higher than owner-occupied, reflecting the risk. One of the most significant factors of our pricing is that it varies significantly by loan-to-value ratio, and it's quite a steep scale. Pricing does also vary by lender, as we outlined earlier in the Q&A, and that's very much a function of the quality of the business. Pricing changes are typically done at client renewal. That might be historically three years, but as Pauline mentioned, increasingly some of those contracts are extended by five. That is the opportunity typically when pricing is changed. Prices are not guaranteed. If experience turns out to be particularly poor or different to what was factored in, we, as other LMI lenders do, retain the right to vary our rate card if industry experience deteriorates significantly. That's a good protection mechanism that we have in our business, in the event that the economy turns surprisingly against us. Our pricing is done through the cycle. We don't tend to move prices every year because we want what we see as the short-term economic outlook. We do that for a couple of reasons. I mean, first of all, our pricing is intended to cover the life of the loan, so it shouldn't be too heavily influenced by what happens in the next year or two. But it's also from a market sort of acceptance perspective, a degree of pricing, I think is a better way for us to go consistently to market rather than our prices changing, you know, wildly every couple of years. You can see in the chart there that particularly sort of the last four or five years, pricing has been pretty stable and consistent at averaging around 1.8% of the loan. If you take a longer-term trend, sort of back to 2007 and 2008 at the outset of the GFC, there has been a significant increase in pricing, almost double, since those GFC days. Again, I'm gonna come back later in the presentation and talk about the profitability of the cohorts. You saw it wasn't really until about 2014 that the pricing got up to the current levels that it is today, and it's been relatively consistent at that level since. The drop in 2015 and 2016 is because that's right at the peak of when APRA imposed the speed bumps. At an industry level, we got a much lower proportion of, particularly above 90 business, which reduced the average level of price. We didn't reduce prices in the market there. That dip in 2015 and 2016 is very much a function of mix of business. Pleasingly, and again, I'll share some data on this later, our cohorts since 2015 are well on track to meet the pricing targets that we've set. I'm gonna move from the revenue side of the business to the claims side of the business. Again, a little bit of a back to basics around, you know, what's the cycle and how our claims pay out. Our claims do have a very long lead time. The first indicator we get of potential claims is obviously delinquencies. Our lenders do report to us on a monthly basis all delinquencies from 60 days and up, and we get quite detailed reporting on the delinquencies and the aging of that business. Clearly, not all delinquencies go to claim. In fact, the vast majority of delinquencies do cure either from becoming healthy or in some instances, and it's been a particular benefit in our portfolio the last 18 months, through a property sale, with strong property market, customers having positive equity, sell the property and, you know, they move on, the lender doesn't make a loss, and there's no claim. But for those that do pass their way through the delinquency cycle, there's obviously a full extension of collection activity, and then, you know, in the later stages through the mortgagee in possession process, you know, following ultimately through to a forced sale if necessary. And in those instances, a potential claim if the value of the property is not sufficient to cover the loan. That whole process from initial delinquency to paid claim, I think you probably appreciate is a long one and can be anywhere from a year up to 18 months. In fact, during the COVID period, much of that later stage progression, effectively there was a moratorium on which was really only lifted about 3 or 4 months ago in terms of volumes. One of the reasons that we've had very low claims in the last 18 months, very low paid claims, has been a function of that moratorium. Delinquencies are our best early indicator of potential claims, and certainly in the short term, the biggest driver of our movement in outstanding claims reserves. Andy did share earlier some of the trends and recent trends in delinquency, which have obviously been positive for us, both in terms of the overall number, but particularly a significant driver of our financial results has been the very low level of new delinquencies. As a consequence of that, we've seen certainly in 2020 and continuing into the first half. Sorry, 2021 and continuing in the first half of 2022, a very low level of claims incurred, being driven by both a low level of new delinquencies and strong house prices. I did wanna spend a little bit of time talking about how our reserves work. I mean, clearly, we don't just wait for the 18 months for a claim to be paid and then recognize it in our accounts. We make a forward-looking view of our expectations around claims. Before I got into the detail of how the reserves work, I thought it might be useful just to step back and think a bit about it conceptually. We have an outstanding claims reserve that is set in respect of past risk periods. So all the risk periods up to the balance date where we think there have been events. By an event, I guess we're meaning a delinquency. That a loan is either past due or is already delinquent and hasn't been reported, but it's a past event that could lead to a future claim. That's effectively what we're setting aside for when we say the outstanding claims reserves. There's obviously a whole heap of future periods where there could be future delinquencies and future events. That risk and those periods are not covered by the outstanding claims reserve. That's effectively conceptually represented by the unearned premium reserve, which is the liability there to cover future risk. That is done on a historic accrual basis. We also do have, I guess in some ways it is an adequacy test. We look at the unearned premium against the expected claims that we expect may occur in future periods. Obviously, during the COVID period, there was a point where that adequacy test was failed, which caused us to recognize some one-off losses to a write-back of the deferred acquisition cost. In most environments, and certainly as I'll share later, the unearned premium is significantly higher than the future what we call premium liabilities. If we look in more detail at the components of the outstanding claims reserve, the one I think that is perhaps the easiest to get your mind around is the reserve for reported delinquencies. For every reported delinquency that we have at 90-days-plus, we establish a reserve. The size of that reserve is a function of both the duration of the delinquency, so the longer the later the delinquency, the higher will be the reserve. It's also a function of the amount of equity in the property. I mean, clearly, we don't go and do an individual valuation of every property, but we do have information based on an initial LVR, and we also have information from an extensive database around residential prices by suburb, and those factors come in. You can see there that the calculation of the reserve is both a function of the duration of the delinquency and the amount of equity in the property. If a delinquency cures through a property sale, we release the reserve immediately. Obviously, if it goes to claim, the reserve is released, and replaced by the claim. If a policy cures or gets itself back to healthy, we release most of the reserve because a fair bit of the risk has gone away, but we also set up what we call a re-delinquency reserve, or it's a category for our incurred but not reported. Experience has shown that, really through most cycles, once a loan has been delinquent once, it is much more likely to be delinquent a second and third time. The chances of it going to a claim in the future are much, much higher than the rest of the portfolio. Accordingly, we did make a change in our reserving basis in 2020, and instead of thinking about that risk as a risk for future periods, from 2020, we've recognized that risk on our outstanding claims reserve as part of the IBNR, and for today's purposes, I'll describe it as the re-delinquency reserve. It's quite a significant reserve, you will see, you'll see later. The third component of the reserves is, as the name suggests, the incurred but not reported, or IBNR. That's for the delinquencies we don't yet know about, that haven't been reported to us, but it's also for the delinquencies between 30 and 90 days. We start our formal reserving at a 90-day basis, but we set aside a reserve for both known delinquencies prior to 90 days, but also for the inevitable reporting delays that come through from lenders, but equally from those customers that the lenders don't yet know about, that are delinquent. Just a closing comment on the healthy, or never delinquent group. I've talked about the fact that, from a profit and loss perspective, or a balance sheet perspective, that is the unearned premium. Our changes in views about those future risk periods don't go through profit and loss. They do get reflected in our solvency calculation, and we'll talk about a bit later in capital. Changes in view about future risk periods and potential future delinquencies don't hit our P&L in the year. You won't see us, for example, we can't and won't either increase or decrease our reserves because of what we think might happen in the next two years around future claims. That's something that will play out through the unearned premium reserve. With that context and background, I want to just spend a little bit of time just looking about how that reserving approach has played out in our results over the last couple of years. You saw quite a significant lift in our outstanding claims reserves from 2019 - 2020, largely because of the introduction of the re-delinquency reserve. That was a one-off hit, in some ways a discontinuity in our reserving methodology. Subsequently, you've seen a modest reduction in the outstanding claims reserves between 2020 and 2021. Largely driven by the reduction in the number of delinquencies and increasing house price appreciation. We have not materially changed what I call the assumptions in our reserving basis throughout this three-year period. Those assumptions are set very much on a long-term pattern. They get reviewed every year. We do endeavor to keep a degree of stability in our reserving basis from year to year. The movement in reserves from 2020 through to 2021, again, an unusual and somewhat volatile period, but the extremely low claims and low reserve reductions in that period have been very much a function of the actual experience that we've seen, not any change in our reserving basis or a change in our view of the likelihood of claims from a policy going from a delinquency to a future claim. We've talked a bit already today around the sensitivity of future losses to the economic environment. There's no doubt that the combination of interest rates, house prices, and unemployment all contribute significantly to the loss environment. In fact, they're all interdependent. One doesn't move without the other. We, as you would expect, conduct extensive analysis on our portfolio to understand where potential losses might be coming from, both at a quite granular level, but also from a macroeconomic perspective. We have a range of models designed to estimate potential losses under a range of different economic scenarios. In fact, we regularly conduct, on a quarterly basis, a whole range of forecast loss scenarios using different stochastic economic scenarios. We also model a range of specific, quite explicit extreme stress scenarios, which is required, both for APRA and for our board and our own capital management purposes. I'm confident the one thing I can say about the future is none of us know exactly how it's gonna play out. Through all this modeling of the impact of economic variables on our potential losses, we are endeavoring to bring our expertise, our deep data, the fact that we've got a 50-year history of understanding how mortgage losses and mortgage credit responds to different economic environments, and bringing that expertise and data to bear on how our pricing is done, our risk management, our reserving, and our capital. Andy spoke about some of the dynamics in the portfolio, and that we do feel our portfolio is in a healthy position and is well positioned to be resilient in the face of what is gonna be a more challenging economic environment. I thought one way perhaps of illustrating this is just to share with you some sensitivities around the potential future claims to different economic variables. I'm not gonna go through every one of these sensitivities. I'm gonna focus on the one on the bottom around the downside scenario of a 10% house price depreciation and a 1% increase in unemployment rate. As Pauline outlined earlier, these are the two variables that most significantly impact our losses, and generally, it's the combination of the two. This scenario and sensitivity is deliberately a combination of the two. You can see from the table, hopefully it's visible to those of you in the back of the room that you know, in that downside scenario, 10% house price depreciation, 1% increase in unemployment rate, that the total additional claims across both the existing outstanding claims and the future claims is AUD 173 million. Again, I just wanna put that in context. That is over the life of the existing book. That's not a one-year sensitivity. That is the impact of these variables on the potential future claims over the life of it. Again, as a percentage, you can see that the total liability under a base case scenario is about the sum of those two numbers, about AUD 1.2 billion. You could see there a sensitivity of AUD 173 million on a base case at 1.2%. You get a feel that's probably about a 15% increase in the total claims cost over the life for that sort of sensitivity. I should also say, and this is relevant to the question, I think, Sid, you may have asked, around what is normal. When we call base case there, that is the liabilities that we have in our reserving and in our solvency calculations. They're reported in our annual results. We typically calculate those on some sort of long-term claim assumptions. I think the best guide I could give you to that, and we've spoken about it before, is that, you know, loss ratios of around 30% or 35%, you know, the industry's had a history, I think, of delivering there. That's certainly the range that we think of when we are pricing for long-term profitability. In our business, that equates to an annual claims cost of around AUD 100 million-AUD 130 million in our current levels of earned premium. So again, you'll hear us make references at various times today about things returning to normal. Again, just to hark on Pauline's point, nothing ever returns to the absolute normal. There will be volatility around that, but. When we use that phrase or that terminology, I think hopefully that gives you some sort of sense of magnitude. I wanted to conclude this section on financials with a particular look at some cohort analysis. The profitability does vary significantly by book year, reflecting a whole range of factors, economic conditions, underwriting standards at the time, mix of business and pricing. They've all varied significantly over time. We shared this slide at the full year results, and I think it's quite an effective way of highlighting the how the dynamics in the portfolio and the profitability in the portfolio has changed over time. The chart graphs the cumulative incurred claims by for each cohort against the cumulative earned premium, not the written premium, it's what's been earned. Because the earnings curve conceptually is intended to recognize earnings in line with the pattern of emergence of claims, then this ratio should give a good, not a perfect, but a good indicator of the ultimate profitability of different cohorts. The results are quite striking. The cohorts from 2008 - 2009 are extremely unprofitable, impacted both by a combination of the GFC, the sizable low doc portfolio that was in the industry and in our books at the time, and as you saw earlier, pricing at that time, that was about half of what it is today. The combination of those three factors made it a pretty ugly couple of years for that cohort. The cohorts from 2010 - 2014 have largely behaved and performed pretty well with the very notable and significant exception of mining. Again, I haven't split these numbers out to show the profitability of mining from the rest, but the slides that Andy showed earlier I think give a good indication for that. They've generally been good performing cohorts except for mining, and the big thing about mining is that took time to emerge. Even though we wrote these cohorts back in 2010 and 2014, the losses on that were coming through in 2016, 2017, and 2018, and 2019, and being a real drag on our results through that period. More recently, the cohorts from 2015 - 2019 have been extremely healthy, claims low, and clearly we haven't had any major events yet, and we are a business that claims do depend on events, but yeah, they are shaping up to be very profitable contracts in the longer term. We deliberately haven't shown the incurred loss ratios for 2020 and 2021. We think it's too early there, but again, not surprisingly, given the very positive environment we've had in the last two years, those cohorts are shaping up very well. Another lens at this same dynamic is to look at what I call the embedded profits in the existing book. Again, just to step back, what do I mean by embedded profits? For each cohort of business, we have an amount of unearned premium, and for each cohort of business, we also make an estimate of the expected claims for future premiums that we call the premium liability. Again, those numbers are disclosed in our annual report, and they form the basis of our solvency calculation for capital purposes. Any excess of unearned premium above those future claims liabilities represents profit that we expect to emerge in future years from the existing book. It's not dependent on writing any new business, that's just profit that if things play out in line with expectations, that will be profit largely because of the operation of the earnings curve that emerges in future years. Again, this chart is really striking. From pre-2014 and before, there's a negligible amount of unearned premium remaining, but there are still some remaining claims. Most of those remaining claims go back to either some of the low doc stuff or mining stuff. It also speaks to the fact that our earnings curve in some of those years was much quicker in those years than it is today. We were recognizing premium much quicker, and as a consequence, there's little or no remaining unearned premium left for those cohorts. Conversely, the cohorts from 2015 onwards have a very strong amount of embedded profit, reflecting both the stronger profitability of those cohorts, but the fact that they still have the majority of their unearned premium still to be released in future earnings. Obviously, I'll keep caveating this, the absolute quantum of profit that comes out is gonna be a function of what happens in the future in the economic environment. I'm not trying to suggest in this slide that we're gonna make exactly that much money out of every one of these cohorts. What I am trying to show is that the nature of the business and the inherent and embedded profitability of the business has materially changed over time, and that we have a good level of embedded profits within the more recent cohorts that will be a strong underpinning for our earnings in coming years. In summary, given the nature of our business, its long-term nature, the business that we've written in the past significantly impacts for a long time. The sins of the past stay around for a long while, and we certainly feel that's been a factor, certainly in the late 2015 - 2018 and 2019, that our profitability was being weighed down by business that we wrote in the past. On the flip, the good decisions and the performance that you're making today, and in recent years can have and will have a very significant impact in terms of the earnings and the returns. Time will obviously be the judge, but we think the profitability of the more recent cohorts, the way they've been managed, the volume in those cohorts, and the quality of those cohorts gives us a very strong and positive profitability outlook going forward. I'm just gonna have a glass of water now, give you a chance to do the same and then perhaps not hear my voice for about 30 seconds, and then I'm gonna come back and have a chat on investments and capital. I should have scheduled a question and answer session before this to give me a chance. Am I going forwards? Faster? All right. Investments and capital. Two very topical things, two very important things in our business, perhaps in the current environment, even more important than normal. What I wanted to do in the investment section is threefold. Give you a quick overview of our portfolio. Hopefully most of you are familiar with that. You've seen it at past half year results. Talk a little bit about how we think about asset allocation. Then I think most importantly, illustrate to you how the portfolio does respond to changes in interest rates. Now, I'm not going to today be sharing with you the actual first half results. As Paul said outside, we'll have to wait for that till. It's only six weeks away. I hope I can, by giving you some sensitivities, help you to understand how our portfolio will have behaved. I wanted to start talking a little bit about our approach to asset allocation and our philosophy for the portfolio. We think about our portfolio in two parts. There's the technical funds, which are the assets that are backing our liabilities. These are the expected future claims liabilities, both the outstanding claims liabilities and the liabilities for future periods. We endeavor to match those as closely as we can. These are long-term liabilities that we match 100% with long-term assets. I think the average duration of this portfolio is 3.8 years, and it has a pretty close matching between the assets and the liabilities. Because it is a matched portfolio, we don't trade that regularly. In fact, we hold the vast majority of the assets and the securities in this portfolio through to maturity. While we recognize mark-to-market gains, or in more recent times, losses, from the move in interest rates, we very rarely realize any assets in this matched portfolio, but rather they hold them through to maturity, and we get the benefit of the high yield going forward. Our shareholder fund is effectively, and the total of that, again, just to give you a feel that the technical funds, I think, in total are around AUD 1.8 billion, and the shareholders funds are around AUD 2 billion. The shareholder fund, we do deliberately take more risk in that portfolio. I wouldn't suggest it's a large amount of risk, but we do endeavor to take more risk and seek some additional return for that. That's predominantly done through a combination of an equity allocation of, I think, 9% of that portfolio. Our fixed interest exposure there is predominantly corporate credit rather than government and semi-government bond. The duration of that part of the portfolio is much shorter. In fact, we give the fund manager much more freedom on that. I think as of 31 December, the duration of that portfolio was only 0.6% of a year. Yeah, I see William nodding. Thank you. More recently, we made a decision. It's not in the charts yet because it wasn't an investment at 31 December, but we made a decision to allocate AUD 180 million commitment to our unlisted infrastructure fund, which I think is about 10% of the shareholder fund. Comparable in size to the volume of equities that we're holding there. We've invested approximately one-third of that with an expectation that the balance will be invested over the rest of the calendar year. Hopefully, again, you can see there a strong philosophy coming through with a pretty pure matching approach on the technical funds, with the shareholder fund still prudently managed, but looking for opportunities to enhance yield and return through an exposure both to growth assets, opportunities to capture some liquidity premium, and also through the exposure to credit to get incremental yield. That's the philosophy. If I looked at the returns that our portfolio has seen over the last six or seven years, and it's been very much one of structural decline, very much reflecting the interest rate environment. We've been in a low and declining interest rate environment for the best part of eight years. I'm gonna come in a minute to the impact of rising interest rates. Fundamentally, that's not a positive for our business because we take money up front, we invest that money, and we pay claims sometime in the future. Investment returns are an important driver of our long-term profitability. We talk about them in the short term as giving volatility in our P&L, and that's right. In the long term, it's a really important part of the profitability of the business. In a really low interest rate environment, that contribution to earnings and contribution to profit, you know, fell significantly from, what's that, a total. I'm just gonna focus on the dividend and interest yield. It was 4% back in 2014, down to 1% in 2021. I think at times during 2021, the running yield actually even got under one percent. Obviously that environment has changed significantly in the last six months, and we saw it start to change in the last quarter of 2020 with rising initially longer term bond yields. That did cause some P&L some mark-to-market investment losses. You see there in 2021, AUD 55 million of unrealized losses, that was largely in the last quarter of the year and largely related to our bond portfolio. That story's obviously continued in the first five and a half months of this year, and I'm sure you're all very familiar with this chart or a variant thereof. You know, in essence, almost across the yield curve, rates are up approximately 2% since the end of last year. That's a very significant and rapid shift in the market. Clearly for our business, as for many insurance and other businesses that hold long-term fixed interest assets, that is gonna cause mark-to-market losses in our portfolio for the first half of this year. On the flip side, as I explained earlier, the higher rates will be a big positive for our ongoing profitability, and we're already seeing that in terms of the underlying running yield on the portfolios have moved significantly up from that 1% level in 2021. That's still got some way to run because we've got the benefit in our running yields from the higher, you know, the longer-term bonds are now yielding more. Over the next six months, the floating rate instruments that we've got will start to see the benefit of the pickup in the short end of the curve. It's very easy to focus just on the impact of interest rates on the asset side of the business, and I did wanna spend a little bit of time talking about the matching of assets and liabilities. That is fundamental to the form of our investment philosophy around the technical funds. Again, I stress that we're not reporting the numbers today, but I've got some sensitivities here that hopefully can share the dynamic that is happening in our portfolio. As I said earlier, the assets in our technical funds are very closely matched to the liabilities, and so consequently, you'd expect the assets and liabilities to move together. The sensitivity I've shown here is one, again, that's in our annual report. A 50 basis point lift in interest rates, clearly we've had more than 50 basis points, but that's the example, has a AUD 33 million impact on the value of our assets. For our liabilities for P&L purposes, there is no offset. Our outstanding claims reserves are not discounted, and the unearned premium reserve that we hold on the balance sheet is an accrual basis with clearly no impact. From a P&L perspective, we only get one side of the impact of the movement in assets, and you see volatility in the P&L. The real picture from an economic perspective is that we do have offsets in the liability numbers, and this is perhaps best illustrated by the calculation of our solvency liability. Now, again, to remind you, the solvency liability is the estimate of the value of expected future liabilities, both the outstanding claims but also the claims from future periods. It's one of the things that drives our regulatory capital, and it's also the best indicator for us of the economic performance in the business. And as you can see there in that sensitivity, we get a pretty good offset on that side of it. For a 0.5% rise in interest rates, we see an AUD 26 million fall in the liabilities. Effectively, the net impact of the two is only AUD 7 million. It's not a perfect matching because we do hold some fixed interest exposure in our shareholders fund. It's only the technical funds that we match. Hopefully, that's a good illustration that we do. We look at this from an economic perspective on both sides of the balance sheet. We know we get P&L volatility, but on an economic sense, we're confident we remain well matched. In summary, the message that I wanted to leave on our investment portfolio is it's very much structured to reflect the nature of the portfolio. We are deliberately prudent and conservative in how we set that, but at the same time looking for opportunities to take sensible amounts of additional investment risk to enhance the return on the portfolio, while remaining true to our core of retaining a really strong capital position and a resilient balance sheet. Rising interest rates are clearly going to have a significant short-term impact on our P&L with mark-to-market investment losses. As I explained earlier, with a significant offset in the economic value of the liabilities. Ultimately, while it gives us short-term P&L pain, higher rates are good for our ongoing profitability. Another glass of water for me. Last but not least, capital. If we've said it once today, we've said it numerous times, we are a capital-intensive business, but it's actually one of the things that we think our capital position is a real asset. It's a real asset and strength for our customers. It's a real strength from the regulator's perspective, and I think it's a real strength from our investors' and shareholders' perspective because of the potential that it offers for ongoing capital returns. I'm not gonna try to make you an expert in how regulatory capital work. It is a complex field, but I thought I'd just give you a flavor for some of the things that drive us. The biggest driver of our regulatory capital requirement is what we call the PML or probable maximum loss, and that's a formulaic-based approach that is set by the regulator that is, I guess, conceptually intended to mean you have sufficient capital to withstand some pretty significant economic stresses. I think one in 200 is what the regulator talks about. They have a formula, and that formula is a function of obviously the amount of exposure. The formula does vary significantly by LVR, so we've got to hold a lot more capital for high LVR loans, hence why we price them higher. One of the other striking features is the impact of seasoning. The amount of capital declines significantly over the life of the loan. This impact of the seasoning is one of the reasons we'll come on later while the business does have good organic capital generation, because we've got a very significant existing in-force business, and as that ages and seasons, the capital requirements on that significantly reduce. That's accelerated obviously if we get cancellations as well. One of our other big drivers of our capital requirements is the asset risk charge. Again, the more we hold in non-matched assets or growth assets, then that significantly moves. Again, another reason why we run a matched portfolio on the technical funds, because that's the most capital efficient for that part of the business. If I look at our capital mix and I'm perhaps gonna start with the reinsurance. Reinsurance is a really important part of our capital mix. We don't always present it that way. We can present it sometimes as an offset to our capital requirement because that's how the regulator sort of views it and presents it. In essence, for us, it's providing capital of AUD 800 million that we would otherwise having to be sourced through different means. It's a very cost-efficient part of the capital. I'm gonna talk a little bit later about how our reinsurance program is structured, but the cost of arranging that AUD 800 million of reinsurance, and it does give us a direct AUD 800 million dollar capital relief, is significantly below the cost of equity capital if we needed to hold that same capital in equity. We also have AUD 190 million in Tier 2 equity, a subordinated debt instrument, again, which is designed to enhance our capital mix and improve our overall cost of equity, overall cost of capital. The volume and the structure of that Tier 2 and how it fits within our stack is, to some extent, heavily influenced by the rating agency requirement. There is scope for that to be a little higher, but it is limited in its magnitude, both from the regulatory perspective and also the rating agency's perspective. The balance of our capital is what APRA would refer to as our Tier 1 capital, which is the net assets of the business and the shareholders' equity. APRA also give you a credit for what I'm gonna refer to as the unearned premium surplus. This is the embedded profits in the business, so that the difference in our unearned premium and our future claims liabilities that does count towards our capital requirements. We do continue to look for opportunities to optimize the capital mix. I'm gonna talk a little bit later about the level of capital, but again, just to give people a flavor, we are mindful of the capital mix. Reinsurance at the moment, our reinsurance of AUD 800 million corresponds to 45% of our PML. From a regulatory perspective, you have the capacity to go up to 60% if you want. Again, we think it's prudent that there be a buffer if we need it, but it actually also speaks to ongoing opportunities to further enhance and optimize capital mix. Reinsurance fills two really important roles in our business. First, as I mentioned, it's a very cost-effective source of capital, but it's also a risk mitigation for severe stress. We have a long-established reinsurance program with a diverse panel of approximately 20 reinsurers, all strongly rated. Our coverage of AUD 800 million is designed to kick in at an attachment point of AUD 1.65 billion of claims. Now, that is quite remote. That's deliberately done. That's one of the reasons why the cost of reinsurance is much more effective than equity capital because it is so remote. APRA does require us to hold capital to withstand those sorts of scenarios. Reinsurance attaching at fairly remote points is quite a cost effective way for us to do that. Pleasingly, we've never got close to claiming on the reinsurance in the well, 50 years the business been in existence, but certainly in the last 10 or 15 years since we've had this structural program in place, the highest paid claims year that we've had was AUD 166 million in 2017, which was obviously only 10% of the way there. It's not reinsurance that's designed for us to be claiming regularly. It's not even reinsurance that's designed for us to be claiming occasionally. It's reinsurance that's designed so that we can claim in extreme events. At the same time, please don't overlook that means it is still doing a very efficient job for us every other year that we don't claim, by providing a very efficient capital mix, and efficient magnitude of capital in our business. I wanted to speak a little bit around capital behavior in a stress, because ultimately our business is about paying claims, and we know that our claims, most important that we pay them, will be in times of stress. Our capital, that's the very reason that we need to hold significant capital in our business so that we are able to pay claims to the industry in times of stress. Our regulator looks carefully at this, our customers look carefully at this, and certainly we at our board look very carefully at this. The reinsurance does provide a layer of protection, a significant layer of protection, but we also have significant amounts of capital to be able to withstand particular stresses. As I said earlier, we do conduct regular stress tests to demonstrate the resilience of our balance sheet. While it ultimately didn't prove to be a big claims event, I did wanna just briefly have a look at the behavior of the solvency position when we were right at the peak of COVID. You see again in the top bar, so sorry, the top part of the chart, the way a stress would typically play out is when the economic environment, if the economic environment deteriorated significantly, we would raise the premium liabilities or the liabilities for future claims in our solvency calculation, and that can and did happen overnight. Back in 2021, I wasn't here, but Connor certainly was, and you know, pretty dire environment, expectations of you know, dramatic increases in unemployment and potential house price falls. That get reflected to some extent in your best judgment that you can. Now, fortunately for us at that time, the rest of the chart didn't play out. We didn't see large amounts of policies going delinquent. We didn't see outstanding claims increase, and we certainly haven't had to pay significant amount of claims. The stress didn't eventuate, but what we did get to see was how our balance sheet responded to the first part of the stress. Pleasingly, I mean, we went in with a strong balance sheet, but even at the peak of the stress, our PCA, our capital PCA ratio, was a very strong 1.78%, and had only fallen by 13 basis points from the previous December. Again, I'm gonna talk a little bit to that as we talk in a minute around the capital generation in the business and why we find ourselves today in such a healthy position, but also a position where we're much higher level of capital relative to our target than we'd ideally like to be. The capital requirements in our business or the amount of capital that we need has steadily fallen over time. The big driver of that has largely been the runoff of some of the old cohorts of business, and that seasoning factor, the aging of those cohorts and the cancellations from those cohorts has really underpinned a fairly systematic reduction in the probable maximum loss, which has translated in a systematic reduction in our regulatory capital requirement over a fairly long period of time. We've also had an improving mix of business. You saw Andy's charts earlier, which had much less business in the above 90% LVR, and that's translated to us into lower regulatory capital requirements. In 2021, we did see a jump in our actual capital levels. That was in response obviously to the COVID crisis, where we lifted the premium liabilities, in expectation of future claims coming through. We also went into what Pauline describes as capital preservation mode. The whole industry did. You might recall APRA didn't even let anyone, no dividends paid in that period. In fact, a number of our, you know, competitors and others in the industry were raising capital at this time. You know, given our strong capital position, we were able to strengthen our reserves and capital position, but didn't need to raise any capital. The combination of that sudden expectation of a dire outcome, lifting capital levels in the business, and then that not playing out over the ensuing 18 months, meant our capital position, you know, when we came out the other side into the end of 2020, was a lot higher and a lot stronger than we'd anticipated. Now that's a good problem to have. We'd rather have been in that position than the other. It wasn't by design, you know, that our PCA ratio has got to the high levels that it had. As Pauline outlined in her session, Genworth has a particularly strong history of capital returns. We've paid cumulative AUD 2.57 per share in dividend, both ordinary and special, since listing in 2014, along with AUD 707 million in capital returns through either buybacks or capital reductions. With the exception of 2020, right at the peak of COVID, we have consistently returned capital to shareholders through a combination of both dividends and capital returns. Our current capital position is extremely strong and well above the top end of our target range. This clearly indicates that we have scope for further capital management. As we recently announced, and Pauline echoed earlier, our objective is to operate within this range consistently, and we think we can get back within that range within the next two years. That suggests, and we certainly feel confident that we have opportunity for ongoing and future capital management initiatives. The way we do that needs to balance between speed and efficiency. We understand that as shareholders and investors in the business, you want us to return the capital as quickly as possible. At the same time, we wanna do that in the most efficient way possible. When we say efficiency, we're meaning both tax efficiency, but also efficiency in terms of the earnings per share growth, in potential in the business. We obviously consider a whole range of approaches that which we could return and manage our capital. On balance, we feel the appropriate combination that strikes the right balance between efficiency and speed is a combination of dividends, both ordinary and special, and ongoing market buybacks. Obviously, any future dividends or share capital returns or buybacks are subject to both board and in some cases APRA approval. Our board and management is very conscious of both the opportunity for capital returns and the importance of that to each of you in the room. That concludes my trilogy. I'm gonna hand over to Pauline to wrap up, and I look forward to joining you at the Q&A afterwards. Thank you, Michael. You certainly made up for your light workload before morning tea. Michael could have done this next section just as well as I could have, but we thought after that heavy lifting, we'd give him a little bit of a break. Just in summary, I'm just gonna quickly talk a little bit about the outlook. There's nothing new here from what you would already know and what we've already said, but just bring it all together. We'll have a Q&A, and then we'll have a wrap up, and then we'll get you on your way. You will have seen all these themes in what we've been talking about today already. We all know we are heading into a different economic environment from the one that we have seen for the last two years. We're heading into an environment in which we do expect interest rates to continue to increase for a period of time. In fact, we saw 75 basis points overnight in the U.S.. No doubt we'll see some more movements in Australia next time there. Yeah, I bet. Well, I'm not making a prediction, but yes, we are all expecting that there'll be more to come in Australia. We do expect, as a result of that, to see dwelling values moderating. We've seen some of that particularly come through in Sydney and Melbourne, and we expect that to continue over the next period of time. What does that mean for us? Again, as we've shared with you today, we do expect our GWP to slow somewhat. It has been doing so over the last 12 months. That's actually, as an insurer, that's a really good thing. One of the things I think is difficult for a listed insurer is I've learned over 30 years, the best way to manage an insurance portfolio is to stay true to your technical pricing and to your risk settings and accept that volume will come and go due to market conditions, and you end up with a much better profitability outcome over the long term. I know that can sometimes be difficult when markets like us to grow monotonically each year, but that's the way that we will manage the portfolio. We will make sure that we stay true to our risk settings and the fact that the last 12 months has been a little. not been a bumpy year for us, we believe will prove to be a good outcome for the business over time. That does, however, not necessarily feed through to top-line revenue growth, because our NEP is a function of the earnings curve and the GWP we've written over recent years. As that plays through, those strong years play through, we do expect the NEP to benefit from that. Bearing in mind, as Michael said, the implication of cancellations. We saw some very strong cancellation years that added a bit of a bonus to our NEP, certainly over the 2021, and in the first quarter results that we shared with you in 2022. That's the volatility that may come through the NEP, but underlying NEP growth should benefit from the GWP growth in the last two years. Claims, as we have shared with you, have been historically low in 2021 and the first quarter of 2022, to the point where we actually reported negative claims numbers in both of those periods. Now, I'm sure it doesn't take Einstein to realize that is not a sustainable position for our business, negative claims. In fact, it's not even a good position for our business over the long term. We exist to pay claims, and so we do expect and welcome claims normalizing to a normal level. Realistically, we probably would have thought that would happen a little bit faster than it has, but we still do expect that that will happen throughout the course of 2022 and into 2023. Bearing in mind the time that it takes for claims, actual claim payments to work their way through our system, what we'll start to see first is the change in the level of HPA impacting our estimate of our IBNR and outstanding claims liabilities that will start to play through our accounts first. Given the changes in interest rates, of course, we have been witnessing unrealized investment losses combined with an increased running yield. It is unfortunate that our P&L has a mismatch in the way that we value assets and liabilities based on interest rate changes, so it does create short-term volatility. But the fact that we do largely hold our assets to maturity and they are largely matched means that we do get the offset in the running yield. That's very similar to what you've seen us say before. We're just bringing all of that together. What does it mean for our business? I think the one thing I do want to say there, as I said down the bottom, we are well positioned for a less benign environment. We've seen it coming. It's not been unexpected that we're going to enter a less benign environment. We've made sure during the good years that we've had that we've done a number of things. As you can see from the work that Michael's taken you through, we've really challenged ourselves on our reserving, our capital position, made sure that we are strong there. We've got buffers in the business with positive equity from the HPA that we've seen. Importantly, we've really also focused on our operations and our communication channels to the lenders, because ultimately that's where we start to see things happening first, and that's where we can affect outcomes. We've really focused on making sure that we're operationally in a position where we get to see the signals coming through. Bringing it all together, as I've said, the 2020 and 2021 GWP growth we saw will underpin the NEP growth. We do see underlying dwelling and loan growth returning to the industry, particularly once migration picks up, but that may take a little while. We may see that it's a little bit flat for a while. We do see customer acquisition opportunities and expansion opportunities in our business as we continue to execute on our enhanced strategy. You've seen those lenders we don't yet have. All of them are within our sights, I would say. We're really focusing on what it would take to create an ongoing relationship with them that was value-adding for both of us. We're also looking at how we can help the lenders that we already work with reach more people, and that's our evolve strategy. From a return perspective, mathematically, all else being equal and no surprises, which we know is never exactly the experience that we've experience, we would expect mathematically the ROE to improve over the coming years as the old book years run off and we converge towards the more recent book years that we believe are exceeding our pricing targets. Interest rates will help that, as Michael has explained, and increased capital efficiency will also be beneficial for the shareholders and for your aggregate returns. Reiterating that we do aim to be within 1.4-1.6x. our PCA within the next two years. We said very explicitly at the last results that when we set our AUD 0.12 per half dividend, i.e. AUD 0.24 per year, we set that at a level that we expect to be sustainable. Going back in time, we had a dividend policy as a percentage of our profits. We deliberately decided not to reinstate a dividend policy as a percentage of profits because of the volatility in the profits of our business. The reality is, as we've demonstrated today, we hope our capital volatility is much lower than our profit volatility. In reality, we're actually trying to target a more stable level of dividend than profits may emerge. That's why we've expressed our dividend expectations that way. We think that that's an exciting investment opportunity. We're looking forward to delivering against that and to the opportunities that may bring. Now what I think we'll do is move to Q&A, and then we'll have a quick wrap-up. Thank you. Thanks very much, Pauline. I'm gonna break with convention at this point in time, but what I would say is actually that last session, we recognize this is a difficult company for a lot of investors to understand. We recognize also the fact that where we are currently within the ASX 300, a lot of people aren't financial specialists, but hopefully, the time we spent today actually gives you a bit more of a feel for how the business actually works. I think Michael did a very good job. I know most of you probably don't know he's a very accomplished cricketer, but I'd say he occupied the crease very well. So from the Q&A perspective, actually, rather than go in the room first, there was actually a question outstanding from the last session online, so I'll read it out. It's from Joseph Koh, Schroders. Joseph Koh, thank you for your question. Is Helia still reliant on third parties like PEXA to inform them of mortgages that have been refinanced or extinguished? If so, why isn't it able to get this data directly from lenders, especially given the importance of the data to Helia's business? Michael, do you want to take that? No, we do get data from lenders. They provide us data on cancellations, but over and above that, we do periodically do data washes with PEXA because we find at times, not every cancel policy comes through for the lenders. It's a good question, but we're not totally reliant on PEXA, but we use it as a one-off. Not one-off. We use it as a periodic exercise with the lenders, to pick up any policies that have slipped through their regular reporting. The next question we had online was, slide 22 has a footnote to the CBA renewal stating CBA subject to agreeing contractual terms. Can you please explain? Yes, I'm sure anybody who has contracted with a big bank will understand there's a very detailed process that comes into all sorts of very detailed clauses that our lawyers are working very closely with CBA on. All, we've said this before, all substantive terms have been agreed. We're talking about some of the very detailed legalese clauses at the moment that we hope to have wrapped up pretty quickly. The final question we have online is quite detailed, so I'll do my best to summarize it. Helia's book value, if you add the embedded profit and unearned premiums, is higher than the current share price today. Given the current share price is less than this value, has the board actually considered putting the business into run-off to realize the intrinsic value in the business? Thank you for that question. As responsible managers of shareholder capital and of the business, we look at all strategic options on a regular basis, and we do from time to time, absolutely, look at the value of putting the business into run-off because of the embedded value and capital in the business. We would be remiss if we didn't look at that. What I can tell you is when we do look at it, every single time we've looked at it, the value is optimized by continuing to run as a going concern. That's for a couple of reasons. One, because of the market opportunity that we've shared with you today that we believe is very real and very accessible to us. Two, because of the impacts of putting a business into runoff and a long-tail business like us. A couple of things happen when you put a long-tail business into runoff. Firstly, the regulator typically requires you to hold more capital, so the capital gets trapped for a very long time. Secondly, you have trouble attracting the talent you need to run the business well, and you find increasingly, particularly the claims tend to misbehave, and it's harder to manage the expenses going forward. When you consider all of that together, we believe there's actually a really exciting opportunity for us and a much more value optimizing opportunity to keep growing the business. Okay, now I'll hand over to questions in the room. Lucy's got the mic. Are there any questions? Hi, it's Andy Chuk from Macquarie again. First question is just around the target to get back within the PCA range within two years. Can I just clarify when that two years starts, and also is it to the top of the range or to the midpoint? That sounds like a detailed one for you, Michael. It's to get back within the range. I mean, that's within the range. I mean, the range is 1.4-1.6. Hopefully that's self-explanatory. Look, the within the two years it wasn't meant to be. We didn't put a specific date on it only because, you know, the nature of our, you know, returns. I mean, you know, dividends are typically six monthly, you know, capital returns are one-off. I don't think it's particularly helpful to say it started at this date or it finished at this date, but we're not trying to be cute about the, you know, the timeframe. I mean, we put out that release in May, I think, was when we put out that release. You know, I think two, you know, two years from that is the appropriate way for you to interpret it. You do have to remember, of course, the underlying, drivers of our business, that it's impossible to predict with that level of certainty, 'cause it will depend too on, our claims outcomes and our growth outcomes over that period. Fantastic. Just one more question on slide 52. You've put out the investment mixes. Just wanna confirm when that mix was done at. Well, yeah, that's the question, sorry. That'll be at 31 December 2021. The asset allocation wouldn't look particularly different today other than through the addition of the infrastructure investment that I mentioned. Fantastic. That's all. Thank you. Siddharth Parameswaran from J.P. Morgan. A couple of questions if I can. Firstly, just on interest rates. Does that feed into your pricing? With higher interest rates, will there be any offset on pricing levels? Yeah, look, it should in the medium term because it does. You know, it's a driver. Again, in the past, the profits have been. The pricing hasn't changed in industry level so frequently. And again, it wouldn't be right to price on the prevailing rates, you know, now because, you know, by the time you write the business in, you know, the next three years, you know, the interest rate environment could have changed. I think a short way of saying, in the short term, no. But if structurally over the medium term, the level of rates changed, I would expect the pricing in the market to reflect that. Yeah. It is an assumption in our pricing, but it's not a spot rate that we put in there. As Michael says, it's a longer-term assumption that goes into our pricing, so it will help us over time. Right. Sorry, it'll help you immediately in the P&L and you said it'll help you over time. Yes. It'll provide pricing flexibility potentially over time. Sorry, that's what I mean. Yep. Okay. Okay, thank you. Just a question also just around premium liabilities and just, I think in 2020 you took a charge on, in your P&L from that. Just where we sit today, should we think that, you know, as you're looking at the economic environment, the impact is large enough to have any potential risks on that front or I'll make some comments 'cause I was here then, and then I'll pass to Michael for some more detail, around the go forward. The 2020 liability charge came because, as Michael says, when you think conceptually about our liabilities, we need to reserve for two different types of liabilities. One is for the claims that have already happened that we haven't yet paid out, which is our outstanding claims and our IBNR. The other is the exposure we haven't yet run, but we've collected the premium for already. Under the current accounting approach, we, our liability for the exposure we haven't yet run, but we've collected the premium for, is done on a historical cost basis of unearned premium, not on a prospective basis of expected claims. There is a test that says if the unearned premium that you've got left on your balance sheet is less than your present value of future expected claims, then you have to basically take the greater of the two. That's what happened in 2020. We were staring at in March some pretty dire economic predictions, and it was before the JobKeeper scheme had been announced, before any of the government mitigations had came in. On those economic scenarios, it looked to us like the present value of future claims that we would pay for the risk we haven't yet run would exceed the unearned premium valuation, and that's why we took that hit. Today we're in a very different situation, and you can see in our annual report, we disclose the headroom between the two, which. I can't remember the number. Michael might remember. No? Again, it's the flip of that slide where I showed embedded profits. Effectively, if you added each of those bars of the cohorts, that's effectively the excess of the premium, of the unknown premium over the premium liabilities. Although, as Pauline said, you can look at that as a headroom. The other thing I'd say is that the, you know, the slide that I gave on the sensitivity to, you know, house prices and unemployment rate, you could do some analysis on that to, you know, form a view. I think, you know, with the headroom we've got is many, many times greater than that sensitivity that I shared with you today. Sure. You'd probably also note too, just the DAC that's on the balance sheet back in 2020 was a lot higher than the deferred acquisition costs that are on the balance sheet today. If there was a need for it, there was a shortfall or a deficit from that perspective, it's a much smaller problem than it was in the past. Right. Okay, thanks. I did have one final question just around the PCA. Is that procyclical at all? Are we likely to see an increase in the PCA as we move into a tougher economic environment? You've given us guidance on profits or a view of how it might emerge, but just on the capital, is there any greater risk on that front? Not nearly to the same extent that it's sort of been done in the banking environment. You know, there are some things that, you know, some of the behavior is a bit finessed, but I don't think. Because generally it's not particularly sort of, what was your term? Pro-cyclical. Yeah. Hi, Brett Le Mesurier from Perpetual Limited. Michael, just back on that slide with the downside economic slide, 48. I would have thought that the adverse impact would have increased, or increased at an increasing rate as your HPD increased. It's actually increasing at a decreasing rate. Can you explain why that happens? Can I get my chart or I'll look at the slide? Well, can I get the microphone? Well, you've got two things happening there. I mean, one is you don't have an unemployment impact as you move from the sort of the second line down to the third line. I think you just need to be a little bit careful that the move from the impact of 96, if I focus on that part of it. Brett, so you're at the 96. That is 5% house price depreciation and 1% increase in unemployment as of 96. Then the move from 96 to 143 is purely the extra 5% on house price depreciation. There's no additional unemployment. I suspect, I mean, I'm speculating because, you know, these. But I suspect the answer is the shape is in. We're not. If I'd showed a 10% HPD and a 2% increase in unemployment, I think that would have been closer to double. In fact, may have even steepened as you're suspecting. To erode your excess capital of 300-odd, do you have a sense as to what that one reasonable combination of those assumptions would be? I mean, I'd only just guide you to, you know, extrapolate from those numbers. Uh, so- You're right that due to the asymmetric nature of the risk, as HPD deepens, the impact does start to escalate because, you know, for anything that's in positive equity, there's no delta until it hits negative equity. You are right. We run a large number of scenarios, as you would imagine, because our business is all about scenarios. Our business is all about when things don't go as expected. We do look at a large number of scenarios. We haven't run any that would erode that excess capital yet, and we've looked at some pretty. We've certainly run the full spectrum of what we're hearing out of market commentators at the moment. Oh. Oh, no. That's him. Sorry, I think there's one more question in the room, and then we'll move to the telephone lines. If I can, Scott Russell at UBS. I just want to follow up on that while the slide's up there. What is the scenario that goes into the PML? The PML is not a scenario as such. It's an APRA mandated factors about how much capital you gotta hold for, you know, each type of policy. APRA have characterized that scenario as being all those factors as being equivalent to a one in 200 event. They don't specify it as, "Here's your one in 200. You gotta run that." It's formulaic that they give us effectively the factors to apply. Have you ever disclosed as you kind of increase the HPD and the unemployment rate scenarios, or do you have. Could you maybe give us a sense for at what point they would reach the PML? I mean, you've got reinsurance attachment of AUD 1.65 billion. It looks like it'll never be called upon because shareholders will be called upon before that happens. Just trying to understand the sensitivity. You're a capital-intensive business. Yes. Yeah. No. We do that. We have got that. I mean, I'm not sure it's appropriate that I share that detail today, but we do have a good sense of what scenario and the probability of that would mean our reinsurance attaching. We also have a good sense of the type of scenario that might cause us to breach our, you know, the lower end of our target capital range. You know, when I outlined the presentation literally every quarter, we will be rerunning scenarios and say, "Well, what would it take?" And certainly in terms of communicating to the board, you know, we'd be in the habit of saying, you know, "This is a one in X year event for us to get to that." Again, I don't think it's the appropriate forum for me to be disclosing the detail, but other than to give you some comfort that we do look at the business in that way, and we do have a good handle on the probabilities. Yeah. Ultimately, you've got a board's targeted PCA range, which affects not only the requirements of APRA, the regulator. It obviously reflects what we think the rating agencies require, but it also reflects the stress testing that we do as a business. The fact that the board is prepared to sit there with a PCA multiple range to sit between 1.4 and 1.6 times should give you some comfort in that regard. Yeah. I think the other thing I'd add to that is, when COVID first struck, as I said, back in March, when we did the DAC write down AUD 180 million, of course, the first question before we thought about the P&L was actually capital, as you would expect in our business. We ran a lot of scenarios at that point in time, and it was when there were some pretty dire economic predictions, and we had no visibility of government intervention. You'll note that despite running all of those scenarios and looking at all the possible outcomes, we elected not to raise capital. That should also give you some understanding of the range of economic scenarios that we can withstand. For me, you know, being new into the business and not really knowing, having a good sense for how the business operated at the time, it was really comforting to see the capital resilience. The capital position is less volatile than our profit position and the capital resilience in the business. Okay. Operator, are there any questions on the telephone lines, please? There are no phone questions at this time. Okay. There are no further questions online that I can see either. I'll thank our presenters from the Q&A. It's now my pleasure to hand over to Pauline to do a wrap-up. Thank you. I'm not gonna keep you very long. You've all spent a huge amount of time with us this morning. We appreciate that greatly. Before I do wrap up, I do just wanna say some thank yous. Actually, Paul, could you just deal with that for me, please? My first thank you is to Paul. Thank you, Paul, for setting up today for us, and you've done a huge amount of work. For all the work that you have done. Our investor relations function is certainly much more sophisticated than it was 18 months ago when you joined. Thank you very much for that. I also wanna thank Lucy, who has worked very closely with Paul to put today together. Many of you will have relied on Lucy a lot for information over the last few years, and it's unfortunately Lucy's second last day with us today. We'll miss you, Lucy, but thank you for all that you've done. Thank you to Hayley and Rochelle for all your work too, to make sure today came together. Now, I can't finish today without coming back to my favorite slide. As I say, I think sometimes we're an underappreciated business, but we have delivered for shareholders, and we're committed to continuing to do so. I'm very proud of the track record this business has of delivering profitable returns to shareholders and second TSR in the financial banking and insurance sector. I guess the main messages we really want to leave you with today are around what matters for our business and why we think this is a really good opportunity, both a market opportunity and a good investment opportunity. We are all about accelerating financial wellbeing through home ownership. It is a critical part of Australian society, and there is lots of reason to believe that we can continue to grow profitably as we do this better. And there's lots of reasons to want to do it better because it's actually something to be proud of, and it's something that really motivates our people. We are Australia's leading LMI provider. We have a market-leading position and have done so for a very long time. We're addressing a large and growing market. We're positioned for profitable growth. We have a unique skill set that enables us to access that growth profitably. We do, even with that profitable growth, have capacity for ongoing capital management, and you have benefited from that, and our intent is that that will continue. I would very much like to say when I'm back here next year, I probably won't set a goal of beating my number one with TSR. There's a bit of a gap to go there in the next 12 months, but I hope that we'll continue to see that strong performance going forward. Thank you for your attention today. We look forward to delivering returns for you as we deliver for Australia going forward and look forward to partnering with you. If you have any more questions, of course, Paul is always available, and the management team and I will be here for a few more minutes this morning. Thank you very much, and we'll see you soon.