Well, good morning, everyone, and welcome to our 2022 Half Year Results Presentation. It's lovely to see so many of you in person at this, frankly, extraordinary venue. Thank you, Goldman. A warm welcome to all of you joining us online as well. I'm joined here today, as usual, by Neil Manser, our CFO, and there are various members of our executive team in the audience as well. Feel free to grill them afterwards. Before I hand over to Neil, I just wanna reflect on the trading update that we issued last month, where we spoke to many of you about the complex dynamics that are operating in the markets at the moment, affecting the motor business and the wider industry. Insurance is ultimately about looking ahead and anticipating claims costs based on what you can see today and what you know of the past. In honesty, this is a complex when there is a period of heightened inflation, war in Europe, supply chain dislocations, uncertain customer behavior as we exit a pandemic, and pricing reform all set against the backdrop of low average premiums. In fact, historically low average premiums. It's a difficult trading environment and short-term profitability has been impacted. Moments like this require a deliberate response. We've taken actions to protect margins, we're benefiting from our diversified business model, and we continue with the strategic priorities which fuel the long-term earnings power of this business. In today's presentation, Neil's gonna talk you through the financials, and I'll build on this by explaining how we see the market and what our strategic priorities are in response to that. Turning to the key messages. The market has experienced a unique combination of factors. We've taken action to get back on track. We are now rising at our target margins. We're pushing further on costs and restoring balance sheet resilience. These actions are expected to return our Combined Operating Ratio to around 95% in 2023, and between 93% and 95% in 2024. Our diversified business model remains important. Outside of motor, other business units are performing in line with expectations, and we continue to focus on putting capital behind the opportunities with the best return. Market dynamics in the first half have simply reinforced the importance of our strategy. We've made good progress with our latest motor pricing model and are digitizing customer journey. Lastly, the long-term earnings power of the group remains strong. The capability the business has built makes us resilient to get through the period ahead and well-positioned if and when the market turns. We've declared an interim dividend of GBP 0.76 per share, and have confidence in the sustainability of our regular dividends for this year and beyond. I'll now hand over to Neil, who will take you through the financials. Thanks, Penny, and good morning, everyone. Penny's captured the key themes in her intro, so let me go straight in with the key numbers, many of which you will recognize from the trading update on the eighteenth of July. We delivered operating profit of GBP 196 million and a combined operating ratio of 96.5%. Our direct own brand in-force policies fell by 1.5%, with our focus on preserving margins in home partially offset by strong commercial direct growth. Costs continued to reduce year-on-year. Finally, as Penny said, we've announced an interim dividend of GBP 0.76 in line with 2021, which results in a solvency ratio of 152%. Moving on to slide six, here we have the headline P&L and ratios. Let me start by reminding you the first half of 2021 was, of course, a very strong result, elevated in large part by the claims frequency tailwinds in motor during the second COVID lockdown. I'll go through the detail by business area on the following slides, but ostensibly, we delivered good results in commercial, home, and rescue, which helped to offset the lower motor result. Prior year reserve releases were in line with expectations following conservative reserving for inflation at year-end, and investment return improved. Overall, in the first half, operating profit of GBP 196 million, a COR of 96.5, and our return on tangible equity was 17.8%, still well ahead of our 15% long-term target. This demonstrates the benefits of our diversified business model. Moving to trading on slide seven. I'll start with in-force policies, where direct own brands reduced by 1.5% over the first half. I pulled out the direct own brands caught in movements on the slide, and as you can see, the biggest driver is home, where we focused on preserving value as the market settled down post-PPR. Outside of home, reductions in motor and Green Flag were partially offset by commercial. Now, Penny will talk to the market dynamics in a bit more detail later on, but at a macro level, we saw lower shopping levels in motor and home, partially offset by higher retention. Then, premiums shown here on the waterfall. Direct own brands were 4.3% lower, with the biggest fall in motor, whereas growth in commercial offset lower home premium. Total group premiums were down less at 2.1%, benefiting from another strong performance from NIG. Turning to slide eight. Before I move on to the results in more detail, let me spend some time on the motor claims inflation trends during the first half. Now, there are three key themes I'd like to draw out. First theme. We've seen claims inflation ahead of what we assumed in our pricing, and there are a few reasons for this. One, the increase in used car prices, which feeds into total loss and theft claims, and influences around 30% of our motor claims cost. You can see on the left-hand side of the slide the impact on total loss costs over the last three years. Two, this was exacerbated by supply chain disruption, which became increasingly acute across the half, driving the elongation of repair cycle times on average over 50%, and increased the number of vehicles written off. Now, this not only increases costs through higher car hire charges, but it also delays the visibility of these inflationary trends. Three, these factors led to higher third-party claims where we can't control the claim, and the impact of this has again, been more visible during the second quarter. One of the questions we've been asked over the last couple of weeks is, could you have seen this sooner? The answer is that the combination of progressive waves of inflation, together with the settlement delays, particularly on third-party claims, has reduced visibility. We knew inflation was there, and we've been pricing for it, but the real extent of it has only come through in the second quarter. The second theme is that despite the inflation, our garages continue to deliver competitive advantage. You can see on the slide that our own garage network, DLG Auto Services, has outperformed. We've seen a smaller increase in repair times from a base that was already lower, and this delivers not just better customer outcomes, but lower costs. Thirdly, underpinning our revised outturn, we have made prudent assumptions on how these trends progress throughout the rest of 2022. We expect used car prices to remain elevated throughout the second half at a similar level to Q1. Claims frequency to remain broadly flat despite the potential impact of the cost of living crisis. Supply chain disruption to last well into 2023. Now, we are seeing positive developments in small body injury claims, which offsets some of the inflation discussed above. Overall, we expect claims inflation in 2022 of around 10%. Now, I've covered a lot in this slide, but what I'd like you to take away is the following. Inflation is market-wide. Evidence has been slow to come through given settlement delays, but we still think that we're outperforming where we can control the claim. Moving to slide nine and the motor result. The claims trends I've just gone through result in an elevated current year loss ratio of 86.4%. The year-on-year view does look quite stark, but remember the first half of 2021, there's around 12 points benefit from COVID. During July, we returned to writing our target margins based on our latest view of claims following pricing action taken and through deployment of new pricing models, which again, Penny will talk to a bit later. Growth written premium was down 6.5% in the first half due to the lower risk mix and the impact of structurally lower claims frequency. Overall, we delivered a profit of GBP 62 million, combined ratio of 105%, and we have taken the actions required to restore margins. Moving to home on slide 10. I spoke earlier about how we're approaching the first half was to preserve value as we navigated the new regulatory environment. This has resulted in a reduction in new business, which you can see coming through in lower policy count, and this is broadly in line with the reduction in policies in the market. We've been progressively pricing the higher claims inflation, which we estimate at around 8% in 2022. The current year loss ratio, 57%, combined with strong prior year, delivered a first half combined operating ratio normalized for weather of 87.5%. Now, we expect prior year reserve releases to reduce in the second half and continue to expect full year combined ratio in the low 90s. Good result while navigating a significant market reset. In commercial, on slide 11, the team has managed to maintain the momentum from last year. We saw both policy count and premiums grow across NIG and direct owned brands at the same time as expanding margins. Despite claims inflation of around 7%, we achieved strong rate carry of around 9%. This demonstrates the benefits of our previous transformation as well as supported market conditions. With lower than normal large loss claims in the first half, we do expect the current year loss ratio to tick up a bit in the second half, but a fantastic result nonetheless. Another strong result for commercial, 12% premium growth, improvement in the combined ratio and a higher profit. Let's move on to rescue and other personal lines on slide 12. Now, the majority of profit here comes from rescue, which you can see on the right-hand side of the slide. Operating profit was GBP 28 million, broadly level on 2021. This is another good result against a strong comparator. The continued low frequency offset by fuel costs and mix effects. Gross written premium went broadly level year-over-year. We aim to return to growth towards the end of the year once our new system has fully bedded in. Penny's gonna talk a bit more about how excited we are about the future of Green Flag. Let's move to expenses on slide 13. Again, we continue to make good progress on the controllable cost base in the first half and aim to reduce operating expenses going forward, despite inflationary pressures. Operating expenses were GBP 5 million lower in the first half as our cost transformation savings more than offset non-cash depreciation and amortization charges. Levies were slightly down due to reduction in the Flood Re levy. Staff costs were 6% lower, demonstrating the progress we made in our digital transformation and automation. Again, Penny will talk through how we're driving uptake through these digital channels in a minute. We're on track to reduce our cost base in 2022 in line with our target, and expect a cost base between GBP 690 million and GBP 700 million. But we won't stop there, having set ourselves a target of GBP 670 million in 2023. We believe the actions we've taken to date have made us more competitive versus the industry, which is vital as the industry adjusts to the pricing practices reforms. Let's turn to the balance sheet, starting with investments on slide 14. Investment return increased to 2.6% in the first half, with higher net investment income alongside positive revaluations on our investment property portfolio. In terms of yield, we reiterate the net investment income yield of around 1.7% for 2020, for this year, with some potential upside if hedging costs come in lower than expected. Reinvestment rates increased during the first half, and we've increased our yield expectations for next year to 2.2%. Credit quality within the portfolio remains strong, but as we've progressed through the first half, interest rates have clearly risen and credit spreads widened. This has reduced the available for sale reserve by GBP 179 million. Now, given the market volatility, we took the decision not to reinvest some maturities, and as we said in our trading update, we're taking further action to improve our capital resilience, and that includes reducing our exposure to longer duration U.S. dollar credit. We've begun this and expecting losses on disposal of between GBP 20 and GBP 25 million during the rest of this year. This is, of course, already reflected within our solvency position, and importantly, will not affect our yield expectation for 2022. Moving to capital on slide 15, and this sets out the capital walk to 13th of June. Now, there are a number of larger than usual movements in the first half, so let me talk you through those. First, we saw capital generation excluding market movements of 12 points, and this more than covered the first half dividend we've announced of GBP 0.76 per share. Market movements were higher than usual and of the 10-point reduction, seven points relates to credit spreads. Subject to the actions we are taking, we expect this to pull to par over time. Now, the impact of the higher interest rates appears in a few different places. Overall, the net effect is broadly neutral, as the reduction in asset values, a positive in the increase in the reserve discounted credit, and a further positive in the reduction in the SCR offset each other. Overall, the SCR was flat with the benefits of the high interest rates I've just talked about offset by the impact of the revised 2022 and 2023 underwriting outlook. You can also see the unwind second half of the GBP 100 million buyback on the slide. Lastly, the ineligible capital relates to the increase in Tier 3 deferred tax from the negative investment mark to market, and again, this should unwind over time. All of this leaves us with a solvency ratio of 152% at 13th of June, well within our risk appetite range. As I mentioned earlier, the actions we've taken during the year have restored our written margins during July, and this will underpin our dividends as we look ahead into 2023. Now, it's important to acknowledge that the revised core expectation for this year might mean that we pay an uncovered regular dividend for 2022, and the board's comfortable with this given the positive outlook into 2023 and beyond. For 2022, with a number of actions in train to increase our capital resilience. I mentioned earlier that we are reducing our longer duration U.S. dollar credit portfolio and with a number of other actions being considered, including the use of strategic reinsurance that I talked about at year-end. With a strong track record of return to shareholders, and we feel confident in maintaining that record as we look ahead. Let's conclude on the Combined Operating Ratio outlook on slide 16. Our medium-term target of a range of 93%-95% holds, but due to a six-point higher current-year loss ratio in motor this year, we now expect the group Combined Ratio to be three points higher at between 96% and 98%. We've taken the required actions to restore margins, and we expect this to lead to improvement to around 95% in 2023, around the top of the medium-term target range, as we are still earning through premium written in the first half of 2022. We continue to tackle costs, and we are seeing rising investment yields. We're confident we have the actions in place to restore the earnings power of the business, and with that, I'll pass back to Penny. Thanks, Neil. What I want to do now is give you my view of the market, the actions we're taking, and what this means for our future strategy. What has happened in the market? Well, FCA pricing reform at the start of the year has been significant. It's caused the new business market to reduce by around 15%-20%, and retention levels to increase by five to eight points. Reducing switching was an aim of the regulators, but the degree of that change is so far greater than we anticipated. Although it may yet moderate if and when premium inflation starts moving through the market. Heightened inflation, especially in used car prices, has persisted, only beginning to fall a little at the end of the period. Meanwhile, supply chain dislocation deteriorated, impacting vehicle repair settlement times, where it became clear through Q2 others were suffering more. There's been a lack of certainty around customer behavior. Having come out of a pandemic where claims frequency's been unpredictable at best, the U.K. is now facing a cost of living crisis which may yet impact driving patterns. As it stands, frequency is some 10%-15% below pre-pandemic levels, and this is reflected by the market in premium reductions through 2021. Further, in practical terms, pricing reform has been a major undertaking for the industry. It's meant changing every model, every price, and many data sources. It's disrupted trend analysis and limited visibility through transition. How's the market reacted to all of this? Well, initially by making an appropriate adjustment for the pricing reform at the start of the year. Also, we've seen new brands and sub-brands and different product sets where firms are able to maneuver due to smaller back books. Just as we ourselves have used different trading strategies between our Direct Line and Darwin brands, for instance. It's now clear the market was not pricing claims inflation. Perhaps, given the complexity, it's not a surprise the market's taking time to find an equilibrium. On the upside, we did see some limited upward price movement in the second quarter and have started to see bigger steps taken by some key players in the last two weeks. If that's the market, what have we done? Well, we've focused on protecting value, mitigating claims inflation, and restoring margins. At the start of the year, our priority was to protect our back books because they represent both value today and potential long-term relationships with customers into the future. On PCWs, where things are most competitive, we're both optimizing cross-brand and building further product options. As a result, we've seen retention rise around six points in motor, with Darwin primarily driving the new business growth. In home, Direct Line performed better than expected, and although new business reduced, retention is stronger than anticipated and much higher than in 2021, which is ultimately the key to sustaining profitability. As Neil's laid out, we have increased prices for claims inflation and mitigated it where possible. Having reset pricing for January's price reforms, we've put through additional inflationary increases from March onwards. This was ahead of much of the market. As the layers of inflation became clear through Q2, we have reacted by step-changing the inflation assumptions within our pricing, restoring our margins. Throughout, we've been using our new pricing capability. The main model drops went live in March and June, and I'll talk to those in a moment. We've seen cost benefits arising from the investments we've made, but as margins have squeezed, we have pushed harder. In summary, while contending with many complex market variables, we've continually assessed claims inflation and where it was likely to land. We've acted quickly to restore margins as soon as visibility became clear. We've done this ahead of the market, and we've delivered using our new strategic pricing capability. Turning to slide 20, you can see how we're improving competitiveness with this new motor pricing capability. Even though it's early days, we've seen it deliver a material improvement in the margins that we're now writing based on the current claims estimates. The results of our most recent motor model deployment have significantly improved our loss ratios. We've seen written loss ratios improve by between five and seven percentage points. This is in line with our expectations and represents a significant step forward. In the current environment, we've invested this into margin, but this should come through and improve competitiveness and is an important part of our future growth potential as and when the market cycle turns. The next stage of our transformation is about pace, the cadence of model updates and optimization. Equally as important is enabling customers to access digital journeys. People want the flexibility to deal with their insurer however they want, wherever they are making a purchase, tracking a claim, or waiting for a settlement. Having built the infrastructure, we are now delivering greater adoption. On the left of this slide, you can see that Churchill is ranked as the leading insurance brand for digital service and claims capability. A quarter of our claims are now notified digitally, and in motor, this is up another 10% from this point last year. Motor online amendments have doubled through the first half, and for the first time in Q2, we have had more customers self-serve through their online accounts than calling us. With less switching in the market expected, competing on end-to-end digital journeys is crucial for our Net Promoter Scores, our customer retention, but also, as Neil said earlier, a lower cost to serve. Now, this slide shows how our motor pricing and digital capability fits within our overall strategy. When adding it to our customer focus, brands, claims expertise, and the track record of innovation, you can see it's a powerful package for the future, and no less so for the market changes. We know it works because of the success that we have seen elsewhere in the business, which I'll touch on now. Turning to slide 23, you can see how our strategy has led to results in commercial, where the right tech investments drive top line and margin growth. Our Direct Line and Churchill direct brands have seen GWP growth of nearly 30% over four years. In the first half, we've seen growth across all products, SMEs, landlord, small trade, van, and we're encouraged that Churchill's business is performing very strongly on PCWs. It's a similar story in NIG. With 25% GWP growth since 2018, it really is making its mark, and continued success has been happening with increased margins. The point here is that commercial is furthest along its tech transformation, and it shows how targeted investment and great people can now strengthen other areas of the business which have similar capability. Another great example is on slide 24, where our Green Flag brand continues to disrupt the rescue market. We're delighted it recently ranked as one of the top 15 brands for customer service in the U.K. That's across any sector. In the last four years, it's grown strongly at improved margins. Rescue operating profit has grown by around 40%. Both commercial and rescue demonstrate how our strategy and smart capital decisions leads to great innovation and brilliant customer outcomes. We're also prioritizing high growth, high return opportunities as part of our ongoing work to deploy our capital as efficiently as possible, and we've started to lay some of the groundwork already. We won the Motability partnership, a capital-light structure which has us reinsuring 80% back to Motability. We're making good progress and look forward to starting in late 2023, when we expect to welcome 600,000 new customers. We've renewed our home NatWest partnership, serving 500,000 customers, and we've taken the decision to reduce exposure to package bank accounts where they don't meet our target return levels. We're progressively recycling capital from lower return partnerships to attractive growth opportunities. To conclude then, I recognize that the events of the first half have impacted the short-term profitability of the business, but we have already moved to restore margins, and the fundamental earnings power remains. The balance sheet remains strong, and we have actions already in flight to rebuild its resilience. Combined, this gives us confidence about the sustainability of our dividend into the future. This is a great business with brilliant people and fantastic brands set to drive growth into the future. Our strategy remains the right one, and despite all the turbulence, we are making real progress. As ever, there is much to do, but we step forward with confidence. Thank you for listening. Neil and I will now take your questions. I'm gonna hand over to Becca, who's our call moderator, to coordinate the Q&A, and I think the intent is to go to the phone lines first and then come into the room. Thanks. I was expecting Becca to speak, but she may be speaking to the phone line. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypads now. If you change your mind at any time, please press star two. As a reminder, if we could ask everyone to keep it to two questions at a time. We will take the questions from the phone line first. Our first question comes from Youdish Chicooree of Autonomous Research. Your line is open. Good morning, everyone, and thank you for taking my question. This is Youdish from Autonomous Research. My first question is on your new pricing engine in motor, which you say is delivering an improvement of, you know, five to seven points in your loss ratio. First, I was wondering, I mean, why did it take so long to actually, you know, deploy the system? Then secondly, if you believe that that level of improvement is sustainable, does that not mean that your medium-term combined ratio target is too conservative? Thank you. Thanks, Youdish. Why did it take so long to deploy? Well, the truth is, you're right. It's taken us a number of years to get to the point where we've replaced all of the motor policy admin system. We've upgraded the claims system. Within that, we've updated all of the models that sit around, and the infrastructure that sits around our pricing. In addition to that, we've developed a strong data capability, both in terms of people and infrastructure, that sits around that and supports that as well. That's enabled us to increase by around fivefold the amount of data points that we're bringing into pricing, to introduce machine learning, and so on, so forth. You're right that it's taken a while to get to the point that we've had the infrastructure and people capability to be able to make those moves in terms of the development. That said, we think that we've made a massive step change this year in the capability that we have. I'm delighted to see the results that are starting to flow through at this point. In terms of what that means in terms of margins going forward, obviously we've put both underlying claims inflation through. We're also seeing benefits from the pricing models. How over time that we deploy that, and where we take that as growth and where we take that as margin will be a choice we make in the context of the market as it develops. Clearly having that in the armory and further improvements still to come is a big positive at this point. Thank you. Our next question comes from Greig Paterson of KBW. Your line is open, Greig. Morning, everybody. Can you hear me? We can. Hi, Greig. Hello. How's it? Just by the way, I'm not gonna ask this, but risk mix impacts year- on- year for motor and home, if I can get those offline, please. Two questions. Willis Towers Watson put out a recent piece of work saying that there was a big backlog in mid-sized bodily injury claims that had built up last year because of inertia in the medical triage business. I don't mean whiplash, I mean, the sort of GBP 50,000-GBP 200,000 claims. I wonder if you can talk about that and whether that's gonna produce upside risk to your 10%. The second question is on the SCR. What is the opportunity for further optimization there? I know you said that the reduction in your credit risk on your asset portfolio has reduced the SCR, but what other optimization, model optimizations should we be factoring some of this in our forecast, is the question. Yep. Thank you. I can do both of those. Yes, Greig, you're right that there are some slowdowns in settlements in bodily injury claims. Getting medical evidence has been slower due to post-COVID. When our claims teams look at the numbers, they factor that into the analysis and that's factored into the 10%. Let's see. I mean, there's also, as you're fully aware that, some of the claims through the portal, we're paying very close attention to what's referred to as tariff plus claims. Again, we've taken some, we think, prudent assumptions around those. On the second SCR optimization, at the first half, there were kind of two big movements. The benefit from higher investment yields is a positive SCR, i.e. SCR comes down. That was offset by the outlook for underwriting guidance, as we talked about. They broadly offset each other. The asset derisking I talked about has only just started, and that's not reflected within the SCR. That could be worth a few points. Looking forward, obviously profitability is a big driver of SCR. To the extent we can improve margins, deploy pricing more effectively, that gives us a slight kick of the SCR over time. Of course, we're always looking at ways we can optimize. I've talked before about strategic reinsurance, which is one of the tools available to us over time. Very focused on optimizing the SCR where we can in the appropriate way. Thanks, Greig. What I was just saying is. Oh, sorry. Just thank you. Thanks, Greig. I think we have no more questions. Go on, Becca. I'd like to hand it back to the room. Brilliant. We'll take questions from the room. If you could limit yourself to two questions, please. There's a button to turn on your mic so people on the phone line to hear. Ria, we'll start just here. Thanks. Thanks, Paul, and thanks, Penny and Neil. The first question is again around reserves. What assumptions do you have, or did you have for inflation at the full year 2021 results? Have those assumptions for inflation changed since then? The second one is around the dividend. You're talking about sustainability and the dividend. But if we think about it in a different way, what level of growth should we be expecting going forward? Maybe not for 2022, but 2023 and beyond. Thank you. Start on the first one. I'll do the second one. Well, I'll start on the first one. I'll take the first one first. Inflation assumptions in reserves, I can't give the exact numbers, but obviously when we looked at the reserve in the year end, we took, you know, what we thought were appropriate assumptions for reserving. Obviously you can see that we've seen positive prior year runoff at the start of the year, during the first half of this year, which supports that. We have seen, of course, as you go through the year, we have seen a tick up in the 2021 inflation as well as 2022. And that's kind of to be expected, and we built that into our reserving assumptions. Want to do dividend? I can do, yeah, I can certainly do dividends. I think the policy is quite clear, which is the progressive dividend policy in line with business growth. Over time, that policy is unchanged. I'm not gonna. Clearly you've seen what we've done historically around how we've grown the dividend to the extent that, you know, the business grows in a similar rate in the future, we'd look at similar set of assumptions. The policy is still the same. At the moment, clearly, we've paid and maintained it in a half year. That's kind of the, you know, as we look this year, the sustainability is around maintaining. In the future, as all the actions we've taken, as the business come on stream, the Motability product comes on, we start to grow the business in the future, we will look at whether we can then grow that dividend again. Thanks very much. Ben Cohen, Investec. Just to follow up on bodily injury inflation assumptions. I just wonder if you could talk to the risk that those would worsen in the second half of the year. You know, how sensitive they would be to you know general cost of living. The second question was, you made reference to looking at reinsurance options for capital benefit. I just wondered if you could say more about that. Would you be looking at presumably some kind of ADC cover rather than any kind of proportional reinsurance? Thanks. I think on inflation more broadly and bodily injury, a couple of different dynamics, I think. At the small end, obviously you're seeing improvements from whiplash reform. That's kind of going in the other direction at the moment, bar the point that Neil said. In terms of larger bodily injury, you're right that underlying wage inflation can affect those in terms of settlements and so on, and that's in a way why we're reflecting that within our 10% overall claims inflation number. Reinsurance options. Look, there are plenty of reinsurance options. We have a look at the slight advantage of being internal model company, so we can deploy reinsurance effectively to the risk types and not standard from the company. It opens up the options for various different types. I'm not gonna say exactly what it's going to be today, 'cause I think that would prejudge what we get to. I think there are a number of options out there. Quota share is one. Reinsurance structures that also look at reserves could be other ones as well. You know, there's plenty of structures out there, and obviously we'll update as we go through the process. Hey, two questions. The first one is just on, I guess the. It's kind of coming back to the trading update. You know, when we look at kind of when you have these shocks in the market, typically they can surprise you for a number of periods to come, right? If you look at 2009, 2010, you had bodily injury and then spiked to healthy years of painful kind of results? How confident are you and how can you help us get to the answers you've taken right now will be sufficient? The second question is coming back to the inflation assumption that you've made from 2022. I'm not sure whether I probably read the press release quite frankly, but you've talked about a 10% inflation number across 2022. Is that an average, is that an exit rate because I think Q1 was less than 10%. Q2 sound like it was 10%. So what happens in the second half of the year? What's the assumption there? Thanks. I think in terms of, you know, what gives us comfort from where we are now, which I think is the first question. Look, we're pulling levers. You know, for me there are two dynamics. What are the levers that support the long-term earnings power of the business? And what are the levers that kind of restore the resilience in the balance sheet, having used some of it up on the event? We've been careful in picking those claims inflation assumptions moving forward. Everything operates in a range, but we believe we have a defensible path through those. We're taking a sensible view, and we'll continue to monitor them and adjust as necessary. I think the supply chain kind of impacts have been quite an extraordinary feature of the first half. I can't ever think of seeing a combination of factors like we've seen in the first half at the moment. It doesn't feel like what we've witnessed is the gradual drift of an issue kind of opening up. It feels like there's been, you know, a big impact from that. We're taking kind of actions both against that, but also on where we see long-term inflation trends as well. I think on top of that, we are starting to see the benefits coming through from the strategic investments we are making, and that makes us feel very positive. Amid all of the turbulence, there's some really, really good signs as well. The exact timing and the shape of moving that into growth depends, you know, as well on what other people do around the market. We know that. For us, focusing on the margins, continuing to deliver those strategic priorities, strengthening the balance sheet with it has enough in there to give us confidence moving forward. That was the trading one. Claims inflation new on you- Slide to that. What we've tried to do is be more helpful by saying, across 2022, we expect inflation of 10% versus 2021 for the year. The reason why I've done that, because if you look at any half year inflation stats, they get very misleading. For example, used car prices started to rise halfway through last year. The pure inflation rate in the first half of this year is very different to the inflation rate in the second half of this year. What we've tried to do is just cut through it all and say, "For this year, we're expecting 10%. For 10% inflation for the year as a whole based on 2021 base. Hi. Good morning, guys. Two questions, please. Seven months on from the FCA pricing changes, given that the impacts have been a bit more severe than expected, have these reforms changed your longer term outlook for the market in terms of growth opportunities and structural profitability? Do you think the reduction in the new business markets for both home and motor are permanent features of the market? Secondly, to sustain a flat or growing dividend in 2023, what sort of growth assumptions are baked into your outlook? Thanks. I'll start with PPR. Yeah. Before dividend. PPR. Look, we have seen structural changes. I think it is, to your second part of your question, it was designed to, and I think it's demonstrating effective at reducing the amount of switching. I think we should expect, therefore, some degree of structural reset for that. At the moment, I mean, premiums are at 2014 levels in the market. You know, bar the rebalancing moment on transition, but you've not seen a huge shift in those for some time. I think as the market, you know, assuming if and when the market starts really moving to address claims inflation, then I suspect you'll see some of that structural shift moderate. It'll encourage more switching for a spell. I think we should expect a structurally lower new business market than we've had before. Does that automatically mean there are less margins in the market? No, I don't buy that. Actually, the renewals book and the strength of customer relationships remain key, especially for us with the business that we have and the customer base that we have. I still see lots of potential around growth, both in the new business market, albeit a slightly different shape, but actually among our own customer base, as well. We remain positive on that score. Growth. There's premium growth and policy growth. Can be quite different. As rate goes through the market, you'd expect premium growth to grow faster than policy growth. There's relatively modest policy growth within the plans. Of course, we've got Motability that comes on stream in Q3, towards the end of next year. Slightly more premium growth because obviously we're pricing at a, you know, the severity inflation will work through into average premium over time. Hi, Faizan Lakhani from HSBC. Thank you for taking my questions. The first is coming back to the claims inflation assumption. When I think about the shape of frequency, when I look at Department for Transport data, it was pretty low in January and February, given the fact that we were still in sort of, you know, pandemic-related restrictions. What gives you the comfort the frequency stays flat from here onwards? My estimate would be that it'd probably pick up even with the cost of living. The second question is on the credit risk. When I look at your assets duration, it's about two years, not probably too different to what I'd expect your reserve to be as well. It doesn't feel like there's a great deal of room to mismatch in the ALM. Just trying to understand how you can shorten that duration. Thanks. Okay. Let me take the frequency one. What have we actually seen? Frequency has been pretty flat from mid-Q1 onwards, pretty consistent. There was a small spike for the storm event, but bar that, it kind of has settled into a pattern. What do we think about when we think about that moving forward? I think there is a structural change in how people are living their lives. If you look at the number of miles people are driving, they are back up at pre-pandemic levels. If you look at the frequency, that has shifted. That is about people driving different patterns and living their life in a different way than they were beforehand. Those effects feel as though they're set to stay within, you know, within a range, you know, around that current assumption. I think the thing that is less certain still than that is around the impact of cost of living on how people are operating. There is a natural assumption, if you like, that when energy prices go up, people will drive less. I think we've yet to see that in any meaningful sense coming through the frequency numbers or any identifiable sense anyway, and we aren't relying on that in our pricing assumptions either. Sorry, just to clarify. Relative to Q2 flat, but Q1 was abnormally low still? Is that fair? It's been creeping back up. There's a graph in there, is there? It's been creeping back up over the course of last year, back end of last year and into the early part of lockdown, you know, some small, you know, smooth movements through particular lockdowns. It settled in, I wanna say February, March sort of time, and has been barring, as I say, barring a blip for the storm events where motor saw a blip as well as obviously the home spike. It's been pretty steady since then. Duration. There's not a huge impact on duration from this. I mean, it's the portfolio we're looking at is just over 10% of the portfolio. And we'll reduce the duration in that portfolio, but it won't have a huge impact on the overall duration. The asset liability match, I mean, we're talking about 0.1 or 0.2 of a year. It doesn't have a material impact on the ALM. Hi, good morning. Thanks for taking my questions. Thomas Bateman from Berenberg. Just discussing a little bit more about the SCR again. I think you talked about the investment portfolio being a positive, but the motor profitability being a negative. How much is that negative on motor profitability, and given that you're now writing at your target loss ratio, could some of that reverse in H2 a little bit? Just on the dividend, you alluded to the discussions with the board and the board being comfortable with, I guess, a flat dividend this year. Did you discuss in that? What are kind of the key drivers? What are the numbers that you need to hit for them to be comfortable with that? Yeah. Let me take the first one first. On SCR, the capital model looks forward, but it will capture some of the impact of the first half of this year as well. You haven't got all the impact flowing through the capital model quite yet in the Solvency Capital Requirement. To the extent the margins improve, and that's sustainable, there might be some upside toward the end of the year as that all fully works through and you start bringing into what you look forward another 12 months. It's still, so there is some drag in the SCR from the aspects we talked about in the trading update. There's potential upside as you go further. That was the first question. Do you wanna do the second one? The board, I'll take the board one. What's the board conversation around dividends? Essentially, you know, this is half motor, half not. All the other business lines are going well to start off with. We've dealt with the margins, so they're looking at a forecast that reflects that when they're considering dividend viability. We're actually seeing some positive market signs, but I don't think we've really, as a board, we've sat in our thinking particularly. They look at the range of the risk appetite, where we sit in that, the levers that we have available to us to strengthen, and it's the package of all of those things that has given the board comfort, and we had exactly that conversation before the trading update. Thanks. Sorry, just one point of clarity. You said that there's a new motor model coming. I think that was in July. Is that in the 152 number or is that a tailwind to come in H2? Some of it's in the 152% number because obviously we knew that model was coming when we look at doing the SCR. As that works through though, you might get some more benefit in the out years as we work through this year. When we do this, right, just to stand back, when we look at the capital model, the guys who run the capital model don't just believe everything the pricing say. They kind of say, "Well, we can see that, but actually we're gonna be more cautious in the capital model 'cause the capital model is a regulatory model." As the evidence comes through, they can recognize more of those benefits in the capital model. Thank you. Thanks, Alan Devlin, Goldman Sachs. A couple questions. First of all, on investment income, you know, given the guidance for, you know, this year in 2022, given current yields, you're worried that portfolio yields kind of altered the go forward and the upside from 2024 onwards. Just on the reinsurance you've talked about, is the kind of profitability this year has that kind of pushed that back to an FY 2023 topic or are there things you can still do in the second half or to help solvency this year? Thanks. Yeah. Investment income, we've obviously given you some expectations for next year. We are investing, we can invest higher than that, and as the book matures, you should expect all other things being equal, and the investment market's pretty hard to pick at the moment, you would expect some upside going into 2023. No, sorry, into 2024 and 2025. There's a bit more upside to come through, assuming current yields continue where they are. On reinsurance, no, I don't think any deal we do will obviously be a 2023 deal because you can't. We will do it through this year to probably start on the first of January 2023. That, you know, these deals tend to be multi-year deals. The reinsurers will look at the same facts we look at. They'll be excited by the benefits coming through from the pricing model which will underpin the returns for the next couple of years, and that's how we'll be talking to the reinsurers. Hi, it's Ivan Bokhmat from Barclays. The first question may be on the five to seven-point improvement to the loss ratio. I'm just wondering if that improvement already includes the 15-point increase on the rates that you've done or it's completely separate? Maybe on the same topic, if you could give a little more color, do you see that through any particular channels or it's across the book? Is it driven by Darwin or the, you know, the traditional brands, et cetera? The second question is on home. You know, your premiums have been down quite a bit and you were saying that you were focused on protecting the book following the reform. I was just wondering whether now six months in, do you still feel you need to do that for the rest of the year? Is it gonna last into the following year? If I could sneak in a third question, please, on Motability, for 2023. I was just wondering, the reinsurance arrangements that you talk about, is this something that was set in place or it can still change after the, this year? 'Cause some of your peers have talked about reinsurance costs going up? Okay. Motability, the reinsurance and the structural agreement. The deal allows us to reprice appropriately for the market, but that's not open to change in the same way as other insurance deals might. Home, the priority actually on home will remain. There is a lot of value in those home back books. There are loyal customers. They're loyal for a reason, and there is lots of opportunity in those relationships as well. We entered the year keen to protect those back books, but actually they remain the heart of the profitability of that business moving forward. What that means though is that as time goes on, and we understand the market, we'll be able to optimize that more effectively in the choices that we make. To begin with, we kind of take no risks on that. As we move on, we can explore it and understand what those optimizations are. Remember, home has got the new system and pricing capability coming in 2023 in the same way as motor has had it. It's opportunity to build different products and pricing structures and so on, and a great deal more flexibility opens up in 2023. For now, we are focused on protecting the back books. We still think there are a growth opportunity within the market as it stands. We're focused on delivering the sort of strategic deliverable that gives them much greater flexibility next year and beyond. I think a final point on growth on home is market's still, you know, still not really pricing claims inflation in full either. There's another moment in time where, you know, we just need to see that move, so we won't run at growth until the environment is right to do so, albeit less extreme than what we've seen in motor. There was a third question, which I have lost track of. Oh, 15 points and the five to seven points out of the model. The claims inflation assumption or the pricing increase assumption of 15 is not inclusive of thos five to seven points. We put 10, about nine points of inflation through, plus the rebalance in PPR. Yeah. Okay, thanks. First one, reserving. Have the inflation assumptions changed on the large bodily injury claims from the full year or not? If so, what was the offset? 'Cause PYD was still quite high in motor. Do indexation clause impact the reserves materially? There was a comment from another insurer that that's had an impact on theirs. The second one, just on the package bank account exposure reduction, I'm trying to understand, is this what's already happened or this is still more to go in the future? I guess if that's the case, what's the sort of quantum, it's probably not profitable, but on premium, and then maybe sort of solvency implications of that going forwards. Thanks. Shall I do reserving? Large bodily injury reserving. Look, we look at this all the time in great detail. We look at all the trends going through. We've historically seen positive runoff from large bodily injury claims. We've seen that continue. We're challenging ourselves on wage inflation assumptions, care inflation assumptions, 'cause they are the key things that drive bodily injury, and we're comfortable with where we're reserving, where the reserves are. That's the first question. Packaged bank accounts. Yeah, starting to see the move. There's a bit of a reduction in coverage this year. It's actually driven by a partner, but actually is consistent with the direction of travel. They come in big blocks, so they're, you know, significant in premium terms, much less significant in margin terms, altogether. They carry the same, depending on what, you know, what territory as the same, carry the same capital loads as other areas of the business. Depending on what you free up, you can free up capital underneath it. The way we're thinking about that is recycling that capital into Motability affects it. The way to think about it at the moment. Thanks. Just a quick question on policy count. So you're down 20 basis points from March and you're saying sort of new business pricing is up 15%. I just wondered if you could give a little bit of color on renewal pricing and how you've seen that relative to where, you know, people are in the market. And then just in home on the second half, obviously it's been one of the driest summers. What's the allowance at the moment? And when you said the market's not pricing for claims inflation for higher subsidence claims and losses there? Thanks. I missed the first one. Yeah, yeah. Is that a motor question? Sorry then. Motor renewal pricing. Motor renewal pricing. Okay. Let me start there. I mean, I think the key on motor renewal pricing is it follows those claims inflation assumptions overall. The rebalance at the beginning of the year under PPR between the front and the back books. Broadly, through the year, what's happening is that we're putting those claims inflation assumptions through, and that's what you're starting to see through the renewal book. If we weren't seeing that, then we wouldn't be able to say that we were confident on the margins. Would you say that 15% in new business price increase is reflected but from a lower starting point in renewal? The nine points that we've talked about in relation to inflation, you'll see in renewal. We haven't disclosed the number of how much those renewal premiums went down at the start of PPR, 'cause pretty sensitive, but yes, you'd see an offset from that. I think that's renewal pricing. What the second one was? Home. Home and overall reserving and what we're saying. I think at the moment, we are not seeing anything of any note. We're obviously monitoring the weather and so on and so forth around subsidence. We are reasonably strongly provided for that territory, and we'll continue to monitor it. Yeah. Perfect. Thanks. Hey, everyone. Jonathan Pierce from Jefferies. First one's just on Darwin. You've mentioned you've had good new business growth with Darwin. Just wondering if we can maybe get some numbers in terms of level of growth and policy count. Then maybe just a point of clarification. The new risk pricing model that you've spoken about this morning, has that been implemented across all of your motor brands? The second one's on Ogden. Just interested to get your take in terms of the outlook on the Ogden rate, just given where inflation is at right now. You do want to do Ogden? Yeah. You do Ogden or Darwin? I'll do Ogden first. If you recut the Ogden rate today, it would be unchanged. If you recut in the first half of the year, it would have been more negative. If you recut it today based on the GAD advice, it'd be broadly unchanged from where it is today. Minus 4.25%. Is there a general expectation in the industry right now, do you think, that that could go down or going forward? I think it's really hard to tell. Okay. It's pretty much a formula. The outcome from the Ogden forecast of the formula has changed by 100 basis points over the course of the first half of the year. It's, you know, we can model out what we think is gonna be at the right point in time. Obviously, the review is a couple of years away still. I think there's still some talk about do they change the method as well to actual rate. There's some discussion in the industry about it. In terms of the pricing models, all brands motor except Darwin is the answer. Darwin runs its own pricing models. We've been using machine learning for some time. Yeah. No, it's operating across all of the other brands. Darwin, can you- The policy count in the half year about 180,000 policies. That's up from 140 at year-end. Decent growth through the first half year, which is what you'd expect. Morning, everyone. Sorry, my voice isn't working today. We found the floor. Derald Goh from RBC. Couple of questions, please. I guess the first one is just on the topic of the cost of living crisis. You alluded to changes in customer behavior, but, you know, I'm just keen to get your thoughts around how you're thinking around fraud, right? Whether it's in motor, home or in other lines of your businesses. Is that already being contemplated within your claims inflation assumption in that outlook? The second one is just on the credits, the credit de-risking. How much will your solvency sensitivity be lowered by based on the expected actions to date? Thank you. Yeah. Cost of living first, and then I'll hand over credit. What are we seeing? We're seeing pockets. You've seen a few high worth vehicles disappearing off the streets and so on, so forth, but it's really pockets rather than anything sustained at this stage. We have some of the most advanced fraud models in the industry. We have, you know, an excellent fraud team. They are tuned in to look for and look at their algorithms to identify those things both at the premium stage and at the claim stage. What are we seeing in customer behavior more broadly? It's certainly a topic on customers' minds and, you know, anecdotally, as you talk to people on the contact centers, it's high in people's mindsets. The ability to offer, you know, different products arrangements, so reduced cover or reduced excess cover may become kind of more appropriate over time. It's kind of still moderate at the moment as the people have always been price conscious. They're price conscious now. I don't think we're seeing a dramatic shift in actually what people are doing. On the other side, we're also mindful about claims that, yeah, are driving behavior and whether there are pluses and minuses there. We haven't taken a dramatic stance in any direction, on cost of living, in our core assumptions, but we continue to monitor it. From a customer perspective, we are, as we have done through and since the pandemic, supporting people if they need help with, you know, payment terms and so on and so forth. Credit? Second question. The impact of de-risking is about a 25% reduction in credit exposure. That's sensitivity. In the interest of time, we'll take the last question from Oliver, and then we'll hand back to Penny. Thank you very much. Just two questions on the solvency roll forward. One is, we've had a lot of questions on the sort of individual moving parts around the SCR, but can you just say whether you expect the SCR to be lower by the end of the year, perhaps with and without reinsurance? And then the second question is on the deferred tax credit, or deferred tax asset. It's about 15 points of the solvency ratio at the moment. What's the driver of that going forwards? As in, well, it can't increase any further, quite clearly, but can it reduce? Okay. The deferred tax, there's two drivers of it. The first one is basically the tax effect of the intangible assets, which virtually unwinds over time as you amortize those assets. The second impact, which will be more half-year impact, is being the increase in the AFS negative, 'cause obviously that has a tax effect against it as well, and that will unwind as you have a border part effect. Obviously, the tax assumption within the DTA is the current tax rate for next year. Clearly there's some debate around what that corporation tax rate will be next year as well anyway. That's the first question. In terms of predicting the SCR, quite hard to predict the SCR precisely, but definitely the impact of the credit de-risking will reduce the SCR. Can I come back on that? I mean, you've got rising prices, which presumably is negative for your SCR, which increases the SCR, presumably. You've got Motability. Many of us are confused as to that, but I mean, if premiums go up because of rising prices, does that raise the SCR? So that's sort of question A, is it then. You've got Motability increasing the SCR. You've got the effect of reducing the package bank accounts, reducing the SCR, and then you've got reinsurance and credit, and/or whatever happens to future expectations about the loss ratio. It's just. Let me try and- In a direction, we know which one drives what, but it's just very difficult trying to sort of pull them all together. You presumably can and know the answer, but it's very difficult for us to second guess that. It's incredibly important for the share price. Let me try and help you then. Motability only comes on stream at the back end of 2023, so we'll have minimal impact on the year-end SCR. To the extent we reduce exposure to package bank accounts, that's positive to the SCR. But again, it takes a while for that all to unwind. You kind of see those two things almost as offsetting each other at macro level. Then you've on the other movements, you've got clearly the asset de-risking reduces it by 2%, which will reduce SCR. It's kinda like GBP 30 million-GBP 40 million, something of that or that range. You've got the question, I think it was from Thomas earlier, around to the extent the price, the capital over time can bake in the evidence of the new pricing model more fully over time, that will have a positive impact. The way that comes with the capital model is really looking at the next 12 months of profits. To the extent the profit out of the next 12 months changes, that is a one for one into the capital model. I mean, premiums going up in isolation does not specifically drive the capital model. Assume that they're just going up because inflation is going up. It's not that you don't take a potential premiums, we much more look at the risks attached to it and then the profit signature of it. Brilliant. Thanks everyone for the questions. I'll hand back to Penny. Hello. Firstly, thank you, I think for the quality and the range of the questions, which, I think just demonstrate the complexity of the environment that we've seen and are seeing. You know, what I'd really like you to take away, that we've taken actions to restore the margins, and we are on that. To remember that this is a diversified business model, so actually Motors had its challenges in the first half, but actually the other businesses are performing well. Fundamentally, the earnings power of the business remains, having taken those actions, which is why we are confident in the sustainability of the dividend. Thank you. Thank you for talking to us several weeks ago. Thank you for talking to us again today. We look forward to chatting to a few of you afterwards. Thanks.