Welcome to the DLG Q1 trading update call. My name is Ruby and I'll be your moderator for today's call. If you would like to ask a question during the presentation, please press star followed by one on your telephone keypad. I will now hand over to our host, Penny James, CEO of DLG to begin. Good morning, everyone, and welcome to our first quarter update. Now it's only been seven weeks since we presented the full year results. Neil and I thought that we'd take the opportunity to update you on our trading strategy and a bit of operational progress through what's been a pretty busy first quarter. Before we jump to questions, though, let me just pull out a few of the key messages from the release. Firstly, overall premium reduced 2.4% in Q1, which is broadly in line with our expectations as we outlined at year-end. In motor, firstly, while the market saw pricing inflation in January as it implemented the FCA pricing practices review, we believe the market pricing hasn't yet fully covered claims inflation from the last 18 months. Against this backdrop, we've remained disciplined and held back in the quarter by deferring marketing spend until later in the year when we can see the benefit. It remains early, but in April, we have seen some price increases in the market. In home, where the FCA pricing practices has had a more material impact, we've seen market movements within our expected range of outcomes. Our priority has been to focus on value whilst the market adjusts, and so we've lost some new business volume in Q1 against the strong comparator of Q1 last year. As we've moved through Q1 and into Q2, our actions to increasingly optimize across brands and to re-energize marketing again should enable us to improve competitiveness as the year progresses. In commercial in Q1, we've maintained the double-digit growth we saw in 2021 and have also had a strong April, one of our biggest months. Secondly, we reported at full year our plans for 2022, where exciting new capabilities will come on stream. Looking back on Q1, I'm really pleased with the progress that we've made. We're delivering step change in our motor pricing capability, and this has seen the development of machine learning models that are more advanced than anything that we have used before. We've got plenty more to come throughout the year. As new models are deployed, and this builds on our market-leading claims capability, improving expense base and fantastic brands. We're really excited at what the team is starting to achieve and the benefits to the business these capabilities will bring. Finally, our disciplined approach, alongside significant pricing capability coming online throughout the rest of the year, means we're able to reiterate our combined operating ratio target of 93%-95% in 2022. Overall, a significant market adjustment in Q1 means we believe the trading performance isn't entirely representative of where we are in our transformation. There is real energy and ambition in the business as we continue to roll out this year's plans. With those remarks, let me just hand over to Ruby and open up the line for questions. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. When preparing to ask your question, please ensure you are unmuted locally. If you change your mind, please press star followed by two. Our first question is from Thomas Bateman of Berenberg. Your line is now open. Please go ahead. Good morning, everybody. Thank you for the color you've given on the results today. I was just hoping you could give us a little bit more, a few more details on the pricing movements in April that you've seen that you think are positive. And just on your reiterating the combined ratio guidance in 93%-95%, can you give any more sort of details about where you are in the range? I think you implied that home would be kind of in the low 90s. Is that correct? And finally, you talked about new products. When should we expect them to come to the market, and what kind of margin do you expect to write those at? Thank you. Okay. Lots in there, I think. What I'll do is I'll come to Neil in a second on outlook type stuff and probably step back slightly on pricing, so we've got the full picture and then touch on April, if that's okay. What do I think overall is happening in the market? Then I'll come to April. Firstly, in motor, what are the components of the numbers? One, probably the biggest component of the 5% movement is actually the GWP reduction. It's actually simply the flow through of the 2021 kind of reductions in pricing that reflect the long-term structural frequency shift. I think that element's natural. I think we've adjusted, and we've seen the whole market adjust, for pricing practices in January and put through a mid-single digit price increase there. That has done, kind of what you'd expect. I think in terms of market pricing more fully, you know, we still haven't seen pricing go through reflecting kind of the last 18 months or so, of claims inflation. What we saw in April was, you know, a few points going in from some key players. A not insignificant movement in April from some parts of the market, but it's one data point, so it's far too early to call that a sustained, a sustained movement. I think finally, what we've seen in Q1 is we've seen some claims inflation increases. I think we called out at year-end 6.5%. We've seen a little more claims inflation come through and a little better frequency. That's kind of the shape. April, good data point, but only one data point is what I'd say. I think in terms of sort of touch on outlook, Neil. Yeah. Morning, Tom. On core guidance, I mean, not a lot to say versus seven weeks ago, to be honest. No material shifts. The kind of outlook for home still low 90s COR, exactly as you said. Then I think the final question was around what products and options and so on are available to us. I think we've got kind of lots in the hopper around marketing, which is where what I've really flagged. We'll have product development as we move through the year, as we say, using the variety of brands and so on. I guess the key point is your last point around margins, where we always look to write at the right margins, which is why we're able to reiterate the core. We will use, you know, creativity on product brand, and, you know, pockets of pricing where we can get the right margins away in this environment to do that. We will also keep back our marketing to the extent that we need to, if we don't think we can get it away at the right margins. Okay. That's really. Maybe just one very quick follow-up, just on motor. You're saying it's down 5%. Do you think this is a little bit more Direct Line specific given kind of new business price increases are probably up year-over-year in the quarter, Q1 year-over-year? Maybe some other players are more have seen positive increases in premiums. Is that. Am I reading that wrong? I mean, the market says the ABI market data is not out yet. I think it's due later in this week but certainly soon. If I look back at last year, you know, most of this rate is about last year flowing through. If I look at last year, most of the market moved, you know, we've, as we've said before, we moved shallower, if you like, in those reductions than the market did. It's not clear to me that the market would necessarily as a result of that be significantly different. Okay, that's great. Thanks very much for your time. time. Good day. We do have further telephone questions. As a reminder, it is star followed by one, should you wish to ask a question. Please keep a limit to two questions per person in order to reach as many as we can this morning. Our next question is from Greig Paterson of KBW. Your line is now open. Please go ahead. Morning, everybody. Can you hear me? Hi, Greig. You're loud and clear. Good. Just in terms of, I'm just thinking about the second quarter expectations. You guys adjusted for the movement down in expected long-term frequency at the end of the first quarter last year, and you're now sort of pointing to year-on-year severity of sort of 8.5%-9.5%, currently. Given that, you know, in the second quarter last year and the second quarter this year, you're both pricing on this adjusted long-term frequency number, does that mean all other things equal, we expect year-on-year rate increases of 8.5%-9.5% in the second quarter? I don't know if you understand. It's a bit of a convoluted question, but the bottom line is, in the second quarter, your frequency expectation will be the same as the second quarter last year. This is the way I read it. Therefore, you'll be putting through high price increases. I just want to confirm that my understanding is correct. The second question well, second part of the first question, given I'm running out of two, is, you speak about frequency being below long term expectations in the first quarter of this year. You also spoke about it last, in the second half of last year being below long term. I was just trying to understand, how the frequency in the first quarter, the actual frequency experienced in the first quarter, compares to the second half of last year. Finally, in terms of advertising spend, which is an important lever, about two weeks ago, you turned on the lever in motor. I was wondering if there's been a corresponding sharp uptick in your new business marketing, market share as a function of that. Thank you. Right. Let me start, Greig. I'll try and do those in reverse order, and if I forget bits of it, I apologize and come back. On advertising, it's kind of two forms of advertising. We're always in the market on kind of performance marketing, so pay per click, looking at optimizing how we get customers through the top of the funnel. We're constantly in the market doing that. Where we're talking about pulling back is more on the kind of brand marketing. You would have seen we've launched some exciting, we think they're exciting, campaigns in April, around Optimus Prime, and we've got some more stuff coming throughout the year. That doesn't have an immediate impact on volumes. There's much more brand health, so you see that benefit over a longer time period. As I said, we're always in the market doing the performance marketing, which has much more direct impact on quotes through the door. On frequency, you're right. Frequency in Q1 was a bit below where we think ultimately frequency will end up. You're right, it was also a bit lower in the second half of last year. I think we are working through to a more normal frequency pattern. Don't forget we had Omicron at the back end of last year that flowed a bit into this quarter as well. There's still quite a lot of noise in the numbers, but we're definitely getting back towards where we would expect long-term frequency or medium-term frequency to be. In terms of the first question, I'm not gonna predict what I think premium numbers are gonna do in the second quarter 'cause I think the flow through, or as Penny mentioned, a lot of the Q1 dynamics is more about what happened last year as it is this year and the flow through of the frequency related price reductions. That continues through the year. I don't think it just stopped in Q1. It's a continuation factor. It's a continuing factor. Obviously there's other things going on. I mean, I think that, you know, there is still Whiplash Reforms, frequencies, variety of other things. There's a lot of moving parts going on. I'm not gonna give you an exact number, but I think the dynamics as we go through the year improve from a kind of year-on-year or Q1 previous year's quarter perspective. However, we are still operating within a market. If the market isn't pricing claims inflation, we will be disciplined in how we approach that market. Is it just to- Hope to help. Sorry. It's just that. Is my understanding correct that your... You know, during pandemic, you didn't price for low frequency, but at the end of the first quarter last year, you made a distinct change for your long-term expectation of lower long-term ongoing frequency. Therefore that year-on-year base effect falls away in the second quarter of this year. Broadly, but I'd say we started to price for it. It's not necessarily a switch across the whole book. It will come in over the time. When did you finish that process of adjusting to the new norm in terms of your pricing? Across Q2. Across the year, Greig. I can't give you a precise date. All right. It worked throughout and through. Yeah. A smooth impact across the year. No, that's great. All right. Yeah. Excellent. Thank you very much. Our next question is from Freya Kong of Bank of America. Your line is now open. Please go ahead. Hi. Good morning, guys. Morning, Freya. Good morning. You guys talked a bit about motor pricing not really catching up with claims inflation, but could you give us some color about the home dynamics and any early indicators in April as well? Secondly, given the tough market conditions that you're seeing, would it be fair to say that your growth plans could be delayed or hampered by these headwinds? Thanks. Thanks, Freya. Yeah. A couple of minutes on home then. I think in home the dynamics are similar, but the balance is slightly different. The PPR pricing practices effects are more significant in Home relative to Motor, if you like. I think the first kind of important point there is that the market made a pretty sensible move, we think in January in terms of moving new business rates, and that was certainly within our range of outcomes. That's, I think the most important kind of point on the Home coming in. What did we do? Well, we differentiated using kind of the brand portfolio. As we said at full year, we're focused in Q1 on protecting value, really. We didn't fight aggressively for business coming in. Rather, we wanted to see how customers were reacting and how competitors were reacting in that market, and then would move into what we felt was the right competitive price point, as we move forward. What you can see is kind of a reset point certainly for Home. Also we'd expect growth from there as we improve competitiveness through Q1 and into Q2, due to both optimizing the pricing and the brands, and re-energizing the marketing, as well. I think that's the shape. In terms of claims inflation as sort of the other effect, if you like, I think it's, you know, as we flagged it at Q1. As we flagged it at the full year results, the market put through a 5-point give or take price reduction just before it came into pricing practices. Whilst it's made the adjustments, pricing practices, I'm not sure it's caught that up. What we're seeing now is kind of, I guess, an elevated claims inflation which isn't fully priced, especially in the PCW channel. We're starting to see that pick up. As we look ahead, even though we can see a minor elevation, if you like, at the moment, not nowhere near as significant as we're seeing on Motor. If we look at what is happening in supply chains and, you know, elsewhere, labor markets, China, Ukraine, and the effects on the supply chains, we'd expect to see that elevation continue to increase in home. And that does feel as though it's moved since, you know, in terms of outlook since the full year results. What we're saying is we'll keep a disciplined approach, which is why we're reiterating the 90s core guidance or low 90s core guidance on the home book. In terms of growth, look, we'll keep looking for the pockets where the margins are right. That's what we do. We focus on the places that we can get growth at the right margins. The timing and the impact on top line will be determined effectively by how much availability of that there is in the market. We will be well positioned, as I've said on a number of accounts, you know, as and if the market starts to put price through that we think reflects claims inflation more broadly. That is something that historically the market has always done. Yeah. Just to follow up on that, are you surprised by how slow the market response has been in home and motor to price for claims inflation? I mean, most players do seem quite rational and sensible. I'm looking. I think in home, things are, and we're looking ahead when we look at claims inflation. You know, I think it's the market's been through quite a considerable adjustment in this quarter. I'm not sure I'm surprised or not by anything. If I stand back overall given the scale of pricing practices as a reset in the quarter, largely the market has done what we expect it to do. I think it's what it does forward looking that matters, if you like from here in what is quite a different set of macroeconomics from what it was two months ago. That's on home. On motor there are many. You know, we've already laid out there are many moving parts, Freya. People took very different paths through last year in terms of the amount of rate they took out for frequency and so on the way through. I think the truth is that we are seeing, you know, claims inflation continuing to elevate at the moment. You know, what other players choose to do with that I can't, you know, I can't express. Okay, thanks. Thanks, guys. Our next question is from Faizan Lakhani of HSBC. Your line is now open. Please go ahead. Good morning. Thank you for taking my questions. Morning. I'm sorry if I missed this, but I've not quite followed what's happened to renewal pricing in either motor or home this quarter. If you could provide some color around how that's different between the two. I guess in relation to that, I'm a little bit surprised by the fact the new business pricing sort of popped in January a little bit, but flattened in February and March. What's driving that, you know? Is there a case that, you know, there was a big sort of distortion in January and now, you know, February and March are more what the market thinks they need to price in? I guess just a bit more broader base as well, given the pricing, given the sort of inflation outlook, how do you expect the sort of underlying margin or the attritional loss ratio to develop in motor in 2022? The final question, so just coming back to the question from Greig on sort of claims frequency. You know, if I look at it, January was probably where we had a bit of a lockdown. Driving was probably still a bit below. We're still thinking working from home. But at the same time I don't feel claims frequency from the sense I get is more than sort of sub 5% below sort of pre-COVID level. If you could just sort of help me understand what's really going on there. Thank you. I think we're dividing about six questions between us as we sit here. Why don't I kick off and then you can. I think. Let me do the shape a little bit in the first quarter, come back on that one. I suspect Neil may come back on sort of renewal pricing and premiums and that sort of thing. Overall, look, I think I can't tell you what was in people's minds in other businesses at the point they put pricing through. My observation would be at the point the pricing practices went live, the market made a step change adjustment in which was consistent with what we had modeled that the market might do on motor, well, actually in both of them within the range of what we expected. My deduction from that is the market has adjusted for pricing practices. You can't see what people have done on renewal pricing, obviously at the moment. You'll get a better picture as and when sort of API data comes out and so on and so forth, because that's less visible as you're operating in the market on any one day. You have seen shopping kind of reduce a little or actually people switching reduce, which probably indicates that renewal prices have responded. I think that's kind of overall. I think why people are or aren't moving in February and March, I can't answer for. All I can give you is the effects that we are seeing and the way we're responding to them, which is what we've said. Mm-hmm. Neil, anything you wanna add? Well, let me. I'll just try and help you a bit out on the kind of the underlying movement. So, you know, at the headline you can see the 5% reduction in written premium. Sorry, this is for motor. And if you kind of break that down, about 3 points of that 5-point reduction is average premium driven. And within that, the vast majority of that 3% is exactly the flow through of the pricing Q1 versus Q1. So that we talked about before. Actually the impact from pricing practices within that is pretty neutral. Now, I'm not gonna break down the renewal price impact versus the new business price impact, but you can take it as actually those two neutralize each other roughly within that construct. If I kinda do the same, let me finish Motor first. Actually, I'll come on to your margin question. When we talk about margins, we're looking to price for a loss ratio. We exited last year at a pricing loss ratio that supported the current year loss ratio for Motor around 79%, which is what we booked in second half of last year. That is still kind of. We're still pricing to the loss ratios that support that dynamic. I think that's the best way I can answer that one. Obviously, I can't talk for others in the market, how they're pricing versus claims inflation. I think you asked about home renewal pricing as well, so let me just try and finish off there. On home, if I look at the same construct as the motor answer I've given you. For own brands, home premium was down about 8%, Q1 on Q1. Now, within that, actually, average premium was up 4%. In home, there's a much bigger impact on new business volumes, and that's because of the trading strategy we deployed at home. We've talked at length about how pricing practices has a bigger impact on the home book than the motor book. Average premium in home is up 4%. Again, I'm not gonna split that between new and renewal, but you can kind of have a, it gives you, hopefully gives you some color. Yeah, that's pretty helpful. Thanks. Our next question is from Rhea Shah of Deutsche Bank. Your line is now open. Please go ahead. Thank you. Just two questions from me. The first is on the home retention. You talk about retention increasing in the quarter. I just wanted to see if you could give any color on the numbers, but also could it be one-off if you're now thinking of pricing more aggressively from the second quarter onwards? The second question is just around what do you need to really occur to start to market those top brands again? I get that you started the superhero campaign, but you're talking about marketing over the rest of the year. Could we end up having to wait until the fourth quarter for marketing, or could it happen earlier? Let me pick up the second one first. Marketing shape. Look, the brand path is not locked in stone, but is largely set for the year. That shape is ramping. As you can see, Optimus Prime appearing in large scale on your screens. There are some follow-ons and some further characters to join them. There are campaigns on Churchill set out for later in the year, campaigns on Rescue, less relevant to the Motor question. Those paths are set. We can dial up or down, but broadly, they are set to navigate from Q2 onwards. I think that part is clear. There is some flex. As Neil said, we're always in the market doing the spend sort of draw into the funnel. We, you know, dial that up or down depending on what we think the efficiency of that is at any point in time. The efficiency of that spend is a kind of factor of who else is driving hard in the market, be that PCW's competitors completely, you know, elsewhere, and a factor of the margins in the business that you're writing. We dial up and down that efficiency accordingly as any sophisticated, I think, marketing player would do. To that extent, that is a sort of a more moderated, if you like, flex, flexible lever as well. I don't think it's a matter of waiting for Q4. It's a matter of dialing that up at the relevant time. In terms of, I think you asked a question on pricing, and we will put through the price that we think is appropriate to hold the margins that we need to across the book. Do I think retention is a blow? I suspect retention is a feature of the market more broadly because it's about how many people are, you know, what people's activity on price comparison sites. Okay. Our next question is from Kamran Hossain of J.P. Morgan. Your line is now open. Please go ahead. Hey. Morning. Hi, Kam. Hey. Hey, Penny. The main question I had is really on, I mean, you know, I guess a lot of the discussion today has been about market pricing and why things haven't reacted. I mean, if you were gonna kinda think about the drivers on what will change, you know, market and, you know, kind of what, you know, the insurance pricing going forward, what factors do you think will need to be kind of apparent for the market pricing to really move up to levels that you think are acceptable? And how long do you think this will take, I mean, maybe not how long do you think this will take, but what are the factors that need to be there? Is it kind of worse results for the industry? You know, or do you think actually other parts of the market are simply looking at, you know, kind of potentially like a lower profit paradigm where, you know, things, you know, we just accept structurally lower returns because retention is high. Any kind of big picture thoughts on that within the confines of what you can and can't say would be really helpful. Thank you. A really interesting question, Kam. I think I probably said before that if I look historically over the last, I don't know, 10 years, whatever, the market adjusts to reflect claims inflation. It basically prices claims inflation. But it does so. The glorious thing about insurance is you don't know the cost of sales until after you've sold it, so not everybody does it at the same time. That's what, if you track the graph back, it would tell you. Where you see a one-off certain move, Ogden rate changes, pricing practices, you actually again see a step change happen in the market. I'm somewhat you know, as I say, you know, I can't climb inside other people's minds, but I'm somewhat skeptical that what we have is some structural change that says the underlying margins that the market is driving for has fundamentally changed. Because I just don't think that you know, I don't think that the evidence point of January would support that, the evidence point of Ogden, and frankly, the historic evidence points. I'm not sure that that's the case. Others may take a different view. I think much more likely that there are so many moving parts. It's been a very unusual couple of years in terms of the kind of volatility of different factors, frequency, now severity because of macroeconomics, overlaid with regulatory changes, that sort of change the whole pricing dynamics of the market. It's quite unusual to get quite as many kind of, you know, volatile features operating in a marketplace as that or, you know. I still believe, as I said at year-end, that as everything evens out and frequency normalizes, which it's probably approaching doing, and it is significantly below historic levels, so I think it's natural that rates don't come back up to the rates they were before the market because frequency is, I think we all believe, structurally dropped now that actually as those things level out, people will reassess what's in their models. I think the unusual factor at the moment is clearly severity is bouncing, is moving faster, if you like, than it usually does. I think that's true across all consumer segments. I don't think that's anything special about the insurance industry. You know, how people respond to that will be interesting to watch. I don't really believe there is some mass structural shift in terms of people's appetite to make margins. I think it's much more about what's moving in the marketplace at the moment. Thanks, Penny. That's very clear. Thank you. Thanks, Kam. Our next question is from Alexander Evans of Credit Suisse. Your line is now open. Please go ahead. Hi, Penny. Hi, Neil. I just wanted to. Alex. Clarify. Hi, hi. I just wanted to clarify that I was sort of reading this correctly because in your release you're talking about protecting value, and if I look at sort of the home numbers, it would suggest that, you know, you're more protecting volume than the loss ratio. By the sounds of it, you're sort of pricing. You're pretty happy, comfortable pricing for the level of claims inflation you're seeing in the market. Then maybe just on sort of the shape of what we would think about 1Q combined ratio. Let's say it suggests sort of higher inflation, maybe offset by frequency, and then is that sort of a lower expense ratio that you would see in 1Q given the marketing? If I could just ask on sort of the market in general, it seems there's a slight increase in product offerings, but maybe sort of lower coverages. Is that something that you're seeing in the market? You know, is that sort of deflationary to market price as you see it? Well, then I do the pricing bit, and I'll pass to Neil for the expenses bit and then product. I think if I look in motor coming out of Q1, what are we saying? We're saying we've been pricing for claims inflation. Actually, as we move through the end of Q1, it's notched up again on the damage side. Actually, our Q1 margins are fine because frequency's been a notch lower than our assumptions. That's really what we're saying. Claims inflation marginally above, frequency marginally below, they net out, margin's fine, is kind of what we're saying on Q1. In the home, similar but subtly different in as much as we anticipated the fact that there would be claims inflation increases coming forward, and we put that through prices in the early part of Q4 last year. You may recall we lost competitiveness in the last quarter. At the point that the market dropped rates out, we were putting increasing our claims inflation assumptions there. We're actually pretty comfortable with the margins on homes that we've seen through the first quarter. Actually, we're still seeing a pretty consistent level of claims inflation. If you think about the way the supply chains work and our contracts work with people, you kinda get delayed effects on some of those things. i.e., you're sheltered for a spell from inflation, but as some of those contracts reset, you know, you reset accordingly. Second, I think, you know, if you look back six months ago, we were probably, you know, people were focused on construction costs, which is a relatively small part of the book. If we look at the impacts or potential impacts of lockdowns in China, impacts of the Ukraine situation on supply chains more broadly and so on. What we're saying is if we look at the consumer indices and so on, we would anticipate seeing an increase as we move through the year in home. We're kind of looking ahead. If I look at the numbers today that actually are happening through the book at the end of Q1, fine, in line with what we told you at year end, slightly above our normal range price for in home. If we look forward, we see further pressure coming in terms of claims inflation. Hopefully that kind of splits out the dynamics in terms of how we're thinking about claims inflation. Do you want to pick up the other bit? Let me just do cost because that's part of your question as well. No change on how we think about costs. Still targeting absolute reduction this year, which is what I set out at year end. In terms of the impact of marketing spend on that, there's actually not a really big impact because marketing spend is deferred over 12 months. It's not like if you stop for a quarter, you don't have any spend that quarter. You've still got the spend from the previous three quarters deferring through. It doesn't have as a dramatic effect you might think initially on marketing. I think there was a question on products in the marketplace. What are we seeing in the marketplace? I think you're seeing, you know, we've always said to you that we think pricing practices, it sort of encourages you to, you know, or one of the positives for us is that we have a variety of brands that we can use in different ways. You're seeing us use those brands in quite different ways in the marketplace, and that will amplify. I think similarly, you're seeing some other players, more essential products out there. You are seeing some step back products in that sense coming into the market. I think you'll probably increasingly see different marketing strategies around, you know, people trialing different ways of attracting customers. It's still very early days, I think. Don't underestimate the fact that it was a big operational exercise to get, you know, the whole market shifting the way it prices in a very, very short deadline. You have seen some changes and some, you know, differences from, you know, those kind of product features and marketing features. I suspect the market will continue to evolve and be creative over the coming year as it turns its mind to that rather than just literally getting compliant. Okay. Thanks a lot. Our next question is from Will Hardcastle of UBS. Your line is now open. Please go ahead. Morning, Will. Morning, everyone. Quick one on frequency returning to more normal levels, motor specific, I guess your point trending towards more normal levels. Have you seen any early signs going the other way, actually, of less miles being driven given the rise in petrol or diesel, etc.? The second one is just thinking about, I apologize, a question on stuff you haven't talked about today. It's on investment return expectations. You gave helpful guidance just seven weeks ago, as you mentioned, of the 1.7 and the 1.8-1.9 for 2022 and 2023. Any update on those you can give at this stage? Obviously, you've had continued movement year to date since then. Yeah, thanks, Will. I'll take those. No need to apologize for an investment question. As a look ahead to 2022, the guidance we gave at the year-end, I think holds. Obviously, the yield pickup we can take depends on when it is mature. Through this year, I think the guidance we gave at the year-end, 1.7, still holds true. I think you're right, yields, risk-free and spreads have moved out since we talked about the 1.8-1.9. On the basis that they hold and the maturities flow, you might see a bit of upside to that. I don't want to bank it in yet because obviously spreads are moving around quite a lot at the moment given the macro environment. I think if current spreads and yields and rates hold, there might be a little bit of upside to that 1.8-1.9 if I look out in the out years. On frequency, yes, trending back to normal, obviously still a bit of noise in the numbers. We actually had some storms during the first quarter which put a bit of noise in the numbers as well. I wouldn't yet say that we've seen a dramatic or a meaningful change from petrol prices, but it is quite early given they only started moving a few weeks ago. Obviously there is a lot of pressure in the system from a consumer perspective. Not seeing it yet, but we're very obviously watching frequency numbers very carefully. To a simple mind like myself, does that tend to take a little bit of time normally when it comes through, or would we expect an immediate impact? Look, it's been a long time since we've had this set of circumstances. I think it would take time to come through. I don't think it'll be a one-off impact. Yeah. Behavioral factors tend to, people take time to adjust generally. Great. Thank you. Our next question is from Nick Johnson of Numis. Your line is now open. Please go ahead. Thank you. Good morning, everyone. Hi, Nick. Hi there. Two questions, please. Firstly, on combined ratio, I think it's quite surprising you've been able to maintain guidance despite negative yields in motor tightening through Q1. You've mentioned the frequency benefit. Just wondering, have you seen any unusual positives on the back book that may have been helpful in Q1. Yeah. How is the back book performing relative to expectations? If you just cover that one off, please. On sales volumes, just wondering if you've seen any headwinds in Q1 from reduced propensity to buy discretionary insurance, such as home contents and also, I guess, sort of voluntary excess levels, given cost of living pressures. Might be too early to say. In which case, what have you seen historically? Appreciate the current situation is unprecedented, but any insight on that would be helpful. Thanks. Thanks, Nick. Let me take the first one, and then Penny will do the second one. On the combined ratio, I think it's two factors, really. One is that we maintained our discipline through last year and into this year. You know, that's sort of enables us to. We didn't cut rates as fast as some of the market, and we've been pricing the claims inflation. That gives us the quality of earned premium as we flow into this year. I think it's the first point, and we'll continue to do that. Secondly, in terms of what's happening in the back book, I think what I'd say is that you know, we reserved appropriately healthily at year-end. We continue to see positive run off on the back book which supports prior year releases, which is obviously a component of the combined ratio. I think of the on the cost of living effects, Nick, look, it's a long time since we've been in a position quite like this from a you know an economic perspective. I think at the moment it's difficult to see, you know, given you've restructured how renewal pricing is happening, the biggest effect at the moment is actually people's prices are probably not significantly increasing on renewals. A gross generalization, but you can see from the numbers that generally from a consumer perspective, you know, average premiums are looking positive. For in motor, premiums are probably the same levels as they were in 2015. In some ways you've got that countering what people are naturally feeling across the whole of their sort of personal finances. I think the comment would be there are lots of conversations on the contact centers with people who are very conscious about what energy bills are doing and will be doing. I think in practical terms, in the numbers, it's very difficult to see anything at this point. Would I logically expect in the long run that people might be more conscious of their discretionary mileage? Absolutely. Actually, people have made quite a structural shift anyway on mileage. Again, it's difficult to pull that apart. The other place you normally see recessionary factors is in fraud levels going up. Not seeing any dramatic shifts at the moment. We have, we believe, the strongest fraud function in the industry. We kind of feel pretty positively positioned on that at the moment. I would say it's a bit early and probably clouded by all the other factors going on at the moment to see what might happen in a year's time, if you like, if this carries on. Understood. Okay. Thank you very much. Our next question is from Youdish Chicooree of Autonomous Research. Your line is now open. Please go ahead. Morning. Good afternoon, everyone. Thank you for taking my questions. My first question is really on the premium increases you've seen in motor in April. I was wondering if you could give us a sense of the magnitude of rate rises you've seen and whether that is across the market or solely focused on new business. Separately, just in terms of trading in Q1, I think in your release you mentioned that trading was in line with your expectations. I was wondering if you could tell us what your expectations are in home and motor, either in terms of policy count or premiums in the coming quarters, please. In April. Oh, and look, we've seen two or three big players put through a couple of points in April, which in itself is one data point and shouldn't be overread, but it's quite a significant move compared to what we've seen in the previous few months. We'll see. To be meaningful, it needs to be, you know, it would, you know, given the gap that we believe is there, that would have to be sustained over a period if the market's to hold margins at pre-pandemic levels, is probably the way I should say it, but that's what we're seeing. I'm not sure we'd give you a future-looking forecast by quarter on premium shapes. I think we've indicated already what the factors are that we're considering while we do it, that we'll go for pockets of growth that we can while, you know, we think the market is not broadly running at the right margin and as it starts to move on that, then we will be well positioned for growth because of all the capabilities we've put in. I think, Stan, would you say having flattish, you know, policy count, at least in motor and home, would be a good outcome? More like a, you know, a realistic outcome? Look, we believe that we're in a good position to grow from here as and when the market kinda adjusts and in home more broadly as we start to step into it. I think you can see what that will do for policy count. I mean, in motor we're only down, what, 0.5% in policy count. I don't think we are seeing some big degradation of policy count. It's pretty minor. Yeah, I think you can see what will happen there. Home, you know, is a bigger gap to close. I don't think we'd expect to see that back in year-on-year growth this year. That would be quite a dramatic thing. All right. Got it. Thank you. Thank you very much. Thanks. Our next question is from Alan Devlin of Goldman Sachs. Your line is now open. Please go ahead. Hi. Hi, guys. Hello. Thanks for taking my question. Most of my questions have been asked, but a couple more. As you mentioned, this has been a massive shift in the market with the PPR. I'm just interested in what are you seeing any kind of structural shift in how people are buying insurance, either through PCW or direct, level of shopping, et cetera. You mentioned you've obviously got lots of different brands to play at. Are any particular brands actually resonating better than you'd expected going into PPR and any brands not doing as well? Given you have launched your new marketing in April, is that kind of a good sign as you think things are kinda settling down, that you're willing to push the button on the start of the big brand push? Thanks, guys. Loads of interesting stuff in there, Alan. I think consumer behavior at the moment, I think we're seeing with Green Flag at year-end, we were seeing lots of people shopping around, less people switching, actually switching. I think that is sort of the Q1 behavior set, if you like. Retention positive. I can't see what the market's doing, obviously, but that's sort of a natural outworking, and certainly that's what we have seen. I think there's a difference between the short and the middle term and the long run, Alan. The market has kind of gone over the line introducing a complex, you know, operational change if you want a better description. Customers have started experiencing what that does, if you like. Now, over time, what will be interesting, you know, if retention rates carry on staying where they are, which is sort of a natural outworking of that, it'll be interesting to watch how the different distribution sort of mechanisms respond to that. That's why I say it's very early days because you would expect the PCWs and any other distribution mechanisms to be trialing different things, and different approaches. Some will work, some won't. I still believe that in the long run it's beneficial for direct players and so on to be in a steadier market which is less focused on new business pricing to the same degree. Anything that takes this thing out of that is net positive in the long run. In the short run, as I said, behavior takes time to change. I don't think you see that. In terms of what you're seeing on the brands, you know, we are beginning to position the brands in slightly different ways into the market. We will kind of fine-tune that as we move forward in terms of both pricing and sort of service and product over time. We haven't overnight switched all the products from A to Z, if you like. Those things will evolve as we see and look at the market and how it's developing over time. I think in the early days, you know, you're seeing, you know. Naturally, as a result of the pricing positions, you're seeing different brands pulling in different places in different ways. Darwin's pulling hard in some places, Privilege in others, Churchill in others, so on and so forth. At the moment, we are not pushed hard in Direct because we want to see. It's much more important in that space that we see how the market's responding before we decide the price point. We wouldn't have expected that to be pulling hard in Q1. Beginning to see some differentiation, plenty of opportunity to expand that further. Seeing a drift away from consumers kind of switching. Time will tell whether that's a permanent effect or not and to what extent it affects the distribution channel mix. I covered that with all of your questions. The final question was whether or not switching on the brand marketing in Q2 is a kind of a positive indicative of how you're feeling for the rest of the year. Sorry. I've got it. I'm gonna go for yes and no. These things are set ahead in timelines. It's a reflection of when it's timed, if you like, for when we think our pricing models give us, you know, greater power in the market. So to that extent, I've said to you before that we've got pricing capability coming in through the back end of Q1 and into Q2, and the marketing begins to step up as we go through Q2 as well. So to that extent, yes. It's not really a reflection of what others might or might not be doing in the market at that point because you've got to place your bet a little bit earlier than that. So. Perfect. Thank you very much. Thanks. Our final question this morning is from Philip Ross of Mediobanca. Your line is now open. Please go ahead. Hi. Good morning. Just one left from me. It's a pricing question, but it is slightly different. If I go back to Q3, which was a long, long time ago now, you talked about focusing PPR on repricing shorter tenure customers. Sort of implying you've done a lot of work on the longer standing customers. Although I think that was more the case for home insurance. Just wondered if that prediction is bearing out to be true so far this year, or is maybe the market behaving sort of differently to what you expected for different tenures? Thanks. I think I'm trying to think if I can even see the tenure question in that sense. I mean, what I was saying at Q3 or what I would have been saying is we had over a number of years, perhaps some of the irony of this is the start point on the pricing practices journey was what I would call outlier cases, some of which were very unfortunate across the industry, if you like, were really long tenured customers. Some of them elderly, had found themselves with premiums that were, you know, that were genuinely excessive. I think what I've said all the way along is we've, some years ago, taken out those tails and dealt with those kind of customers and corrected anything there. Progressively over a number of years, we've kind of tightened the limits on that into further and further into the core book. We've been all the time tightening on that, you know, kind of narrowing the distribution of pricing, if you like, is the best way of describing it. By the time we got to Q3 and we were having conversations last year, really the work on the tails, as I say, had been done to align them with, you know, everything else at the five-year point. Anything beyond five years is sort of in the same margin bucket. The work in January is about leveling out the first five years tenure. That's effectively what we were saying. I don't think we're seeing anything different. I mean, it's very early days to be able to see what's happening in specific cohorts by tenure. That degree of granularity. You've only got, you know, still a couple of months data in that, in that sense. I think it's very early to see, but I wouldn't anticipate any dramas happening through tenures. I think what you're more likely to see is, kind of, adjustments through different segments and people focusing on different segments. Maybe those two things are kind of linked to where people's value is, which could be linked back, you know, tenure to a degree. No, I think shorthand is I'm not seeing anything dramatic in the market that is surprising. You're seeing some players playing more aggressively in some places than others, but nothing that you can pinpoint to a particular feature. Okay. Thanks for the detail. Brilliant. Is that Ruby, is that the final question, Phil? That is all of our questions. In which case, thank you all for joining us. Thanks for the richness of your questions because I know there's a lot going on in the quarter. We remain super optimistic about the positioning of the business and the progress that we're making. We will look forward to speaking to you in at half year and seeing what progress the market's made. Thank you. This concludes today's call. Thank you for joining. You may now disconnect your line.