All right, thank you. We're now joined for our last speaker of the conference. Saved the best for last, of course. Thank you. Don't let anybody else hear that. We're joined by Definity CEO, Rowan Saunders. Rowan, thanks again for joining us this year. Great to be with you. Thanks so much. All right, it's a question I've asked everybody. Let's get your perspectives on how the first quarter has shaped up with only a couple of days left. Yeah, I mean, I think we ended last year with a lot of momentum, and so certainly we're pleased with the expectation. It's kind of as we've been anticipating. And when we think about, you know, how we exited 2023, good growth momentum, great broker proposition, more diversified earnings that after the investments we made last year. But when I reflect a bit back on 2023, when we entered 2023, there were a lot of headwinds. And I think as we go into this year, it certainly feels like there's less headwinds than it was. So, you know, let's hope it's a good year. Okay. So it sounds like we're off to a good start. One of the businesses where there is a lot of tailwind, in my view, is personal, personal auto. Growth was good last quarter, up around 8% year-over-year on the top line. What can you tell us about what's driving that growth? Do you think it's sustainable in 2024 and in, and in 2025 as well, I think is important. Yeah, been quite a big shift for us in the momentum of auto, and I think, you know, a couple of things you'll recall that from a portfolio mix perspective, over the last couple of years, what we were trying to do was to grow personal property and commercial lines at a rate faster than auto. And so that was part of the portfolio construction, you know, plans. The other thing was in the back end of 2022 and 2023, auto was difficult. You know, people back driving, frequency up, and steep inflation. So for us, last year was very much about margin and not growth. So we led on rate, proactive rate filings, and so that was very successful getting those into the system, but it did mean that our competitive position, you know, was reduced. As the rest of the industry seems to be reflecting the loss cost trends in automobile, they too have taken price increases. You know, Ontario is the biggest market for sure. It's about 70% of our business. You now got the industry average price is about 10-ish%, so our competitive position's improved much better. So now you're starting to see that in Q4, and I think we expect right through to 2024, not just the average premium moving up, but back to unit count, you know, growth. And so that exposure growth, growth is coming. So I think when we think forward for 2024, 2025, 2026, we should be back to a much more healthy automobile growth than we had in 2023. Yeah, good to hear. In terms of the auto book, you've got 12% that's in Alberta. Yeah. There's a rate cap there as well or in place at this point. Maybe talk about, you know, your view of the regulatory backdrop for the next couple of years. Do you think that the rate increases the industry is putting through right now, 10%, is that something that's sustainable? Yeah. Look, I think that the good news in automobile is that when you talk about Alberta, I mean, it's unique. It's the only province where you do tend to have regulatory and political intervention in the product. So the 10% that we're kind of getting certainly across, you know, Ontario and other markets, I think that is sustainable. I mean, I think we see all competitors leaning in, reflecting price changes, and I think that's going to continue. I think Alberta's a little bit different, and so that's really the kind of the outlier. And the story there is, I mean, this, as you know, came out of a political motivation through the election cycle. First a freeze, migrated to a cap, and the government now is working on a series of product reforms. And so I think their plans are to work with the industry to figure out what the new reforms and new product would look like, and then we expect that it will release. But it certainly is something that, you know, is a bit of an agitation, and it isn't good for the functioning, you know, of the market. Outside of that, I do think what you'll find is good pricing power continues. We've seen not only good new business pricing, but still high retention a nd at some stage, you know, consumers do get a bit fatigued, particularly with automobile pricing, and that normally is followed by a series of product reforms, and that's the typical cycle we've seen over the decades. So I think, you know, the big catch-up in pricing really has happened in the last, you know, 12 to nine months. Ourselves have had double-digit prices. We've got 13, 14 percentage points of written rate flowing through the portfolio. That runs into double-digit earned rate this year, but we'll be lapping those rate increases in the second half, and so likely we'll be back in the regulatory filing approval. But for more, let's call it more modest increases, that really just now reflect your rate adequate and, you know, what do you need to match the loss cost trend. Yeah. Okay, so maybe last one for personal auto then. The target or objective is mid- to high-90s combined ratio. Tailwinds, which suggests you can do that this year. What do you see as maybe the biggest risks to achieving that combined ratio objective? Look, I'd start by saying I think we're very confident, you know, in that, in that number. And, you know, when you think about, you know, the components of that, the biggest one is, of course, can you get your segmentation and your pricing done and implemented? And that's actually done. So this is now just mathematics. You know, we really have the segmentation filings, we have the rates done. They're now earning in. Retention is high, so it's quite a mathematical exercise. I think, you know, if there's any risk to that, like when we think, well, where would the risk come? It really is on the cost side. So is there something that's unexpected in terms of inflation? We've seen inflation normalized. We've seen it kind of pretty elevated, but flattened for the last several quarters. What would have to happen is there'd have to be a real acceleration of that to kind of create, I think, risk to that guidance. Yep. Yep. Okay, understood. I kind of lied, since the next question is on Sonnet, which is somewhat personal. There's a lot of it. Yeah. You know, this is, this was a big topic during the IPO phase, as a key differentiator for Definity relative to some of the peers in the industry. So I guess, maybe we'll start just very broadly, what do you see in store for Sonnet i n 2024 and in 2025? So on the Sonnet, I mean, I think this is a very strategic investment for our organization, and it's clear to us that consumers are changing buying patterns. More and more of personal lines is going direct to consumer. More of it is going to be done digitally. So we've learned an awful lot, and we've built up the model. I think we've proven to ourselves it resonates with consumers. It's great, robust technology, easy to use. So we know we can scale up. What we've been trying to do in the last little while is make sure that we're confident we can get it to break even and contributing from an underwriting perspective. And so that's why this last year has been much more about the path to profitability than continuing to scale. We know we can scale when we choose to. We've targeted to get to break even by the end of this year. So on a run rate basis, we think that'll start being accretive, and that's the expectation. So this year is still really a fairly flat year for us, for two reasons. One is the focus is still on margin and rolling through the portfolio. The other one is we're growing outside of Alberta, but because of Alberta, we're actually contracting a nd we had about a 66% retention rate on Alberta auto last year, which was fine because that's unprofitable, and so we're trying to make the problem smaller until the reforms, you know, come in. That will continue again this year. So the way to think about Sonnet, it's really still flatlining this year, growing outside of Alberta, contracting in Alberta on the way to profitability. And at that stage, you know, we'll be comfortable to start stepping back into unit count exposure growth in 2025, 2026, and 2027. When we think about some of the tools there that are working really well, we've introduced UBI, usage-based insurance- telematics, and that's now about 60% of new automobile sales. So consumers like it. Helps them control. Ideally, we can assess their driving patterns better. We go both ways in that we can give discounts for great driving, and we can have surcharges for if the driving, it goes the other direction a nd then the other issue is the group and affinity. That's really working quite nicely for us. You know, we had no group and affinity business. It's now a third of the portfolio and a significant part of the new business. And then more recently, what we found is a great interest from some, you know, big brands, big corporate partnerships that we're partnering with and kind of white labeling products with them. So I think there's quite a lot of opportunity there. For us, we're pretty clear, let's get this model working, prove that it can run, profitably. We know that the loss ratio is improving. We know the expense ratio. It used to be a drag, it's now the same as the industry, but it should be about a 10-point advantage. That will just come with more scale. So I think, you know, as we've committed, let's get that over the line this year, and then we'll build it next year. Okay. Something we'll keep our eye on. Shifting to personal property. Obviously a very elevated catastrophe year in 2023, 16 points in terms of combined ratio tied to catastrophes. What are some of the actions that you've taken in the property business to mitigate future catastrophe losses at these levels? Yeah, personal property. I mean, I think when you think about Nat Cats and the intense weather storms, this is the line of business, out of all the three lines of business, commercial, personal auto, and personal property, it's the line that's most exposed to it. You know, and in fact, you know, when I think back to last year, I think something that is an interesting, you know, fact, last year was certainly, in our mind, an outlier. There were 21 Nat Cat events. There were 10 events in the third quarter, well more than we had anticipated. That being said, we still made an underwriting profit in personal property last year. Not everybody in the industry did, but we did. So I think it gives you a good sense that we've got our arms around this business. We've got some great underwriting, you know, and pricing capabilities. The actions we take, there's a number of them. I mean, I think the first thing is you've got to have an appropriate reinsurance structure in place, and we've got great strategic partners with reinsurance. We bought a Cat A gg program for 2022, 2023 and 2024. That's really a transitional tool for us as we're scaling up and building that portfolio. So I think that's an important piece, and it's really there to protect capital and the outsized losses. The second thing is pricing and segmentation, and this is something we spent a lot of time and effort on. Fortunately, personal property is a completely unregulated line, so it's just whatever the market, you know, will bear. We're changing and segmenting all the time. We've got a pretty advanced methodologies that we employ, and the market takes a lot of price. I mean, this is still high single digit rate and then another 6%-8% indexation. So we're funding the weather losses. The other area is continuing to be nimble and adjust the product and conditions. So an example would be in hail zones, if you have an old building, we don't give you full replacement cost for your roof. In flood zones, we put sub limits on bigger deductibles. So product pricing, you know, is a capability you need in place. And then the other one is about accumulation management, and so this is really making sure that you're sophisticated in knowing where you're putting your exposure. And one of the reasons why you've seen our personal property growth rate slow a little bit, is that in some cat-exposed zones, we are bringing that methodology, that more sophisticated lens. So we would look at areas that we've marked to much more prone to Nat C ats. We think about, you know, the traditional prevailing winds, we think about the topography, and, you know, we would have a system that says, "Look, we'd like to be underweight in that area than not." So we're thinning out parts of the portfolio. So, you know, managing that is, you know, a core skill. And then the final one is claims, supply chain, and cat management teams, which we built up pretty significantly. So, you know, we're not worried about this, like, we actually think this is a great opportunity. I think the market is going to grow substantially over the years. And if you're best in class, we should do well a nd I think last year's a good example. I mean, this was a pretty unusual year. Look, we're not happy with the 99 combined ratio, but it's still a profit in a really outlying year. Yeah, and in a normal catastrophe year, like, could this business do sub- 90% combined ratio? I mean, you say sub-90%, we're—like, we target mid-90s- Exactly. ... or maybe a little bit better. So I think, you know, there is some volatility there. In a benign year, yes. We don't actually target sub- 90% at this stage. So our overall philosophy, given where we are in our market share, is we think that there's lots of growth opportunities. So we're much happier growing at twice the rate of the industry at a 95% than try to run to low 90s. In the future, we could easily adjust that philosophy, but at this stage, that's the way we think we can compound the earnings, and it's the best value for shareholders. Yep, agreed. Let's shift to the commercial segment, where you have seen really strong double-digit premium growth, combined ratios consistently improving. Maybe just sort of talk through what is driving the strength in that segment. Any lines that are in your view, performing better than what you would have expected in terms of, like, how you're budgeting on an annual basis? Sure. Look, I mean, I think we're delighted about our commercial business, and if you just think about the journey of the last couple of years, it's dramatically changed. because before we were a public company, Economical, the Mutual was very much of an SME-type player. The teams and the talent we've brought in have really allowed us to be a one-stop shop. So we range from SME business to certain verticals in mid-market, and then into specialty a nd we've really built a fantastic, you know, team there. So when you think about what's driving the growth that we've had, the first point I would make is we've taken advantage of firm market conditions. So roughly 60% is rate, and 40% is share gain. So, you know, it certainly helped adding a lot of margin to that. It's broad-based, but the fastest growing areas are really the commercial property in the SME and the specialty, and we bring different propositions to the marketplace. So in the small business, commercial property, we've launched Vyne Small Commercial, so it's very similar to what we've done in personal lines. It's a great digital tool. Over 50% of the eligible business brokers can self-quote and bind on our terms and conditions and pricing methodology. So it's slick, it's quick and easy. And what we're seeing is brokers are consolidating that small commercial business. They don't need to deal with dozens of insurance companies. So that, you know, for example, last year was about a 30% segment, 30% growth for us in that segment. Yeah. So that would be one of the really strong ones. The other one would be in specialty, and on the specialty lines of business, there's a couple, you know, product lines that we really focus on. But you've got your professional lines, like D&O and E&O, you've got some surety, you've got specialty and excess, you know, property lines, the sharing economy. And that's really quite a build for us. You know, that's a big part of our portfolio. It's close to 30% now, so it's come up quite nicely. But when you think about what our natural share could be, we're still in the low single digit, you know, market share points. There's a lot of upsides for us. The way we've really succeeded there is by bringing in teams and talent, and the brokers would much prefer to deal with domestic players than international players, because we have a much more strategic relationship with them. So, you know, what's kind of doing better than expected? I think the specialty business. I think we found it probably a little easier, and we've to gain the share we wanted to. We thought it would take longer, and I think brokers and risk managers have just jumped on board faster than we would have budgeted for. So that's a positive surprise for us. Yep. We're seeing some commercial lines start to soften. Is there any business lines where Definity is operating, where you're seeing some shifts in the insurance cycle? Or maybe some changing dynamics around pricing, around terms and conditions? Well, I think in commercial lines, we know the big answer, the general answer is it's still looking very firm. As you start to look a bit more granularly, what we're anticipating is, let's call it, I wouldn't say softening, but I would say some tapering from some of the past. And it makes sense because, you know, we're running this business in the high 80s, low 90 combined ratio, and the loss costs are reducing. So you've got still some inflationary trend. In the past couple of years, we needed eight, 10, 12% rate. Well, when you're running at a 90% combined ratio, if loss cost is four or 5%, as long as you're getting four or 5%, you're covering it. I think our teams would say today we still believe we're building margin. We're still having written rate in excess of the loss cost trend, so that's the good news. I think when you think about the question, like, you know, will it, the market shift? Commercials is different from personal auto or property. It's not one market. And I think what the behavior in small commercial is very different from certain verticals, certain, you know, product lines. So in small commercial in Canada, it's really quite concentrated. So five or six big insurance companies have the lion's share of it. Most of the average premiums are relatively small. Brokers don't shop it a lot, so it's pretty sticky, and, nothing has changed that we can see in terms of our rate filings as opposed to it's automated, we push it out, it's renewing. As you get into some of the larger and some specialty lines, you know, there you're seeing a bit more competition than we saw a couple of years ago, which is kind of, you know, logical to expect. So I think, you know, we're expecting some tapering in some lines. Normally, you see this on new business before, well before you see it on renewals, but it's not an unexpected. We've been a three or four -year of a hard market and as I said, you know, we're still kind of, I think, adding to our margins. Yeah. Okay, good. One aspect of the ROE expansion story is obviously M&A. We've gone over that quite a bit. Maybe the piece that doesn't get as much attention is the scalability of the platform and the- Mm-hmm ... operational improvements, whether that's coming from innovation or another source. So how many points of, let's say, expense ratio do you think are still on the table for Definity over the next couple of years on that ROE expansion plan, and when do you expect to realize upon that? Yeah, I mean, I think it's part of, you know, the journey for us. And so when we, you know, think about the last number of years, what we wanted to do was build growth engines that could build the revenue, and we've done that quite strongly. We then focused on increasing sophistication, underwriting discipline, and improve the loss ratio. We've kind of done that. So the next leg of the stool for us is to get some operational leverage and improve expense ratios a nd it's not that our expense ratios are off market, they're not, but we're very digital. We've made big investments, and so we should be running more efficiently than I think we are. For us, this is not about a knee-jerk reaction. We're building and we're growing, and that's a benefit, because I think what we'll now start to see is some operational leverage. You know, when we think about the next couple of years, we'll still be building our expenses, but not at the same rate as revenue. So probably it's more of a gradual half a point a year for the next couple of years. I think there's a couple of points out there, you know, for us. Last year, the expenses came down a bit for a number of reasons. Partly, when you have bigger Nat Cats, you pay less commissions to the brokers, so that we're expecting that to normalize. But there was, our underwriting expenses did improve. That will hold, and I think we can continue to improve on that. So it's one of the other levers. I mean, I think as we think about the business and we're very focused on, like, well, how do we move that operating ROE up? Of course, there's M&A, which we'd like to do at some stage to deploy the excess capital, but even outside of optimizing the balance sheet, we've got Sonnet, that's going to get better, and that's going to, you know, help us by a few points. You've got the claims business that we're just launching the new transformation system, new technology. There's still room for improvement there, a nd then there's a couple of points on the expenses. So these are all things that, you know, we're pretty confident about and working steadily to execute over the next couple of years. Yeah, great. The M&A question I will ask is this: of course, the environment is a bit challenging. Bid-ask spreads are wide to go out and buy a larger scale insurance carrier. Obviously, the market's good, cost of financing is high, so it's going to be a potentially it's a little bit tougher. So there is an element as you sort of approach the end of the demutualization protection window late next year, it's either get big or get bought. And so is there, y ou know, how does that affect how you think about M&A, and your strategy on M&A? Yeah, like, but I think what we think about is kind of how we build this business. You know, how do we create shareholder value? And, we definitely see M&A as a part, a tool for us to get into our objectives. So our objective is be a top five player, and once we are a top five player, we'll have another objective of being a top three player. But organically, we know we, we're gaining. We used to be number 8 a couple of years ago, we're now number six. We used to be four in the broker channel, we're now number three in the broker channel, and there's only CAD 500 million-CAD 1 billion dollars of revenue difference. But so, you know, for us to kind of close that gap to top five, it does require some kind of a, you know, modest type acquisition. So we would like to do that. And we think that the industry is going to be more conducive to do that. This industry should consolidate. It has been consolidating. There was a bit of a hiatus through the COVID periods, but if you look over the last 20 years, one and half to two points or so of market share per year changes hands traditionally, and we think the conditions are ripe for that, you know, to come back up. Look, we don't—we think we've got a great organic story. We know we can build the book value strongly and the business, the margin outlook looks very great, so we're very confident about that. Certainly, M&A is an accelerator, but we don't feel under undue pressure to do something for the sake of doing something. We, you know, we've worked hard to build a great business. We're not going to be undisciplined. But we're pretty sure that there's going to be more opportunities in the next little while, and we know that not only have we got the financial capacity, but we're ready to do something. We've built a business for a bigger infrastructure, and one of the examples I use is we could buy CAD 1 billion of personal insurance business, drop it onto Vyne without any headcount, and that's because Vyne's already built for a business like that. So, so that's something that, you know, it's opportunistic. You need sellers as well as, you know, having a willing buyer. But, but it's something that that Phil and I are working quite hard on. Excellent. Well, we've only got a couple of seconds left, so let's... Why don't we wrap up the latest edition of the National Bank Financial Conference with that, Rowan? Thanks very much. Appreciate it, as always. Thank you very much.