Good morning, and welcome to today's In Focus session, showcasing our UK GI Personal Lines business. It's great to be able to welcome so many of you to Aviva in person. This is the first In Focus session we've actually been able to host. As you know, our In Focus sessions are designed to help you understand how we are transforming performance, building momentum in all our businesses as we seek to achieve sustainable long-term growth. With me today, Adam Marston, CEO of General Insurance business in the UK and Ireland, and Owen Morris, MD of UK GI Personal Lines. Before they begin, I'd like to highlight a few important points. As you know from our recent results announcements, quarter by quarter, we have continued to deliver on our strategic ambitions. We are building upon a unique position of market strength with a clear strategy to drive profitable growth.
This underpins sustainable cash generation, supporting the group in meeting its financial targets and delivering our dividend and capital return promises. The UK Personal Lines business plays a core role in this. Our UK GI business represents around 20% of the group's own fund generation in 2021, and around half of this comes from our Personal Lines business. This business has a strong performance track record, providing cash generation, operating profit, and access to customers for the Aviva Group. It is customer-centric and is diversified across both product and distribution. Performance in 2022 has been very strong, particularly in the context of the current market conditions. Before we get into the detail, a brief update on our overall GI business across the UK, Ireland, and Canada, which continued to trade positively over the closing months of 2022.
We continue to price appropriately for inflation, especially in UK Personal Lines, where we have been responding at pace to emerging data and trends. Weather experience has been an area of focus across the industry over the past few weeks, and for Aviva, our weather experience across the whole of 2022 was broadly in line with our long-term averages. This includes estimated costs of around GBP 50 million for the December UK freeze. At our full year results in March, we expect to be able to report a group combined ratio of around 94.6%, which is consistent with the guidance at our Q3 trading update in November. This is a strong result and testament to our disciplined delivery in challenging market conditions. It is, of course, at this stage, still subject to audit and finalization procedures. So now back to Personal Lines.
We continue to see a very positive outlook for this business. As Adam will be setting out an ambitious plan based upon the strong track record and the strong and profitable growth opportunities, which are all underpinned with excellent technical foundations. These ambitions are challenging and of course, dependent on future market condition. What's most important, of course, is for you to prioritize margins and won't chase top-line growth at the expense of profitability. With that, I'll pass over to you, Adam.
Thank you, Charlotte, and good morning, everyone. It's a pleasure to be here today to talk to you about our excellent Personal Lines business. We have an at scale leading Personal Lines business with strong diversification by product and distribution, exceptional technical foundations, the leading brand, and firm control over claims and inflation. But what does it take to win in Personal Lines? I believe there are five critical success factors. The first is customer and brand. This is mainly a market where customers buy via price comparison websites or PCWs. As long as your price is competitive, it's your brand that really drives sales conversion. And on PCWs, the Aviva brand enjoys a more than four times better click-through rate versus non-Aviva brands when positioned third or fourth on the page. And this is a material advantage that drives profitable growth for us.
The second is technical foundations and efficiency, both of which we excel at. The third is scale, particularly in retail, which is the largest segment of the market. To be a leader, you must be strong in retail, and in turn, that means being strong in motor. We are, but we plan to grow retail further. The fourth factor is claims and supply chain, particularly true today for obvious reasons. We focus on keeping indemnity costs low and having rapid feedback loops, ensuring that we can act quickly to address inflationary pressures as they emerge. And lastly, these factors allow us to be diversified but focused. That doesn't mean doing everything everywhere for everyone, but instead making smart, focused choices about where we allocate our capital to generate strong returns.
Aviva is well-positioned across each of these success factors and is consistently one of the top four market players, each of whom have around a 10% share. Aviva's strengths have been driving improved performance, and despite challenging market conditions, we are winning. We've moved up to number three in volumes, outperforming versus peers on combined ratio at half year 2022, as we came out of COVID, and into the new normal post-general insurance pricing practices market. So the personal lines market is around GBP 25 billion of gross written premium and size, with motor and home together making up about 75% of that volume. Half is sold direct or via PCWs by players using their own brands and underwriting capacity, and we call this segment retail. Half is sold by brokers and partners using someone else's underwriting capacity, and we call this non-retail.
Most of the market profit is in retail, and particularly, as you can see on the slide, in motor. Aviva has clear headroom to grow here from its current 8% market share. But the market is undergoing significant change. We see several factors at work, and are well placed across all of these market dynamics, and indeed, some of them may drive an improvement in our relative competitiveness. Starting with regulatory, we were well prepared for the pricing practices reforms. Over the last five years, we've been taking proactive pricing action, significantly reducing the new business versus renewal differential. In terms of retail and digitization, about 90% of motor and about 75% of home customers now buy via PCWs. We have the strongest U.K. brand, and our customer franchise means we are incredibly well placed to take advantage here.
Already adding over one million policies since launching Aviva Online, which is our Aviva-branded PCW play at the end of 2020. On inflation, we acted quickly and believe we rated ahead of the market. We disclose rates of 8%-10% in motor and 9%-11% in home at the end of Q3, and that looks broadly the same at year-end, with a 9%-11% range for both motor and home. On cost of living, we've launched new propositions, for example, Quote Me Happy Essentials, which offers quality insurance at a more affordable price. So let's dive a little deeper by looking firstly at our diversified portfolio. By product, we're not reliant on any single class of business. We are number one in home and heading towards number one in high net worth post the Azur completion.
And travel is returning strongly post-COVID, and we have a targeted, healthy share of motor. And this diversification means we have less exposure to motor churn or claims inflation, and importantly, access to sizable and stable home back books. Post pricing practices, retention is up by eight points in direct motor and three points in home partnerships. Secondly, we have diversified distribution. Here, we'll be focusing on retail, where we have plenty of headroom to grow, particularly given our leading brand, technical data, and pricing foundations. Given our strong growth from our investment in Aviva PCW and Aviva Zero, we see this as a strong foundation to build from as we continue to invest in this channel. We've already sold more than 65,000 Aviva Zero policies for around GBP 30 million of gross written premium since launch less than 12 months ago.
Some of you will be aware that Aviva Zero has an embedded carbon offset feature, which appeals to many of our customers, but is much more than just that. It's also a leading tech stack and offers transformational pricing, speed, and sophistication. We're already number one in non-retail distribution and have been for a number of years, fueled by our leadership in bank partnerships. Partnerships remains a strategically important channel for us, where we're looking to both digitize the customer journey with partners that we have and to win new ones. Lastly, I want to touch on consistent profitability. Here, we can see that both retail and non-retail have been profitable over the long term, but as retail offers materially better margins by an average of around eight points, this is where we've been focusing our efforts to profitably grow the portfolio.
Our position today comes from a multi-year effort to transform performance. Phase I was portfolio reshaping, maintaining our number one position in bank assurance, but dialing up retail to access more of those profit pools and aggressively simplify the business. Phase II, which we're in now, continues to focus on mass market and mass affluent customers in retail, and since last year, strong specialist growth in high net worth, where the acquisitions of both AXA XL and the Azur teams are on track to make us the leading player. So the shape of our portfolio is moving more towards retail and specialist intermediated, all of that supported by a simpler underlying model, which in turn supports an improving combined over time. We've already reduced the number of products and applications materially by over 2/3 in products and around a third in applications in the last two years.
This obviously helps reduce cost, which allows us to price more competitively and supports us in meeting our growth ambitions. In phase III, we'll maintain our emphasis on retail distribution, motor, home, and travel products, looking to engines like Aviva Zero as we re-engineer our portfolio around attractive, profitable areas. That will leave us, by 2027, with a majority retail business that is significantly simpler and more efficient. We expect it to generate around GBP 3 billion of revenue, which implies a 5% CAGR over the next four years, all at a sub-94% combined. Right now, in current market conditions, we're of course, prioritizing profit and rate discipline over top line growth, particularly in the retail motor market, where we've focused our attention on dealing with inflation.
That said, I'm still very pleased to say that we've grown Gross Written Premium in 2022, albeit reducing motor by 4%. So how have we achieved that turnaround? And a big factor has been Owen and his team. First, this is a team of specialists with high levels of technical expertise. We have actuaries, underwriters, and data experts, the very skills needed to compete and win in a highly competitive and technically demanding marketplace. Second, it's been assembled from right across the market with extensive experience between them, and we'll soon be announcing an exciting new hire as marketing director from one of our key competitors. Third, it's a team with focus. Each business owner is clear on their customer segmentation, strategy, and targets, and each are complementary to one another and to the whole. And lastly, it's a performing team.
Personal lines has an engaged and diverse workforce. The team understand, are bought into, and are delivering on our strategy. So in summary, we have a diversified scale, simpler business, led by a leading team, which is growing underlying profits. We're clear on our priorities and targets, which are aligned with the Aviva central strategy, built around customer, growth, efficiency, and sustainability. Taking those one by one at a personal lines level, that means being a trusted customer champion and growing our retail customer base to more than 5 million. Means becoming a diversified growth engine, driving towards that GBP 3 billion gross written premium business. It means forging first-class foundations, giving us a target overall combined of less than 94%. And lastly, it means leading on sustainability, supporting the group in achieving its own net zero targets by 2040.
These ambitions are challenging and, of course, depend on future market conditions. What's more important is that we'll continue to prioritize margins and won't simply chase top-line growth at the expense of underlying profitability. I'm gonna talk through each of these priorities, starting with customer. Our business is built around our customer-led brand segmentation. Each segment has clear and differentiated leadership, customer propositions, distribution channels, and service models. We have a deliberate, targeted play for each customer group in the market. For a customer who wants good cover at the lowest possible price, they can buy a Quote Me Happy Essentials product via a PCW for around GBP 40 less, on average, than an Aviva-branded PCW policy, albeit with different and lesser features.
By way of contrast, for a high net worth customer, and Owen and our team only deal with select high net worth broker partners, underwrite each risk individually, and give a one-to-one personal claim service. These are obviously very different approaches, but they're tailored to the to the needs of specific customer groups. Both propositions work, both make money, and both enjoy excellent customer feedback. In between those two, of course, we have Aviva PCW and Aviva Zero, focused on the mass market customer base, while Aviva Direct looks for cross-sell opportunities in the mass affluent customer segment. We also have unparalleled reach via the U.K.'s major banks to other mass affluent customers. Our service story is one of leadership, innovation, and increasing efficiency.
Our TNPS performance is strong, at between 33 and 36 points for our main Aviva brands, and in RNPS, Aviva score is around seven points better versus the market level. These scores, of course, achieved in the context of real-world supply chain disruption. We have the number one insurance brand. We continue to invest in our brand, having recently launched a new national media campaign. We have excellent foundations to work from, but we have far greater ambitions for our retail business. We want to complete our work to ensure all customer journeys can be completed online, and we want to grow voice and digital assistant services to replace legacy phone demand. We will maintain human support, using AI to identify when it's needed, and prioritize that voice-based support and service, particularly for vulnerable customers.
Through doing this, we drive not only great customer outcomes, but also great commercial outcomes, too, and we're targeting here a 43% reduction in cost per policy by 2024, with 26% of that already achieved. We're looking to grow our percentage of online servicing to 78%, which is where we are today, and then up to 85% of servicing online overall. Lastly, we have the Aviva customer franchise, where we have proven cross-sell capabilities. Nearly half of our direct sales are to multi-product customers, and in turn, those multi-product customers have nearly a seven-point higher retention rate. That's very important to us, and we're focused on driving multi-product sales where it makes sense to do so for our customers....
To fully utilize this capability, we're working hard to increase the absolute number of Aviva customers we can reach, and there are initiatives underway across the wider group to grow our marketing permissions for all customers. As a result, we've already seen an increase of around 2.5 million customers with marketing permissions between 2021 and 2022, and we expect this to rise to around 55% of all customers in 2023 through myAviva customer journey enhancements, third-party data enrichment, and ongoing simplification of our marketing preference processes. This utilization of customer relationships is already underway, with beneficial relationship pricing for our pension customers being automatically applied to their Aviva PCW motor quotes, which has driven improved conversion. In summary, we're already a scale provider with 3.4 million retail customers.
With our brand reach and strong distribution assets, we can grow that base. But even more excitingly, with increased levels of permissions and our proven cross-sell capability, we can accelerate sales to existing customers and drive higher penetration and long-term retention. We believe there is real commercial upside here. On to growth. We play across all channels and see attractive segments in all of them, but our particular focus is on retail and high net worth. Our rationale for our growth strategies is fairly simple. This is a retail-dominated market with half of all the personal lines volume. Both retail and high net worth demonstrate growth potential from their current base. We have healthy market shares already in partner and broker, but we have more headroom to grow in both retail and high net worth. And both are attractive profit pools.
Retail is the largest profit engine for us and for the market. High net worth is a growing segment with low price sensitivity, but very high service sensitivity, which allows us to write consistently in the low nineties combined, given our underwriting capabilities. Lastly, we believe we have the best high net worth team in the market, plus a consistently well-performing retail asset. We already have the foundations. We're simply scaling them up. At a portfolio level, our strategy is to grow and rebalance from majority non-retail to majority retail distribution in order to exploit the market's most attractive profit pools. In totality, we plan to double our retail business and reengineer our non-retail portfolio to maintain our number one scale, but with a laser focus on returns.
That will deliver our overall combined ratio of sub-94% and increase operating profit to more than GBP 200 million a year by 2027. We'll achieve our ambition to become around a GBP 3 billion business, writing at that 94% combined through our focus on profitable segments and by widening our competitive footprint. One important point for you to take away is that this combined ratio ambition isn't dependent on improved efficiency. It's about re-pivoting the existing portfolio towards these more profitable segments of the market. But as you'd expect, we're still laser focused on efficiency, which will, of course, help support growth through more competitive pricing. Retail will become the majority of our business by next year. On growth, we have a range of distinct brands with focused customer propositions, each with key priorities and target segments to maximize coverage and growth potential.
We've already seen significant growth in PCW that's been achieved with healthy profitability, with an average combined for the last five years in the low 90s. Looking ahead, this multi-brand targeted approach, underpinned by our leading technical foundations, will generate significant growth as we reshape our portfolio. On to non-retail. First, we have our significant growth engine of high net worth operating from the mid to ultra-high net worth customer segments. This capability has been added through acquisition, and we're now firmly on course to be the number one team in the market, which opens up material, higher margin growth opportunities for us. The AXA XL acquisition saw 90% client retention, which is impressive. We have distribution access via brokers asking us to grow and access to customers via our commercial SME and Succession Wealth businesses.
Turning to mass market broker, we're being selective about the business we write, working with specialists to expand our market reach at more attractive returns and ruthlessly optimizing that broker portfolio for profitability. That doesn't mean we're shrinking the business. It simply means we're being selective about what we do and who we work with to maximize returns, but still with a growth mindset. In partnerships, we already have a leading scale position today, but we are evolving that position for tomorrow, and we're looking to the future. Today, we're the main provider of home, travel, and gadget insurance to the UK's main banks, and renewed the home and travel deal last year with TSB to run until 2028. This partnership strength in home is a major component of our number one home market position and share.
Our strategy in this core book is shifting the model from branch to digital, reflecting changing customer buying behaviors to win new partners to access new and growing customer groups... and these long-term partnerships place us in a great position as the market evolves through the digitization and regulatory shifts we discussed at the start. Accordingly, we believe there will be opportunities to further strengthen our position in home and travel in the short to medium term. Lastly, we see partnerships remaining as a key distribution route for the future. We recognize that our markets will change in the long term, with more insurance embedded in partner propositions, accessed by customers in potentially new ways. At this point, I'll hand you over to Owen to take you through the strength of our technical foundations, sustainability, and tell you a little bit more about innovation. Thank you.
Thank you, Adam, and good morning, everyone. So far, we've talked about our customer strategy and growth opportunities. The key underpin of those are the technical foundations within our personal lines business. This is a price-driven, deeply technical, highly competitive market. Our technical foundations need to be exceptionally strong to compete, create returns, and win, and I'm pleased to say they are. First, technical capabilities. We believe we have the largest and most experienced pricing team in the market. Second, we have recognized customer capability and service with a lead over the market in NPS and brand. And third, we have an experienced claims team and are investing further to enhance journeys and improve indemnity outcomes. And finally, we've continued to improve and simplify our business, reducing our product estate by two-thirds in the last two years.
This gives us the foundations upon which to grow profitably and sustainably. We have considerable capability in data science and machine learning, not just in pricing, but across the value chain to support these foundations. In data science, we have over 70 analysts and machine learning engineers dedicated to personal lines, and via Aviva Zero, we're now looking to deploy the next generation of AI and machine learning models to step change our market competitiveness.
In pricing and underwriting, we deploy real-time price optimization across all retail, motor, and home products and brands. We utilize well in excess of 1,000 individual features sourced from 40 external data sources, blended with unique internal customer insights and our significant claims data assets, which produce highly granular and accurate views of projected costs. In 2022 alone, we added 27 new features, including road segment-level traffic patterns and driver behavior.
In customer service, we use natural language processing and speech analytics to deliver a better, more personalized customer experience and greater efficiency. And lastly, in claims, over 80 claims decision points are supported by data science to drive optimal decisions, fraud detection, indemnity, and improved customer outcomes. In isolation, each of these is important, but it's the connectivity of this circle that is key. It is here that we have clear strength. In the speed with which we ingest a vast range of data points, automate identification of trends, apply judgment and our insight, and use these to deploy prices that are predictive of future claims costs, not just models of the past. 10 years ago, we started deploying real-time price optimization with our granular multi-layer peril rating.
five years ago, we were the first to start deploying machine learning live into our technical pricing, and we continue to evolve, work, and deploy fully automated machine learning models that are more predictive of future claims costs and respond rapidly to changes in claims or market trends. Given the depth of experience sitting around our technical strengths, this is a capability we will continue to invest in and maximize to support our strategy. Moving to our operations. Within our motor claims team, one of our differentiators is Solus, our wholly owned car repair network. It currently manages 36% of all our motor claims, while our approved network of motor repairers more widely, which includes Solus, manage around 80%. Solus gives us the best capability to serve our customers, with 12-day key-to-key times, faster than market rates, with a very low complaints rate.
The ability to manage supply chain costs with lower average costs than the market, and more recently, reduced supply chain disruption through digital pre-diagnosis and 24-hour operations. For context, Solus has about 1,000 staff across 21 sites and operates nationally aligned to volume density. We have a deliberate claims routing strategy to Solus, with expansion plans to move its coverage of our motor claims to 50%, with our planned new sites highlighted here in the Southwest and the Northeast of the country.
On inflation, we are in exceptional times, not unprecedented, but certainly not market conditions, the like of which we have seen for many years. Our leadership team have significant depth of personalized experience and have been through many market cycles. This, combined with our technical foundations and sophisticated feedback loops, gives us a strong platform to deal with what has been a challenging inflation environment.
We acted quickly, we recognized the emerging issue in September 2021, and reprojected our forecast scenarios every two weeks through Q4 2021 and 2022. Clearly, a key response has been our disciplined and early action in rating, reflecting our forecasts. In Q3, Amanda referenced, we have increased motor new business rates by an average of 15% and home by 8%. These equivalent numbers are now +20% for motor and +13% for home, as we have continued to apply rate in the fourth quarter to mitigate claims inflation. Rate is not the only lever to combat inflation. Supply chain control and efficiency is a key asset. This gives us better, deeper data into the supply chain, enabling us to segment costs, not at a macro level, but in a granular way.
For example, we identified the vehicle manufacturers which were being most impacted by parts supply chain disruption and have targeted inflationary loadings to reflect such granular insights. To our fourth pillar, sustainability. We are committed to playing a key role in the delivery of the Aviva sustainability ambition. In climate, we're working towards net zero across claims and underwriting. In communities, we're focused on inclusivity, founding an industry-wide working group to tackle that subject in the context of the cost of living crisis.
And we've made great progress on sustainability. We're just below 40% of women in senior management positions and engagement scores, the highest ever in Personal Lines. We also consider sustainability through a business lens, which brings me on to innovation. We recognize that our markets are changing, and with that comes both opportunity and the need to future-proof our business.
Aviva Zero takes our technical foundations to the next stage, having three core features that we have built. First, a leading personal lines tech stack. Second, transformational pricing, speed, and sophistication. And third, a sustainable motor proposition, where we track customer appeal, iterate, and scale up. We've already sold more than 65,000 policies with GBP 30 million of GWP since launch less than 12 months ago. Together, these give us significant advantages dealing with instant real-time data. For example, we can take a trading decision, make the change, fully test and deploy within 10 minutes, and see the impacts immediately. We're excited at the prospects here, and Zero will be a vital part of our retail growth plan. So exciting times for the personal lines business, and with that, I'll hand back to Adam to close and take us into Q&A.
As we've demonstrated today, we have strength across all the elements of customer, brand, technical foundations, retail, claims, supply chain, and diversification. This provides us with a robust platform for profitable growth, and we're confident it can be delivered. Let me leave you with why we will win. Our personal lines business has headroom to grow in profitable and actionable growth opportunities in attractive market segments, particularly retail and high net worth.
It has a scale portfolio already delivering strong performance against the market and competitors in a challenging environment. It has leading diversification across both products and distribution, with deliberate, targeted brand and customer segmentation, powered by the number one brand in the market. It has a deeply focused and experienced team, bringing excellent technical foundations in key skill sets such as pricing and machine learning, deployed right across the business.
It has industry leadership in sustainability, and finally, a key role in contributing to the wider Aviva Group, providing cash, operating profit, and crucially, access and growth to mass market and mass affluent customers. We're proud of what we've achieved in our personal lines business so far, but also genuinely excited about where we can take the business next. Thank you. With that, I will hand back to Charlotte.
Thank you, Adam. Q&A. If you would like to ask a question, please raise your hand. And because we're live beaming this, please wait for the microphone to come to you and then clearly state your name and organization. We have lots of you here today, which is really great. So in order to get round everyone, please could I ask that you limit your questions to just two parts, and obviously, if we've got time, we can come round again. Also, please focus your questions on this subject matter, because that's also an important point. So with that, who wants to go first? Ooh! Do you want to bring just here?
Yeah. Thank you. Good morning. This is Ashik Musaddi from Morgan Stanley. Just a couple of question. Could you just remind us about your reinsurance strategy in the personal lines business and what you're seeing at the moment in terms of... Is it going to be a drag in terms of margins? That's what we are hearing from the reinsurers. So any color on that would be helpful. And secondly, with respect to inflation, I mean, clearly, Direct Line gave some update last week, where they mentioned that inflation has picked up again in fourth quarter versus third quarter. Because in third quarter, there was a view that inflation pricing is more or less matching each other, but in fourth quarter, things went backwards again. So what are you seeing in terms of inflation versus pricing for your own book, both in motor as well as in home? Thank you.
Okay, so let me take the reinsurance first and then-
I'll take that one.
... hand over to you for the inflation question. So look, reinsurance, it's been a topic that's been out there. We've really had a difficult renewal seasonal round, hardest market, I think, since about 2001. Particularly if you think of the cat cover there, the markets really didn't open up until just before Christmas, which is very much unprecedented. So I think if you look, and the sort of data that we're hearing is that across property cat loss protection, if you risk adjust it and look at the inflation for XOL, it was as much as 75% price increases. Now, we achieved pricing at a fraction of that, I assure you. Terms hardened significantly across the market, but we made very few concessions and have fought very hard to keep consistent wording.
So our cover is in place. Our placement is complete. That said, there were some changes to the structure compared to the previous year, both in terms of higher retention and more limited reinstatements. These changes were necessary just simply for the market conditions that I've explained. It does mean a bit more risk has been retained, which has had a modest impact on our capital requirement, but we're satisfied that the outcome gives us a program that enables us to execute on our business plans as we intended.
I think, you know, that's not necessarily the case across the market, so we could see some change in some's ability to trade. Outside of the cat cover, for us, certainly, other lines, small or no rate increases. And then I think the other thing to watch is that the motor bodily injury reinsurance comes renewal halfway through the year, so that's another point to watch. But overall, we're happy with the placements.
Inflation?
And if I take the question on inflation, you asked about the bridge between the third and the fourth quarter. I did note that we did see some rise up in the fourth quarter, so the 8%-10% for motor became 9%-11%, but it was 9%-11% for home in the third quarter and 9%-11% for home in the fourth quarter. And what I'd point you back to here is I think it's quite difficult to compare and contrast across the market because everyone's sort of input set is going to differ. The example here being things like Solus that actually has a 3%-5% cost advantage compared to the wider market.
So the two weekly process that Owen talked about takes a very granular set of Aviva specific inputs to create effectively then an inflation number, which then effectively translates through to the technical price and the rates you heard Owen talk about in the market. But those inputs and outputs will, I think, differ by market participant.
Thank you.
Okay. Just find somebody. All got their hands up.
Thank you. Stephen Howard from HSBC. You've given the combined ratios for the retail and the non-retail. Can you break them down for us between the claims ratio and the admin ratio and the acquisition ratio for both the retail and the non-retail, so we can see where there is potential scope for improvement on those ones? And then secondly, the Court of Appeal gave a judgment on the mixed motor claims a couple of days ago. Can you give us your view on what the Court of Appeal has said and whether this is gonna lead to any particular increase in your reserves? Thank you.
I think Owen and I will take the first part together, and then I'll come back to the Court of Appeal question. We aren't going to give a granular breakdown of our combined ratios further than we've disclosed in the pack. Just to remind you what we've said, we've said our retail business has delivered low nineties, really across the cycle for a number of years, and our non-retail is around eight points higher than that, and we've pointed you towards a combined ratio for high net worth in the low nineties as well. I don't know, Owen, whether you wanna provide any further detail.
No, just to say that I think that eight points reflects the fact you get better retention rates, gets all the things you described around better acquisition costs, and, and you get to keep all the things in that value chain and build that, say, that better relationship with the customer. So those are the things that we wanna maximize and, and, and push there.
In terms of the motor claims judgment that came at the back end of last week, this is linked to effectively tariff claims through the, through the portal. I genuinely think it's too early to answer the, what's the read across into market practice. That judgment only came out, I think, on Thursday or Friday last week. It's fair to say, I think there is a question in the wider market whether that will lead to some increased claims farming as we saw pre, pre-reform, but I think very early to point to any specific data that supports that conclusion. So as you'd expect, we keep a very watchful eye on this and all of the other inputs into our models and look to price appropriately for the behaviors and trends that we see in the market.
Okay. Go over here.
Hi, thanks very much. It's Farooq Hanif from J.P. Morgan. Just on the whole technical expertise side, we hear a lot from different companies about machine learning, about techniques, and it's very hard for us to appraise. What can you give us in terms of, you know, the advantage that you think you have, either in terms of margin or speed to market, in terms of pricing over your peers? I mean, how can we judge that advantage? 'Cause it's obviously something that you started early. Second question, going back to inflation, there's been some concern recently about bodily injury inflation, and care costs. I'm just wondering, do you know what your thoughts are on that and how you feel like you've anticipated that? Thank you.
... Owen, why don't you take those?
So in terms of technical expertise, look, everyone's going to say they've got brilliant pricing teams. I think when I look at our capabilities, that track record of delivering change. So if you think about 10, 15 years ago when we launched Quote Me Happy, we grew very rapidly into the market with that launch, and that was founded on exceptional pricing back then.
I think when we look at our current level of capabilities, you know, I did ask our team to sort of add up how many rate changes or whatever we made, and they added up for Aviva Online, which is our motor PCW play, and it was over 100 last year alone, just in one product and one brand. So we've got lots of agility, lots of skill, and a track record of delivering it. I think the most exciting opportunity for us is our segment-level penetration, say, is 15%. Market share for low-risk drivers driving newer vehicles, our actual opportunity is to deploy those foundations in some of those other segments that Adam's describing. And then in terms of,
It's the inflation, bodily injury, and care costs.
Yeah, so in terms of inflation, bodily injury, and care costs, we look really closely at wage inflation indices to do that, 'cause I think that's obviously the bit that's front of mind. So we pick various different indices and then mark our rates to that. Slightly below damage, but certainly reflective of wage inflation.
Okay. We go over there.
Thank you. So first, slightly linked to the previous question, but you've been top three in your markets for a long time. Numbers one and two seem to be relatively entrenched, not only on AI, but generally, broadly speaking, where do you see your dis- your, your differentiating competitive advantage? The other one, if you can just quickly revisit on reinsurance. If you can give a little bit more clarity on the attachment points for cat risk, to the extent that you're able, that would be very helpful.
I'll just cover the reinsurance. So I'm not going to give you any more detail on reinsurance today. Any more detail we'll cover on the ninth of March.
In the first question, the sort of that competitive advantage or the differentiation, I'll ask Owen to comment more specifically in motor, but, you know, remind you, against the competitive peer group, you know, we hold advantages in home, we hold advantages in travel today, we've got some advantages in high net worth that we are building on, and so the, the headroom opportunity, I'd orientate you back towards motor. In terms of the levers, you know, I, I think we've tried to address a number of them during our remarks, but things like the brand obviously have a big competitive advantage. Aviva is a really well-known, well-trusted brand. When it appears in price comparison website rankings, then, you know, you saw that click-through advantage, or you heard, rather, that click-through advantage we pointed to.
I think the skills and expertise right throughout the business, then including coming into the claims and supply chain, things like the wholly owned motor repair network, there is only one of our peers that owns an equivalent network. The rest of the market effectively uses open market partnerships or opportunities. And so I, I think there are a number of proof points we've tried to indicate that we believe in aggregate will allow us to compete to win and gain share where it's sensible and prudent to do so. But, Owen, perhaps you'd like to just sort of talk about motor in more specific detail.
Yeah. I come back to when we look at... When I came into the business and looked at the penetration we've got in those low-risk drivers in kind of new vehicles, it's really leading, but we simply don't have that share in some of the other segments, such as Quote Me Happy Essentials, and some of those other parts of the market we're describing. I think the upside is considerable simply by taking our skills there and deploying them in that context to serve new customers that we're underrepresented in. I think the second advantage is around the depth of our deep data, so that the length of claims data we have, the size of those assets, the ability to deploy those learnings on top across the different parts of our business, gives us a real unique advantage there, too.
Okay. Just coming.
Thank you, Owen. Darragh Quinn from Goldman Sachs. A couple of questions. First of all, on the, you mentioned your pricing, if the-- and you've navigated the inflation better than some of your peers. How do you expect to play that in 2023 if the market does have to catch up and push pricing ahead of claims inflation? Will you take advantage and lag the pricing and grow market share and hit that GBP 3 billion target earlier, or will you look to, you know, focus on margins and hit that 94% target? And then the second question on distribution.
Obviously, you've benefited from, particularly from the Aviva brand being on the PCWs and building the retail, but post that pricing practices review, how do you think distribution actually kind of evolves over the next, you know, five to 10 years? You know, will PCWs become less important? The one kind of partnership you didn't mention was OEMs. Will they become important distributors of of motor insurance products in the future? Thanks.
Why don't I take the first part, Owen, and you take the second? So look, we believe with the rating numbers we talked about that we did successfully navigate the inflationary challenges in 2022. I'm not going to give you a forward-looking view of our pricing strategy into 2023. I think what I'd draw you back to is our need to balance the need to rate sensibly and cover for inflation.
And if we can do that and grow simultaneously, we will obviously look to do so. However, and, you know, I draw you back to what happened in motor last year, you know, where we can't do that and where it doesn't make sense to do so, you know, our primary target is a profitability, is a sub-94% combined target, rather than a pure top-line growth target. So we're always mindful of the ability to grow and look to find those sensible opportunities, but we need to be sensible and cautious as we do so.
... Yeah, so on distribution, I think if we go back to, say, pre-pricing practices, I think we called reasonably well what we thought would happen to the different components of the market as we went through 2021 to 2022. We're pretty pleased with how that landed. I think the way we think about it going forward is, given that price walking won't happen, you will see slightly lower renewal increases across the market. That's probably not that big. It's probably a small single-digit percentage, would be my estimate. That will cause renewal rates to rise, which is a good thing for big, established players and to build those trusted relationship with customers. I think you will, as a result, and actually, the size of the increase is generally what drives people to shop, see slightly less new business.
Do I think it will be that material in terms of overall strategic change? No, but it's certainly an effect that we'll... we'll see how that levels out over the coming year or two. That would be my thought on that. And then building to your question on OEMs, absolutely, I think there's a potential that that will happen, and that, that change will come.
I think we're preparing ourselves for it with things like Aviva Zero. So one of the reasons for that data layer that really runs through that platform is to be able to deal with connected motor data as and when that arises. I think also in terms of things like electric vehicles, we, we tend to overindex by about 40% on electric vehicles relative to combustion engines, reflecting our sort of low risk, newer vehicle segments. So I think we're well placed when that market does move in that direction. But yes, it's something we're watching very closely.
Thank you.
Hi there, Faizan Lakhani from HSBC. I have two questions. The first is on, since COVID, we've seen a reduction in claims frequency, potentially structurally, but a certain company pointed to Q4 seeing an uptick in claims frequency. What are your views in terms of reduction in claims frequency versus your pre-COVID level? And the second is on the household market. There are data points that suggest that there still remains a differential between new and renewal business pricing. At the half year, it was around 30%. Given the fact that you have quite a large back book, do you still expect to do some more work in terms of adjusting for that new renewal differential? Thank you.
Owen, why don't you take part one, I'll take part two.
Yeah. So in terms of COVID reduction and sort of systemic change, I think there's definitely something about mindset and thinking about where we are now and understanding the patterns now and projecting forwards. I think it's very easy to go three years back, but it's starting to get less relevant. So we're very much focused on projecting frequency out. I think in terms of what do we see in terms of frequency, the key things we look at are things like driving patterns, as I said in my presentation. Those are the sorts of things I look at for indicators of where I think frequency is gonna go, where the new normal is gonna settle.
I think actually we got it very close, actually, in terms of when we thought, when we, where we thought COVID would come out. I think, you know, everyone remains very vigilant on frequency as we go through 2023 to make sure those patterns don't shift, and if they do, we get ahead of them. And I think those lead indicators of driver behavior and traffic densities, that sort of stuff, will help with that.
Plus, you just might as well mention home frequency as well, because as you just talked about motor.
Oh, yeah. So on home frequency, we've certainly seen some home frequency drop since COVID, particularly things. Some sort of the slightly more attritional type perils. I think that has enabled us essentially to within our rating, to effectively take a little bit of. When we think about inflation, we said if inflation is 9%-11%, our home rating is at 8% against that. That's a combined renewal new business split. And the difference, of course, is the frequency reduction. So we've certainly rated ahead of inflation, in our view, on home.
So sorry, on home, we're hearing about pick ups on escape of water claims that had sort of come down during COVID. So would you have to readjust for that in 2023, or do you think we're gonna get to sort of a lower level of claims frequency on home as well from now on?
I think my general view on home is that with more people working from home more of the time than pre-COVID, which I think was the, the basis of the question, you know, perils that may have been picked up after a longer passage of time are now being picked up more quickly. And I think that's the sort of- that's the reference point I'd sort of ask you to think about with, you know, home viewed through the sort of customer lens. And then if we can move on to the sort of new renewal differences, we believe that we are fully compliant with general insurance pricing practices. We have obviously... You know, we plan to be fully compliant. We've submitted our returns to the regulator on that basis. I do understand the question on the basis.
I think there is, a, a body of, you know, if you will, the sort of press articles that speaks to a, a difference, and I think I'd draw you back to some of the inflationary points, because the way pricing practices needs to work is, you know, there can't be a difference from, new business to renewal for the same product in the same channel.
Does that mean the prices can't go up year on year? Well, no, because, you know, obviously inflation, you know, on a, on a purely like for like basis, will and has pushed pricing up in the market year on year. But I think that point about making sure that people are comparing like for like, apples for apples, in terms of the product and the channel when they're drawing those conclusions, is, I think, an important read-through. Ultimately, you know, we're awaiting regulatory feedback, as is the market.
Okay.
Howzit? Greig Paterson, KBW. In terms of motor, I mean, you're talking about you've done well, et cetera. What is your combined ratio for motor in 2022, please? And what was it in 2021? You know, 'cause you've given us a whole description, but we wanna know what the bottom line is to sort of, how can I say, do a hygiene test on that.
The second thing is, some of your peers have pointed to your Essentials product, which is a new product and therefore does not fall within pricing practices, comparison rules this year, having a problem in 2023 renewals because you'll have a comparison, and they argue that you've put in a new business discounting on that product this year. So I wonder if you want to talk to that theme. Finally, I'll stick another one. Do you want to say something on pet, whether you see that as an opportunity or not?
So why don't I take the first two, and Owen, you've got pet. We aren't going to provide a more granular product breakdown between motor or home. What I would say is, over the cycle, 10+ years, both lines of business have performed relatively close to each other, in line with the retail combined ratios that we've given you in the pack. And so, you know, just to remind you, the disclosures we've talked about is low 90s in retail, low 90s for high net worth, and an eight point difference to non-retail. I think in terms of peers and the Essentials product, let me just remind you, the Essentials product we built really to face into customers' very legitimate cost-of-living concerns.
Motor is one of the very few legally required lines of insurance in the U.K., and consequently, having a solution that solves for a very legitimate and genuine customer need, where they still need motor insurance, but want to spend a little bit less for potentially fewer features and options as a consequence. That's why we built Essentials. That's the purpose of Essentials, and I think that purpose, if anything, will be absolutely maintained through 2023. So... I'm not worried about the read-across to pricing practices. I'm worried about what was the genuine customer intent behind having a more Essentials... Some people call them values, we call it Essentials, but, you know, use the phrases interchangeably. That's why we built it, and that's what it's there for. Owen, on pet?
Yeah, look, pet, pet is definitely one that we watch and look for. In terms of what we might do there. I think right here, right now, I think there's only so many things you can do as a business, and I think what we're trying to do is bring focus and discipline. And right here and right now, as I say, motor and home, and the strategy we've outlined is where our focus is. But yes, one to watch and think about in the future.
Okay. Go ahead.
Hello, it's Barrie Cornes of Panmure Gordon. First question I've got, just slightly surprised you haven't talked much about customer satisfaction levels of the products you sell. Just wondered if you collect the data and how you compare to others. And second question, in terms of distribution, just wonder how you manage the conflict or potential conflict between broker and direct and PCW, bearing in mind you're looking to grow in a high net worth and direct. Thank you.
Do you want to pick up the first one? I'll pick up the second one.
Yeah, so I think our... I think Adam referenced some TNPS scores in his part, and I think, you know, we're pretty happy with where those are. I mean, obviously, it's a huge focus for us to try and get those TNPS scores moving forward over time, because that's how you build your brand and your relationship with customers. I think on the positive side, we've moved it forward with some really good digital experiences we're starting to deploy through the journeys, and Adam, again, referenced that.
I think on the negative side, on TNPS, certainly, it has been more challenging with some of the claims, conditions, and supply chain disruption on that side. But look, we're pretty satisfied where they, where they are, and we're also satisfied that we get actually broadly similar claims, TNPS scores across Quote Me Happy and our Aviva brands, which reflecting the fact that customers are understanding and happy with what they're getting.
I think your channel conflict question, I think potentially that was more of an issue in the past than it is today for us. We have a much more tightly defined view of the customer groups that we're now targeting through our direct and PCW brand and sort of customer segment strategy. And what we're looking to do with our broker channel is effectively complement that business rather than cannibalize it or fight for the same customers.
So that reference in the pack to a much more a much more sort of specialist and defined approach with brokers, where, you know, we're targeting areas of the market that our own direct and PCW brands either don't reach or we don't want to reach, but yet actually where that broker has specific skills, customer affinity, customer loyalty, or, or brand pickup. And so we think of them now as very complementary channels, but we absolutely do look through to make sure that we're not competing head-to-head for the same customer, for the same product in the same channel.
Okay.
Thanks. Rhea Shah, Deutsche Bank. The first question is, could you just provide, maybe some retention rates for home and motor, and what the direction of travel has been on those over the last 18 months? And then in terms of inflation in motor, specifically, are you able to break down damage inflation into different buckets and also talk about directional trends in terms of supply chain, for example, et cetera?
I mean, why don't I pick up the first part, and you pick up the second part? I think we did disclose some retention rate trends in the third quarter. Broadly, I'd say to you customer retention rates are in the sort of low 70s up to mid-90s. It does depend by product and channel. And what I pointed you towards earlier in terms of, you know, some of the impacts of pricing practices, is we did see an uplift in direct motor and a smaller uplift in partnerships home business. But in terms of specific data points, I'd guide you towards that range in aggregate.
Yeah, and then on inflation. So look, the process we go through is to take every type of inflation that we see, from used cars right the way down through the stack parts, paint, all the way through, including things like, as I say, for bodily injury, those wage indices. Weigh those and then multiply those through to come up with our views on inflation. So that's the process. That gets reviewed very regularly, and obviously, we do what we can to mitigate all of those impacts. That's where the 9%-11% comes from, and obviously, we have processes that as I continue to look at actual experience as well as our views, which bring those two together.
As we look forward, I personally think it will be quite similar as we look in, certainly on home as we go into 2023. I think, on motor, I think things like used car prices, we think it's been well seen in the market, probably are softening off a bit, which may give a tiny bit of a lower range as we look forward. But again, we're just gonna follow the same discipline and process we have done and make sure we are rating strongly and ahead of that.
Hi, thank you. Thomas Bateman from Berenberg. You mentioned the Lemonade partnership. What do you think they can offer Aviva? Kind of what do they do that, that you can't do at the moment? It sounds like you've got quite a good range of expertise. And just thinking about Ogden next year, yes, we've got wage inflation. I think generally, we think that the Ogden rate might go up. How big an impact is that on kind of total claims costs for bodily injury claims?
Well, I do the first part, knowing you do the second. So Lemonade partnership, I'd remind you, Lemonade is a insurtech from the U.S. Its primary focus in the U.K. is it launches is on the home renter's market. What do they bring to us that, you know, compared to the risk carrying or the underwriting capacity component, which is what we provide to them? I think it's a few things. I think it's access to a part of the market that historically that we haven't been in in size and scale, the home rental market. And, you know, I think if you think about that through the macroeconomic lens, you know, we do think that more people might be renting rather than buying over the, over the next sort of part of the cycle, the economic cycle.
So, clearly, that's a part of the market that we think is going to grow, where they have a legitimacy, understanding, and a strong track record, albeit in the US market. And I think their, you know, their proposition, their UX, their UI, their customer experience and journeys, I think are very strong. And I think there's ability for us to learn from those things and align them then with the areas of our perhaps more traditional strength, along with underwriting, pricing, risk selection, execution, claims management, et cetera. So I think it's a partnership that, you know, while small in the total context of our personal lines business, it's a good example of where we're trying to test and learn different parts of the market. Owen?
Yeah, just very quickly on Ogden. Certainly something we watch very closely in terms of understanding where we think it might go, looking at the various indices that sit around it. At the moment, we're not changing our approach, but again, it's one of those things that we watch, you know, month to month.
Yeah. Andy.
Thanks. Andrew Sinclair from Bank of America, two from me. Firstly, was just on the, on the repair network that you have. You talked about having a real lower cost advantage there. I just really wondered if you can put some numbers around that and, and how it's evolved over the last few years, in terms of the advantage. And secondly, was just on the 94% combined ratio target for personal lines. I see that's an IFRS 4 target. Just wondering if you can give us an idea, given that will be IFRS 17 in, in, in 2027. Can you give us an idea there? Thanks.
Thank you. So in terms of the repair network, I think I said in one of my earlier answers, if you compare Solus to the partner network, we work with the covers, then the sort of totality, 80% being all of the claims within that envelope, 36% is Solus. Solus has about a 3%-5% cost advantage. Is what is the number I pointed towards. Where does that come from? It comes from things like labor costs, it comes from potentially supply chain, and it comes from some of the efficiencies that we're able to drive in terms of, you know, when we bring cars in, how we route cars, and generally the efficiency end to end in that business. It has, and it will evolve.
And I, I think as a future-facing point, I'd ask you to think about is, you know, 75% of services engineers are now qualified to repair EVs. And clearly, you know, EVs, as they become more technological, if that's the right word, in terms of their makeup, then, you know, that will change, you know, both the cost of repair in the industry and the time it takes to repair certain things. And as a consequence, motor repair networks, whether they're owned by an insurer or in the open market, will need to evolve with some of those future tracing trends that Owen talked about in the context of mobility earlier. And then in the combined target?
Yeah. So then on, on IFRS 4 and IFRS 17, you remember from my video on IFRS 17 in December that we're applying certainly the net-net approach to reinsurance, so you won't see any changes from that. There are some, you know, modest differences in, in some of the treatments. As we move forward and give you more information on the IFRS 17 perspective, you'll see that, that these, these, how these translate, but it's, it's a very modest adjustment. So for, for the moment, it's easier just to, to focus on these numbers. He's got the mic now.
Thanks, Gordon Aitken from RBC. So first question on machine learning. You mentioned this, Owen, and I wonder if you just give us a sort of tangible example of what you mean by machine learning and how it would change a price, if that's how it works. And the second question on cross-selling, you mentioned that, and excuse a bit of skepticism, probably in this room, and we've heard a lot about cross-selling. It you know it probably in this room 20 years ago that was the start of it, but also downstairs not so long ago. Could you maybe put some metrics around that? So what proportion of the-- of your target, your ambition growth. Are you allocating to cross-selling? And maybe you could talk about products per customer. What was it a year ago? What is it now? What's your target?
I want you to the first one? I'll take the second.
Yeah. So I'll stop me if this gets too technical, but effectively, what people mean when I certainly when I talk about machine learning, is the ability to pick up what we call nonlinear effects in, say, claims data. So when we used to have things like generalized linear models, what you'd do is you'd have to kind of hand fit a curve through things. So you sort of say it goes like that, and then you pick a different factor, which might be age or whatever, and put a different line through it. What the nonlinear machine learning models allow you to do is to get a much more granular view of exactly how that moves in a sort of interaction between the two, if that makes sense.
So what we've been doing is, and doing our pricing, is build one of those machine learning models for each of the heads of damage, so for things like third party, for accidental damage, et cetera. And then we construct from a frequency and severity perspective with those models, a really granular view of every risk we write. So when I think about machine learning in terms of that risk cost modeling, it allows us to pick in a much more fine way, specific risks from other risks. And equally, you can deploy those sorts of skills in a whole different number of contexts around market and all sorts of different ways. But does that give an answer to how we're thinking about it? And so getting better at that allows you to pick risk better, essentially.
In terms of cross-selling, we're not giving more targets than we are in terms of the disclosures on page 17 of the pack. But, you know, what I'd draw you back to is, you know, we do have a strong cross-sell base where it's appropriate from a customer perspective to do so today. That customer base is growing. So some of the numbers you see on slide 17, you know, as we bring more customers into the business with more marketing permissions, I guide you towards, you know, retail customers tend to have marketing permissions in the 75%-80% range, so generally, you know, do give their permissions. That allows us to use the product and channel or solution rather, universe that Aviva brings to bear. And two very tangible examples.
One we've talked about in the pack, where for Aviva's pension customers, we are applying an automatic discount into price comparison website, motor sales. We are seeing both a new business pick up as a consequence, and, you know, and then some of those retention dynamics play through. And the other pilot that we are literally just starting is with the Succession Wealth business that we acquired in our life business that I think you're all aware of.
You know, they are often asked by their high net worth customers about their own personal insurance, and haven't, up until now, had the ability to solve, if you will, for that question from their customers. And so actually putting our high net worth business together with the Succession Wealth business to, I suppose, try and answer a legitimate customer, query or demand, is another good example of what's different now compared to the past. I think, Charlotte, we're maybe going to say more about this.
Yeah. At the March presentation, there'll be a little bit more, so we'll come back to it then.
Great.
Thanks.
Hey, James Pearse from Jefferies. Have you found that you've remained more competitive in the non-retail business as you've been putting through rate increases this year versus the retail segment? I'm thinking specifically on personal motor insurance, I guess, at a broker channel is less price elastic. And then second question, peers have been specifically referring to third-party claims inflation as being an issue in motor insurance. I'm just wondering if that's something that you've also seen, and if you can provide any more color in terms of what's causing that.
Do you want to pick those on?
Yeah. So in terms of competitiveness, actually, our competitiveness has changed in quite a similar way across the retail and non-retail parts of our motorbook. The large, the largest part by distance of our motorbook is in retail, so you can kind of take that, and it carries across, we've been pretty disciplined in both of those. In terms of third-party claims inflation, I come back to the process we followed. So absolutely, we have the two weekly forecasts that I described, but actually, we also have what I call a monthly valuation light. So we kind of get our actuaries together with our claims people, together with our pricing people, not to wait for each quarter to kind of spit out the result, but to really give us that granular view of what's going on.
Yeah, we certainly saw a slight uptick in third-party property damage as you look back through Q4. I think that's one of the reasons our eight to 10 went to nine to 11. So that will be within our 2022 numbers when you see them in March. And obviously, we took rating action accordingly just to pick those trends up. But yeah, the process is the important bit around how do you keep picking up and getting ahead of those trends and using multiple different ways of thinking about it, so you don't miss it on one, but you pick it up on another. That makes sense?
One more there.
Thank you. Stephen Howard from HSBC. Two questions, one on reserve buffers. Currently, do you think these are adequate in the light of the higher inflation, particularly on the wage increases side, on the bodily injury reserve buffers here, and any expected change to the prior year releases? And then secondly, on the reinsurance thing, obviously, you mentioned higher retention and other changes having an impact on the Solvency capital requirement. Can you quantify that a bit in the group context of the Solvency II ratio? ... Thank you.
Thanks, Stephen. So look, on both of those, I'm really not going to give any more detail today. You know, suffice it to say, the reserving factors in all of the inflation and all of the same data, as Owen and Adam have been talking about. So that feeds the reserve process, and then we conclude on the best estimates there. And as I say, on reinsurance, and it's whilst it has led to some higher retention levels and, you know, so slightly different reinstatements, that does lead to a bit more risk, which has been reflected in the will be reflected in the capital requirements, but we'll take you through that in March. We're definitely going round again at this point. We'll take this one as the last question, unless someone that's not asked a question wants to.
Hi, apologies in advance for this question. Farooq Hanif from J.P. Morgan. I've been asked to ask it, but can you talk about inorganic growth in UK personal lines right now and your views on that?
Look, everything you've heard today is, is around our core plans, which is all organic. And what we've always said is that, you know, our approach to capital is we, we will invest it, we will consider M&A, and as you would expect, we have a, a team that are screening opportunities. But the bar for M&A is really high. So, you know, as I say, everything that you've seen and heard today is around organic, but there's two examples that we've talked about, Azur and the AXA XL, where we have looked at moments where it made sense to bolt something on to, to, to lift, or accelerate our progress through the strategy. So that remains the approach, and it's, it's consistent with what, with what we've said.
But not really anything bigger than Azur and AXA XL?
No. Okay, I think I'm going to cut it there. So I'd just like to thank you all for coming in on this foggy day. And thanks very much to Adam and Owen, for everything we've been through today, all that detail. We look forward to speaking to you at our full year results, when you'll see even more information, on the ninth of March, and in the meantime, thank you again, and have a good rest of the week.