Conduit Holdings Limited

Good morning and good afternoon, everyone. Welcome to CONVEY 3 interim results for the first six months of 2024. The presentation will be covered by our CEO, Trevor Carvey, our CFO, Elaine Whelan, and our CEO, Greg Roberts. Noting the disclaimer on page two, I give the floor to our CEO, Trevor Carvey, starting on page three. Thanks, Antonio.

I'm pleased to report that we have delivered a comprehensive income of $98.1 million for the half year, representing a return on equity of 9.9%. This compares with $78.6 million and 9.1% for the same period in 2023. This means our book value increased to $6.69 per share. So a good year-on-year performance in what has been acknowledged as a relatively active loss period for the industry. We've grown strongly with gross premiums written of 737.8 million, a 36.1% increase in comparison to the same period last year. A good progression year on year, but with perhaps slightly more front loading than we've seen before. Our robust capital base and retained earnings both support continued growth. as does our careful approach to deploying our defined appetite for natural catastrophe exposure, which I can confirm remains within our stated tolerance level. The severity and frequency of natural catastrophe events was again seen to trend higher in the half year and make it one of the costliest for the industry. While convective storms, floods and the Baltimore Bridge event made headlines, that our own experience is within our normal pricing expectations. Our discounted combined ratio was 75.1%, which compares to 72.5% for the first half of 2023. As would be expected, this includes a provision for the Baltimore Bridge. Our undiscounted estimated loss for this event net of reinsurance and reinstatement premiums is $19.8 million. And while not individually significant in the context of our overall portfolio, nor outside of planning assumptions, there was no similar event in the same period last year. Events like Baltimore can certainly have an impact on market conditions, just as the recognition of COVID losses or wider strengthening of pre-2021 casualty reserves can. I'll make some broader comments here on general market conditions and the trading environment ahead and then Greg will provide more colour and detail shortly on a class-by-class basis. Overall, the market environment remains a great place to be operating and deploying into, and while there is general market commentary around a deceleration in the strengthening of rate, which we certainly observed too, we remain in an environment which benefits from the compounding impact of some significant changes in recent years. Remember, importantly, policy terms. As regards market capacity, we have unsurprisingly seen some new appetite enter the market, notably in the property cap space. But we see this new supply being offset to some extent by inflation-led increases in demand. And this situation was indeed the case in the US mid-year cap annuals. In the non-cap space, we very much like the dynamics here still and the way we can bring on business through the entire quota share aspect of our portfolio. This has been an opportunity we have focused on for the past few years. It has performed well for us and is underpinned by the principles of how we seek to build a well-rated portfolio that keeps volatility in check. Finally, in regards to commentary around our growth path on from here, it is important to note that while we currently are seeing enhanced new opportunities in property and specialty, all three divisions grew during the six months. More on this on the next slide. As I said, Property and specialty stand out right now. Year on year, gross premiums written increased by $195.6 million, with property driving around two thirds of that growth and specialty a letter under a third, with casualty making up the balance. That is a broad split and skew that we are very happy with and have spoken about previously on these calls. Working with our partners to best match their needs and our appetite remains what the team works hard on every day. We do this on individual contracts and on a cross class basis. A real benefit of our operating model and on our ability to consume and analyze data. We remain focused on growing a balanced portfolio, not just between our divisions, but between subclasses and indeed for property between the cat exposed and non cat exposed lines. Overall, across the entire company, we maintain the approximate 70-30 balance between non-CAT exposed and CAT exposed contracts. We like the fit of the non-natural perils component that our chosen partners manage and deliver, and it continues to price up well in the context of the overall balance and diversity of the portfolio. In casualty, good partners are also a focus. While we have grown modestly by $7.6 million versus the comparative period last year, we have developed our relationships where our key partners and insurance carriers have been shown to deliver on their own pricing and cycle management disciplines. This is not only about short term results, but about how our data analysis confirms that actions planned become actions taken. Before handing over to Greg, a word on the expense ratio and the trends we see over time for the company. The other operating expense numbers that we are seeing now in 2024 and the trend down over time is very much in line with the plan we articulated when establishing the business. As was expected, early initial build cost acts as a drag on performance, but by half year 2022 through to the current half year 24, we see the scaling impact that is present in the organisational make-up and from half year 23 to half year 24, The other operating expense ratio reduced from 5.7% to 4.6%, which is a healthy position to be in the industry. That said, we continue to invest in infrastructure systems and people, and we benefit from building and driving the business strategically from one location. And we see that immediacy of working is a real differentiator, and that should not be underestimated in terms of tangible value. So thanks, and I'll hand over to Greg.

Thanks, Trevor. The property market remains strong, continues to be an attractive market to conduit REIT as we continue to build and grow our treaty portfolio. We have increased our gross property premiums written by $133.4 million from H1 2023 to H1 2024, which is as a result of new and renewal contracts from H1 2024, but also from premium writing through from prior years. Inflation has not gone away and we're continuing to grow our premium base ahead of exposure with our established quote share partners and their reinsurance treaties. Overall, our footprint remains where we believe the best trading environments lie and so still have a weighting towards the US and are focused on the primary market. As I've mentioned in the past, territories such as Florida remain a part of our portfolio. but this has not been an area where we have sought to expand through the mid-year renewals and have therefore maintained a geographic distribution within the US on a broadly similar shape to that of 2023. This consistent approach to the management of accumulations allows us to continue to grow our property exposure whilst remaining within our preset PMLs. Our primary footprint, typified by ENS and middle market quota share treaties, continues to deliver growing subject premium base generally driven by rate our partners continue to exhibit discipline across the terms and conditions and are ensuring that original deductibles remain appropriate for the growing risk exposures this is so very important as much has been achieved in setting a manageable risk transfer level from the original policy holders and when deductibles do not keep up with inflation that's when the problems occur The ENS market remains strong, with limit deployment remaining sensible. That said, increased competition is visible. It's also worth noting that a delta between CAT and non-CAT pricing is becoming more visible for property policies placed in the ENS market, and the CAT-related component of the risk is starting to show signs of some rate softening. The broader CAT excessive loss market is always more sensitive to the supply and demand of capacity And our view here is that margin has started to reduce, resulting in broadly flat risk-adjusted pricing. Within the context of our overall property growth, our XOL premium has increased, but generally in areas where it complements the broader natural catastrophe exposure footprint. The texture of our portfolio remains stable, which, as Trevor mentions, can be exampled by approximately 30% of our total property, specialty and casualty portfolio premium, being associated with natural catastrophe risk. Finally, a comment of the undiscounted combined ratio, where it shows a small uptick half year 2023. This is driven mainly by an increased acquisition ratio with loss ratios largely flat and loss activity broadly within expectations for H1. H1 2024 shows our casualty gross premiums written at 148.2 million US dollars, being a 5% increase from H1 2023. Though this is not a significant movement in percentage terms, the continued dynamic underwriting activity of the team means that we have a mixture of growth from key partners, as well as actually reducing shares of other business, as we work with our partners to continue a balanced and disciplined portfolio construction. The management and pricing of risk accumulations continues to be assisted in our weighting to quota share over XOL, delivering balanced blocks of adequately priced premium for smaller risk limits when compared to a pure XOL portfolio. It is evident that more claims from 2019 and prior underwriting years are making their way through the courts and into the data sets and back year track records of current treaties in the market. This is clearly causing actual claim experience to deteriorate for these pre-conduit treaty years and put pressure on the treaty economics. This has been manifesting itself through some Seeding Commission reductions being passed back to reinsurers in the current year. And indeed, we're seeing this in our portfolio with renewals through H1 2024. Again, areas such as public DNO continue to show significant variance in the insurance risk pricing. we remain very cautious here. The headline rate changes are significant, but sometimes do not tell the whole story. Our experience here is that the market is dealing with this in very different ways in managing their deployment and options available, such as either increasing attachment points or de-risking their dollar limit positions as not always being applied. As ever, the primary market is very broad in its underwriting approach, and the skill here is understanding who is doing what and when. We continue to monitor the pricing adequacy of the underlying insurance policies through the sharing of incredibly granular risk-based information from our specialist insurance partners. The underlying rate generally continues to flow through in absolute terms, which is good news, but of course then when considering the impact of claims inflation, the net effect is dampened. Overall, though, we see our partners behaving in a disciplined manner, providing further rates maintained ahead of inflation, and we remain very comfortable with our overall casualty positioning in the market. We've had a strong H1 in the specialty division, with gross premiums risk and growth of 59%, as we continue to add balance blocks of various classes to our portfolio. We delivered on some good opportunities in the half year, including a number of multi-class transactions with key partners. These deals can take sometimes significant time to execute, but deliver very balanced risk profiles and solid long-term fundamentals. Our specialty business remains a broadly low contributor to our overall natural catastrophe exposures, and managing the risk accumulations has always been a key focus of what we do here in this class. One benefit being the reduced requirement or need to hedge large peak positions as we continue to build the portfolio over time. Over the half year, the higher combined ratio moved up from 80.7% in H1 2023 to 95.7% and is largely driven by the Baltimore bridge loss which occurred in Q1. As we have mentioned earlier in the presentation, We believe that the Baltimore Bridge industry loss will likely provide an important data point as the key year end renewals come to the market. On specific classes, we've noted through H1 that increased demand by more reinsurance limit from the marine and energy insurance sector is putting more capacity into classes such as offshore and also the renewable sector. This has created some increased demand in reinsurance limit, which on the one hand is good, But we've often not seen what we would view as the appropriate premium being passed over to the reinsurers here. It is definitely a growing sector, and we watch it with interest, providing, of course, we're able to achieve a balance between risk and premium going forward. On cyber, this remains very much an incidental class for Conduit, and we continue to largely pick up exposures via broader contractual relationships, where cyber is a small part of a client's insurance footprint. The recent CrowdStrike event provides an important data point for the industry and goes to the point we have made before, that being able to fully understand, control and price for risk accumulations is fundamental to our business. In closing, our specialty book continues to add to the overall portfolio mix and complement what we do in property and casualty. We remain focused on the classes we know, understand and like, enabling us to price and structure the reinsurance transactions appropriately. We continue to see opportunities for growth in the larger key partner transactions. And looking forward, year-end renewals could see some re-rating in the recently loss-impacted classes. So looking across all three portfolios, I continue to see opportunities to focus our efforts on through the remainder of the year. And with this, I hand over to Elaine.

Thanks, Greg. Gross premiums written of $737.8 million are up 36.1% on the prior year, which is in line with both our growth strategy and with what we've just been telling you about the market conditions we've seen. On an ultimate premium basis, we typically write the majority of our book by the half year. I would echo Trevor's comments and say that this year we have front-loaded the book a little more again, given the opportunities we have seen. Our proportion of quota share business remains reasonably consistent year on year, again reflecting where we've seen the best value. We would therefore expect the half-year gross premiums written growth percentage to moderate a bit by the end of the year, although we still expect to see very healthy growth there for the year. We have reinsurance revenue of $382 million versus $278.7 million at the prior half year, a 37.1% increase year on year. Our reinsurance revenue is essentially gross premiums earned, less seeding commission, and a smaller adjustment for non-distinct investment components. It therefore tracks the same pattern as a gross premiums earned would have, just a lower number after the seeding commission deduction. Seeded reinsurance expenses, which are essentially our seeded premiums earned, excluding reinstatement premiums, were $43.8 million for the first six months of 2024, compared with $35.9 million for the prior year. Our outwards cover has increased year on year as the Emirates book has grown, in addition to price increases at the January 1 renewals. Although it was a relatively active first half for losses for the industry, including the Baltimore Bridge, which was a sizable specialty market event, we don't have any individually significant loss impacts to disclose. Our reinsurance service expenses includes both loss and loss-related amounts, but also reinsurance operating expenses, and an allocation of some other operating expenses. In our interim financial statements segment disclosure, we've provided a breakout of that number into the loss and expense components so that you can see those separately and also to help with calculating our net loss ratio. So our undiscounted net loss ratio for the half year was 73% versus 68.1% for the prior period. Our discounted loss ratio was 62.4% for the half year this year and 57.5% for the half year last year. Our combined ratio for the half year was 85.7% on an undiscounted basis and 75.1% on a discounted basis, compared to 83.1% and 72.5% respectively for the prior year. A comprehensive income for the half year was $98.1 million, or an ROE of 9.9% compared to $78.6 million and 9.1% for the prior period. On the investment side, yields have increased a bit this year, although not too much. Also, the portfolio is generally yielding more now with current book yield at 4.1% versus 3.2% at June 30 last year. Overall for the half year, we returned 1.5% versus 2.1% in the prior year. We remain relatively short duration and our focus is on maintaining a high quality, highly liquid portfolio. Duration is currently 2.5 years versus 3.1 years on our net reserves. Average credit quality is AA, and you can see the usual pie chart here with our asset allocation. And other than cash and cash equivalents ticking up a bit, which is largely timing, no real changes from prior quarters in that or our strategy. I'll now hand back to Trevor for closing comments.

Thanks, Elaine. So in conclusion, it has been a solid half year with a 9.9% return on equity. And these interim results demonstrate the resilience of the company's underwriting approach in a period of elevated industry losses. We are clear on our risk appetite as regards to volatility and to any writing business where we have confidence as to plausible accumulations, both within our underwriting portfolio and also on the asset side of the balance sheet. More broadly, I'm certainly glad that we are able to focus on the road ahead without the distraction of managing runoff from less optimal market conditions. and the development of losses written during weaker market conditions. From inception to the 30th of June this year, we have written over $2.6 billion of gross premium. We could have written more, but have made some strong underwriting calls directionally over that time and will continue to do so. Our early call in 2021 to focus on the quota share opportunity supporting the emerging improvements in the property E&S market is one that we can certainly point to. In closing, we remain confident as to market conditions and in the diversity of opportunities we see as we continue to deploy our capital base to grow. I look forward with confidence to the remainder of the year and looking ahead to 2025. Thank you. And I will, on that, back to Antonio.

Thank you, Trevor. Let's move now to the Q&A session. And can I please remind everyone to keep it at two questions per person. Thank you.

Participants can submit questions in written format via the webcast page by clicking the ask a question button. If you're dialed into the call and would like to ask a question, please press star one. We'll pause for a moment to assemble the queue. We will take our first question from the line of Tifronis Spirou from Berenberg. Your line is open.

Well, hi there. Thanks for the detailed presentation. I guess I've got two questions. One is a real question on capital allocation. I assume you get to ROE of around 18-10% year-end. This is probably the second year running now. How should we think about capital allocation decision into next year? I appreciate this is still quite early, but is the scope to increase cash repatriations to shareholders whilst still withdrawing capital to support growth? And if so, what would be your preferred method? Presumably the 20% earnings yield from your shares could be a quite tempting return. There's a second question for Elaine. You previously talked about a discounted combined ratio turning towards the low 80s. This is around 85.7 today. Excluding the Baltimore Bridge, we can get to around sort of 80s, which appears to be very strong. Can you perhaps help us put that into context? um in terms of the h1 performance versus overall ambition and how is that how is that tracking thank you hey chef um

It came through a bit muffled, so I think your second question was probably clearer in terms of the guidance that we've given. The mid-80s emerging was the guidance that we gave under IFRS 4 reporting, and we did notch that down a little bit with IFRS 17. I think with where we sit at the half year, I wouldn't read too much into what we're reporting. I think there's been a fair bit of activity this year, and there was last year too, the first half, But there's a bit more of the kind of mid-sized cat and larger loss events that we might be expected to pick up bits and pieces on. So, you know, when we kind of ignore those, we're really kind of pretty much in line. And again, around that guidance, I think what we always point out there is that, you know, we are only in three and a half years into the business. We are still building our reserves there. So until all of our reserves reach that level of maturity, that build is ongoing. Your first question, was that on capital returns? I didn't quite catch everything there.

yeah so so potential for access sort of additional capital returns on top of the dividend um at year end assume you get to around 18 20 re um presumably got enough capital to grow whilst returning a little bit more capital is that um something potentially thinking about as you're going through sort of the second half of the year

Yeah, I think it's pretty early to be giving any kind of guidance on that. You know, we've still got a fair bit of the year to go and see where we are and what our expectations are into one-one renewals. And if we see the opportunity to deploy capital, then we will do. So we're a ways off of making any decisions on that at this stage.

And just to add to that, Triff, hi, it's Trevor. You know, as we've said, we kind of called it out a year ago that to deploy into, we still see it that way, particularly in what we call the non-CAT space, so the risk piece for the business or area of the business. And that's still something which we see as an opportunity and will certainly form part of our focus as we go through the end of this year.

Thank you.

Your next question comes from Abid Hussain from Panama, Liberia. Your line is open.

Hello, everyone. Two questions from me. The first one is on the strong growth that you've delivered. It looks like you say that it's coming in non-catastrophe exposed lines. Just wondering if you can give us some color on what sort of subclasses that was in, please. And then the second question is on pricing or rates and the outlook there. Just wondering, and I appreciate it's slightly early, what's your view on how the 1-1 meals might pan out given the large losses, the large loss activity across the industry that you name checked, including Baltimore, the floods and the storms? Thank you.

Morning, Abbott. It's Greg here. Yeah, I think When we talk about non-CAT, obviously, that can include business that has a small component of CAT in it. And I think that's the key there in building a distribution of risk in the portfolio that we like, is not just thinking about the types of products you sell, but where you pick up that exposure from. As Trevor mentioned, what we call the risk book, typified by US property business, particularly in what we'd call the non-admitted space, but E&S and some middle markets and that area of business. You know, these aren't risks that are, you know, unable to be involved in a CAT. It's just that that commercial type business, the application of deductibles, the correct valuation of exposures, the implied insurance to values, and then the rates that are collected allow, I guess, the insurers and then by definition us as the reinsurers to feel comfortable with the premium collected. to support both CAT and non-CAT related future claims. And that's still a healthy environment. Those markets are still producing rates ahead of inflation and those exposure bases are growing and our partners are picking their way through that in a disciplined manner. So it's a progressive piece and we're very comfortable with the work that our partners are doing.

I understand a bit on some of the classes in the first question. As far as I think casualties has generally been underpinned by underlying inflation. And we've seen that over the course of the last couple of years. I think we see that trend probably still carrying on. Property from a cat standpoint, well, who knows what happens in the next six months of the year or something through the wind season. So that's very susceptible to recent loss experience always has been. So, you know, you really need a crystal ball in that front, I suppose. And then the other classes like, you know, Baltimore sits within specialty classes. I think some of those areas will react to it. It's a very large event. So I think we'll see some reaction in the market there. Although, as we saw post-Ukraine with some of the aviation business in the market, Some of that you could argue didn't react particularly strongly. So the market will be what the market will be, but we cast on it fairly wide to at least be able to see and ascertain from a whole host of classes where the value is. Hopefully that's a bit more colour for you.

That was helpful. Thank you.

Your next question comes from the line of Derald Go. Your line is open.

Hey, hey, morning, everyone. Hope you're well. My first question is casualty, so I hear what you're saying.

Can you speak a bit louder? We can barely hear you. Is this any better or not? Yes, thank you. Hey, so my first question is on casualty. You're saying that it's, I mean, we've known for a while that, you know, the problematic years seem to be 2019 and prior. But I think from some of the U.S. reporters, there seems to be some issues emerging of some more recent accident underwriting years. Can you maybe share what you're seeing on that front and kind of what reassurance that you can give to the extent that your pitch is always about running a so-called legacy-free balance sheet? My second question, it's around the overall risk mix. So you've grown very strongly in property and specialty. It feels like, you know, we're going to continue to trend on that direction. I mean, to what extent will that kind of impose some kind of limit to your internal risk tolerances, however that is captured? Do you kind of need to take out more retro or do you have to tweak your growth plans to be able to grow a bit more going forward? Thank you.

I'll take the second piece first around the property growth and the risk tolerances. For us, we've always stressed that when we're writing property business, our preference generally is for the non-risk piece, but obviously we do assume cat into the portfolio as well. We're always very conscious of the tail element to the cat business. When we reported at year end, you know, the BSCR that we reported was high 380s or 380 approximately. That's a pretty good place to be. We plan out over, you know, a three to five year planning horizon. And within that planning horizon, obviously with the benefit retained earnings as well coming through, we see no additional need to or changes for the business. So the model that we've got and the ability to add business to it in a diversified way is standing the test of time and it's the way that we want to continue to build the business. On the first point, on casualty, early days, as we know, the casualty classes can run out to five or seven years in some cases. We've generally supported partners that have got long track records so we can see what's happening in their portfolios going backwards, even though we came on and were partners for them from 21 onwards. The experience that we've had to date, we like. We like the portfolio we've got. We like what our clients are doing. So at the moment, yes, it's early days. We reserve where we do prudently at this stage, we believe. But the early signs for us, you know, we really like what we've got in the portfolio. So I hope that helps a bit.

Yeah, thanks for that, Trevor. Can I just follow up quickly on the Solmcy point? So the BSE is about, you know, 380, as you say, but the ECR, I think it's 269. And if I'm not mistaken, it's the 269. That is the real bunny constraint, isn't it?

I think that's looking at regulatory numbers, and there are some peculiarities around the ECR and how that comes out in early years, given that we're growth. I think we look at our own internal requirements, and AMBEST is the bigger drivers of how we do the business, and they are risk-based models, and that's what we use as a first point. Still plenty of room in the ECR as well.

Yep, and again, just to complete the picture, you're still happy, you're still not considering possibly issuing some debt?

Well, obviously, we don't have any debt in the balance sheet, but it's not a current consideration.

Okay, thank you.

Your next question, Consulana Joseph-Sinans from Orton. The note is open.

uh hi there can you hear me yes hi um good morning to you guys in the meter and then congratulations on a good set of results here um for my first question i was hoping if you could provide sort of some color on the pathway on expenses and you noted that the you know expense ratio this is related to the other operating expenses was sort of in line with your IPO kind of guidance. You know, you've got one more year to go on that. And so, you know, can you sort of provide any kind of work on maybe how much further they would fall? And tied to that, it's just that I noticed that, or remember that the four-year figures You mentioned that you'd flag some extra headcount coming in. Is that already reflected in the first half, or is that more sort of a second half item for the agenda? And my second question, and apologies, it's a little bit nerdy, but I wanted to ask you about the discount factor that you have, particularly then in the property book. To me, it stands out being a little bit higher than some of your peers. You know, just without being maybe very, very deeply headlining the rule, the only way I can kind of rationalize it is that you seem to be maybe incurring more than you're paying out. You know, this is sort of particularly in the property book, you know, Could that be sort of interpreting that you're being extremely conservative and building up buffers, you know, in this book? So any color on sort of the discount packs there would be much appreciated. Thank you.

Hey Joe, I think both of them sound like they're for me. I think on the expense side of things, we haven't given any updated guidance on that on an IFRS 17 basis. I think on an IFRS 4 basis, we said that we're going to get into that 5% to 6% range and we were kind of really getting there. We haven't given the guidance because there are some allocations now that come in under IFRS 17 into the reinsurance operating expense ratio as well as the other operating expense ratio. So we might be in a position to give a bit more on that towards the end of the year. At the moment, we're just trying to see how those allocations settle down as we grow. There is a bit of an impact of business mix in there as well. But in terms of hiring, we're pretty much done. There's a few more positions that we are filling into the second half and there might be a few more into next year, but we're pretty much there now. On the discount factors, it's kind of hard to comment on how we are versus peers. We're kind of in control of our own numbers and our own policy decisions. We do use the opening discount rates, the opening rates to discount our numbers. If there's any specifics that you wanted to go into in terms of your assumptions versus how we're coming through, then happy to take them offline because there might be a bit of a longer conversation on that. But I think across different companies, different policy decisions drive different outcomes.

OK, yeah, the second question might be one to take offline. But thanks for any way, especially on the first question. Your response has been very helpful. Oh, and actually, sorry to, if I may, just ask one extra sort of small point. I noticed that in the presentation there was no PML figures this time around, and that's something that's been given before. Is that sort of, you know, going to be the case going forward? Or will it sort of maybe, is it just going to be shown as sort of the year-end?

It's the year-end disclosure predominantly, yeah.

Okay, okay. Thanks for confirming that.

Your next question comes from Andrea van Ebden. From Peel Hunt, your line is open.

No, thank you. Good afternoon. I just had one question on the cost of doing business. Can you maybe comment on the trends in city commissions? I think you sort of alluded to the fact that within casualty there was a trend of sort of lowering those city commissions or returning them. Can you maybe comment on how that is affecting your commission structure and whether there's going to be less of a drag in that commission payments as you grow? Thanks.

I think I'll pick that up, Greg. I mean, first point is that, yes, it has an effect, but it's obviously not the driver of the result. But clearly it's related to, well, in all negotiations, the combined ratio is a function of the loss ratios and the acquisition ratios. I would say there's a, you know, you get a bit of a natural seesaw effect within reason. if you take a class like property where loss ratios at least on the primary side have been performing very strongly you know it's natural there's a little bit of market competition and the ability for seeding commissions to just marginally creep a little bit I wouldn't say these are significant movements but it's noticeable but of course what you're really looking at is the margin delivery which is the combined ratio which is both function of loss ratio acquisition and then the structuring of the deal itself, how much volatility versus the mean result. And then something like casualty, the same sort of concept applies where there perhaps has been some loss ratio creep for the market, predominantly driven by prior year development. And we mentioned sort of prior year and nominal claims coming through into awareness for the pricing of risk going forward based on those prior years. The acquisition ratios or seeding commissions are used to dampen the effect of those loss ratio movements and hold those combined ratios. So they are certainly linked. We observe it, but these are very small marginal impacts.

And just to add to that one, on an IFRS 17 basis, those seeding commissions are now an offset in reinsurance revenues? because our brokerage costs come through in our reinsurance operating expenses. So that's more of a mixed impact in terms of where we, what line items that we show it in.

No, I understand. We're just wondering whether that sort of trend is strong premium growth, therefore strong seeding commission growth as you grow your book, whether that sort of delta is going to ease so that you get some sort of efficiency or operating leverage on those acquisition costs?

Yeah, I mean, it is a ratio, so I think it comes down more to mix.

Okay. All right. Thank you very much.

There are no further questions on the conference lines. I'd like to hand back to the room.

Thanks very much for being with us today. It's been good to update you on our interims. Still got the half year ahead of us. or the second half year ahead of us for the six months. So I look forward to the market with enthusiasm. We look forward to seeing you on the 6th of November for the trading update. Okay, thanks very much.