Thanks, Mike, and good morning, and welcome to NobleOak Life's FY 2025 results presentation. I'm Anthony Brown, CEO of NobleOak, joined today by our CFO, Scott Pearson. I'll begin with a summary of the year's highlights, then hand over to Scott for the financials. After that, I'll walk through our strategy and outlook for FY 2026, and we'll close with Q&As. Scott and I are especially pleased to share today's results. We believe that they're strong and reflect the momentum behind our business, and we also have a couple of exciting developments to share. Before diving into the results, we'll just quickly revisit NobleOak as an investment proposition. We're Australia's fastest-growing and most awarded direct life insurer, a challenger brand driven by a genuine commitment to our social license, delivering quality life cover for Australians at an affordable price and all backed by personalized service.
We're clear path to a AUD 1 billion in-force premium within an $11 billion market. Our momentum remains strong. This growth is supported by a diversified strategy with both direct and advised distribution and ongoing investment in technology and innovation. NobleOak's origins date back nearly 150 years. We pivoted in 2012 to become a life insurer with AUD 4 million in in-force premium at that time. Since then, we've grown more than 100-fold to exceed AUD 460 million in in-force today. As shown in the investment highlights section on the right of the slide, life insurance offers the advantage of recurring annuity-like income stream, meaning that as we grow our in-force premium base, we also build long-term value. Currently, our trading valuation reflects a significant discount to the present value of these premiums, which will be demonstrated later in this presentation.
FY 2025 was one of our strongest years, marked by disciplined execution, market outperformance, and strategic investment. We exceeded top-line guidance, maintained a robust capital base, and built on our groundwork for long-term value creation. Slide four shows our consistent market share gains in in-force premium, a key value driver, reaching AUD 464 million in FY2025. Combined with financial discipline, this supports strong and consistent underlying profit growth. To the highlights section on slide six, we continue to outperform the market, growing in-force premium by 20% and gaining share in both our direct and advised channels. We're proud to be Australia's most awarded direct life insurer for the sixth consecutive year. We're particularly excited about winning the 2025 ANZIIF Life Insurance Company of the Year award, which was announced just a week ago.
ANZIIF is the leading professional association for the insurance and finance industry in APAC, and its Life Insurance Company of the Year award recognizes excellence across service, innovation, community impact, and industry leadership. It's the first time we've won this prestigious award, competing against other life insurance companies operating in Australia, and it's a great endorsement for the value we're delivering to clients every day. We maintained our targeted investment in technology, including AI and automation, to boost efficiency, reduce cost to serve, and enhance customer experience. Having reached a milestone in organic capital generation in 2024, we continue to generate strong and growing cash flows. Our acquisition of FiftyUp Club is performing ahead of our expectations and expands our reach in the over-50 segment, with new offerings like Travel, which we recently launched, and our soon-to-be-launched Pet Insurance.
We've unlocked new growth opportunities, including a direct channel partnership with a leading health insurer, which we've only recently signed after 12 months of hard work, and we're really excited about the opportunity. We've got the upcoming launch of Futura Protection with our NEOS partnership, which we announced just a few days ago. In short, we're investing in what matters: technology, partnerships, and people to further build a business that fits for the future. Looking at the key financial highlights on slide seven, as mentioned, our in-force grew 20% to AUD 464 million ahead of our 15% guidance. This was driven by both strong sales and lapse rates, which were better than industry averages. New business market share remained above our 10% target at 12.8%. Underlying profit pleasingly grew by 22% to AUD 18.3 million in disciplined underwriting and expense management.
Our capital adequacy ratio was at the top end of our target, which Scott will touch on later. In summary, our strategy is delivering, market share is growing, margins are strong, capital remains robust. I'll now hand over to Scott to talk a bit more about the financials.
Thanks, Anthony, and good morning all. Yes, we are pleased with the results we're presenting to you today. I'll start at a group level, where our strong in-force premium growth helped us reach a 4.1% market share, and new business sales grew by 17% to over AUD 63 million, the 12.8% new sales market share well above our 10% target. Lapse rates remain below industry average, and insurance margins remain strong. Pleasingly, our disciplined underwriting and conservative risk retention continue to support stable margins. Strong net margins and the RevTech acquisition helped drive the underlying impact increase by 22% to AUD 18.6 million. I would note that statutory impact was lower at AUD 7.1 million, including one-off impacts of the RevTech acquisition and a provision for the potential exposure to stamp duty in Victoria.
Turning attention to the direct channel, a key value driver for our business, direct in-force premiums grew by 9%, and we were pleased to reach a significant milestone of AUD 100 million in in-force premium in July. Our direct market share has increased to 9.3%. Our focus on digital marketing, alliance partnerships, and customer experience drove strong sales. This was in a period where we deliberately reduced marketing spend to support the RevTech acquisition, which benefited directly our margins alongside favorable claims experience in the period. Direct expense ratio remains stable despite increased investment. These factors resulted in underlying impact growth in the channel of 52% to AUD 8.9 million. Now on our strategic partner channel, our partnerships with NEOS and PPS continue to drive strong growth. In-force premium grew 23% to over AUD 364 million, reaching a market share of 3.5% in the advised market.
Pleasingly, new business sales increased by 22% as we continue to take market share now with 13% of a growing market. Our insurance risk management remained disciplined. We've focused highly on pricing reviews, offsetting claims experience, which was absolutely in line with the market. Our discipline delivered stable insurance margins over the year in this segment. Our strategic partner expense ratio was impacted by regulatory and capital management investments, due partly to our friendly society structure. These factors resulted in underlying impact growth in this channel by 5% to AUD 8.7 million. Our next slide is to support the ongoing growth in NobleOak. We are commencing a project to transition from a friendly society structure to a life company structure, consolidating multiple benefit funds into a single statutory fund.
This has support of our regulators and will improve capital and cost efficiencies, particularly in the strategic partner channel in the future, and provide greater agility to our product and pricing processes. Implementation is likely to take two to three years, at a cost of $3 million- $4 million investment, and a payback period of about three to four years. This is an important transition, and we intend to manage our capital tightly during the period. Looking back at capital as at 30 June 2025, our capital base was AUD 51 million, with a strong capital adequacy multiple of 186%, which is top of our target range. The RevTech acquisition and the Victorian stamp duty provision have impacted assets above target. Importantly, as previously mentioned, we continue to generate capital organically, opening up future strategic options.
For the first time since the IPO, we've actually been publishing an embedded value or EV calculation. We know this has been a focal point for the market, so we are pleased to publish it today. Using the same discount rate as our IPO prospectus at 8.5%, NobleOak's EV as of 31 December 2024 was AUD 197.6 million or AUD 2.16 per share, including franking credits. This EV represents a 90% increase since the EV we reported at IPO. I will note that EV reflects the value of NobleOak's existing policies, implying valuation upside from our strong growth trajectory. We intend to report EV annually going forward, noting that it will be calculated as of December each year. Note that we've included additional information on slide 25 of the pack, including methodology and scenarios with different discount rates for those that are interested.
We're pleased with these results in summary today, and we hope that you are too. With that, I'll hand back to Anthony.
Thanks, Scott.
Let's now turn to how NobleOak is investing for long-term success. As mentioned, we remain committed to invest both short-term and long-term success. Our focus to date has been on growth in our core direct and strategic partner channels, and we're beginning our disciplined expansion into strategically adjacent markets, which positions us to reach AUD 1 billion in in-force premium, approaching a 10% market share in the next 10 years. This is an exciting time for the business. Our diversified growth strategy aligns with our purpose about building and protecting Australian work with integrity, and these priorities are underpinned by ongoing investment in our people who remain the heart of NobleOak. Growing with purpose, discipline, and a clear focus on delivering long-term value. One thing that will support our growth and profitability is our disciplined investment in technology, including AI.
Our AI strategy is designed to enhance customer experience, improve efficiency, and enable better data-driven decision-making while keeping people at the center. The strategy includes three overlapping phases: assist, automate, and transform. We have already seen a positive impact from phase one with tools like AI-powered call monitoring in our quality and assurance team, which has improved service consistency, expanding our call coverage from 20% to 100% of calls. We are now scaling automation across our underwriting, claims, service, and sales teams. The third phase focuses more on custom AI solutions to elevate the customer engagement and build a scalable, future-ready business. We view AI as a strategic enabler for long-term growth and innovation, not just a technology investment. Our approach is bold but measured, ensuring we achieve sustainable, positive outcomes, which we're already seeing across the business. Turning to slide 19 are our key strategic priorities for FY 2026.
We are excited about the year. We plan to invest in growth across both direct and strategic partner channels, with the year ahead including a number of great initiatives. We're launching a white-labelled product in our direct channel with a leading health insurer that I mentioned, which is an exciting new distribution opportunity for NobleOak. We are working closely with our partner to bring this to market early next calendar year. We'll be able to reveal the name in the coming months. We're rolling out a refreshed brand campaign expected to boost brand awareness and increase sales volumes in the direct channel. After a period of reduced market presence, the campaign will reignite our brand awareness and drive engagement across our direct channel, targeting online and alliance partner customers. We're building momentum in wealth through Wealth Maximiser.
Just in pilot phase, it does market strategic expansion beyond life insurance, offering accessible, high-quality financial planning advice to Australians in response to the outcomes of the Quality Advice Review, aiming to make high-quality financial advice more accessible and affordable. We'll also scale our new Futura Protection product with our NEOS partners in the advised market, which we see as another revenue stream. Targeting a different segment of the market to our current NEOS product, we plan to launch Futura by the end of this calendar year. We've recently enhanced our capital management framework, and this slide outlines our approach, designed to support credit growth and maximize shareholder value. There are five guiding principles: preserve strategic flexibility, balance risk and return, prioritize high-return investments, carefully balance reinvestment with shareholder returns, and continue to invest in customer experience to maintain our edge.
Our capital strategy is really anchored to our PCA, prescribed capital amount. We begin by assessing free cash flow and our capital position, and then we apply filters to guide the deployment of that capital. Capital above our buffer is either reinvested organically or inorganically, or returned to shareholders through dividends or buybacks. For FY 2025, the board has prioritized growth investment and prudent capital preservation as we transition to a life company structure and has therefore not declared a dividend. Finally, turning to FY 2026, with improving industry sales volumes, we expect to continue outperforming the market. We're targeting force growth above 15%, driven by new business share and lapse performance. We remain committed to our disciplined financial management while investing for growth. Our end impact is expected to grow by more than 10%.
We'll continue investing in a world-class team, expanding our actuarial and AI capabilities, and hiring to support growth. Enhancing the customer experience remains a priority with continued focus on improving our digital journey. We are executing our diversified strategy to drive organic growth through innovation across channels and product lines. FY 2026 will be another exciting year for us. I look forward to updating you on the progress throughout the year. Before we open to questions, I just want to thank the NobleOak team for their outstanding efforts this year, and of course, our shareholders for your continued support in our belief and our vision. We have built momentum as we look ahead in FY 2026, and we are focused, energized, and ready to deliver another year of strong performance and progress. With that, we will open up for questions. Thank you.
Thank you, sir. If you wish to ask a question, please press star, then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star, then two. If you're on a speakerphone, please pick up your headset to ask your question. At this time, we'll just pause momentarily to assemble our roster. The first question we have will come from Philip Pepe of Shaw and Partners.
Hi guys, congratulations on a good result and thanks for the embedded value. Saves me building a model. Just kidding. Just a quick one, please, on the conversion from a friendly society to a life insurer. Can you just remind us or give us a bit more detail of what the benefits are to your shareholders from that conversion?
Benefits to shareholders. Strategically, it's about capital efficiency and speed to market. Essentially, as a business, we will find that there will be a lot more cost-efficient capital management strategies under the life company structure, and we'll have a greater ability to get our products to market faster. That's the answer, Phil.
Got it. Thank you. Nick, mixed the hands of the guys from the other side. Sorry. That's all right. This side of strategic partners and big ratio ticked up for the year. What's the outlook for that? Does it stabilize at sort of 1.8, 1.9, or does it remain high because of the CapEx venue flagged earlier?
Yeah, good day. Hi, Phil. It's Anthony here. I think you're talking about strategic partners growth. Look, we're expecting the strategic partners growth to remain really strong next year. On a total new business perspective, even higher than last year. With the new Futura Protection product, which we are expecting to launch at the end of this calendar year, we're hoping that that will also contribute to the strategic partners continuing to be a pretty successful part of the business.
Where is the admin ratio likely to track next year or this year?
I think in aggregate, Phil, the admin ratio flag was at 7% at a group level. We would have imagined, I guess we'll continue to see economies of scale over time. We have seen, as I said, some increase in, I guess, the regulatory and capital management costs in the period, which is why we've implemented that project we talked about a moment ago. We will see economies of scale as the business grows.
If I can sneak in one more, please. There's been some press talk about NEOS being for sale. Has that, and will that have any impact on your business going forward?
Yeah, hi, Phil. There has been press on that. Look, I suppose we've got a very good relationship with NEOS, as we're probably showing through launching another product with them, a good long-term relationship. We've got long-term distribution agreements, which remain on hand. We're not aware of any competitor purchasing NEOS, and our understanding is that it's a minority of the business that they're selling. We're certainly not expecting any material impact on us. I suppose another consideration is the in-force premium remains, you know, with NobleOak anyway. We're the underwriter for the in-force premium with NEOS, and we will be with Futura as well.
Excellent. Thank you. Thanks for taking the question. Bye-bye.
No worries.
Once again, if you'd like to ask a question, please press star, then one on a telephone and wait for your name to be announced. Next, we have Nick McGarigle of Barrenjoey.
I think just a comment on the Board's view on cash. Sorry if Phil asked that question, but just to what you're looking to do with any cash flow generation out of the in-force book. I think there was a comment that that is more likely to be reinvested than returned.
Yeah, thanks, Nick. That's correct. Our ratio is 186% at the moment. We do have a reasonably strong capital position, and we are growing capital. The board has decided to reinvest in organic growth, but also prudently maintain our capital as we transition to a life company. The life company transition, while as Scott said, it will increase efficiency of capital management and also create a lot of flexibility benefits to us. There will be a cost, which is probably AUD 3 million- $4 million in the next couple of years. We want to make sure that we're maintaining our capital prudently to take us through that position.
Okay, thanks. I guess unpack margins in the strategic partner. We just took a bit of a step backwards. Can you just talk through what was the driver of that? Was it a particular investment around getting some of these new products to market?
Yeah, thanks, Nick. I think the impact margin was the actual insurance margin stayed relatively stable, with both the disciplined underwriting activities and pricing processes sort of offsetting claims experience. The main driver was the tick up in expenses that we sort of talked about a little bit earlier, which is around us having to manage the infrastructure and governance frameworks, risk management, but particularly the capital management activity we're doing to support that segment, which is one of the key drivers while we're actually implementing and we're commencing the transition to the life company project.
Okay, thanks. On the direct side, new business sales have kind of been steadied around that $10 million mark. What kind of factors can you do to, or is there any kind of the new deal with the health insurer, et cetera, does that kind of help improve the profile for growth in the direct business sales?
Yeah, Nick, it's Anthony here. We're still holding a 9% market share in direct, and it is growing well. It did slow the sales during the year because we reinvested some of the marketing dollars from our direct portfolio into the RevTech transition and purchase in the middle of the year. That was sort of a strategic decision that we made. We did expect the sales to slow a little bit in 2025, but we're expecting them to go back to the sort of 12% CAGR rate this year. With additional brand spend and investment in technology to help us with our sales and service proposition, we're pretty confident that that will continue to increase. The new partner that we have as well, the leading health insurer, will be a really amazing partnership for us. We're quite excited about that.
It will commence early next year, but we do expect to get some sales in through this financial year. Most of it will start to come in in the next financial year.
Does the change of ownership of RMCWA change the dynamic with them at all?
No, they're not direct competitors. That's actually been a really successful partnership with us. It remains that way. We don't see any impact, Nick, on that.
I mean, is there an opportunity to have a relationship with IAG?
Sorry, I missed what?
Given they've been bought by a larger insurer, is there an opportunity to have partnerships across that network?
Sorry, Nick, we just couldn't quite hear the question. Do you mind repeating?
Given they've been bought by IAG, is there an opportunity to have a broader partnership with them?
I see. Yeah, there could be. We're certainly exploring that. We're not sure at this stage, but we're exploring a few opportunities, including that as a potential.
Okay, there are no further questions at this time. I will now hand the conference back over to Mr. Brown for any closing remarks, sir.
Thank you very much. Thank you for your engagement and all of your questions, and thank you for attending. I hope you're pleased with the progress we've made. It's been a great journey so far, and we're expecting to continue that in 2026.
Thanks again.
We thank you, sir, and the rest of the management team for your time also today. The conference call is now concluded. At this time, we may disconnect your lines. Thank you again. All have a great day.