We good to go? Brilliant. Thank you. Well, good afternoon, everyone, and welcome to this year's Capital Markets Day. My name is Adrian Cox. I'm the CEO of Beazley. This isn't a regular Investor Day. We're not here to give you the investment thesis of Beazley. This is more of a kind of a geek out afternoon, where we're going to go into a little bit more detail about two of the bigger subjects of the day in Beazley, in property and in cyber. And it's really around a theme of how do we think about risk in a changing world, which is very relevant for both those industries. And it's been a very big year for both teams for slightly different reasons. As you know, we raised capital last year, partly to support a very significant and quite rare opportunity in property. I think the team has had an excellent year. I think we did that at the right time, and I think we're at the forefront of seizing on that opportunity. I also think there's more to come, and so Richard will be talking a little bit more about that. It's also been a very big year for our cyber team for slightly different reasons. There have been some headwinds as well as some tailwinds, which, again, I think the team have managed very well. The whole cyber war conversation, which has really dominated this year, was a very important conversation for us to have. And one of the key tenets, I think, in making sure that this product is sustainable, can grow, and can provide the sort of solutions that the businesses across the world really need in a way that is not going to bankrupt the insurance industry. And I think we are at the tail end of that conversation now, and it's been a very important one, and I think the long-term thesis for us around cyber is unchanged and very exciting. And, we're gonna talk a little bit about some of the changing nature of those risks and, and opportunities in, in cyber. So to start with a couple of introductions then. I'm Adrian Cox, CEO. The speakers for today, so is Bob Quane, who's here. He's our CUO. He'll be talking a little bit about climate change. The property conversation will be led by Richard Montminy, who runs our Property Risks division, and then Paul Bantick, who runs Cyber, and Aidan Flynn, who runs Underwriting Management for Cyber in London International, will tag team the cyber conversation. We have a hard stop at 5:30 P.M. today. We don't have to go on to 5:30 P.M. today, so we will carry on for as long as the Q&A continues. We're gonna have specific Q&A at the end of each section. So we're gonna start with property, then have a Q&A session, then move on to cyber, repeat, and then we'll have a more general session at the end. So please save your questions for the Q&A sessions, which I will be moderating. Before I hand over, though, to, Bob... Richard, I'd just like to start with a couple of words about cyber and kind of a sneak preview of what it is we're gonna be talking about, this afternoon. And it's around systemic risk for cyber, which is the dominant subject when people talk about that industry. And it's the one that, I think divides opinion the most, and people will feel very strongly either way and both ways about, how measurable or not that risk is and how we should cope with it as an industry. We've been sharing for many years now how we think about systemic risk and the evolving nature of that systemic risk, at Beazley, how we built scenarios over the years that reflect the risks that we see around us, and how we've built that cyber ecosystem and the intelligence network that allows us to assess new threats as they develop and think about what impacts that may have on systemic risk. And alongside that, of course, within our internal model, we have long had a cyber curve that we've been maturing over the years that allows us to assess how much capital we need, to be able to write that business safely, that sits alongside that kind of deterministic scenario work that we have done. And those two pieces of work have been working in symbiosis for a long time. Alongside that, though, we've also been working with a number of third parties on their development of their assessment of systemic cyber risk. We've been working with governments and government agencies, various academic sources, and third-party modeling firms to help them build their view of risk and for them to help inform our view of risk. And that's been beneficial to us and our learning. It's also been beneficial to those third parties as they, as their learning and their sophistication of modeling matures. And I think that's good for us, and I think it's good for the cyber market, because as we've said for a long time, I think, and another important tenet of a maturing and developing cyber industry is for it to develop a more coherent and consistent view of risk, and a common vocabulary to talk about downside risk. And that is to everyone's benefit if we can develop a more coherent and cohesive and consistent view of what downside risk talk looks like. I think that helps the insurers, I think it helps reinsurers, it helps regulators, and it helps investors assess and compare systemic risk across different parts of the industry. And, that industry has been maturing, and that sophistication of that modeling has been maturing, which has been good. And over the last couple of years, as we've talked about this year actually, we're seeing that consistency across third parties and their view of risk start to mature, start to be more consistent, and start to be more sophisticated. And that's one of the reasons why we were able to sponsor a cyber bond this year and show our investors some third-party modeling that we thought was sophisticated enough and mature enough and similar enough to our own view of risk to share with those investors... and I think that bond market, as we've seen in some news this week, continues to evolve so that there was the first 144A bond that finished last week that has even more public views on third-party views of those sponsors' risk. And we have always been very clear that we want to evolve our involvement in the bond market and the ILS market, because developing and growing a sustainable cyber catastrophe market is very important for us, and it's very important for the industry as a whole. So you'll continue to see us exploring and trying to help grow that cyber cat market. So as cyber modeling continues to mature, and get more confidence amongst investors and regulators and the like, we thought now was a good time for us to share with you some of the probabilistic modeling that some third parties have done for us. So we've long shared with you some views of what our own RDSs look like. Today, we're going to share with you some views of what probabilistic output from some third-party modelers look like, so you can see a slightly broader view of what other people think of our downside risk in cyber, and how that compares to some of the RDSs that we've shown before. Those numbers are obviously quite different. So as you go to the extremes... Ooh! Blimey, of those curves, those numbers are unsurprisingly quite different to our RDSs because they represent a different point of a return period. But what you will see is that the numbers that we'll be sharing with you are quite consistent with the sorts of risk appetites that we have for other peak risks. And so hopefully, that will share with you some confidence we have that we're managing cyber and the downside risk for cyber consistently with how we, how we think about other sorts of peak risks. So I thought it was useful to share a bit of background thinking about what we're doing this afternoon and why we're doing it, and why we feel that that's appropriate as we play our part, I think, in helping mature and get more sophisticated conversation around cyber systemic risk, which is such an important subject for us and for the cyber industry as a whole. So with that short introduction, I will hand over to Richard. Oh, please read the disclaimer. Did you just have to move the desk up? Yeah. So embarrassing. Sorry about that. Thanks, Adrian. Good afternoon, everyone. My name is Richard Montminy, and I lead the property division, and I'm happy to spend some time this afternoon with you to discuss what we've been doing in our property businesses. I guess I need to do this. Cool. I wanted to start today with the property market, which has and continues to be more complex, and the impact of climate change is increasingly making property underwriting more challenging and less commoditized. As you will note in the enclosed graph, there has and continues to be a steady increase in risk, driven significantly by natural catastrophes. This increase is continuing to have an impact on both the frequency and severity of losses, both insured and economic. As you will note, and you might have trouble reading it, to the far right there is the 2022 year. Insured losses from natural catastrophe events were estimated at $120 billion-plus, making 2022 the fourth highest annual insured loss from natural catastrophes since 1970. When you look further into the current years, the trends we saw in extreme weather events during 2021 and 2022 have continued throughout 2023. And as of now, the insured losses from natural catastrophe events in 2023 have already surpassed $100 billion. This rise in insured losses has maintained a long-term trend of somewhere close to 5%-7% annually. Climate change is a key factor in this upward loss trend. Not only factor— It's not the only factor, because exposure changes and inflation have also played a key role, but it's very meaningful nonetheless. The consequences of the continued increase in risk and natural catastrophes has continued to change the world's risk landscape. So with that trend in mind, the risk complexities in today's world continue to not only force one to deeply analyze obvious perils, but more importantly, try to anticipate the unforeseen. The ability to have an informed view where things are complex, volatile, or changing fast, plays well into our underwriting approach and skills. When one can break down, review, and analyze complex risk, complex risk information on a consistent basis, they should be in good position to reduce volatility and mitigate the unknown within the portfolio. In the 24 months or so leading into the current year, we considered the property market conditions to be too soft. Thus, while we worked through this period, we reshaped our portfolio through risk selection and optimization versus growth. During this time, we continued to focus our efforts on understanding the challenges of climate change, strengthening our pricing, improving our underwriting tools and catastrophe modeling, and upskilling our underwriting expertise. We also further strengthened our insights and analytics by enhancing and investing in our pricing and exposure management teams, including the hiring of an expert in financial climate risk. As a result of the significant turn in the market at the start of this year, we've been able to lean in and grow our various property portfolios by what we have seen as the best opportunity in the property market in decades. All occurring when we feel pricing and terms are more accurately capture the risks and exposures and play into our strengths as a specialist insurer. This next slide should be familiar to some of you, as we shared this view during our half-year results, where we discussed our three key trading platforms. So if I start in the middle, being our North American platform, where you can see 35%-37% of our premium, our property premium emanates. The key here is being that all this business is written on a non-admitted basis. The reason why this is important is the commercial property market has and continues to become more complex and involved. The reason this is extremely important is the commercial property market continues to be complex and volatile. Therefore, the ability to pivot and adapt to the market, as well as fast-changing opportunities, is best written through the non-admitted space. This has and continues to be a key benefit to us as the admitted market has much less flexibility in being able to react, and we can quickly react and change as the market continues to change. With this in mind, throughout the year, we've continued to see significant shifts in programs across the industry as brokers have had to pivot from the traditional admitted market to the non-admitted market to be able to build and to provide solutions for their clients. This has played well into our strategy and strength, as the result in market shift has supported a significant portion of our premium growth in North America, where we've seen the year-over-year H1 growth in excess of 125%. We expect continuing momentum continuing through the rest of the year and forward. We've also seen significant growth in our global wholesale platform, where the majority of our remaining property business is written. This business has also grown close to 50% in 2023, and we fully anticipate to see further momentum in 2024 through continued organic growth with additional international expansion into our various property businesses. This growth will be further enhanced through 2024 and beyond with our expanded European footprint. This expansion into the European market will be further supported with recent key underwriting hires, as well as the local support and expertise from our new European General Manager, Fred Kleiterp. It should be noted that as we grow and develop our business across these three platforms, we will also continue to closely manage it and manage our experience across these regions and will pivot where necessary as the local market cycle. To this end, we did see a drop of approximately 11%, as you'll note in the graphic, in our European platform at our half-year results. This drop was mainly due to the local markets not supporting appropriate pricing associated with the respective risks and exposures. We fully expect this market to continue to adjust accordingly over the next six to 12 months. So what are we doing as a team? We're continuing to enhance and build our teams across the underwriting platforms to support our portfolios across the regions in the world. The U.S. commercial market offers significant opportunities, and we will have and continue to lean into this market and grow our U.S. property franchise, while also seizing opportunities in our SME and reinsurance businesses. In addition, we'll also continue to grow significantly in other key geographic regions and markets around the world, including Europe, as I just mentioned, Asia, Australia, New Zealand, et cetera. This expansion will continue to add broad diversification across our property risk portfolio, all while remaining diligent in our analysis and underwriting to pivot accordingly when the regional cycles of the market exist. While we see regional cycles in the market, we also are continuing to see see more property markets around the world continue to harden and de-commoditize as the secondary perils of fire... I'm sorry, secondary perils of flood, wildfire, tornado, and hail continue to plague the industry. These secondary perils are forcing carriers to be more to be more analytical and specialized, and many of those are what drove that $100 billion-plus you're currently seeing in today's market. I'm sorry, in 2023. The flight to specialization supports our strategy and approach of providing key managed primary capacity to our clients and brokers. This is a key value and benefit to the market, as it enables us to work closely with our clients and brokers while best managing the pricing and terms and conditions to support the deal. And certainly, one cannot forget about climate change, which will also continue to evolve and cause uncertainty for property owners and drive up demand for insurance and risk management support. This uncertainty will continue to have an ongoing market impact, which will cause carriers and capacity to move in and out of the market. This will further support the ongoing improved pricing in terms and conditions. In this next slide, I'd like to touch on a key area of focus of mine since joining Beazley back in 2019, being our claims ratio, and more specifically, continued claims loss ratio improvement. As you can see, our claims ratio has been trending downward since 2020. This has been driven by the continued strict foundational focus on improved risk quality and selection for all businesses within the division. This focus, coupled with comprehensive analysis of locational exposures and risk, has been critical in driving this ongoing significant year-over-year improvement of our claims ratio, and thus, is also driving our property risk combined ratio. Another key driver of our need to better understand climate risk is to manage volatility across our businesses, which, given the opportunity, as we've seen in property, is an important consideration. This is a graph we've shared before, which shows our ratio of our 1-in-250 risk appetite as a percentage of shareholder equity. Over the past 10 years, our risk appetite has remained relatively stable while the shareholder equity has continued to increase. As a result, you can see here that volatility has been on a downward trajectory for more than a decade, which is a result of our ongoing dynamic portfolio management and optimization. When we move to the next slide, we look at our potential impact to earnings being our 1-in-10 estimates. As you can see, the 1-in-10 estimate event for property relative to annual earnings of the entire company has continued to trend down. Just four years ago, a 1-in-10 loss event could have reduced our annual earnings by as much as 70%. Today, a similar event is expected to impact our annual profit somewhere in the range of 30%-40%. Many of the foundational strategies that we have discussed today have and will continue to create a more stable and less volatile earnings environment. I would now like to introduce Bob Quane, our CUO, to discuss the next section, which is on underwriting for climate change. Thank you, Richard, for explaining some of the excellent work you and your team have been doing to grow and develop the property portfolio. Obviously, a lot of work has been done around climate change and how it's impacting property risk. Climate change is creating new and increasing risk, and we've been aware of this for a number of years. We wanted we started by avoiding the risk by tightening terms and conditions. But as we've become more comfortable, we've been pulling exposures back onto the books, as we've been working to implement tools and processes to allow us to do this. The industry hasn't fully figured out how to do this yet, so there's some advantage, a competitive advantage to doing this well. And as a specialty insurer, we want to be a leading supporter of clients as they seek to adapt to climate change. So let me start by covering the materiality assessment, which feeds into our overall climate risk framework. The assessment looks at two factors: the materiality to our business in terms of our portfolio of an individual peril and the potential impact climate change will have on each of those perils. These material assessments have been mapped out, as you can see in the chart, highlighting which perils are likely to have the biggest impact on Beazley. Unsurprisingly, for a specialty underwriter with a significant U.S. E&S business, North American hurricane is our most material peril today. This is also a peril for which there is scientific consensus of some climate change impact. The output from this process allows us to prioritize our efforts when developing climate risk tools, and we refresh this chart annually. Over the last two years, we've been focusing on developing climate risk change condition view of risk for the key U.S. perils, and in 2024, we will broaden that out to other important U.S. perils. To ensure our property business is prepared for the challenges for the changing level of risk that climate change brings, we've established a climate risk framework. This framework allows us to develop sophisticated tools based on approach and supports underwriters in making informed underwriting decisions. The framework comprises of an action plan, which is based on five key pillars. Let me walk you through each of these pillars in more detail. Firstly, pricing. As Richard mentioned earlier, we have strengthened our pricing team to truly equip our underwriters with the pricing tools they need to consistently underwrite profitable business. Our focus here is moving from a broad-based assessment of risk on a geographical basis to a location-level approach that allows us to assess risk for each climate peril at an individual level and to calculate the associated costs of writing that specific risk. Additionally, models in the market have historically been based on a combination of climate science and historical data without an allowance for the impact of climate change. Today, our pricing, our catastrophe modeling, and natural hazard research teams work together to reflect increased risk due to climate change into our pricing. In combination, these improvements really allow us to refine how we select which risk to write, as underwriters have a more granular, forward-looking view that ensures the appropriate premium is charged for the risk taken. More accurate pricing also allows us to show where the greatest risk from different climate perils will arise and managing the line size we are comfortable deploying. Moving on to catastrophe modeling, where we have made three significant adjustments in the way we model these risks. Firstly, we've upgraded our modeling tools. This is focused on better understanding of how recent events have been different from previous ones. A good example is incorporating our learnings from the increased flood risk that arose from Hurricane Harvey in 2017. The second change was creating a dedicated natural hazard research function. This ensures greater scientific grounding for any future model changes or for creation of any new models which require validation. This allows for regular maintenance of the models and ensures the model is modified to reflect the portfolio that we underwrite. And finally, we also strengthened our catastrophe modeling reporting to ensure we are able to get insights more quickly and consistently across property risk. It also allows data to be more readily available and further integrated within our pricing tools. These changes have significantly enhanced our catastrophe modeling capabilities, allowing us to assess catastrophe risk better, stay ahead of emerging science, and ensure that this knowledge is shared with the wider business. Next, I'm going to discuss portfolio management. Portfolio management supports individual trading teams to capture the key metrics needed to manage their own portfolio and is tailored to the product specifics of each team. Additionally, we have implemented division-wide tools that are used to specifically manage our risk appetite. As we have a limited risk appetite, it's important that we optimize our risk appetite between the individual property teams. By segmenting our portfolio across regions and teams, we can dynamically pivot the portfolio in places where we're getting the best pricing or move away where we have highly aggregated exposures. The combination of portfolio management across both individual team views and divisions allows for effective monitoring, management, and increased insight of the entire book. This ensures we are maximizing our profitability while remaining within risk appetite. The next pillar, climate scenario analysis, is how we assess the financial impacts of climate change under different warming scenarios. By analyzing different climate scenarios and their potential impacts, we can evaluate the resilience and vulnerabilities across our portfolio. This assists us when making strategic and business decisions. We have conducted physical risk scenario analysis for a range of different temperature scenarios, each equating to different time horizons. For example, we've conducted a physical risk scenario for U.S. hurricanes for three temperature scenarios. 1.4 degrees corresponds to a short and medium term, and it's in line with the Paris Agreement. 2 degrees corresponds to the medium and long term, and 3 degrees is an exploratory hot house scenario. The results provide a number of metrics, including average annual loss and the 1-in-250 model loss, both at a portfolio level and a regionalized level. The analysis outputs allow underwriters to review how the portfolio grows today could have an impact to the exposure to the future climate risk. By embedding scenario analysis into the framework, catastrophe risk can be viewed with a future lens. So what does this all mean when it comes to underwriting individual risk? The previous four pillars are all about managing across our portfolio, but the underwriting pillar is all about underwriting an individual client and understanding their assets, where they are located, and how they are managing the risk. To that end, we've developed a climate change metric in partnership with a third party that focuses on how U.S. hurricane risk is expected to change from now out till 2030. This allows us to look at the physical assets of our clients and understand how climate risk impacts them over the next five to 10 years. We use a traffic light system and focus on the red clients to engage with them to ensure they have identified risk and what steps they're taking to mitigate climate risk. For example, although two clients might have similar assets and similar geographies, one client may have done some work on assessing their climate risk and are already building out protection. By talking to our clients and their brokers during the underwriting process, we are better able to understand the work that they've done and what they plan to do and use this information in our underwriting, risk selection process. We plan to progress with additional perils, based on our climate material assessment and are currently working on U.S. flood. Overall, our focus is working with our clients to ensure they are adequately prepared to face climate change. By engaging in a productive feedback dialogue that leverages our in-house expertise and external research, we are delivering real benefits that a specialty insurer can bring to our clients while protecting the financial strength of our business. In summary, underwriting for climate risk is an ongoing journey. We are moving to a forward-looking approach to modeling, deploying new tools which seek to estimate what the exposures will be rather than what they used to be. We are transitioning underwriting each peril, each asset, at each location. By using this forward-looking approach, we are building a detailed and sophisticated view of risk that is constantly updating and improving our underwriting capabilities, allowing us to actively select each risk and engage in a positive feedback loop with our clients and brokers to improve the risk management of climate risk. The E&S market in the United States is providing an excellent place for Beazley to be in the current market conditions. The increasingly complex, complex risk landscape that climate risk change is delivering plays to our strengths in terms of underwriting for a specialty insurer. Before we go to questions, I'm going to turn it back to Richard to cover the property outlook. Thanks, Bob. So I'll spend a few minutes and discuss where we see the market going. So throughout 2023, the market has continued to see property values increasing to reflect proper exposure and certainly inflation levels. In addition, terms and conditions have continued to improve and tighten as the years continued, and all while attachment points and rates continue to increase. In addition to these risk improvements across the property portfolio, we have made ongoing strides in our understanding of climate risk, as Bob just illustrated. We've also been actively investing in modeling and pricing tools and taking steps to embed the learnings into our underwriting processes. As we progress into 2024, we expect favorable conditions to continue. While we won't grow at the same rate as we've experienced in 2023, we don't expect the market... I'm sorry. While we won't grow at the same rate as we experienced in 2023, we do expect to see growth next year, and we should remain positive. All these factors have put us in a solid position to continue to take advantage of the market, of the market conditions and continue to build our property franchise in the world, in the U.S. market and the niche markets around the world. Hopefully, over the last 30 minutes or so, we've had, Bob and I have had a chance to kind of ground you on what we've been doing over the past few years, but more importantly, where we are currently and what's carrying us forward. So now I'd like to bring Adrian back up to the podium and moderate our Q&A session. Thank you. Thanks, Richard. Thank you. Oh! There we go. All right. I will take the... We have a microphone. Great, we'll pass it around. Would you please start by introducing yourselves? Hi. Because not all of us know you. Darius Satkauskas, KBW. Just one question. So, you suggested that you addressed some of the concerns the market has about some of the frequency exposures, you know, adjusting the model, the pricing and, and whatnot. There still seems to be very little appetite among reinsurers for frequency exposures. So what's your reinsurance buying strategy to maximize that growth opportunity? Are you willing to pay a higher rate? Are you, are you just retaining more? What's the, what's the outlook going forward for that? Thank you. All right. Bob, do you want to take that? Thank you. Yeah. Yeah. So just to make sure I understood the question, you wanted to know if, if we don't have the proper rate adequacy, how would- So the question was- I could- That's all right. Reinsurers are willing to take less frequency risk- Yeah ... now than they used to be able to, hence the attachment points going up. And they appear to be charging an appropriate price- Yeah ... for the risk they're taking. What does that mean for us? Yeah. Well, I mean, first of all, in 2023, we planned for that, and we were able to get the reinsurance structure that we need at the price that we had planned for. I think it was an advantage to go out in April, at April 1st, because the market had settled down by then when we renewed our treaty. But to be honest, you know, we're comfortable with the attachment point that we have. In the past, we took advantage of inexpensive pricing. So if we were able to get the price at... you know, get the coverage at that price, then we would take it. But we are comfortable with where we are today. We were really being opportunistic in the past. I always say, the only fun part of a soft market is buying reinsurance. That was a private comment. Yeah. Provided we can charge appropriately upfront, a properly priced and structured reinsurance market is a good thing. So to put what Bob said the other way, if reinsurance is intentionally or unintentionally subsidizing insurance, it encourages poor behavior, right? It encourages insurers to give away risks that they should be dealing with themselves and to price risk inappropriately, which is one of the drivers of the soft market that we've been dealing with for so long. Actually, a reinsurance market that is disciplined, pricing properly, and not taking risk it shouldn't be on, means insurers need to deal with that risk properly themselves. And that's been one of the drivers of the really significant change we saw in the U.S. market, as insurers had to deal with that risk properly themselves. Suddenly, they were pricing it appropriately and putting out the right amounts of capacity, which gave us the opportunity to do what we needed to do. From our perspective, the longer the reinsurance market remains disciplined and properly pricing for the risk it assumes, the longer the opportunity we will have. Nick? Thanks, Adrian. Nick Johnson from Numis. I'm just wondering on the traffic light system that you're using for, I think, did I hear correctly, just U.S. clients at the moment in certain risk types? In what proportion are sort of coming up red, amber, and green? How much business are you having to turn away because they're not reaching- meeting your requirements? I'm not sure of the proportion. Jack, do you know the... I'm not sure of the proportion that's red, amber, green. I think that's something we get back to. Yeah. Yeah. Okay. You got any idea, Richard? Mm- ... Nah, not off the top of my head, 'cause it's early sailing. So- We'll, we'll talk about that next time. Yeah. Do you want to pass the mic to your left? Yeah. Thanks. Hey, it's Kamran Hossain from JP Morgan. Can I just go to the 1-in-10 year event slide? Yeah. Well, I've got the slide in front of me, that's why. Basically, the numbers obviously come down, but it's still relatively high, given the pickup in interest rates, given the, like, recurring income in the investment side. Is that a single scenario or is that like an aggregate? That's AEP. Okay. Okay. So what would a 1-in-10... If we look back over the last, like, 15 years, what's a 1-in-10 year look like? It was- Like, which one of those would be like a 1-in-10? It was higher than that. Yeah. So one of the things that was mentioned in the slides that Richard didn't talk through specifically is, we're a primary insurer, right? So we, relatively speaking, we're more exposed to the near term than the far term because we're at the bottom. So if we're writing more excess business, the 1-in-10 will be relatively low, but the 1-in-20 or 50 will be a lot higher. So actually, a lot of our exposure is in the near end of the tail. What we had seen as climate change was making its presence felt more, was that the 1-in-10 exposure was going up 'cause more stuff was happening, and that was the action we took to bring that down. Understood. It's right behind you, Andrew. Thanks. It's Andrew Ritchie from Autonomous. A couple of questions. When you say you're a primary insurer, but you do write treaty reinsurance as well, can you just... I'm just trying to understand your relative appetite. Obviously, you've grown, most of the growth has been on the primary E&S property, but how do you judge the relative attraction of writing a little more E&S property versus a bit more reinsurance? I'm just curious how you, how you judge that and how you assess the relative returns are per those two choices right now. Second question: if I think about mistakes in the past that, not Beazley necessarily, but particularly Lloyd's insurers have made in property, it has been an underassessment of the inherent cat risk, particularly in E&S property, because a lot of people write it and think, well, I'm not, you know, underestimate the actual underlying cat exposure 'cause they focus more, this is a sort of property per risk type approach. So how are you sure that you're capturing all the relevant data, particularly for E&S property? And in relation to that, how much of that business is delegated for you guys? Richard, do you want to take those two? Yep. So on the first one, when we—our treaty book is a subset of the overall, obviously. And really, what we've done, like we were talking about in the other question, when you look at the treaty market, is our team has also adjusted our attachments and adjusted where we play. And we're gonna cycle in and out of that market as the opportunity supports, you know, what we're trying to write. So, it's gonna be a... It's a factor of our business. It's not a huge factor. It's gonna just continue to, and we'll moderate and move. If the market starts to crater, then we're gonna just shrink it down. As the market remains supportive, as Adrian said, 'cause the attachment points are where they are, and I don't see that moving. I mean, even when you look at what's going on right now, that's in the 1-1, you don't see it coming down. So I think we all feel very comfortable that the attachment point for the treaty market is at the appropriate levels. Pricing is moving around a little bit, but it's staying where it needs to be. So right now, it's I wouldn't say we're overly bullish, but I wouldn't say we're also going the other way on it either. It's just, it's a business that we will continue to maintain, and we're looking to grow it in 2024, but we're going to grow it on a managed basis. One of the things that Richard was saying earlier is that one of the benefits of bringing reinsurance and insurance together is that they are actively allocating aggregate live- Yeah ... according to where the risk reward is better. So that team gets together continuously- Monthly ... through the year. Yep ... to see where the risk reward generates the best return for us, whether it's some of the homeowners business that we write, the small commercial, the large open market business, London E&S business onshore in the U.S., or the treaty one, and we will allocate capital live according to where we see the best opportunity. We were not able to do that as well when there were two separate teams. You know, as we've been saying consistently, at the moment, pretty much the best bang for our buck is in the U.S. E&S business. You're right. It hasn't always been that way, and if that happens again, we'll allocate the capital elsewhere. Just add one thing on treaty. I think it also helps diversify our book, 'cause a chunk of our primary book is in the United States, where on the reinsurance side, we're allowed really to access the entire world. Do you want to talk about how we avoid the E&S under cat estimations of the past? Yes. Yes. So that gets into a lot about what both Bob and I were chatting about, and our rating structure in E&S. We went from, you know, managing, paying, you know, essentially rating fire, quake, and wind, and then, like, more of a common load for all the secondary perils. Now, our rating structure is definitely peril specific. So we have, and we went to this a year and a half ago, two years ago now, where each and every risk is loaded in, and each peril is identified per risk, and we rate accordingly for the peril. So we don't. It's not that we weren't capturing it before, but we were capturing them on a more collective basis. Now, we specifically look at each peril, and we determine what is the impact of that peril to that location and what is the impact on how is that driving the average annual loss, and how is it going to impact the return on capital for that particular location in that account, in the portfolio? So we have a much closer view and an informed view, and it's all the way down on the underwriter's platform and with the rating structure, the tools that we use. Yes. But when you think about it, if what you're doing is pricing for wind, and then loading a percentage of the wind price to cope with everything else, where the exposure of everything else has absolutely nothing to do with the wind exposure, it makes, with hindsight, that makes no sense. So unpacking that is quite key, and ensuring that we get the data to allow us to do that is quite key, which we wouldn't have been able to do five years ago. And then thinking about that, not only where the perils are today, but where they're developing, and making sure we price that accordingly and manage our bet sizes accordingly. That's the, that's the change. So we may get it wrong, but at least we're thinking about it for each location, for each risk. And so deciding to get it wrong rather than just relying on some blanket load, which is guess what? It also plays into... Bob touched on it. You know, we have, we have what we call our capital management optimization group, which manages this aggregate Adrian's talking about. On a monthly basis, they get together, and we look at it, and so all that data within the rating tool rolls into this tool, and we get that portfolio view where you can drill all the way down to the location, but you get the portfolio view, so you can see where are we getting the best trades that we talked about before. So is it, is it in a certain region of the country? Is it a certain line of business? Et cetera, et cetera. And that team will dynamically, you know, come to a conclusion where we might shift aggregate. If we're getting a much better return in the Northeast than another part of the country, then we'll shift aggregate accordingly, and that's something we've been working on for a while, where you have that ability to pivot and move, and that gets back into the other comment I made about being in an E&S market. So we don't have to file rates, we don't have to do... There's different things we can do that gives us a lot more adaptability to the market, and we can move and pivot very quickly and capture opportunities when they present themselves. You asked a question about how much of our book is delegated. It's 10-ish, 11%-ish. Against property risks, yes. Mm-hmm. It's never been a big feature. Yes. Back there. Oh, look. Yep, brilliant. Oh, do you... Yeah. Yeah, do you mind? Is that all right? There we go. Thanks, mate. Hello, this is Barrie Cornes from Panmure Gordon. I've got a couple of questions if I may. First of all, there's obviously talk of the hardening market, continuing rates going up, higher attachment rates, and so on. Just wonder what that means for buyers of insurance, whether or not they simply say, "Well, we'll have to self-insure or simply not buy." So, if you would comment on that, please. And secondly, just coming back to the point you were talking about there, Adrian, about individual perils and pricing them specifically, I just wondered about the data, where you get the data to do that. Is it internal? Is it external? Do you have the skill set to write individual perils? Thank you. Richard, you want me to take that? Yeah, I... So, the first question was... I'm sorry, 'cause I was thinking about the second one. What? Repeat the first one again, I'm sorry. Yeah, the first one was really whether or not, buyers of insurance- Yes ... can actually afford to keep paying. That's right. So we are seeing that phenomenon a little bit over the last, but I'd say probably 12-24 months now. I would say you're seeing that much more in the large commercial space, so your Fortune 1000 business and whatnot, where those clients, I think they have the ability on their balance sheet to say, "You know what? We've seen, you know, rate increases for eight quarters now. We're gonna take a larger proportion, i.e., increase our retention or take a quota share line." So you're starting to see that phenomenon develop in that market, more so than I would say, the mid-market segment, depending on how you define the market. But it's something that still, I think, is out there. You're also seeing now, brokers are playing into alternative risk transfer and some other different methodologies to help kinda dampen the increases. The nice thing when the market, from our perspective, as you see the continued increases, is that I'm much more apt to say, let's push the retention, let's push the terms and conditions, et cetera, than just getting additional rate. So there is that balancing effect, and we are getting the rate, but I think the point that I'm trying to make is that we've seen the cat deductibles going from 5%-10%, you know, or 2%-5%, depending on which region you're talking about. Which I think is, that helps definitely move you further up, obviously, on the—from the cat event, but it also eliminates any of that attritional noise, which has been a pet peeve of mine for a long time. So, that part of the market, I think is still healthy. I think there's certain regions that probably take a lot of conversation to go around, where you could run to a point where maybe is the market gonna make insurability questionable? Flood is one that always comes to mind, where you start seeing people start to wonder whether they're going to buy wind. So they, some people might start carving out perils. But it's a great question from the perspective that it's really starting to raise its head now, but I think it's just more of a pivoting effect of what's going on. The reverse on it, too, is also you're starting to see more players come into the market. So where the market a year ago was much tighter, it's not softening, but it's dampening a bit as we get into this latter part of this year, and it'll be interesting to see what happens in Q1 of next year. I don't think, like I said, I don't think it's going to continue to go up. It's just not going to go up with the trajectory it was. But I think this is a really important point, right? So just as a correctly structured and priced reinsurance market forces insurers to underwrite properly, making sure that people that buy insurance are also retaining an appropriate amount of risk means that there is an alignment of interest between the client and the insurer, and that we're, we're all trying to do the right thing, which is to increase resiliency and risk management. And one of the features of the property market in the past was that there wasn't enough risk-sharing, deductibles were too low, and insureds, it was easier to buy cover than deal with the fact that your exposures are going up... and so whilst brokers will often try to scare you with, "Business is just going to leave the market," our approach is: we want the appropriate level of risk sharing between client and insurer. That is Insurance 101. You know, you want that to be right, and rebalancing that is an important part of what we're trying to do. There may well be an affordability question at some point, 'cause the question, and we were having this discussion earlier, the question about who pays for the effects of climate change is a very big question, right? The answer from our perspective is, we're here to price it and to risk transfer it. We're not here to pay for it, right? There may well be big questions to answer about who pays for the increased cost of risk, but that's not our, that's not our role. Our role is to be able to enable the risk transfer and to help build resiliency. I guess- Do we have the confidence to price each peril? I think was the second question. Let me just say one thing. I think the more you share as well, the more the client cares, and then the more they control that risk, and it, it does help the losses across society, so that helps, too. Yeah. And on how we price each peril, we do have our Chief Actuary in the room with us. We've continued to gather data, so we certainly use modeling data coupled with, you know, data and risk attributes, and that goes into our secret sauce on how we do it. So we have been breaking down. Like I say, we identify each peril. We use external and internal views of the risk, and then we have our pricing algorithms to tackle the risk. Ooh, a lot of hands now. Hi, it's Ivan Bokhmat from Barclays. I have a few questions. Well, the first one on property, I was wondering if you could share, within your growth this year, how much was with existing clients, where you've expanded your relationship from specialty to property, and how much was genuinely new? Just to understand, you know, how confident you are that you understand the history between those new behind those new risks and so on. The second question, I was wondering, you spoke about models. Maybe you can elaborate a bit on, like, the external vendors you used. Do you are you, you know, user of RMS, AIR? How do their adjustment to their models are factored into yours? What specific adjustments you may be making, you know, just in general sense, let's say, an extra load to particular perils? One more question. Actually, on the slide that's open right now, slide 17, it shows that your your severe convective storm model is only going to be implemented by the end of 2023. So, considering that we just had record losses this year, do you think that this is going to affect the demand for next year? Are you going to have, like, substantially higher loadings for this risk? You want to start with the first one? I can't even remember what the first one was. We need a pen. Yeah, I don't... You're right. I'm sorry. The first one- because we're focusing on the second and third one, I think. The first question was, how much of your property footprint is cross-selling of your existing client? Oh, that's right. New versus... Oh, that's right. New versus... Yeah. Yeah. Thank you. So I would say percent wise, I mean, we have a significant component of this year's growth is new, new, but a lot of that is driven off of our distribution channel. So we distribute through the wholesale market and the retail, but significantly through the wholesale side. In the wholesale side, you do see a lot of churn. So certainly, our new is up in that regard. As far as how many of those are new clients versus old, I don't have that metric in front of me. We are seeing a lot of opportunity in the mid and large space, which actually I like in better risk, because you see a lot of our big retail competitors, the IGs, the Zurichs, et cetera, of the world, FM, where they've cut back from 100%. So the market, on a lot of things we've discussed today, is forcing some of those carriers to rethink their approach, and the significant approach in the past was providing 100% for a lot of these big corporate risks, and now they've backed off of that, and they're doing 50% or 60% or 30%, which creates a lot of opportunity for a specialist insurer like Beazley to come in and write supporting lines on these programs. So that's where a lot of business is also coming in- We are finding- and will continue to come from. Yeah, and we're finding as well. So we've got a thing called close to the client, and we are finding that, we are managing to cross-sell property into a lot of clients that we already sell D&O to or- Cyber ... political risk, too, or cyber, too, and that's been a key factor of us being able to get access to some of these clients. Definitely. That's been quite useful because, as you say, we already know them. You know, understanding your client and their attitude to risk management and how they behave before and after a loss is key, especially for the very large ones. For the mid to small risk stuff, it's much more transactional, always has been, because you never get a chance to meet the client. Yeah, and I would just add, on the retail side, which we really increased our influence this year, that was largely all new business because we really grew on the retail side. On the wholesale side, we had a, you know, a normal retention rate, and I think where we, where the stuff that didn't renew with us, a lot of it was what we didn't want to renew. Yeah. We were moving up the chain a little bit, moving away from the smallest risk and moving to the larger risk. So, you know, retention was where it needed to be, and it was even active management of what we wanted to keep. To move on to how you've underwritten the severe convective storm exposure this year, given the model has only just been finished? Correct. The forward-looking model. Yeah. So, tornado, like the other secondary perils that I've mentioned, it certainly gets identified, okay? That's why I say that's the beauty of the tool that we have. So it's really falls on whether the... when the underwriter is evaluating the risk, it's in the tool. It'll identify if it's in a, you know, known tornado zone within the U.S. or other parts of the world, and then they would take appropriate action with deductibles, terms, conditions, and pricing. If the risk price is outright and it makes sense, we're going to write it, or certainly take a shot at it. If not, then we don't. But we're from a aggregate perspective, doesn't really hit the materiality scale for us too much, 'cause keep in mind, tornado is not like a hurricane, it's not like an earthquake. It's such a small footprint. So it's really what we focus on there is just making sure that we have the right terms and right pricing to support the risk that we're going to take for that particular account. You're right, there's been a lot of SCS activity this year. Yeah. Our loss ratios this year have been very positive because we've been able to underwrite it around it. So we'll start pricing that just a little bit. Our risk selection in making sure we're only taking on SCS risk where we can appropriately price for it, that has been live this year, and it's been very useful, actually. Oh, we're an RMS shop, so we use RMS exclusively. We do use different components of it, and then we will also put our own version on top of it. And there are other- Yeah ... third parties that we're working with- Yeah -that are augmenting what RMS do. Yeah. Because RMS haven't got there yet across the board, and we don't agree with everything that they've done, so we definitely apply our own view of risk on top of that. Yeah. There's quite a lot of that, and we've, we've also been working with some different third parties. Some of them, actually, who aren't in the insurance industry per se, they do other stuff, but some of the modeling that they do is highly relevant to scenario planning, which is and scenario analysis, which is, which is what we're doing. So that's been quite exciting. So it, it's RMS-based, but we've adapted it a lot. Yeah. To what I'd mentioned, that we also modify it to make sure it reflects our portfolio that we write. 'Cause everything you get is kind of off the shelf, and all insurers need to modify it to reflect their own portfolio. And for U.S. Wind, we have modified it for climate change, but RMS has tools to help you do that, and that's how, you know, we've modified. For U.S. Wind, we've done that as well. Okay, I think we're going to have two more, well, three more questions for the hands that are up, and then we'll, I think, move on to cyber. Hi, this is Freya from Bank of America. Could you talk a bit about the dynamics that you're seeing in the admitted versus non-admitted markets? Is there rate momentum going through the admitted markets, so more business is flowing back in, or do you see this as, as disrupted for a long time? And how much competition are you seeing in the non-admitted market at the moment? My second question is, I guess, given the increased sophistication of modeling and underwriting for specific perils, if we were to have a rerun of the Texas freeze from 2021- Mm. What would that look for you? Okay. On the admitted, non-admitted, like I was saying in the, in one of the prior questions, I think what it's done is created. It's not like the admitted players are exiting the market, they're just managing their exposures down a bit. So like I said, they, where they were writing a lot of 100% deals, now they're only willing to do 30%, 40%, 50% of a deal, which has created an opportunity for E&S type markets to support and play where they want to play, and which gives the broker a solution to provide the client. So I would say it's definitely the capacity has shrunk a bit on the admitted side, and on the E&S side, it's growing, and many were sitting on the sidelines. Some are starting to enter to come back in now, which is creating some of that, a little bit of that dampening effect I was alluding to in the outlook. That's how, that's how I'd answer that one. Do you want to- What was the second one? That's why you've got the pen and paper, Bob. Yes. Why are you giving the pen? Oh, you couldn't hear me? What was the second question? The Texas freeze. The Texas freeze question. If we had that again, what would it be? Would it have as much of an impact on us? Yeah. So I would say, and I'm looking over at Jack, I would say that I think it, it would have less of an impact because, again, what we're, what we're trying to do is continue to diversify and manage the portfolio and manage where we write business. The challenge we saw with, like, Uri versus Elliott, Uri was much more concentrated in a specific area for a longer period of time, right? So I think it exacerbated that storm or that effect. Could it happen again? Of course. I think, I think maybe it wouldn't be as, as a dramatic event because I think they learned something down in Texas from that, with some of the things that helped, drive the event. When you compare it to Elliott, which was a more wider spread, I think that one when it occurred, et cetera, but it was spread over more states. And again, it's how we manage and we look at our risks that we write. Again, there, there you're really getting into either probably in both regions, you know, risk selection, risk selection, risk selection. Do we have-- Do you... You know, when you peel back the onion and look at the engineering behind the risk that you're writing, you know, have they taken proper precautions to insulate piping, et cetera, which will prevent freeze? There's a lot of what we do behind the scenes and how we underwrite and analyze risk to pick the right risks. We're asking questions that we wouldn't have asked four years ago. Essentially. Yeah. Yeah. Thank you. Afternoon, it's Abid Hussain from Panmure Liberum Just one question on data science, please. Do you think that data science is still a differentiator for you, given the ability of most insurers to now access AI and large reams of data? So is that still a differentiator for you? And if so, can you quantify the benefits in terms of your loss ratio from, from- the new approach, and from your risk selection approach? I think it's interesting question. I would say data is key and king. I think it's how you analyze that data and put it through how we do things versus competitor X, Y, and Z. The reason why I bring that up is that, we've spent a lot of time, as we said earlier, you know, breaking down the risk at the location level, getting the key risk characteristics of that in, so the underwriter has a very informed view, and then augmenting that with, "Okay, let's make sure that identify all the respective primary and secondary perils that could be affecting that particular location." I think how you use that data to do that analysis is key, and that's something that we spent a ton of time on, in our systems, so the underwriter has that view. We also have an engineer in-house now that also provides a secondary view for an underwriter if they ask specific questions on a risk. So it's not just about having data or having AI, it's about that people view component of how you want to analyze risk, and that's where the underwriting science comes in, if you will, around how we evaluate risk. So some people might say, you know, it doesn't really come into play, but when you look at the significance of how we've moved the book, in putting the cat part aside, it's really been driven around how that analysis and the underwriter's ability to essentially pick one risk over another by the analysis that they- It's an interesting question, isn't it? Yeah. Because, property cat was very well modeled. That's why so much capacity and capital came into it, because people believed the models until things changed, and then suddenly just relying on data science doesn't really help anymore because you need a view of risk, right? And that's what we spent some time developing. Will increased data help that? Sure. Will more sophisticated modeling help that? Sure. But with a risk that's changing and fundamentally changing, you need to develop your own sense of what your view of risk is and make sure you apply that consistently, and that's why I think you'll see views of risk diverge for the next few years because of that uncertainty. So I don't think it's a data science war, this one- Mm ... because of the nature of the change. All right, one more question, and then we'll go to a break. Hi there, Faizan Lakhani from HSBC. You put a slide up showing the loss ratios from 2020 to 2022, and that they're improving. But obviously, the nat cats were very different across all three years. So if we were to try and sort of normalize the three years, what is the underlying improvement in loss ratio over that period? The attritional? Yeah. Second question is, you put a slide from Swiss Re saying that the long-term trend is 5%-7%, market remains hard next year. So should we assume that to stay where we are, you probably need high single-digit rate increases next year, and then you get top line growth on top of that as well? Is that the right way to sort of think about it? And the third one, just a very quick one, could you lay out which territories you still see good opportunities in E&S and how that's gonna change over the next year? Thanks. So I'll start with the third one, because I still think the U.S. is probably still the most target-rich environment to write business, especially in the E&S space. As I said, with... I keep coming back to, with a lot of the big retailers cutting themselves back for obvious reasons, it's creating more and more opportunity coupled with- But which states specifically? Which states- Well, which states within the U.S.? I mean, the Southeast is gonna be begging for capacity because of the pressures around wind. California, Pacific Northwest, Northeast, they're all the key growth areas in the U.S. is, are the most populated areas are where probably you see the most growth potential. But certainly, I mean, across the country, we've written business this year. So, the loss ratio question, if we peeled out the cat, you'll still see the... You would see the same, actually, you'd probably see a little steeper trajectory on the attritional side. And- Well, that's what you've been really focused on, isn't it? Correct. Is getting the attritional loss ratio down. Yeah. Yes. 'Cause that's what's in our control, and that's what the underwriter... It goes back to all these other questions we talked about, how, you know, picking the right risks and evaluating the risk accordingly. That's, that's been a significant focus for the last three, four years. And then, the middle question, it was the 7.5% trend, and I'm sorry, the- So, um- That we showed. ... 5%-7% inflation is what you think the- Oh, that's right. ... exposure is going by. Do you think that's the base for the rate change we need next year to maintain the margin? Um. Is that a good way to think about it? Yeah. I mean, I mean, I would say yes, it's probably a fair approach. I mean, values, this gets into a very, I think, a very involved discussion around where do you see values going, and each and every account, I think, has different points on its curve where they are. Obviously, we have clients that the values are right up to snuff, and there's other clients that are still wrong, and we have long discussions with them, or we don't write the risk. So I think as you try to sit there and say, "Okay, how do I stack on a year-over-year basis?" You've got to figure out, okay, where will that sit? I think that, you know, whether it should be 5%-7% for inflation or exposure growth is probably reasonable and fair, might be a little bit lower than that. And then rate, we're probably putting another estimated 5%-10% in rate, depending on how you look at it. If you break down that- Yeah ... that 5%-7%- Yeah ... if the values are properly done, right? You don't need extra rate for it because you're just driving the rate against a bigger value. Exactly. So you get the extra money in that way, the rate increase is on top of that. So you need to break that 5%-7% between that which you'll get anyway, because the exposure growth means you just get more premium- ... and that which you need to charge extra rate for, because the likelihood of loss or the severity of loss is going up because of other forms of inflation or an increased severity or frequency of nat cat. And that's the bit that we need to make sure that we keep an eye on and charge for that increase in exposure. What Richard was also alluding to is undervaluation in property insurance is one of the long-term issues with property, because clients like to undervalue rather than overvalue their properties because they pay less for it. And so one of the other things that the market has been doing assiduously the last couple of years is making sure that the schedule of values is actually accurate. So we're charging the rate of the right numbers in the first place. So one of the drivers of the premium has been we're charging better rates. We're also making sure that we're charging rates on the right values- Yeah. because that way we get the right amount of premium, and keeping an eye on that is as important as making sure we're getting the right rate. It sounds like sort of 5 + 5 is sort of the right way to think about it. There we go. Yeah. And keep in mind, there's a little bit of a risk-adjusted rate in there because we talked about earlier, some clients, instead of just seeing their rate, true rate change every year, are taking higher retentions, you know, lowering the terms, et cetera, et cetera, which we do bake in when we look at, 'cause it does affect- It's not all premium. It's not all premium, yeah. All right. Thank you. That's great. Thank you very much indeed. We will break until, let's say, 1:55, and then we'll come back and talk about some cyber. Thanks so much indeed.... Are we all in? Great, let's kick off, and then we'll move on to Paul and, and Aidan on the cyber. I just thought I'd stay for ten seconds because one of the questions that Richard was asked earlier, we did actually have the answer to, but Jack, our actuary, was too shy to give it to us. So, between 15%-20% of the clients that we looked at are amber and red on our traffic light system, to give you some sort of view. Just thought I'd share. Right. Thank you. Okay, on to cyber. Great to see everyone again. I've met many people before. Another fun, interesting, and challenging year leading the cyber business at Beazley. And what I think I've worked out now is that's always going to be the case with cyber. It's probably never going to stop. Don't know what we'll be talking to you about next year, but that's the fun bit of cyber. What I am pleased is to have Aidan joining me for the first time, so I'm not up here on my own, which is great. Aidan has been with us for a while and helps with exposure management, modeling, systemic risk, lots of things, and provides critical support and a lot of our think tank engine behind that. But more importantly, I've always spoken about that we have a team of people that go to bed and wake up thinking about profitability and how do we keep safe, and how do we maintain profitability with the threats, with the, with the risks and everything that we're seeing out there, and how do we build that into our underwriting? Aidan leads that for us outside the U.S. and has a big role to play in that globally, so it's great that he's able to join us. Okay, I'm driving the slides as well, so... Gonna start with a bit of a market update, and then we'll move into some of the modeling, things that Adrian gave you a bit of an intro into earlier. So first, rating environment. We are obviously seeing a -4 there, and we've... Nothing really in terms of context, in terms of previous updates that we've given you on rate, has really changed. You do see different things in different segments. Primary is certainly holding up a little bit better than excess placements. That's what we'd expect to see at this part of the market cycle. Different industries are holding up better in terms of rate compared to others, and that's natural because what we've seen with cyber over the years is different industries move and different threats move at different times, and so you have different rating things going on with different geographies, different industries. But overall, the rates are fairly stable where they are right now. We've actually seen some improvement in certain months, in a certain half of the year, and it'll be interesting to see how we, how we fare going into the new year. One of the important things, I think, to point out and to remember at this point is just the rate that's been achieved in the last couple of years. I remember standing here last year, and we had a graph that showed the rate that we achieved, not only as Beazley but, you know, above the market average, and there was 200%-300% of rate that the cyber market achieved during 2021 and 2022. So although a -4% is negative, you have to have it in the context of that rate that was achieved. And we've already said that based on the threats that we were seeing earlier this year, some of that rate was a slight overshoot, and we were committed to giving that back to clients where it was the right thing to do. So this is all very much in line with our plan, and we're still very much achieving our profitability, and the book is still priced very adequately where we want it to be. Our strategy being mostly a primary carrier definitely helps with managing through the market cycles, both in terms of thinking about the rating environment and what we're achieving. And overall, the war has had some impact on rate, but war is not... The war endorsements, as we'll get to later, is not really a rate issue. It's about tackling what is one of the key issues for cyber insurance to keep growing in the next five to 10 years, which I think the team have done a tremendous job in help leading the industry on. Competition, switching over a little bit. It does vary. We always, the U.S. was certainly more intense during certainly most parts of this year, although we have started to see, as we expected, more competition start to emerge in Europe and further afield. However, there is still a strong demand and supply. So ultimately, the cyber market, as we always predicted, is going to grow, and we're going to see growth continue to emerge. We're going to see that demand emerge, and we've seen a lot of that, as we've been telling you all year round, internationally, outside the U.S., Europe, Canada, Australia, U.K. We've had a huge amount of success in Asia as well. We've now got a team of four based out there. So although there is more competition, it's not necessarily lots of new capital that thus far we're seeing. It's a lot of existing carriers that we've seen over the years of the cycles that we've seen for the last 10 years on cyber, that I would describe, in our opinion, as being a lot more active right now. There is spots of new capital, but definitely some carriers are back in cyber after perhaps, you know, exiting, retreating for a little while, but we're not seeing any new capital. But again, the one area that we do see some opportunities is in the SME space, and everyone defines SME differently. I'm very aware of that. So when we think about companies with revenues less than $250 million in revenues, I don't think it particularly matters which currency you're in in the world. If an organization is around less than that, then that's how we'd view SME. We're certainly seeing a lot more opportunities there. We've seen some challenges in that part of the market for some of the other insurers that were heavily invested there, and we're starting to see some sort of emerging demand, which is great to see. The loss environment. This is one that we've spent a lot of time in the last couple of years up here talking about frequency and severity, and all the underwriting action, and all the things that we've walked you through previously. What I can tell you is that our frequency remains at the low levels we've previously shown you, told you about, and reported about. October, November continue. Now, I'm quite pleased. Thanksgiving last weekend, Labor Day in September, bank holidays in the U.K., they were bad in previous years. It doesn't mean that things can't change, and threats won't change and evolve, but, you know, the team had a quiet Thanksgiving weekend in the U.S. in terms of our cyber response team. And I was pleased, A, 'cause they got to have one, because they don't get to have a quiet Thanksgiving every year, and B, that that just shows where the threats are, perhaps compared to some of the previous years, that we've seen. Why, why is this happening? Everyone keeps asking me why it's happening. Adrian says, "Is it lucky, Paul? Is it something else?" You know, "What's really underlying this threat issue?" And what I say back is, "Well, the trend has been for 11 months that our frequency has stayed at these low levels." We always thought that things were certainly helping frequency. The Russia-Ukraine war. There was a lot of cyber activity that was more criminal in nature that became more political in nature, and was involved in the war. Everyone in the world saw suppressed frequency because of that, so the levels that we saw go down went down even further. But actually, what we've seen is, and what we've heard in the market, is that that's coming back. Not for us, as I say, but we are hearing from reinsurers, from the cyber ecosystem that we're part of, not just the insurance cyber ecosystem, but the wider ecosystem, where obviously we have a huge network. We have the Beazley Cyber Council that is made up of lots of government agencies, threat intelligence experts that advise us on these things, and meet quarterly. And one of the things they told us in Washington last month is, "Yes, frequency is definitely back, and attack's on the rise." No doubt, if there is a move in frequency, we will feel that. But one of the things that I do, I do think stand us in good stead is all of the business and the underwriting that we did in 2021. We shed a lot of accounts, accounts that were red or amber, that didn't have the right controls. I think in one year, we shed somewhere between 50% and 60% of our policy count. That, as we told you about, was a huge year for us, and that was always the plan, that that would get the resilience of the book up to these threats of ransomware. So if ransomware is coming back, I'm hopeful that the underwriting we did, plus the resiliency that our book now has because of that, is going to help us with the frequency and withstand that, and hopefully, you know, do well. Now, it also helps that there can be a bit of luck in there. You'll never ultimately know the whole picture but, like I say, it's been quite a period of time now. What we have seen, and what you'll read about, is there have been some severity losses in the market. I'm not going to name clients, we never do that. Everyone reads the papers, everyone reads the news. They all hit our phones nowadays, straight away, as soon as they happen. And we have been on some of those large clients, but that is what we're here for. That's what we're here for. Clients can have the best controls, represent the best risk, and they can have a big ransomware attack, and it does happen. And we're here not only to help, you know, cut the check when that happens, but also to make sure those clients know how to respond to, and can respond to, and get back from that event as quickly as possible, to really limit the impact that it's having. So we anticipate that. We expect the large accounts to have some claims every year. We've seen some of those, but again, we're not seeing any trends there, just large account claims happen sporadically. Move to the next slide, which is where I hand over to Aidan for the first time. Great. Thank you, Paul. So turning now to war, and as discussed in previous updates, the adoption of new policy wordings in relation to war and cyber war has been a key issue in the market this year. To recap, Beazley started to implement the new wordings from January 2023, and we did this consistently across our cyber business in all territories. I'm pleased to report an update that the wider cyber market is now reaching what we think is parity. And by the wider cyber market, we mean the London market, but also the U.S. and international domestic markets, too. I would say two trends are evident. Firstly, many markets have now updated their wordings, which is pleasing. But secondly, these wordings are converging on the Lloyd's approved standard that Beazley very much led, some of that work over the course of this year. We still do see some evidence of one or two markets adopting the older approach. But further potential changes are anticipated in January next year. And we always expected that different markets would move at different speeds. But the underlying trend is clear, and by January 2024, we will have updated all of our portfolio at Beazley, a full-year after we first implemented the changes. And I think what is for me most encouraging here is that the initial concern from brokers and insurers about why these changes were being made is receding to a large extent. Why? I think there is now much greater understanding about what the changes are firstly, but also why these changes are needed. We've been doing a lot of education and discussion with insurers and brokers about the reasons why cyber war can create intolerable systemic losses for the market. And ultimately, clients want greater certainty and clarity as to when the policy responds and does not respond. And it's been helpful that the market has been able to find a consensus about what the solution looks like to provide that certainty and clarity. And then threat intelligence. This is something that is continual. This never stops. We're doing this daily, weekly. We have threat intelligence feeds from lots of threat intelligence and threat intelligence firms around the world. We're talking to government agencies. We are now, from when we started this several years ago, when we first told you that we were creating the Beazley Cyber Council, to where we are today, we have a regular cadence of meetings. The great thing about it is we have now people reaching out to us to say, "We'd like to be involved. How can we get involved?" We've got a lot of experts out there outside of the insurance industry that are saying, "We'd like to not only help you understand the threats and talk about threats that are current and perhaps potential ones down the line, but also we'd like to hear what you have to say." Because as an insurer in this space, you have a lot of data, a lot of information. You're able to see threats very quickly as they start to emerge, and so we're having a fantastic evolution of the Cyber Council. As I said, we met recently in Washington. Adrian attended that, and we had a great conversation. There is nothing coming out of our threat intelligence network right now that gives us cause to change any of our plans, but we constantly monitor it, and we make sure that if we do see something, we consider it, and we factor it in our plans. We're always monitoring geopolitical changes, so this is not just a threat intelligence network with cyber experts. We have geopolitical experts, people that are thinking through, because generally, as we see with some of these larger scenarios, when we get to systemic risk, they can be geopolitical in nature. They can start there. And so we're constantly thinking, not only does... How does the cyber threat landscape look like from a technical standpoint, from a capability standpoint, from, you know, criminal activity standpoint, but also what's happening geopolitically in the world that we should be thinking about? We're doing a lot of work on AI. I'm sure that will be one of the questions later. And we actually have a whole separate working group that is thinking through what is, A, the threat that AI poses? Does it make events more or less likely? Does it impact our clients' resilience to events? Or, B, and because everyone sees AI as a threat, to be very clear, does it help resilience? Is it going to increase defense, and what's the balance between those two things? And so there's a huge amount of work and thinking that we're doing with our Cyber Council on that. And the other piece that we're doing is: how do we use the AI? We have a, as we told you, a cyber ecosystem. Some people that have been to meetings in the past will remember the big diagram that we showed of our cyber ecosystem that looks like a honeycomb. And how do we use that? Because we're connecting threat intelligence, underwriting, client portals. We're getting, you know, on average, 5,000, 6,000 phone calls from insurers during the year to ask for help and support on various things. How do we use AI to drive that response? How do we use it to make us more efficient? How do we use it to make sure that we can be in touch with our clients in real time, getting them the threats as we're seeing them, notifying them of vulnerabilities? So there's a huge amount of short-term pilots that we're working on between now and the end of the year that we hope to be able to deliver, that will start us on that journey. So very exciting stuff, but we're thinking through it from, defense and offense. And then lastly, we told you that we have our traffic lights that we monitor the cyber business. We report them still every month to the underwriting committee, the exec and the board see them as well. And there's nothing in our traffic lights, both from a frequency standpoint, from a threat standpoint, from us operationalizing all the things that we do around Beazley on cyber, to give us any need to change our plans. So that's where they're at. Back to you, Aidan. Great, thank you. So turning now to the cyber premium splits, I will start by providing more detail on how each region has contributed to growth in 2023. Then, later, we have a slide that Paul will cover around our growth outlook as we head into next year. Overall, we have grown this year in each of our three platforms. Taking these in turn, year-on-year international growth of 34% has been especially positive and encouraging. Europe is presenting lots of opportunity right now, and we are very pleased with the progress we have made in the major markets there, so in Germany, in France, and in Spain. Outside of continental Europe, so principally the U.K., Asia, and Canada, all of the teams there are also performing very well. As you can see, we are experiencing a faster rate of growth in our international business, where we see lots of very attractive opportunities still. This gives us a more diversified book of cyber business. We expect to see continued demand for cyber insurance across all of these European territories next year, as awareness of cyber risk continues to increase. Our U.S. team has faced stronger headwinds to growth this year. I mean, as has been quite widely remarked, there is strong competition in the middle market and small risk segments in the U.S. And of course, the U.S. market is more mature with the large risk space more heavily penetrated. But we are seeing growth, and we do expect the middle market and small risk segment to continue evolving and presenting opportunity in 2024. And lastly, growth in our global wholesale business via Lloyd's in London has also been positive this year with strong year-on-year growth. And that book's only picked up momentum as the year progressed. So overall, we still remain very confident in our medium-term plan. We invested early in key countries, and we've built a leading team of underwriters in those countries, and we feel well-placed to capture a new opportunity as we head into 2024. I think that's a really important point. We invested outside the U.S., we started that journey 10 years ago, and the plan was, we knew that market cycles and different territories with cyber will do different things with demand and supply at different times. And so very early on, we invested in building out the non-U.S. part of our team and platform, and we're now doing that across Beazley, as Beazley is continuing to build out in Europe and in Asia and further afield. So it was always the intent that at some point, this would happen, and obviously, the underwriting is the same globally. We are globally consistent on how we underwrite this risk. There can be regional differences with legal and regulatory environments, and that's all factored in and things like that, but ultimately, we are consistently and globally underwriting this business, and we are growing with the same profitability targets in mind. Okay, there's a lot of long words that I'm probably going to get wrong a few times here. Catastrophic probabilistic modeling. I'm only going to do that once. So just skipping on one more slide. We've always shared, and at the last Capital Markets Day, we showed and spoke about our RDSs, actually our realistic disaster scenarios, and we've always run these and evolved these, and they are incredibly important, and we will continue to do that. That's one point I wanted to open with. The RDSs, the scenarios we build from the ground up, really enable us to leverage all of the experts that we work with, like the Beazley Cyber Council, to help us think through what scenarios should we be thinking through in terms of modeling, and what do they look like from an impact scenario. RDSs were the best approach because of the infancy of the modeling market, as Adrian said. You know, it's been something that's been evolving over time, and, you know, when we go back five, six, seven years, they were, they were new, they were uncertain, they didn't have credibility. However, what we are seeing is the probabilistic modeling starting to evolve. What do we mean by that? The ranges of outputs have narrowed. There's a less spread, and the external models have improved. What we've got out there, when you talk to lots of people involved in this part of the market, is a range of models that are looking at this different ways from a probabilistic standpoint, different types of scenarios, different ways... I've done the same thing. Different ways of getting to them- Uh-huh. But actually coming in closer on a range, and that is starting to drive a lot of confidence, not just within the insurance community, but within the investment community, within third-party capital community, and other spaces. They're however not at the same maturity level of those that we see and typically heard about during Richard and Bob talking about nat cat. But the more we encourage, adopt, and use them, the faster we will get there. And if the cyber insurance industry is going to continue to evolve on our journey, whether it's to a $30 billion market, $40 billion, $50 billion, that is critically important that that happens. It's important to note we've always run probabilistic scenarios internally. Yes, we spoke about our RDSs because that is where we were focused, and that because of all the reasons I explained. We've always run probabilistic scenarios internally as an alternative view of risk, both our own and third parties. So over the years, we've worked with several third parties, actually, and we've licensed a few. We currently license CyberCube, and Aidan will come onto that a little bit later. And we've been learning on that journey. We've been learning how they work, the best. We've been using it to glean the best from everything. We've been on that journey for five, six, seven, eight years together, and we've been learning as we go and learning, "Ah, this is slightly different. How do we use that? How does that impact?" And so we're now into some real deep understanding around, around these models. The really important note I want to stress across as well is we've always capitalized using our internal probabilistic model, not the RDSs. So in terms of us moving to the addition of cyber probabilistic modeling, it does not have any capital implications. So what is changing from 2024? From 2024, we are going to add managing our internal risk appetite based on our internal probabilistic model, and we wanted to talk you through a little bit of this today, show you what that might look like, and have Aidan give you some of the technical details behind that. What is not changing, and everyone can see this slide for themselves, we're gonna continue to, as I said earlier, work on our RDS suite. It's incredibly important. These things will run and work side by side. We continue to want to evolve those, think those through. It's a critical piece of thinking that we want to keep doing. Our technical experts will still be there. They'll still be in the room. We'll still be leveraging and growing that network and helping them to, you know, to help us support us more. We'll also continue to work with third-party modeling companies. We regularly, it feels more regular than it is, every few years, we do RFPs, and we go through a process of reviewing, where are the modeling companies? Where is the market? Because it has been evolving, and it has been changing. So we have a huge amount of energy and effort across the company to do that process every couple of years, and we will continue to work with third parties. It will not change any of our capital requirements or implications. We're evolving the models, but we're not driving any additional capital requirements. And with that, the next one. ... Great, thank you. So, here I will provide more detail of the model outputs. As Paul mentioned, the probabilistic risk appetite we are transitioning to is based on the cyber risk within Beazley's internal model, and this is the model currently used by the capital team. I think it may be just worth noting here and just pausing briefly to say that the probabilistic cyber risk has been included in that internal model for some time, since it was approved by the Central Bank of Ireland in 2016. So this view of risk is already well established within Beazley, as Paul mentioned. So why are we transitioning to this approach for setting risk appetite? Firstly, because credible, probabilistic models are, in general, preferable to deterministic ones, and they are now getting more credible and offer more certainty. This move will allow us to think about more extreme events than we currently contemplate in the RDSs, because the internal model includes scenarios that are much more remote and much more extreme than the RDSs. So one example of this I wanted to use by way of illustration is our cloud outage scenario. So in our RDS, we assume a large regional event occurs that impacts the U.S., and we base this on the largest U.S. region for prudence. We selected this scenario because we view it as the most realistic, based on historic events, but also based on our knowledge and understanding of cloud infrastructure itself. The internal model, in comparison, will allow us to think about more extreme scenarios, including national and even global cloud outages, by extrapolating the RDS losses for these more remote events. Previously, we were stressing the RDS assumptions and parameters to achieve a similar view. But the internal model will allow us with greater ability to assign probabilities to those more remote losses. So secondly, we also anticipate that these more remote scenarios will become a more important perspective in the future. They provide reinsurance externally, so to investors like yourselves, to insurers, to regulators, and they allow for comparability between insurers, as they do now, with property catastrophe exposure. So turning now to some of the detail. So here, here we show the RDS net and the probabilistic net side by side. The probabilistic loss is shown, based on a 1-in-250-year event, and this is consistent with the return periods used to manage the natural catastrophe risk. The probabilistic loss is larger than the RDS because, as I said, it includes more remote scenarios, and it also generates larger net losses, because the non-proportional reinsurance is exhausted by scenarios of this size. But broadly, the probabilistic outputs are similar in size to the results of the stress test that we historically have performed on the larger RDSs. And for comparison, our natural catastrophe risk at the 1-in-250 is 524. And so cyber is broadly comparable in terms of the planned risk and premium to property. Sorry, it's me. Yeah, it's fine. Trying to help. There you go. So just to continue the theme of the previous slide. So as part of the model validation, the internal model is compared to other models on a regular basis. And here, in this slide, we show the total cyber risk included in the internal model, compared to the CyberCube model, CyberCube being a leading vendor model in the market that Beazley licenses. And what we show here is a comparison of the two model curves, at a range of return periods. And we do this on a gross basis to avoid reinsurance effects. And this shows that we are already capitalized to risk that is consistent with external models. Finally, in this section, I also wanted to remind and comment that we also continue to very carefully manage systemic cyber risk within the underwriting process itself. In particular, we manage dependent business interruption exposure, which is a major driver of cyber systemic risk. This is important because many of the cat cyber scenarios involve losses to insurers that arise from their dependency on third-party suppliers, where the third-party supplier itself suffers the cyberattack. Beazley's dependent business interruption aggregate is currently lower than the peak we had two years ago in 2021. We're at 87% of that peak, despite a substantially bigger premium base. Had we not managed that aggregate carefully via limits optimization, via reductions in some areas, we would have had a substantially bigger exposure to this key area, as we grew the total premiums over this period. So with that, I'll hand back to Paul for the next slide. And I, and I think that's a, that's an incredibly important part of Aidan's team and the job that that team performs is as... And, it's very common to property. Using the aggregate that you have, optimizing it, and deploying it wisely is critical on cyber as you're growing—as you're growing the business and as you're continuing to, to write, to write the business. To say that we have 80% of, you know, the aggregate deployed that we had several years ago, with the book being, you know, almost three times the size, shows you just the amount of optimization that we've been able to do and achieve over that period, which is... Which again is about how you underwrite each risk, the underwriting guidelines that you, the team have, and how we're thinking through the use of the aggregate that we're deploying. And then switching tax lastly and finishing, a bit like property, with an outlook. We still anticipate 2024 will be a growth year after the challenges of this year. We had significant headwinds this year, and as Aidan alluded to on more, we are seeing the market start to reach parity. We are seeing those headwinds starting to calm down, and that means that we can get back to hopefully executing on the type of growth that we've talked about and anticipated previously. We're investing in the team, we're investing in services, we're investing, we're investing in services because, for me, services and international expansion will be key to growth going forwards. Doing services well before a client has an event, after a client has event, during a client have an event, is table stakes for cyber insurance. If the market is going to evolve now, and we're going to see demand continue to come to get to the $30 billion-$40 billion market size, there's no, there's no rate factors in a lot of those predictions. It's flat rate to get to those, to get to that place. It's new buyers coming online. And we can't always predict which country will come online, which demand will come online when. It's not gonna be a straight line curve for the cyber market to get from where it is today to where it's going. But what we do know is having services, having the international presence, having the U.S. platform, and just the team in place that we do to capitalize on opportunities there, like the sub-$250 million revenue space, is going to be critical. We have an agile team, and I do think it's important to remember that cyber is going to work and is currently working more like a short tail class of business. We have an agile business plan. If threats evolve or we see a threat, that may change our plan, and we will evolve and underwrite and adapt quickly. We may well see an opportunity. If there's, you know, potential opportunities that emerge in the U.S. or in Europe, or we start to see opportunities, we'll be very quickly to adapt. One example is, given the growth and the opportunity that we've seen in Europe this year, we've done some secondments from some of our U.S. team to London and further afield. They've been incredibly successful. We're a global team. We are not set up to be regionally, just set up region by region, by region. We're a global team. If you can underwrite cyber in the U.S., you can come to London and Europe and underwrite cyber. And, you know, we're actually thinking through how do we do that? Have an agile business that we can deploy the right people, in the right places, at the right time, to make sure we're addressing whatever opportunity we have, whatever need we have it might be. If we see those things, we're gonna be on a journey, we'll continue to pivot, we'll continue to evolve the business. With that, I'll invite Adrian back up to host any questions. Thank you. Right, any questions other than the RDS number and capital returns? Sounds like I have the microphone already. First of all, thank you very much. This is really interesting disclosures we've been asking for for a while. So maybe I could ask about a little bit about that 602 number first. So you mentioned that there is obviously a range of estimates. So maybe you can try to help us outline within the external model range, what kind of, you know, the upper bound, the lower bound we're talking about, and what is it informed by? And the second question I have is a little bit more broad. As you say, that there are more companies coming back into the market, the ILS space is developing. Presumably, a lot of it is because of the development of vendor models. Could you talk about the landscape of those model providers? How often are they being updated? And, you know, for example, if CyberCube were to change their definition of a particular peril, how much of an impact on the market could that have, if you could suggest? Thank you. All right. Do you want to talk about the range that the external models have? Are we gonna- We- ... give a view on that? We're not. We have a view. The external models do have different scenarios that obviously have different ranges, and it's obviously very scenario-driven as well. We've shown the cloud one here. I'm, you know, I'm not gonna get into the differences between them. We've shown the cloud one here because it is the largest, if not one of the largest. You know, it's in the top two or three scenarios for everyone. That's why we've used that one. It's typically the one that is the most developed for most. It's the one that probably existed the earliest in terms of thinking through these scenarios. But that's the reason why we picked that one, because that is the most relevant one, one of the largest, if not the largest, that you see coming from the external models. Talking about them a little bit more, you're right, they used... You know, a lot of the third-party models used to do updates every five months. That was one of the reasons why you couldn't really use them and build them into your business. That is one of the things that we have seen start to also improve and moderate. There are annual reviews, but they're much more in line with the property reviews that happen. They're much more moderate in nature because the confidence that's growing in those scenarios, the modeling and the output that we're starting to see there. And you're right, the ILS space is very interested in this, and I think what you're seeing and the reason that you're reading so much about that, and you're hearing so much about that, is the cyber market, more broadly, has brought a lot of quota share, historically. But now, thinking through, and you're starting to see a market emerge for cyber, whereby you have attritional and cat. And just like the property market, where you have a property reinsurance market and a property cat market, we always hypothesized that that would- that the same would happen for cyber because of the similarities, because of the look-across, and because of the way cyber business works. They are... The ILS space is definitely getting more confidence in those models because of them coming to a, I guess, a closer range of numbers, a closer range of outputs, a different level of sophistication, and I think that's incredibly important, and that is why you're seeing the activity that you're seeing. One of the reasons that we were able to do the first cyber bond at the start of the year is because we did use a third party. We used CyberCube during that process. That's public. We did use them, and that, again, helped give a lot of confidence, and that's happening at a time where you do hear and see that the traditional reinsurers and the reinsurance market for cyber is starting to optimize and think about how they optimize that risk. At that point in the market cycle, in the alternative capital's world, in other words, that's when they come in and step in, and that's, and that's what we're seeing, I think. So that read across to nat cat is probably the most useful way we can frame it, right? The reason we're doing what we're doing now is because the sort of range that you see in the cyber modelers now is fairly consistent with the sort of range you see between AIR, EQE and RMS on- Mm ... on the cat, which is an acceptable range for the insurance market. And the sorts of updates that you see and the impacts that they have are at a level that are more consistent with what we see on the property side. So we... You know, the property market, every time RMS does an output or an update to AIR or the rest of them, recalibrate and think through what that means, it always has some sort of impact. Sometimes, it's quite a big impact, but it's tolerable, and we're seeing a similar sort of behavior on the cyber side, which is why we've done what we've done for now, because we think that is useful and tolerable. Oh, hi there. It's Tryfonas Spyrou from Berenberg. Got three questions, if I may. The first one is on the growth runway in the U.S.. I just trying to get a feel of whether there's more of a structural, cyclical element to the slowdown. It feels like you're saying that part of the market is saturated, at the same time, penetration is low, capital deployment is low in absolute terms. So, any color on what's sort of happening in the dynamic there? Second one is on the insured market loss that corresponds to that 1-in-250 return period, if you can maybe put a number on that, and whether the war exclusions are factoring into that number. And the last question is more of a sort of broader one. Just trying to get a feel of how your thoughts on your cyber ecosystem and underwriting capabilities, and how do you contrast them with those of the newly created insurer techs in the space? Obviously, these companies attract really high valuations, so, because of the perceived IP strength. So any thoughts on any contrast, that would be helpful. Thank you. Okay. Okay, cyclical versus structural U.S. growth opportunities. I think the headwinds that we've seen in the U.S. this year is just 'cause we've got a more competitive market. If you look at what happened, rates went up a lot in 2021. And if you look at the U.S. market in 2021, there was very few carriers writing U.S. cyber at that particular point in time. And, you know, we've been very clear on our strategy: focus on risk selection and drive the rate that you need to deal with the underlying exposure that had come through from ransomware. What you saw was the cyber market grow, premium growth, frequency and severity come down. That has led to a natural, as you say, market cycle, more competitive U.S. market, where perhaps people thought that rate was gonna continue a little bit longer than it did all the way through 2023. We were quite fortunate in that we started taking action at the end of 2020, so we had that plus 2021, plus, you know, half of 2022. What you saw, as you saw at the, in our results at the back end of 2022, that's when the competition started, and that's carried through this year, and I think perhaps there was some, you know, some aggressive new carriers with some budgets based on the frequency and severity, based on the rate they'd seen from the market, and that's made it hard, made it a challenge for us. And then if you add in a war exclusion conversation at the same time, and lots of other things in the U.S., it does... It has made the year a challenge, and I think to still be growing in that is actually an achievement by the team, a massive achievement compared to what we hear is happening in the broader market. Where does it go from here? I think- ... I would think that next year you see we're starting to see it moderate slightly already. I'd hope that that continues, but like I said, we have a well-priced book, and we're hitting the profitability targets that we've always aimed for. There's still new, new business available in the U.S., right? Mm. So when we think about penetration rates, so what's the structural opportunity for growth in the U.S.? It's mostly in what we call the SME environment, where the penetration rates are much lower. And so there's less new, new in the mid-market. There's very little new, new in the large, but there's still a lot of structural growth available in the U.S.. It happens to be the section of the market that's most competitive at the moment. So we're, you know, we're doing the right thing. But there is lots of structural growth left in the U.S., but it is particularly in that segment where the growth comes last, and that is normal in a market maturing. You usually start with the large move down to mid-market, move to the SME. The other comment I'd add to that is, what's not in those numbers that I can tell you is, you know, we've written still strong new business policy numbers. It's just that it's more middle market in nature. During the hard market, the large accounts drive a huge amount of rate because of the premiums and the losses and. But actually, we're growing in the middle market space, and that's sub- $250 million. If you look at we're investing heavily in international, in the U.S., sub- $250 million in revenues, where brokers are looking to automate, drive efficiencies, drive digitization, that's where the growth opportunity is in, in the coming 12-18 months. Moving on to what is our one in 250 equivalent to as a market loss? Do we have that? No. Can we share that? No, we don't. We don't. We're not sharing it? I, no, we don't, we don't have it. We don't have it for the market. The other, the other problem with the side market, as you know, is, you know, we're obviously disclosing a lot of information, a lot of people. It's very hard for modeling firms to help with that right now, so... Shall I cover the war? Yeah, go. Yeah. So we assume the loss is covered, so we don't apply the war exclusion in the model there. But you're right to hint at the correlation between very extreme remote cat events in cyber and nation-state cyberattacks. In terms of who has the capability and in terms of who has the motivation, our view is that for these very extreme remote events, it is more likely that there will be some nation-state involvement. But to answer the question, we don't take credit for that in the model, so we don't assume that the exclusion would apply. If you look at a lot of the third-party modeling companies, a lot of their scenarios actually say, most likely, nation-state, state actor. So, and then that will depend what happens, the facts at that point in time, but we're not assuming the exclusion is or isn't applied. But I think we are assuming having a proper war exclusion is necessary, given that it's the most likely vector. We're through a whole year now, so the whole book has gone through the process of having the updated war exclusion added to it by the time we get to the first of January, and all of that business will certainly be quoted by this point in the year as well. In terms of comparing our ecosystem to the rest of the markets, we're not gonna answer, we're not gonna answer that question. I think that's for you to determine. But having a fully functioning holistic ecosystem is very necessary, so I, I hope our peers have one also. I thank you for the presentation. There's a lot of food for thought there. So I'll give my question sequentially. So the first one: Why is the competition lesser in the U.S. and Europe SME space? I'm assuming that in Europe, you're growing again within the SME space and not overall. So just some color on that. The competition is fiercest in the U.S. SME because that's the one that most carriers are most familiar with, and it requires the least amount of customer engagement and complex claims ability to be able to do, and wordings, adjustments, and crafting and so on, so forth. So it is the most competitive landscape because that's where everyone is, and it's the easiest thing to be able to do from a technical perspective. When we unpick our European book, it is more mid to large risk-oriented. Mm. So there's relatively little SME being bought there. There is some, and it will come, but when you look at the premium mix, it is much more heavily large risk and mid-market oriented, which you would expect given the relative maturities of those two markets. And that's similar to how the U.S. market evolved, and that's what we anticipated in Europe. Large accounts buy early and were the first buyers, and what we've seen in the last 12-18 months in Europe, particularly, is the middle market now starting to come online. Is there anything structurally stopping your competitors from looking at you and following you into your- Into Europe? Yep. No, and I have no doubt at some point they will do. We've been building out in Europe that infrastructure, the services capability, and the brand recognition for eight years now, and it takes some time to build trust and brand recognition in Europe, particularly as a company not domiciled in France or Germany or Spain or one of the other major economies. So just like building a U.S. business from scratch in 2004, it took us over a decade to get trusted. Coming in new as a carrier in Europe, it takes a long time to establish your credentials, which is why we did it so early. So I've no doubt they'll come, and they'll try hard. It takes some time to build that trust. Okay, thank you. And, the next question is: You had some disruption when you included your war exclusion policy in your documents. Now, why do you think that this will become more widely deployed in 2024? And if it does, should we expect your competitors to have some disruption? And linked to that, could there be more pressure on pricing? And could we actually see new capital finally come into the market now that war exclusion becomes more widely adopted? A lot of the comments we've made are fact-based. We are seeing more and more carriers adopt wordings, partly for regulatory reasons, 'cause they've been told to, as all the Lloyd's carriers have been. Partly because of reinsurer pressure, partly 'cause of management pressure, partly because they've been persuaded by the arguments. As Aidan said, there are one or two still to go. Our expectation is that the vast bulk will have decided by 1-1, to do so by a combination of those factors that I've mentioned. And that's why we think the Lloyd's will be largely behind us, tomorrow. What impact will that have on prices? I think it will help price adequacy because it stops insurers competing against that and up forcing some insurers to lower prices as an alternative to the war exclusion. So we're hopeful that it will just help concentrate on different things. Any comment on new capacity finally entering the market because they now feel the risk is more manageable? I would, I would say we're not, we're not seeing that yet. We could see new capital. Think about that, but what we are seeing is the alternative capital that we've been talking about emerging from an ILS standpoint. Certainly, having clarity around the war exclusions and having that deployed is certainly giving greater confidence to that part of the market. You're hearing about bonds being written. We did bond this year, you know, there's others in the press, and certainly one big leg of that is the war exclusion. Are you expecting your competitors who are probably likely to catch up in 2024 to have some disruption similar to yourselves, or do you think that that will not be an issue in 2024? I think—sorry, go on. No idea. Yeah, that's what I was gonna say. Yeah. Thank you. No worries. Yeah, Freya Kong from Bank of America. I'll also ask my questions sequentially. The barriers to entry have always seemed quite high in cyber, partly due to infrastructure, but also due to understanding of risk. Do you think this is no longer the case, i.e., it's easier for start-ups to now come in and enter this market? I guess, where do you see your advantages versus peers being, why would a broker or client choose you, and how do you sustain your leadership in cyber? To that? Yeah. I think the barriers to entry are getting higher. I think it's going the other way. We always said they were high, and I think they've gone up. To create the kind of service offering that you have to have to be a market leading in cyber now is a substantial investment and a huge undertaking. And to do that is a real challenge. Not only that, you can build four or five parts of that ecosystem that you need, both in threat intelligence, underwriting capability, working with different vendors, so on and so forth. If you can't connect all that together, it won't work. And if you can't show up to an insured and a client and a broker with all of that connected, it won't work. So for me, actually, that's a huge barrier to entry. I also think that a lot of the more established cyber carriers have got, as Aidan showed, years of thinking through systemic risk and how to manage it, model it, and how to deploy your aggregate, and how to optimize your aggregate behind us. And I think that's a huge part. Mm. It's gonna be very hard just to suddenly start doing that and come to market. So in my opinion, there may be more competition, but the barriers to entry of doing cyber well and to become a leader and to have these things, I think they're higher than they've ever been. Yeah. So I think the positive benefits of advancing the systemic risk discussion and having more of a shared vocabulary vastly outweigh the threat of it commoditizing our business. I don't think that's gonna drive that. Okay. And just on systemic events and coverage, there seems to be a general reluctance to cover systemic risk within cyber, and insurers are doing what they can, or the industry seems to do what they can to write it out, like in the war wording example. Do you expect systemic risks, risks across the board might just be written out of coverage in the future, or is there a role for the industry to play here? I think if you look at cyber insurance, there is a huge amount of systemic risk that cyber insurers take. So if you just take a step back for a minute at the systemic risk that can arise from cyber, there is lots of it, and that is a risk we've been managing, we're comfortable with, that we're thinking through, that we are taking, and we are, you know, going to be providing solutions, and we are providing solutions to clients too. And that will continue. But there are a few things, and it is a few things, where the systemic risk just becomes too big for the commercial sector, and war is really as we've said all year, war is the one. You know, as with many insurance markets, war is just going to be an event that is too big and needs to be excluded. So for me, it's about, as an insurer in this space and as the commercial market, we need to keep evolving. We need to keep bringing capital in, so we can provide those solutions. We do need to take on these systemic risks. But what we also need to be very clear about is when we have these scenarios, the war scenario, where it is too big, that we're clear about that, which we have been with client and brokers, and we exclude that and that's the way to evolve the market. Let me just add one- Yeah ... one, one point there. I think there is a definitional challenge in cyber with the term systemic, and the work we have been doing over the past couple of years has been focused on how do we distinguish the systemic, that it can still be insured in the commercial market from the catastrophic, you know, where these are not just earnings events for us, but significant capital events for Beazley or for the market. And I do think we need to try to distinguish the two, because as Paul says, I think it is reasonable to expect coverage to respond to a level of systemic exposure that, you know, our policyholders have. But there is a ceiling above which, you know, markets cannot really go with the current market structures. So our view is we should insure as much as we possibly can, and then insure what will bankrupt us in the industry, because that's not responsible either. What we shouldn't edge into is starting to exclude that which is inconvenient, because that's not responsible, and that's where we're trying to go. Okay, thank you. Sorry, last question. The $600 million, are you comfortable with this level? And just as you look at property PMLs as a percentage of shareholders' equity, is this something that you monitor for cyber? And I guess, do you see this being managed down with potentially more cat bond support over the coming years? The parallels are clear, absolutely, and we absolutely have a look at it in terms of risk to profit at a lower return period level and a risk to equity. The cyber and property have different returns on equity, and as the risk reward between those classes ebb and flow, we will take more or less risk to equity appropriate with the reward we're getting. As part of that too, depending on the efficiency of being able to hedge that risk, that will influence that decision-making as well. But the way we're thinking about cyber downside is exactly parallel to how we think about property. Yes. Hi, Darius Satkauskas, KBW. Just two questions, please. So the first one is: why do you think some of the players in the U.S. market were reluctant to implement the proposed T&C changes on war exclusions? What's your thinking around that? And the second question is: what is Beazley's approach to paying ransom in your key geographies, and do differences in views on this between the insurance companies matter in how appealing the policy is to the client or not? And then where do the authorities stand on this at the moment? Thank you. Okay. So we're not going to answer the first question, because it's not up for us to comment on what other insurers are doing and what their rationale is, right? That's completely up to them. I think what we have been very clear on is why we're doing what we're doing, and then it's up to others to make their own decisions. Do you want to talk about- Ransom payments ... ransom payments? The decision to pay or not pay a ransom is always the insured's. It's, you know, it's their claim, it's their scenario, it's their crisis. That is their decision. What we do is bring to bear the experts that can help the insured with whatever it is they decide to do. And what we've seen actually over time is ransom payments actually have come down as resilience goes up, as you'd expect. You know, we've seen the actual ransom payments over time, and that's common across the industry, have come down. But as always, if there are individual jurisdiction, country laws, legal requirements around the payment of ransoms, we'll obviously be making sure that we're fully compliant with those and advising our insureds to do on that as well. Our view is it's not our job to decide whether ransoms are legal or not, or should be paid or not. That is a public policy issue, not an insurance issue. So if our insurer decides that it's the best thing for that company to pay a ransom in a highly stressful situation, and it's legal for us to indemnify them in that law, then that is the right thing for us to do because our duty of care is to the client. It's up to public policy to decide whether that's right or not, and we don't want to get involved in that. Just on that, is that something that's discussed upfront with the client? Because obviously, that Oh, yeah ... then changes the amount that you might have to indemnify. Oh, yeah. Yes. Yeah. Oh, sure. Nick? Hi, sir. Nick Johnson from Numis. Just one question, actually. Just wondering how you put a probability on the scenarios you've talked about. So it's not like hurricanes, where you've got 100 years of data. So why are these scenarios deemed to 1-in-250 and not, say, 1-in-100 or 1-in-10? Yeah, yeah. I mean, that is clearly a key challenge for the industry in terms of how we validate these assumptions. We do use expert judgment in to a large degree there. And as you say, there is no experiential data that we can pull from for these extreme remote events. But what we do is we extrapolate the losses based on what we do know for the more frequent and higher probability events. So the key step forward that we've been making on this is, whilst you may not be able to judge the absolute probability of a particular event happening, you can start to think about what the relative probability is, right? According to the relative difficulty of the two things happening. So the example Aidan gave earlier was, an RDS is around a regional attack on a particular piece of cloud infrastructure with a certain set of downtimes and recovery times and impacts. And we can put a return period on that, because we've seen that sort of stuff happen, and you go: how much more difficult and complex is a nationwide one? And we can put a relative probability on that based upon its relative difficulty of happening and then extrapolate that further. ... What the industry's got more sophisticated about, I think, is being able to go from one to t'other and start to agree on relatively how complex and difficult are those, are those things, and therefore likely to happen. Back here. Thank you very much. So I just wanted to ask about the, the fact that you're not seeing the same level of frequency as the market, the severity is going up as well. If we were to move the same level of frequency what the market is seeing, apply the same level of severity, rate changes, what does that do to your loss ratio in cyber, given the fact that you have potentially prudent loss picks or assumed to be? I'm not sure what happened in IFRS 17 yet. I haven't quite worked that one out. But yeah, if you could help me on that one. The, the second is, how has your cyber PML over equity developed over the last couple of years? And has the increase in property exposure helped sort of reduce that as a percentage? Thank you. Yeah. So as I think Aidan was saying, it's been coming down. And as our equity has been going up, that's quite a helpful combination, isn't it? So yes, it has been. Do you want to talk about the first one? Frequency and severity? Yeah. As we said, we're, you know, focusing on the attritional side of things. The frequency is stable at the lower levels, and as we said, there has been some room, because the rate, obviously, there's a function of two things of profitability. There's the frequency and severity, and there's the claims, and there's the premiums that we're charging, and the rate, and the rate that we get. And it appears for some of the frequency and severity we've experienced in more recent times, that has been slightly overshot, and so that's why we're giving a bit back. We're committed to doing that, but I think it will move with the threats. I think it's less about looking back, and it's more about looking forward, the answer to your question, actually. It will depend on what we see in the next six to 12 months in terms of the threat landscape and what happens. You're right that the frequency is back. We haven't seen it yet. We may start to feel that, and we'll see where that goes. The severity, just to be clear, though, is not severity across the book. Just to make sure that that's, that's understood. It's severity in the large account part of the book. What that means is we've seen some large, high-profile, big-name accounts have some events. That happens every year. It typically comes feast and famine sometimes. It sounds crazy, but holiday times is quiet. You know, certain other times of the year are busier than others, and so we have, we have seen a little bit of that. Certainly, we've said that we'd expect our frequency to come up if the industry is seeing that, and we're comfortable with that, and we monitor that, and we measure that on a monthly basis. And if we see that getting to a level where we need to take action, then obviously we will. And so, yes, our original loss picks don't assume a below than average in that frequency. Yeah. And roughly, what's different to your frequency versus the market? Can you say that? We're not going to share that. Yeah, fair enough. Yeah. But I think we are still deriving the benefit of our ability to assess particularly ransomware exposure and the investments we've made in the past few years to better understand how these attacks are successfully perpetrated. I think that has stood us in good stead over the past few years in relation to frequency. It's not a new threat. It's the threat- Yeah ... that we were underwriting for in 2021 that's coming back, that we shared 40%-50% of our book over controls. So that's the, that's what we're seeing. Thank you. James Pearce from Jefferies. First one, just kind of a follow-on from Freya's last question. So, you've mentioned that in property, your risk appetite is for a 1-in-250-year scenario that's less than 20% of equity. Do you think about your risk appetite for cyber at that 20% level as well? I think- Yeah, okay. So we haven't disclosed that yet. Okay. Fine. I'll move on to the next question. So you spoke about fee-based earnings a bit in cyber in the past. Just wondering kind of how we should think about that in terms of overall earnings mix going forward, and whether you'd consider using reinsurance to leverage that? Okay. So fee-based earnings from a fronting, as well, from getting paid to take risk by others and from, I guess, other revenue sources, I suppose. So in terms of fee-based earnings from a reinsurance standpoint, we've always said that one of... You know, as you've seen, we've grown a bit on cyber, and we've grown net this year, and we've, you know, we've bought less reinsurance than we have in the past. Why have we done that? Because property had a great year in growth. We managed a diversification. We were never. We were always doing it to make sure that we were a diversified business as Beazley. You know, Beazley is not, and will not be a one-stop shop for anything. And so really, if you look at it, it's not been about the money we can make. We're very fortunate. We've been very lucky that reinsurers have been oversubscribing to some of the reinsurances that we've been purchasing. We've been very fortunate, and we've been very well supported. But for us, it's not about that fee generation. It's about actually diversification in Beazley and managing that diversification, and thanks to the phenomenal year that the property teams had, we're able to be even more diversified, which enables us to keep a bit more of our cyber premium and grow. We've always said that we have an aspiration to generate risk-free revenue from our cyber business. We've spoken about an entity we have called Lodestone. We also have a lot of cyber services within a team called Cyber Services, that reports up into me, and we are still very excited about that opportunity. I think the most important thing is we want to reinvest again into all our services, because cybersecurity and the cyber service landscape moves very quickly. It moves. If you look at the cybersecurity industry more broadly, it's growing, it's predicted to grow, but the services you need evolve quickly, that market moves quickly. So what we're doing right now is reinvesting in our services to make sure that we're positioned, A, to help our clients if they need it, to B, to make sure we have best-in-class and continue to have the best-in-class leading cyber services, and C, once we have that, generate risk-free revenue opportunities where they exist. That's, that's how we're thinking about that right now. Hi, I think, still two questions from me, please. One, coming back to the modeling question. It's a really basic question: What is a probabilistic model? How does it work, and why should we feel good about it? Why do you take comfort from it? I'm just trying to get my head around it. What sort of data goes into it? Is it deterministic? Is it stochastic? Just any color on that would be useful. Thank you. And then the second question is on, again, it's coming back to an earlier question, is on the systemic cyber risk. Can you give any color on the systemic cyber that is covered within the policies, either implicitly or explicitly? And then I'm just wondering if there is demand... I guess there is demand for a standalone systemic policy, and would you ever, would you ever sort of issue one at the right price? Okay. So standalone cyber war, what systemic coverage are we providing? And any more thoughts on how the models are built? Do you want to go with the first one? Well, yeah. So, yes, it is a stochastic model. So, we incorporate the scenarios. They are RDS scenarios, so they are incorporated into the model. But it isn't a deterministic model, so it is a full stochastic model. So the second question was about systemic cyber we cover? So before you go to the second one, just on the modeling side, so where does the data come from? Because I can understand for a cat risk, you've got hundred years of data, but well, how do you build a stochastic model based on stuff that just hasn't occurred historically? Yeah. Do you want to talk about the model, develop it? You go for it. Yeah. So, so, so we do, we do carefully develop each scenario. So when we think about, you know, what are the top potential cyber events that could happen that could have a widespread effect? So we, we have about 10 that we think about in our RDS suite. And what we do there is we, we have a lot of internal experts. We come up with assumptions and parameters around, you know, what are the specific steps and stages of an event? What can happen at each stage of an event? And then we, we do use external experts to help us challenge and test those assumptions and parameters. And we take a long time to think about those, and over time, we build up a picture of our best view of what those events could be. We then do—I mean, you're right to say we, you know, it's difficult to validate these extreme remote events, but, you know, as Adrian says, we can think about the relativities between events that we have seen. So if you take the cloud, there have been quite a number of cloud outages. If you take widespread ransomware events, there have been quite a number of widespread ransomware events, and we have learned from each one. So we take the learnings from each one, and we incorporate those into our scenarios, and we go from there. And so what we're talking about in terms of the maturation of the modeling industry is that we have our, our own views of, what has happened and the evidence around them, our own views about what an RDS could look like, and then how to make that more extreme, and the relative difficulties and probabilities of those. The other vendors had their views, and you go back two or three years, and those views were very, very different from each other. And what's been happening over the last few years is there's been a lot more discussion between those experts, including a number of the companies themselves, who are responsible for the exposure in the first place. And there's much more of an alignment of a conclusion about what those relative probabilities look like and what is the art of the possible and so on and so forth. So that's how it's been built up. And the reason we've got more confidence is because there's more of a coherence between the various different experts across government and different consultancy companies, different threat assessment companies, and the companies generating the exposure themselves, as to, relatively speaking, how likely these things are. And that enables us to bring up enough data to produce the curves on a stochastic basis that you've seen here. And I think that's a major step forward. Yeah, and I think if you think about, you know, as Adrian says, is there a consensus about what are the top three largest events that are possible? And I think you're right. So there is a growing consensus about what those events are and what types of technologies could give rise to those widespread events. Which leads a bit on to your, second question, which is what types of systemic things are there, that could happen? Well, it's a lot of things that have just been described. Some of the ones we've spoken about before that would be potential systemic events would be, you know, obviously a cloud outage. That one's we've covered pretty well, that's spoken about. Some kind of mass ransomware event, not lots of ransomwares during the course of the year, but, you know, a, some sort of service supply chain issue that distributes a ransomware to lots of companies, all at once. Could be a software provider, could be a hosting service, could be lots of things that could distribute that en masse. And then we think about things, attacks on the financial service industry. We think about, you know, attacks on the Fortune 500. You know, there's a whole suite of scenarios. Some of them, you don't get beyond- Mm. You know, a very low amount. Some get to your 1-in-250, and the ransomware ones and the cloud ones are typically the ones that people agree get you to the higher levels. But we also give a lot of thinking to the lower events as well. The answer is, everything's covered. Like, we're not excluding- Yes. We're not excluding systemic. We pick out certain things which we think are fundamentally uninsurable or uninsurable up to a certain amount, and then we exclude them. So the answer is, everything's covered, unless we specifically outlined the specific things that aren't, because that's the nature of the cover. And then in terms of a product, for systemic, not right now, but what we have done is, obviously, we've told you about the updating of the war exclusions. And some of the feedback we got from clients is: "Oh, we want that cover." We're like: "Well, that's too much cover for us to give for the reasons you've heard." So what we did was we went away, and we went into the Lloyd's Lab. There's a Lloyd's Lab, and Adam was actually leading on this. And we said: "Right, can we put together a war product for cyber war for clients? So we're excluding it from the cyber business and the cyber policies, but can we put together a war product?" And so we've been working with... There are other brokers in there, there are other insurers in there, in the Lloyd's Lab, thinking through, and we've actually written a product, and we're thinking around how we will start to offer that, and use that, and deploy that. It's in a pilot phase. But like most war products out there, as you've seen with the marine market and other markets, it will be a ring-fence, finite amount of appetite that you can control, and manage, and price for, rather than having a huge systemic war exposure without an exclusion. So this is very akin to how the other markets have managed those sorts of products. Now, that makes sense to me. I can clearly see there's demand for such a product out there. All right. I think that's it. Oh, no, I think that's it. Thank you very much indeed. I hope you found that useful. If you've got any further queries, please route them through Sarah, and let's break. Thanks very much indeed.