Good morning, and welcome to our full year 2021 results presentation. I have to say, it is great to see so many of you here actually in person. What a change of events. A warm welcome to everybody who's joining us online as well. I'm joined here today by Neil, our CFO, and in the front row, members of our leadership team. Before I hand over to Neil, I just want to reflect on what has been a year of significant delivery to the group. Firstly, we have delivered a strong financial result, growing our profitability while delivering our target to improve the quality of our earnings. We've done this by navigating a complex Motor market with discipline and delivering growth in Commercial, Home and Rescue. Secondly, I'm absolutely delighted with the strategic progress that we've made this year. We have now successfully completed the main elements of our technology transformation. First, I've refreshed my leadership team, so now we have the combination of skill and experience required to utilize the significant capabilities that we have coming online in 2022. Now, I'll explain later why these achievements set us up for growth. First, I'm gonna hand over to Neil, who can walk us through the financials. Thanks, Penny. Morning, everyone. I say it is great to be presenting to some actual faces and people rather than camera today. Great to see you all here. I'm delighted to be presenting another set of strong financials. I'll begin with the highlights on slide four. As Penny's already mentioned, it's a strong financial performance with operating profit of GBP 582 million. We grew our direct own brand account by 1%, bouncing deflating markets in Home and Motor, with continued momentum across Commercial and Green Flag Rescue. Costs reduced, and we've met our current year contribution targets, with increasingly more profits emerging from the COVID factors. We didn't see the repeat of travel claims or the investment losses we saw in 2020, and this was partially offset by higher Motor claims as frequency moved back to expected levels during the second half of 2021. Secondly, we had a great result at Home. Weather helped, but underlying was strong. Thirdly, prior year reserve releases rebounded and importantly came from more recent accident years. Lastly, we cut costs by GBP 18 million. Good underlying trading across the board with results outperforming against our financial targets. Let's turn to the details starting on slide six with policy counts and premium. This is where our diversified business model really shows through. If I look across the charts and slide, there are three key trends to pull out. First, Motor and Home were both a tale of two halves. In Motor, we traded with discipline throughout the year in a deflating market. In the first half, you can see we pulled back and you see that fall in IFBs. Whereas in the second half, as our new Motor platform came on stream and brought in pricing improvements, it meant we stabilized policy counts at 3.9 million. In Home, the story's the other way around. In the first half, we capitalized on a buoyant market and grew across all channels. In the second half, as the PCW market discounted, we pulled back, resulting in flat IFBs from the half year. Now, the key message here is that we traded the market actively, choosing when to grow and when to protect margin. Secondly, Green Flag, Commercial Direct and NIG each grew strongly, and this is evidenced by transformations delivering, and Penny will talk to that in more detail later. Lastly, if I put all of this together, our diversification enabled total policies and premium to be broadly flat overall and direct own brand policies to be up 1%. Growth in a challenging market. Let's start with the second. Before I look at the individual results, I'd like to spend a bit of time on slide seven, on Motor claims trends as context. Now, there's a lot on this slide, so let me break it down to a few key themes. First, frequency. I'm sure you're all very familiar with the charts car usage on this slide, and our frequencies tended to lag miles driven due to both the nature of our book and the pattern of customer driving. In the first half, this was a tailwind, but during the second half, frequency moved back to expected levels. Moving across to severity inflation. Overall, we ended the year slightly above our 3%-5% range of expectations, and this is due to heightened claims inflation. Secondhand car prices have risen dramatically since the middle of the year, and this impacts both total loss settlements and theft claims. This builds on inflation already there from higher costs of claiming and longer car hire periods. Now, as you recall, as we said back in our claims deep dive in June, we believe we have a competitive advantage through our repair network and supply chain, and that allows us to mitigate some of this inflation damage pressure. Nonetheless, looking to 2022 over the short term, I do expect inflation will remain elevated across the market, and we'll use our claims advantage to remain a relative outperformer. Now let's move on to how this translates into the Motor results on slide eight. Motor operating profit was GBP 315 million, and the combined ratio was a strong 92%. As you'd expect, profit was down versus 2020 as conditions normalized in the second half of the year. In particular, the current year's loss ratio is 79% in the second half, and that's two points better than 2019 and in line with underlying 2020 levels. As we've talked about many times, we are pricing our best view of risk without pricing one-off COVID frequency benefits. You can see this in our average premium, which is only 2.5% down versus the market down more like 7%. This means we are well set as conditions normalize. Prior releases were up a bit on last year's low-water mark and were gained from more recent accident years. This shows that the reliance on large prior year reserve releases from the old years is now behind us. To bring that together, another strong earnings performance from Motor. Let's turn to slide 9. Again, we deliver an exceptional result from Home, with operating profits of GBP 142 million. That's a combination of good trading, benign weather, and additional prior year releases. The attritional prior year loss ratio edged up slightly from the low levels in 2020 as a result of price changes and mix shifts, fewer old partners, and more PCW new business. We saw a slightly elevated level of large fire claims. As you'll recall, we said prior year reserve releases were low in Home 2020, and they've increased this year, largely driven by favorable developments on the escape of water claims. To all of this, delivered a headline combined ratio of 80%, and when normalized for weather around 85%, which is five points better than 2020. It's a very positive year for Home. If I look forward, we expect the 2022 combined ratio to return back to the low 90s, which we saw in 2020. Let's move on to Rescue and other personal lines on slide 10. Here, headline operating profit improved by GBP 58 million and returned the segment to profit with a combined ratio of 87%. Now, this was predominantly driven by the normalization of the COVID impact on travel in the first half of 2020. On the right-hand side of this slide, you can see that Rescue delivered operating profit of GBP 55 million and a COR of 75%, which is a fantastic result. I said at half year that Rescue is well-positioned, and this has continued to come through from Green Flag direct growth and better indemnity control following the launch of a new claims system. This year, Green Flag sustained that transition to policies. Now, new customers will be offered a service contract, which means we can sell them non-regulated products as well. Now, there's a small accounting change which is set out in the premiums. Longer term, this is a new revenue source supporting Green Flag's challenging position. Finally, let's turn to Commercial on slide 11. Well, I hope you'll agree, the results demonstrate that this unit has been through a great transformation over the last couple of years. It's grown both top line and operating profit and is building a really meaningful market position. Double-digit premium growth was delivered across direct PCW and broker channels. While the reason for this growth is different in each channel, the consistency is around giving customers and brokers the right propositions backed up by great service. We've continued to carry rate across the board, and this supports future years' underwriting results. In 2021, the attritional loss ratio was a couple of points higher at 62% due to a few large fire claims, and prior year reserve releases were stable at 11%. Overall, operating profit grew by GBP 10 million to GBP 60 million, and we expect more growth to come through in the first quarter. Now, on to expenses on slide 12. We continue to make good progress on our cost agenda. Operating expenses, GBP 706 million, GBP 18 million lower than 2020. This drove a 0.6-point improvement in the expense ratio to 23.9%. In the chart, you can see that our costs before levies, depreciation, and amortization were down GBP 37 million. This means we exited 2021 on our expected cost run rate of below GBP 700 million. How does that compare with what we formerly when we set our expense ratio target back in 2019? Between 2018 and 2021, we've delivered a 7% reduction in controllable expenses. Even more if you include claims handling. How have we done this? First, our technology transformation, property restructuring, as well as other initiatives, reduced IT and other costs by 12%. Secondly, we've reduced headcount by over 10% as we've made processes more efficient, digitalized customer journeys, and tightened head office functions. Thirdly, we've made marketing more efficient. Now reducing marketing itself isn't a target as we see customer acquisition as a core strength, but we challenge every day on its efficiency. On cost, we're in line with where we thought we'd be, a run rate of GBP 700 million, while offsetting higher levies. A quick word on our competitiveness over the last couple of years. If I look at our direct peers, we estimate their expense ratios are up around 2 percentage points while we are broadly flat. A step forward in competitiveness against the market, which was always our objective. Let's move on to slide 13, and we reiterate our target in this expense ratio of 20% by the end of 2023. Let me talk you through the key moving parts that support this. Cost, growth, and inflation. As I said in the previous slide, we're in line with where we'd expect to be on cost, and we are looking to make further absolute cost reductions over 2022 and 2023. You can see the key buckets of savings outlined on this slide. In terms of growth, we've always said that a 20% ratio assumes modest growth. While it's true that the market premium is smaller today than we'd expect it is, we're building a great business that has all the capabilities to deliver the required growth. Penny will talk through this in more detail later. Now, lastly, it would be remiss of me not to acknowledge the inflationary environment we're in at the moment, and obviously, very significant uncertainty given ongoing events. We've already seen some inflation in terms of skills, and I do expect this will feed through into broader costs. We've built some mitigation going forward and long-term supply contracts, but clearly, we are not immune from this trend. Step back from the detail of these two slides. Key point is we've made progress, and are focused on continuing to make progress to make DLG more cost competitive versus the market. Let's move on to investment return on slide 14. Here our high-quality portfolio delivered strong gains in 2021. Investment return increased by GBP 51 million- GBP 146 million, primarily reflecting positive fair value adjustments in our investment property portfolio. The net investment yield at 1.7% was a little ahead of our expectations due to good performance on the high yield portfolio and rising risk-free rates. If I take current rates and our maturity profile, we expect net investment income of 1.7% in 2022, increasing to between 1.8% and 1.9% in 2023. Now, let me spend a couple of slides on capital starting on slide 15. Over the last few years, we've evolved our capital structure alongside market developments and our increasing current year profitability. Now you can see on the slide I've split this into three phases. In the current third phase, we see further opportunities to optimize and add flexibility for future growth. There are three elements to this. First, we've reduced the level of Motor excess loss reinsurance, increasing retention to GBP 5 million as rising reinsurance rates and reducing bottom uncertainty means retaining more makes sense. We've used management actions, including improving current year underwriting to fund this, and this means the SCR was broadly stable. Secondly, we raised Tier 2 debt at a 4% coupon in 2020, which in effect has pre-financed the expensive 9.4% bond, which has a first call date on the 27th of April. Thirdly, our improved current year profitability together with the internal model gives us an opportunity now to investigate potential longer term strategic reinsurance solutions. What I'd like you to take away from this slide, we've done a lot on our returns, our balance sheet is strong, and we have further opportunities. A few words on capital distribution on slide 16, where again, we've increased the dividend and announced a further share buyback. Let me start with a reminder of our capital allocation approach. We first look to invest in the business and pay a regular dividend. Secondly, we look to see whether there are inorganic opportunities, including partnerships. Thirdly, we return excess capital to shareholders. Last year, we've invested in the business with further technology spend, the property transactions, and an increase in Motor reinsurance retention. Also announced the Motability partnership. Now, it's not consuming capital yet, and when it does, we use a relatively capital light reinsurance structure. After these, our strong organic capital generation means we can announce another GBP 100 million share buyback program. Now, this brings us to 160% Solvency coverage, which is bang in the middle of our risk appetite range. As I said before, I'm proud of our long-term track record for returning capital to shareholders, over GBP 2.1 billion in the last five years, and I'm pleased we can continue that today. Finally, targets and outlook on slide 17 before I hand back to Penny. I'll start with the weather and then talk about the early observations on how the market's developed so far in 2022. On the recent storms, it's still relatively early, but we estimate claims in the region of GBP 30 million-GBP 40 million for Home and Commercial combined, and that's well within our annual weather expectations. Moving on to Motor and Home. At a market level, we've seen slightly more shopping, but less switching. Market new business premiums in January and February have grown mid-single digits in Motor and low double digits in Home. We see this as a positive start and it falls within the range of outcomes we have prepared for. We've always said that having a multi-brand portfolio sets us up well as it enables us to both protect value and be competitive in new business. This is exactly what we're doing. Penny will talk to this later on. What does that mean for the financials? Well, despite the significant changes to the market, we are able to reiterate our key target of a combined ratio of 93%-95% normalized for weather in 2022 and over the medium term. With that, I will hand back to Penny to update on the strategic progress we're making. Thanks, Neil. Now I want to spend most of the time that I have with you today talking about our transformation and how it sets us up for the future. First, let me remind you of our business case. We have a track record of strong and consistent shareholder returns. As Neil spoke about, our strengthening profitability gives us options to improve capital efficiency. Our diversified business model and scale enables us to compete across all risk-reward groups to market and build valuable customer relationships. This year, we've completed the main elements of our technology transformation, meaning we've retooled almost the entire business. This means that we have exciting new capabilities coming on stream in 2022. I have a refreshed leadership team packed full of customer and digital experience and with the ambition to leverage what we have built to grow this business. Moving to slide 20. This is a business that consistently delivers. We've maintained our return on tangible equity as over 19% for the last five years, and have delivered operating profit of over GBP 500 million every year. We've significantly improved the quality of our earnings, with over 50% coming from the current year. Now our prior year reserve releases predominantly relate to recent business, around 85% from the last five years. We have now corrected the over-reliance on historic balance sheet strengths. This profitability has underpinned growth in the ordinary dividend alongside additional returns, with GBP 2 billion of capital returned to shareholders over that period, including the GBP 100 million buyback that we've announced today. Having addressed the sustainability of our earnings, I'll now explain how we are fully focused on the opportunities to drive growth before looking how this and our approach on pricing practices may affect 2022 beyond. Now, on slide 21, you can see our brand portfolio, which drives our track record of strong shareholder returns. Having strong brands with multiple products across a range of customer channels is something most of our U.K. peers simply do not have, and it's a significant strength. We've continued to expand our brands, develop new products and services, allowing us to build valuable customer relationships. It also means that we have versatile trading options because we can use differing brands, propositions, and pricing to target a variety of different customer segments. We know that this leads to successful outcomes, evidenced by the MCS scores of our two major brands and retention rates, which are among the highest in the market at 85% in Home and 77% in Motor. Our new platforms also means that we can leverage sophisticated data to reach more customers and build deeper relationships. This is a fantastic place to be following the FCA's new pricing changes. Because the end of universal discounting means that a reputation for quality insurance backed by trusted brands will matter more for customers. On slide 22, you can see why having a quality claims operation is also vital, and we have real strength here versus our peers. First, our scale is a significant advantage. We work with over 1,500 suppliers across the U.K. Every year, we handle around a million claims, fix 200,000 cars, and incur claims of roughly GBP 2 billion. It's key to our top quartile leading indemnity control. Having the largest insurer-owned garage network gives us double-digit repair cost advantage. This year, we further increased our capacity by purchasing our 22nd site. Second, we're increasingly using digital journeys to deliver benefits. All claims can now be registered online across Home and Motor, and it's proving popular. For instance, in the recent storms, 50% of customers notified their claims digitally. We're using AI technology to assess damaged vehicles, speeding up decision times on whether to repair or to move to cash settlements. That's important here. While we're not immune from inflation, we are in a better place than most due to our claims toolkit. It delivers business efficiency, and it allows us to mitigate some of the pressures. Finally, great claims capability will really matter in this new insurance market, as always, because customers being well looked after when they need us is the real key to loyalty. Moving to slide 23 now. I'm absolutely delighted with the progress that we've made on our tech build. Now, there's a lot on this slide, but what you need to know here is that the main elements of our technology transformation are complete, and we believe we now have kit as good as any in the market. It includes re-platforming our Commercial, Motor, and Rescue businesses, much of claims, telephony, finance, hardware, and much more. Critically, we've also put in place the people and infrastructure that give us a solid data foundation. A major milestone this year has been rolling out our new Motor platform across our largest brands, Direct Line and Churchill. It enables pricing at a different pace and granularity. It enables self-service. It enables product to come to market at a much greater pace. There's more to come as we embed that system, but it significantly adds to the group's ability to commercialize opportunities. Now, I'll explain what this means and how we intend to drive future growth in a moment. First, moving to slide 24. You can see why we're excited when we look at the performance of the business areas which are already fully agile and have had more time to fine-tune their technology. Our Darwin brand has been a massive success. It's now a significant player in the PCW market, having grown to over 150,000 policies in just three years. Green Flag is disrupting the Rescue market, having delivered a new claims system and policy platform. DLFB is continuing to grow in the direct SME space, and Churchill for Business is a brilliant example of how we're using brand recognition and PCW trading expertise to develop new income streams. Now, the premium of these retail businesses might be relatively small, but since 2017, they've collectively grown from 9%- 15% of our Direct Home brand GWP, demonstrating what can happen when you get brilliant people and give them the right technology. Taking this all together, this slide proves value or gives us valuable proof points of what can be achieved. What then about the future? Now, over the next two slides, I'm gonna take you through the six big levers that we have, where you can expect capability to keep coming through. Starting with slide 25. First, as I've discussed, there will be a step change in Motor. On pricing, our pricing data teams now have a combination of tooling, data, and flexibility to achieve great results. Our new Motor platform means we can now price faster with greater granularity and more sophisticated pricing techniques while integrating more data into our models. Let me give you just a few examples. We're seeing 75% reduction in the time taken to bring new major pricing models to market. We've already seen the benefits of straight-through pricing deployment in the second half of 2021, and we're now adding machine learning techniques. We're delivering a five-fold increase in the data sources enriching our models. We have more models going live in the first half of this year, meaning our pricing is materially more advanced than anything we have used before. Of course, this is crucial because you need speed and the predictive power of data to succeed in this market. Second, we're now adding Home to the same platform, so the step change in pricing capability that we've seen in Motor will be replicated on Home. As we develop our Home platform, we see great potential in expanding our product set, whether that's targeting new opportunities in the renters market or leveraging our brand presence to offer existing customers more products and services. Finally, we want to be the electric vehicle insurer of choice because we believe it's part of our role to help customers transition to net zero. We've made great progress by developing our new Direct Line offer, Zoom EV. It's a great example of how we'll use new partnerships to create value. This isn't about offering quality insurance alone. It's also about offering quality repair. We're training our technicians in EV repair, and our new technology and training center in Churchill gives us clear strength as we remain at the forefront of rapidly changing car technology. What sets us apart on EV is our ability to deliver end-to-end, from developing propositions, to pricing effectiveness, to our repair expertise, and we believe that it's this combination that you will need to win. Moving to slide 26. We now all have the toolkit to deliver for customers. First, we will accelerate how we improve our digital customer journeys, driving greater efficiency benefits. With our new Motor platform up and running, the team will focus on fine-tuning its capability in 2022 to deliver more effectively for customers, materially improving the quality and proportion of customer journeys done online. Having created the ability for customers to track and manage claims without needing to make a call, we're now focusing on increasing uptake. Not least because we know it improves MTF scores, as well as freeing up our consultants to deal with more complex customer queries. Second, we're delighted to have achieved two significant partnership results this year. We're preparing to welcome some 600,000 Motability customers in 2023, giving us extra added insight into a new fleet of modern vehicles. I'm really pleased to announce today that we've extended our long-term partnership with the NatWest Group until 2027, where we currently provide around 500 million customers with Home insurance. Finally, we'll be ramping up our marketing presence for Direct Line, for Green Flag, and for Churchill. Now, we know that our customer ads have real appeal, and after a quiet period, our marketing will be back in style, underlining that strong brand identity equates with quality insurance. That we know is a powerful lever. Expect new superheroes, a chilled out Churchill, and watch out for the Amazon Web Services ads featuring Green Flag, no less. Having gone over these two slides, I hope you can see that we have a rich and varied toolkit ready to drive competitiveness. To use this toolkit means having great people. For any insurer to succeed today, it needs to be agile, expert in digital, and obsessed about customer journeys. To achieve that, I've made substantial changes to my leadership team, bringing customer and technology to the ExCo table, adding agile and digital experience to our insurance expertise. We're bringing in new talent into our data, pricing, and technology teams, while opening opportunities for people to reskill across the organization through our apprenticeship programs and data academy. Our brilliant people make this business what it is. Our passion for tech and data is attracting new colleagues, as is being a proud purpose-led organization, from delivering a 50/50 ExCo, celebrating our diversity and inclusion agenda, embracing hybrid working, and tackling climate change. These are all big pull factors of why talented people are joining us. Given all of that, how do I feel about our position now the FCA pricing changes have actually landed? Well, I believe we've charted the right course through this early trading period because market dynamics to date are within our range of expectations, with inflation coming through on both Motor and on Home. Our approach has been to prioritize value as the market settles and while we understand customer behavior. We've held back marketing spend for later in the year. To date, retention rates look strong, and we're beginning to use our brand and channel diversification to our advantage. The early signs are in line with what we were expecting. Now we will, of course, navigate this new market with discipline. We believe we can win because of the strengths that we have. We have leading customer service, strong brands with unique propositions, and a market-leading claim service. We now have technology that is as good as any in the market, meaning that our pricing teams and data scientists have the tools to deliver a step change in our pricing and underwriting capability. It will significantly reduce our cost to serve through increased digitization, and we'll be able to get products to market much faster. You can also see tangible actions that will help us grow. We'll dial up both marketing and pricing as we move through the year. We've already seen strong growth in our retail businesses who are further along in their technology transformation. We've got a significant partnership with Motability coming in 2023 with around GBP 500 billion worth of GWP per year. Taking all of this together, it points to how we can drive growth later in the year and beyond. To conclude, I hope that you've heard how well-positioned we are now that our core technology transformation is complete and our data foundational capability is in place. That we reiterate our 93%-95% core target for 2022 and for the midterm. 2022 is the year that we pivot from building to capitalizing on what we've built. We have a clear plan for growth, the business has momentum and energy, and we are ambitious for the future. Thank you for your time. Neil and I, and other members of the team, will be delighted to take any questions you have. If you would like to ask a question at this point, please press star followed by one on your telephone keypads now. If you change your mind, please press star followed by two. Please limit yourself to two questions per turn. When preparing to ask a question, ensure your phone is unmuted locally. I will now hand over back to the management team to take the questions from the room. Brilliant. Thank you so much. I'll just pass over to Will. Thank you. Hey, Penny. Well done with last year's results. First question, it's a couple of questions. I won't take too much time. It's around the spends you wanna change when you get to this loss. Thinking about solvency implications, you talk about automatic actions offset against all else equal, what we have done to solvency. When I look back, there's a very kind of increase in volatility, I guess. Have you done any sort of back testing what that would have done, I guess whether it be last year historically to profitability, had you been at a GBP 5 million level? I don't want to take up too much on this, perhaps just one more point. How does this change the relative attractiveness of quota share options going forward? Does that, you know, change the benefits of doing certain other things? I will take that. Thank you, Will. The solvency impact, it's low tens of millions, probably a pattern. Everyone moved to that. It's like the lower layers of the Motor insurance program, they are more kind of money swap layers rather than real quantity layers because you know, there's a lot of claims going through those layers. It's not like. It's very different, for example, to a property cat layers which are very large catastrophe layers. These are money swap layers. The reason the change to the pricing was just not economic on it. Strategically, we think it's marginally positive to do it based on where pricing was. I didn't expect it to be a significant increase in volatility, to be honest. The second part, sorry, the pricing part. Yes, it probably does, you know, the things that improve the ability to have more strategic reinsurance relationships, there's a couple of things there. There's clearly the action to take on the debt size, make the debt more efficient, and the current improved capital position is a key contributor. Also, you know, having a little bit, having a slightly higher potential in Motor does make it a bit easier while the Motor plays back onto it. Yeah, thanks. Alan then Mm-hmm. I have two questions for you as well, please. First of all, just on pricing versus claims inflation. Where are you saying you are as a business? Also where do you think the market is as a business in the pricing versus claims inflation? Secondly on the expense ratio, the 20% guidance. Where does that leave you? You say you have carried this as a group over the last couple of years. Where does that 20% leave you versus competitors, 22% Mm-hmm. Should we expect that 4% benefit to be invested into growth when it does come through or will that be set out through forecast? Thanks. Okay. Why don't I take the pricing one and then you can do the expense one. If you bear with me, a slightly different story from Motor and Home on pricing. What I want to do is just step back because I think the entry point to 2022 is as important as kind of what's happened in the first part of 2022 to understand where we are. First, I think the most important factor is the severity and frequency, and PPR is kind of as perhaps a less critical component. What happened through last year and essentially we navigated the market with discipline throughout last year. That's the kind of approach that we chose to take. We lost a bit of market share in the first half, so we dropped about 1.9%, something like that, in policy count. It flattened in the second half. I think not 'cause the market got easier, but because we had pricing capability starting to come through and it started to get traction, if you like. You can see the outlook from all that if you look at the ABI average premiums. The market's off about 7% last year. We're down 2.5%, and actually pretty much all of that 2.5% is risk mix, not rate for us. So we're overall flat. Broadly, what's happened is severity inflation has been offset by frequency benefits through that time. I think Neil talked about earlier, as we came into the second half and the pricing approached our, you know, the frequency approached our pricing assumptions, then we moved into a sort of 79% loss ratio, kind of in line with kind of our expectations. All of that says we came into 2022 in a good place, and a good place relative to the market as a whole. What's happened as we come into 2022? Well, the market's moved up mid-single digits on Motor, something like that, reflecting pricing practice changes. We think that's probably enough to address that, you know, address that change. We're comfortable that that's within our guide rails, for pricing practices. You know, we've made our adjustments as well, accordingly. I think from here is where are we? What the market hasn't done is recover the seven points or so that it lost last year. We feel in relative terms that we're coming in a good place, Alan. As we look forward, we think our claims capabilities, we're not immune from inflation, we're not immune from claims inflation, but we do think we have some advantages relative to the rest of the market that will help us navigate it. Probably that's the sort of Motor synopsis. We still have capability to come on screen, I think. That's why we're feeling to be confident. That's why we've switched to the 93%-95%. Home, broadly the other way around, actually. You know, we went pretty hard in the first half of the year, taking advantage of a buoyant market. We figured that it would probably get more competitive as the year went on. We came to pricing practices. That proved to be right. You know, new business prices came off by about 4% in the market towards the end of the year. We didn't follow that. Again, we ended the year in a position we're pretty comfortable with, margin wise. I think, pricing practices is much more of an effect on the Home market than it is in most markets. The markets, you know, put through low double digits, sorry, on Home. Again, we think enough to deal with the, you know, front book, back book leveling up. It's less clear that it's enough to recover the five points it dropped out at the end of last year. Although interestingly, if that's what you would continue to see prices go up in Home's, so maybe that's, you know, heading towards that adjustment. I think as we come into the market in 2022, we focused on value. You know, especially in Home where, you know, there's a significant back book. Our first thought is to make sure that we understand what customer behavior is doing, what the elasticity of the market's doing. This is a reset for the long term. We started on the basis of protecting value. As we do through the year, then we'll ramp up the marketing, understand the elasticity as we move it, and then improve our competitiveness over time, as time goes on. That's probably, I think, the only thing I haven't touched on is inflation in the Home running, you know, just at the top of our 3%-5% range, something like that. Less of an issue at the moment. Neil Manser. I think our sense is, yes, we're going for the correct question. You know, if you look at how the market has been moving since we set the target, I think 2020 is a more ambitious target today than it was back in 2020 because of the jaws of the market. If I think about, we are still investing heavily in customer acquisition through the direct channels. Good and positive spend. If I look at that, I look at the controllable expense ratio within that number. I think these are very competitive questions. Morning all. James Pearse, Jefferies. Thanks for taking my questions. You mentioned you're seeing premium inflation on new business in 2022. I just wondered if we could get some more color on renewal pricing, specifically in Motor and Home. The second question is just on CapEx. What should we expect in terms of CapEx going forward? I guess, what's required to maintain a leading tech platform? I'll do the first one if you do CapEx. Yeah. Yeah. Look, renewal pricing. I mean, naturally, as you come into pricing practices you'll see, you know, some increase in new business prices, some reduction in renewal prices. That's the entire aim of the exercise, really. Certainly seeing that. There's no market data available at the moment. You know, we're ahead of the ABI, and that's sort of the first data point where you can get an overall sense of ARP. In terms of what we're doing. It varies across different segments, different brands, different channels, across the piece. I don't want to give you a specific number because it's commercially sensitive right at this moment. I think that's one to talk about in retrospect for Q1. CapEx. GBP 220 million for this year. I think it will take down a bit from that level the next few years. It's gonna be significant though. Just looking at Ash on CapEx, who's sitting right back there. We will continue to spend and invest in the business. I mean, the technology is a forever spend, policy spend. You know, well, less than GBP 120 million, but it'll continue to be significant. It's Farooq Hanif from JP Morgan. I've got three questions. Last one's very short. The first question is just about kind of mindset within the company. Obviously, since the IPO, you've managed very heavily for value over volume or growth. Can you maybe talk through what the change in mindset within the company has to be to get that to grow? And maybe how people will be incentivized or, you know, or what your colleagues will be, you know, looking to do to spur that going forward. That's the first question. Second question, you talked a lot about capital efficiency in the presentation. There's the debt subject to a kind of redemption this year. Why not reissue or, you know, I mean, you've issued it. You'd like to take that off the solvency ratio, but why not reissue something there? Then the third question, and any kind of thoughts or guidance around whether 79% current year traditional loss ratio in Motor goes to 80% for 2022 would be very helpful. Thank you. Do you want to start with mindset, and you help me with the other two or? Yeah. Right. Mindset, really interesting. I could do this, I could have about three hours on this answer. There might be a short answer, but I can't promise length of the answer. No. I think if you just think about what we've been doing over the last year, you know it was a hell of a hard year for Direct Line. Whereas while short, but we've been building the technology in each product. We've been building the data foundations and bringing in data skill sets. We've been doing a pricing transformation, bringing in new people, changing processes, getting ready for tooling. We've been continuing on our agile transformation path. Asking people to work in different ways, different groups in a much more fluid manner, which is not straightforward when you are working from home and you have never done it in an office. We've been starting to rebalance where we do our engineering and bringing that in-house. As we started to move onto our new technology, we're also bringing those capabilities in. In terms of mindset shifts, we've been kind of building up to this because there's been this huge wave of activity driving towards looking and feeling different. Now, that's not the same as changing a value-over-volume mindset. If you ask me if we're still gonna work with discipline in the market, then we are. Definitely stand for. We think we've done the right thing through last year. You know, that remains our philosophy. If we didn't say that, it would be much more difficult for us to talk about 93-95 CORs and so on, so forth. To that extent, the mindset remains the same. I do think there's a real sense that we've spent a lot of time building capability, and now we can start to see some examples coming and landing some stuff in the market. You know, it's really exciting when you're starting to put models out there when people's hands have been tied and not been able to do their pricing models, and now they've got two, three of them stacked up, waiting, ready to go, waiting to see what it does in the market. I think there is different energy and, please just have a chat with the team to see what it looks like. Thank you. Next thing, capital efficiency. Yeah, the debt calls are into this month. Effectively pre-financed it last year with the fourteen-point debt, which bring us on 4% margin. I think it's a good trade. We don't need to issue additional debt. Balance sheet's strong to the capital ratio. Now the Tier 2 in there is at 10 mid on the range. But of course, always with capital opportunities, as Penny says, clearly we're more. We've got the potential now to investigate more strategic reinsurance, and that has interplay with the debt stack as well. Mostly capital looking around rather than on one thing. On the Motor loss ratio, 79% second half year, exactly 78%, good entry point into 2022. The key there is that we are attracting with only 1% versus market of 10%. Premiums offset as conditions normalize. That's a good entry point into the year. We have a lot of pricing benefits or improvements come through, as Penny referred to in her presentation. I think that gives us opportunity. We shall see how the market bears, really take that margin. Hi. Thank you. This is Ivan Bokhmat, Barclays. A few questions, please. The first one, so you may have heard last week, your one of your competitors given an outlook for 2022 expecting profits to go down. Obviously, you know, we are out of the frequency benefits for Motor. I'm just wondering if you could perhaps frame an outlook, a short-term outlook for 2022 in a similar context, whether you expect profit improvements. Of course, mindful that you had a big restructuring cost in 2021. The second question is just a follow-up on the reinsurance aspect. So one, I was wondering if you could highlight how much have you saved compared to your previous arrangements in terms of spend in reinsurance. And second one, clearly this should probably also bring some reserving implications. I was just wondering how you would change your approach, going forward. Do you want to take it? Thank you. On the outlook, I hope we've given you some real parts. The 93%-95% is a key outlook statement for me. In 2021, the combined ratio was 90%, headline 91% normalized. We've given you the glide path, and I've given you some expected things on investment returns as well. One we haven't given you is realized gains trigger in the last forecast, particularly in markets, real estate. I expect those to be minimal going into 2022. Hopefully there's enough moving parts there for you to help you. On reinsurance, the cash saved is about GBP 60 million, roughly. Now, that's a cash save. That's not a profit number because obviously we assume the claims would be flatlined. As you said, sort of earlier, these working layers, you get a lot of claims from those layers. There should be ultimately a small term in there for us because we've taken out reinsurance on it within that. Reserving. No change reserving, to be honest. It's reserving exactly the same way we always have done. We reserve pricing then do the reinsurance, which is the exact approach. Perhaps if I could just follow up. Would that then, you know, in a certain period of time, two, three years, lead to an increased PYD going forward simply because you have to retain more? I think, theoretically, if we reserve to the same standard and you're seeing reserve releases flow from the back years, then more of it will accrue to us versus the reinsurers. I think that it will take a number of years for that to build up. It's not. I don't see it as a short-term impact. Hi. Good morning, everyone. It's Thomas Bateman from Berenberg. Nice to see you. Just two questions, please. Just on the Motor outlook and growth really. Given those changes to the transformation program of the last year or so, it felt like it was almost there, but you know, there's still more updates to come, still year-on-year declines in this growth. You know, should we expect policy growth in most of this year? The second question is just on the expenses. Could you give a bit more color on maybe the direction of moving parts? You know, what do you expect D&A to go up to, levies, and what are these kind of premium assumptions that you're expecting? Well, I'll take the first one and you take the second. Thomas, the Motor growth, you got. When you look at growth across the board, we've got three out of the four businesses growing. Home, I suspect will be, you know, flat this year because of the approach we've taken to pricing practices. Really it is a Motor question, you're right. We've entered the market in the right place, so we're feeling good about that I think. When we look at what's coming on stream, we've got strengthening claims that will hopefully should give us an advantage if inflation will come from an increase in factory market. We've got pricing capability coming on stream as we move through the year even more. We've got back-end loaded marketing. What does that add up to? Oh, sorry, we've got Motability coming on in 2023. I think what I said in the presentation is we'd like to see it come back into growth as we move through the year to the end of the year and back, you know, and into 2023. That, that's the shape that we're thinking. Now, there is a reality check. We operate in a real market and we will always take the right disciplined choices through that market as it moves. That in the end is determining what the shape. That's really a picture of where we see our competitiveness improving, if you like, in every timeline and what time. On cost, I'm going to have to look at it a little bit. The depreciation and amortization will tick up a bit here because we're still turning on new systems. That's the IT project we start to amortize. You will see a small amount of growth coming through in the D&A line. Levies I don't control, so quite hard to give outlook. Look, I mean, there's been pressure on levies, but let's hope some of the pressures have reduced. You can see that the last few years there's been significant uptick in levies coming through. Obviously we have to keep tight hold of control across spend, which is where we are. We're tackling it. In terms of growth, I'm not going to give you a precise answer. We said modest growth. You know, obviously the growth will come through. We'll make the choices in the market we need to make. It really depends what we can do. You You know, discipline, as you said, we'll make those choices. It may not be a straight line growth. It will probably be kinked. Penny's talked a bit about visibility as well. Now obviously you should say that there's a lot of inflation in the market. To the extent that inflation drives premium, that should be obviously a positive to help that modest growth. Just following up on the expense question. If there isn't any modest growth, let's say an adverse scenario where there is no growth, are there any levers to sort of bring that expense ratio down to 20%? My second question is on the market share in Motor and Home so far this year across the different channels. Market share across the different channels. I think A, it's early to say, and B, I'd come back to we started this new year focused on value first. We wouldn't, and we've literally held back marketing. We would expect shape of our performance through the year to reflect shape of that marketing spend. We wouldn't expect to be, you know, increasing market share at this point. We would expect that competitiveness to return and sharpen as the various different things that I've talked about come on stream, including the marketing through the year. On costs, I mean, I think so far we're on track with cost savings of GBP 100 million, despite high levels in the marketplace that has been tough. I think with where we've had success online, we have accelerated cost-saving rounds. I think reality is that we hope inflation in the marketplace will improve pricing and that would help to modest growth. Hi. Excuse me. It's [Ben Curtis] at Investec here. I just wanted to come back on the Motor combined ratio. It looked like in the second part of last year, the Motor combined was north of 100%. I just wondered, in that context, your confidence level in terms of getting Motor into the 93%-95% target that you have for the group. Maybe you could just, I realize it might be a reiteration, but reiterate in terms of the steps in which you would expect to see an improvement in that ratio versus the second half. Thank you. Look, I mean, I think the big story is we think 93%-95% is absolutely viable, which is why we reiterated it. We think that because we've come in and we're in a good place in the second half of the year on loss ratios, we believe we've got better claims capability in the market, so that, and that will give us an advantage. We think we've got pricing capability that is building through the year. Actually the market moves and steps, you know, the step in pricing and new business pricing we're seeing in the market as a result of pricing practices is in line with our expectations as well. With all of those together, we're comfortable with the 93%-95%. Anyone else? I would just say too, there's obviously timing to inquiry in the second half of the year, which may. If you take the second half of discrete, you might get the overall picture over the one better indication. Good morning. It's Barrie Cornes from Panmure Gordon. Just a couple questions if I may. First of all, coming back to expenses, just could you give us some color on the Motability? I think you mentioned GBP 500 million of gross written premiums. I wonder what the expenses are in respect. Will you be absorbed from your existing capabilities, or will you recruit, if you like, bring over the RSA staff, which are based up in Liverpool as I recall. The second question I had is, what do you anticipate in respect of claims frequency if, and I appreciate it's hypothetical, but fuel costs do rocket to the point of GBP 2 a liter, whatever. Would you anticipate claims frequency dropping, and as such, would you look to return premiums already paid, or would you simply roll that out to next year's premiums? Well, I'll take the second one, and you take Motability. Yeah. Yep. I think customer behavior. What happens on frequency is obviously a critical assumption for this year as a whole on Motor. We haven't yet landed what normal looks like post-pandemic, is the first thing. I think at the end of last year, we'd got to kind of 100% of the, you know, pre-pandemic driving levels and somewhat less than that in terms of frequency levels because some people were driving different kinds of mileage. I think when we come to, I don't know, March, April time, we'll really start to see what normal looks like from a less sustainable factor. I think everybody in the market will have made a different assumption on that and will be adjusting accordingly. I think from that point on, clarity will become kind of increasingly important. You're right that the squeeze on you know personal individual economics and so on is likely to have an impact. It's difficult to point to exactly what that is because it's a long time since you've seen that kind of pressure in people's you know wallet and whether they'll choose to spend those discretionary spend and what impact that has is, I think, also kind of difficult to model out right at this point. There clearly is a chance that frequency or driving miles starts to drop as fuel prices get more expensive. You know at the end of the day it may affect top-line premium. We don't know yet. I mean all of our You know, our customers generally can choose to reset their mileage, and so on and so forth, and, you know, we accommodate that. We'll see. If that is the case, it'll come with a frequency benefit as well. I think we just have to see how customer behavior develops. On Motability. First thing, delighted to bring the team on board with Motability, transferring across. In terms of the contract, I've been careful not to bring into Commercial contract terms, but the costs do come on, but there's a mechanism within the contract that they shouldn't have a significant impact to our expense base. Morning, everyone. It's Derald Goh from RBC. Two questions please. First one is circling back to your point around where do you think the market is pricing relative to claims inflation. Maybe you could give any more comments around how that's split between the direct channels and PCW, please. And maybe also where do you think you're better positioned relative to peers across those two channels? The second one on claims inflation, I'm just looking to get a sense around how robust are your mitigants in place, I mean, things like your repair network, et cetera. How much of a CPI increase beyond your current expectations can be absorbed within your claims severity if the inflation are slightly above 3%-5%? Thank you. Okay. Shall we start and Neil chip in? On channel wise, I think you're certainly seeing, with pricing practices going through as well, some differences between the PCW and the direct channel, in terms of what it's saying in terms of inflation. I think that's certainly a factor. I think more importantly, where are we on inflation? We're seeing between 6% and 7% in terms of claims inflation in Motor, around top of the 3%-5% in Home. Let's focus on Motor for a second. We suspect that is better than some players are seeing in the market. Underneath that 6%-7%, you've got damage inflation that's slightly ahead of that, and you've got kind of bodily injury that's slightly below that, averaging out. What's been driving the damage inflation is a number of factors. Some supply chain issues, timing of turnaround of vehicles, which means replacement vehicles can, you know, become an expensive part of the claim. Cleaning costs, but probably the single biggest feature is secondhand car prices, which are now maybe 40% ahead where they were at the start of the pandemic. When you're factoring that into total loss costs or the, you know, theft claims, that starts to get quite material. Those are the kinds of things that are driving it through 2021 and obviously potentially you've got energy costs and things that can amplify that as you go through 2022. What have we got that makes you know makes us able to mitigate some of that? I don't say that we are immune from it, but what are the mitigants? Well, it starts with the accident repair centers. So half the cars that we repair, we fix ourselves, half through basically the Tier A suppliers. We know that there is a material difference in the pace at which we turn vehicles round in our in-house versus our Tier A's, which again you know goes straight to how much time you're you know how much you're spending on replacement vehicles. We have a team and have done since really the early days of the pandemic focused on supply chain organization. For instance, we move and recycle parts around the sites. If we're getting shortages in one area, we can maneuver between the sites. That's another example. We're obviously repairing more than we were given the replacement vehicle cost changes. We've just bought small vehicles because that helps alleviate some of the replacement vehicle costs and so on, so forth. There are kind of numerous examples that build up. In total, you can manage the end-to-end with a relationship with a customer. You can at each point in that value chain. There are things that you can do to eke out benefits. We, you know, that's what drives to our repair cost advantage. We believe that amplifies when we go against the market, if you like, out there. I think there are cost inflation as well. Well, including cost inflation as well. I think the company's probably the cheapest possible in the market maybe. Energy, it's not a big spend for us. However, our team was very foresightful when they forward bought energy a couple years ago. We forward bought out to spring 2024 prices, lower than market prices today. We've effectively hedged our energy costs out. You know, when we look at our contract, we try as much as possible to put in fixed price contracts. For example, about 60% of our tech contracts are fixed price for the next couple of years. We've got some mitigation there from good forward planning from the procurement team and supply team. As I said, we're not immune, but not really special. I think the last one is Home. Like I said, it's probably operating around the top of the 3%-5% range. Probably the key point there is there are pockets clearly where you're seeing much higher inflation around construction costs and so on, so forth. Actually, a relatively small part of the claims within the Home book. You saw, you know, a lot of decorating, a lot of, you know, tech and damage replacement, goods replacement, cashing out and so on in the Home book. Actually, construction is a relatively small piece, so which is what keeps it, I think, within that range. Hi. Brijesh Siya from HSBC. Two questions. The first one is, I understand you can't give the breakdown of renewal pricing and what that's doing. Can you give us an indication in terms of the split between new and renewal for yourselves, Motor, and Home as a proportion? The second is on Home's acquisition and loss ratio. I can see that's stepped out and you highlighted a few reasons. Yes. I just want to understand how much of that is potentially due to COVID unwinding benefits that we saw in the first half of the year versus you becoming more competitive and willing to take less margin in that book. The first one first. Yeah. Home, it is more mixed shift than it is COVID. I mean, as you said, the COVID had an impact on different types of losses, but overall it did have a material impact. That's right. We haven't really shifted competitively as a rule on Home. On the renewal book, I mean, I think not a lot more to say than obviously you've seen new business prices go up, renewal prices will come down to balance that out. We haven't yet got to our final landing positions on new and renewal because of the approach that we are taking into the market, which is why we're not going to give too much detail at this point. Sorry. At this point. Sorry to interrupt. The question is what proportion of new and renewal, as a percentage of the sort of business you write? What's the overall proportion of new business relative to renewals? I mean. Sure. Look, we're seeing strong retention rates. Retention rates are kind of in the high 70s for Motor, low, you know, mid-80s for Home. The way to think about it is probably that renewal pricing and the renewal book is a way much bigger impact on the business than new business in any, you know, at any point in time. Which is why as we come in and we say, you know, it's very early days, sort of the first couple of weeks of understanding what renewal pricing is doing, which is why we're much more focused on getting renewal pricing in the right place than we are on new business. Sorry, I misunderstood the question. That's great. Thank you. I'll now pass back to Juan for any questions on the line. Thank you. As a reminder to ask any question, please press star followed by number one. The first question comes from Greig Paterson from KBW. Please, Greig, your line is now open. Morning, everybody. Penny, in the U.K., in the Motor, the average premium was down year-on-year. Did you say that rate was flat year-on-year and the reduction was due to mix? Just some clarification on that. The second question is on retention. You said it remained strong this year. Could you just say for Motor and Home separately whether it was up year-on-year or down year-on-year, retention rates? Thank you. Greig, sorry you can't be here. We're missing you. Where are we? Motor average premiums, yes, we said up 2.5% across last year. All driven by rate, risk mix. Rating flat. Broadly, what's happening overall is that frequency benefits were sort of mopping up severity increases. It's yeah. All risk mix, not great. Largely the risk mix is driving through because some of the pricing model changes that you've seen at half year. I think that's what's driving the kind of risk mix shift. There's some risk mix shift going on still in the market in a pandemic world, as well. Retention's strong. I don't want to get too closely into whether it's above, below or sideways, largely because we've only got about two weeks' worth of data. I think we're probably you know, pushing beyond what is a reasonable assumption. Strong is good enough, Greig. Thank you. See you next time. Cheers. We currently have no further questions. I will hand over back to the management team for any final remarks. Brilliant. Look, above all, thank you for actually being here, in person, most of you. Fantastic to see you. I think hopefully what you'll take away is that we're feeling pretty good about this year, notwithstanding, some of the wider uncertainties that are going on. I hope that that has come across today. We will all be around for questions. Will, I know you've got seven more, so we'll be catching up afterwards. Thank you very much.