Hello and welcome to this Asset TV Insurance Asset Management Roundtable with me, Mark Colegate. Today we are focused on the outlook for infrastructure as an asset class, both equity and debt. To discuss that, I'm joined by three experts here in the studio. John, let's start with you. Can you tell us a little bit about when and how Manulife got involved with infrastructure investing? What do you cover?

(John) Sure, so I've been with Manulife since 2001 and we've been running the infrastructure program since then and decades before. And part of that is many life companies, their portfolios are dominated by debt. We're making 50-year promises selling life insurance. Infrastructure is a great place to make 20 and 30-year loans. And so that's the origin of our $50 billion global infrastructure debt program. We also found that on the equity side, it's a great resilient asset class that performs well when you need it to. And so on that side, we're $20 billion in infrastructure equity, giving that kind of low volatility cornerstone to the alternative equity book.

(Mark) Now, you're at Manulife and John Hancock as well, so big insurance companies in North America, are you running all of that money in-house or do you open these programs up to third parties?

(John) Yeah, so on the infrastructure equity side of that $22 billion, it's sort of $ 16 billion direct and then $6 billion with other managers. And we found that we don't have a monopoly on good ideas. And in fact, while we love the control and the returns we get in the direct program, there's some things that are maybe higher volatility or we don't have the right skill set where we'd rather have the diversity of assets that you get in a managed portfolio or maybe it's a geography where we don't have boots on the ground and a partner will have that knowledge and insight and add to our performance.

(Mark) Thank you. And, Reena, Phoenix, how do you think about infrastructure? Where do you get involved in the decision-making over asset allocation, selection of managers, direct investments, all of that?

(Reena) Yeah, so Phoenix Group has about $240 billion in assets under management for our customer book and another $40 billion that we manage on the balance sheet. So that's $280 billion of assets that we manage. Phoenix Group is the UK's leading retirement savings provider. And given our long-term investment horizon, we are well aligned to invest in infrastructure as an asset class. In fact, we've been doing that for the last at least a decade, if not more. But given that we've been around for over 240 years in the form of different brands like Standard Life, which people may recognize very well, given a number of people's pensions are with Standard Life. And also throughout the brands like Phoenix Group or Reassure, infrastructure is fundamental to how we invest our long-term savings and retirement money. So we've been doing that for a long time. Of the $40 billion that we have on a balance sheet, we've allocated about $1.2 billion to infrastructure assets so far and a large number to renewables in the UK.

(Mark) And is that all infrastructure equity side or a mixture of equity?

(Reena) So that's infrastructure debt. On the customer side, we also started allocating to infrastructure. We've got $800 billion in our customer heritage book. And we've made a further commitment to allocate about $2 billion to private assets of which infrastructure is an important component.

(Mark) Thank you. And Roman, in terms of LNG, it was a huge business. Which part are you focused on? What are you using infrastructure to do for you?

(Roman) Yes. So I sit in the institutional retirement division, which does the pension risk transfer business. So that gives us effectively, we take on long-dated pension liabilities and that effectively gives us the capital to invest in assets. Generally, I think we're looking for long-dated high credit quality assets. We have a stable source of liabilities. That's why we can also invest in illiquid assets and benefit from the liquidity premium and infrastructure is very much one of the asset classes that are in the mix and that we invest in as part of our overall allocation to assets. I think similar to what Reena mentioned around, I think there are sort of on balance sheet book. That's predominantly in the debt form because that's from a regulatory perspective, the better asset for us to be backing in your liabilities. We selectively play in equity, but that's a smaller proportion.

(Mark) And we've all talked about infrastructure in the round. But John, it's covered by infrastructure. Right. I mean, how broad a definition do you have of it?

(John) Yeah. So we've got 300 borrowers in the debt book and maybe 80 portfolio companies in the equity book. There's a high variety of what's in there. For our program, energy transition has been a central part of it, whether that requires utility lending or gas-fired power plants that helped America get off of coal, then wind that helped us be the first economic renewable, now solar, now batteries. So there's a large part of energy transition in infrastructure because your asset will be regulated or maybe you'll have a 20-year contract for selling your output. So you're really protected against economic cycles. The same thing would be true of public-private partnerships, where again, you 'll have a 30-year concession with fixed profit margins that are very stable. We then go into other sectors like sometimes in the North American context, pipelines can be in-bounds or out-of-bounds. More recently, digital infrastructure has been very important. Telecommunications, towers, fiber, data centers, all of that whole ecosystem. And then you'll get some one-off services that are essential and you say, "Hey, that is something where there's stable demand and I'm sure that this is going to be a low volatility investment. Let's dabble a toe there as well."

(Mark) I'll just get a quick feel from Reena and Roman. Anything that you'd add to that list or are there parts of that list that you, into which you wouldn't stray?

(Reena) I think for us, there is a difference in how we invest with balance sheet and infrastructure because we are bound by Solvency II regulations there. So for those assets, it has to be fundamentally credit-only investment-grade, long-term maturity, no spends. The attraction of that asset class is really the predictability of the cash flows. On the policy hold aside, we are looking at a variety of assets through different types of funds and that includes a focus in core, core plus and value-added infrastructure. So the dynamics are dictated by insurance regulations in terms of how we invest for our customers versus how we invest for the balance sheet.

(Mark) And Roman, in terms of focus on that balance sheet, but it obviously really stressed the importance of high-quality bonds essentially in that. But within that, do you find plenty of high-quality bonds in the digital space as well as in the more traditional definitions of infrastructure?

(Roman) Yeah, absolutely. I think we are trying to set up in principle to look across the piece. So traditionally, I mean, there's social infrastructure, economic infrastructure, clearly energy transition is a big theme for us and we have been investing for a long time in this back in 2017-18. For example, some of the offshore wind-type of transactions were provided quite sizable investment opportunities, solar and so on since then in that space. And then clearly digital is very much a topic. We are looking at, again, as Reena mentioned, I think some of the challenge we have in terms of engaging even more in that space is that regulation skews our thoughts, focusing on investment grade and especially emerging technologies where, I guess, by definition of them being emerging, there isn't that long through the cycle track record. It's harder to get investment grade ratings on those and that's the things that are harder for us to access at this point. So it's very much something that I think we are keen and constantly evaluating how there are ways we can get engaged.

(Mark) Now, all of you have mentioned the long-term nature of some of these liabilities that you're looking at and therefore the ability to take these very long term views. Reena, on the bond side, can you sort of talk through what your definition of long term is at Phoenix group? And what does that mean for how much liquidity you need in some of these assets? Because if I look back at the years, lots of chatter about the illiquidity premium. And I guess that might look quite attractive if you're investing on a 70-year timeframe, but probably not something you could take advantage of if you're investing on a six-month timeframe.

(Reena) Yeah, no, that illiquidity premium is very attractive to us as long-term investors bringing in patient capital into the infrastructure space. So from our perspective, what are we using infrastructure investments to do? They are backing our long-term liabilities, pension liabilities. And these could be running all the way up to 50, 60 years in the future. So we are looking at bonds from anywhere between 10 to 25-year maturities.

(John) And maybe to double click on Reena's point, I think what's lovely too is the taxpayer benefit that we bring when Reena and Roman and I are making 20 and 30-year loans on capital intensive assets like a new hospital, a new highway, a new wind farm. The ability of the utility and the ratepayer to repay that over 25 years instead of five years is critical for delivering affordable public services. And so we meet frequently with regulators who are very eager to see us get involved because we're the long cheap money that helps meet their public policy goals. So I think there's a lovely symbiosis on both sides of what we do for our policyholders and for the communities we serve.

(Mark) Which I'll pick you up at that point. How do you work out what an acceptable investment return is for you? This is what's perceived to be an unacceptable amount of money to pay for this new hospital or road.

(John) Right.

(Mark) If I say my capacity as a taxpayer and a voter.

(John) Right.

(Mark) Because those things have sometimes been rather out of alignment when you look back over infrastructure.

(John) Right. It's the structure of the issue. And so if maybe a state or a province could borrow at Treasuries gilts plus call it 60, 70, 80 and a utility would borrow at plus 130 and then a non-recourse project finance loan might be at plus 200, plus 250. So there's a difference between a 4% coupon and a 6% coupon. But relative to equity charges that would be looking for a 15 to 20% return, we 're still wonderful value if you can bring us in to deploy. And then frequently we're brought in because the public sector is looking for the private sector to bear the on time on budget delivery risk. So when we're getting paid an extra 100 basis points, we're also taking the risk that that wind farm or solar farm gets built on time and delivered on spec. And if it doesn't, our customer, the project company, eats that cost overrun. So that's kind of the value transfer.

(Mark) Again put in my tax per hat on. Right. Doesn't this all sound like a government doing off balance sheet finance? And frankly, the British government or the US government or the Canadian government could borrow a lot cheaper from the markets than it could borrow from Manulife or Phoenix Group or...

(John) So I don't think you're a US federal taxpayer nor are Roman or Reena. So I can't thank you for the big dig, which was a big tunnel under Boston that had an original budget of two and a half billion and came in at 14 billion. And that was because it was public sector, open book, cost plus procurement where you have to hire the low bidder and if they pushed you a very loose ragged contract, well, the price seems so good. Let's take it. And then they say, oh, did you want on-ramps? That's going to be a bit more and your two billion turns into 14 billion. And so public authorities can for sure borrow at a lower cost of funds, but we've seen cost overruns in the public procurement process be bad value for the taxpayer. And so that's really the key to project finance and private delivery of infrastructure is that you're moving that responsibility for delivering on time on budget to private sector entities and not having a public authority get overwhelmed by contractors who take advantage of them.

(Mark) And Roman, sorry.

(Roman) Yeah, maybe just to add, I mean, there's also, I think, I mean, there's a genuine risk transfer effectively happening here. I mean, we have not just... I mean, it's not explicitly guaranteed or even implicitly guaranteed the performance of these assets by the government in most cases. So that's why from a rating perspective, typically these assets or a lot of the financing infrastructure to be sort of just about investment-grade or BBB, BBB-minus. So there's definitely scenarios where things can go wrong and the government wouldn't be on the hook. So there is different than effectively something which would be explicitly guaranteed by the government or outright financed by the government.

(Mark) Okay. So one, I suppose this has brought us a little bit into sort of, if I can call it political risk. And I think let's sort of just broadly, the risks in infrastructure at the moment. So really, can I, I mean, fundamentally given, I mean geopolitics feels that it’s right up in the air at the moment. I think it's fair to say without going to... It's got more and more detail than that. But it does raise the question of just how safe is infrastructure as an investment? I mean, if you look back over time, I mean, maybe let's focus on the equity side. We talked quite a lot around the debt. But how secure is it as an investment for policy holders?

(Reena) So if you look at long term returns of the asset class, right, they've been depending on which segment of infrastructure you pick. I mean, we talked about core value-add and opportunistic. The core infrastructure, assets that have utility-type characteristics, so predictable cash flows, low leverage, inelastic demand, all of this can lend itself very well into providing exposure to assets that have low risk, so less volatility, less correlations versus other asset classes that we have exposure to in our portfolio and predictability of returns. So to us, it's quite intuitive as to why you wouldn't have that type of exposure for our pensioners, for our long term investors. And we do. So we are allocated to infrastructure equity. I talked about having an allocation in our heritage insurance portfolios is about 800 billion committed to infrastructure equity, and we're looking to do more for our DC pension scheme investors through the one to two billion that we've committed into private markets.

(Mark) And just on that side, how much does the demographics of that part of the business affect what exposure you want to have to infrastructure? And also, is that demographic age is the point that you want to perhaps start moving out?

(Reena) Yeah, it's something that we pay a lot of attention to what is the average age of our customer, and therefore how are we allocated in terms of our investment book into delivering to and through retirement security for those customers. So in the context of ensuring an element of consistency in portfolio returns, investments in infrastructure and themselves quite well, to investments from the policy holder book, from the customer book, and the predictability of returns there, the uplift that could come through strategies like opportunistic infrastructure. So we talked about themes like renewables, digitalization, more around demographics, so hospitals, care homes, social housing. It's a story that lends very well, both in the accumulation stages in terms of providing that inherent cushion against market volatility to some degree, and then also potentially, and we have to look at how this may be lending itself to the through-retirement phase in terms of the de-cumulation phase that you talked about earlier.

(Mark) Thank you. Roman, you were talking certainty on the bond side, there's obviously these very long-term investments that you do. So more recently, there's obviously been an issue with a spike in inflation a couple of years ago, and it's still running a little bit higher than central banks would like. How much inflation protection can you build on the bond-side of infrastructure?

 (Roman) I would say the majority of the exposure that we have is not explicitly inflation- linked, but the underlying assets clearly produce a return which is at least sort of typically broadly correlated to inflation. There might be time-lags, and so on, maybe between how quickly things can be passed through. So I think from our perspective, it's clearly something, when we invest in the debt, we look at also what is effectively the exposure to inflation shocks in how far can the revenues that the project sort of generates in how quickly can they adjust to inflation. So if there's, for example, a significant cost inflation that would impact how costly it is to maintain the underlying infrastructure, how effectively could that be covered by then-increased revenues? And that's one of the parameters we look at when we evaluate against the stability of the kind of debt that ultimately we would be providing against the project.

(Mark) I think a point that it's almost the underlying business can link its revenues to inflation, and the right measure of inflation of the project involved, they'll have the cash flows to pay the bonds, but looking to the bonds themselves, as you said, they're not inflation links, those coupons on the whole. But just out of interest, what sort of long-term assumptions do you make about what inflation is going to be if you're looking at over 20, 30 years? How do you just calculate that? That must have a big role on whether you think that's a real yield, you're being offered or a nominal yield that could go horribly wrong on a 15, 20-year view?

(Roman) I think we try to generally hedge this kind of risk. It's not something we can take an outright or we take a material outright view on. So we have some of our pension obligations, they are inflation-linked in some shape or form, and at which point in time we hedged it, either through buying inflation-linked assets and there's gilt linkers and various options clearly there outside the infrastructure space or the derivatives that we can use to basically get that inflation hedge. And then there are some that are nominal at which point, of course, we only need sort of nominal assets. So I think we have clearly, we have some views around underlying inflation, house price inflation, how maybe RPI, CPI hedge and all these things kind of develop, but ultimately we are trying to be broadly sort of hedged and protected against the inflation risk as opposed to sort of taking views on, this is the real yield or that's going to be the inflation rate. Because I think if you had asked people in 2021, they would have seen forecasted inflation and rates. I think clearly very few only predicted quite how quickly it would rise and that didn't impact us materially in terms of our ultimately sort of balance sheet strength because fundamentally we are hedged against most of this risk.

(Mark) Thank you. John, I want to come back to energy transition renewables because you touched on them. We've also been talking about political risk. What sort of impact does that have on the pricing of some of these assets? I mean, I think something like the inflation reduction act, which seem to push a lot of money through into energy transition renewables.

(John) Yes.

(Mark)The current US administration seems a lot, certainly the verbals are a lot less key on that.

(John) Right.

(Mark) Because that does the pricing and the risk of these things. That's the question. Our program is focused in US middle markets. So I'll focus on that area. And it's a program.

(Mark) Can you define middle market?

(John) Yeah. For us, that's going to be investment sizes of sort of 100 million to 500 million. What we find is you need to remember that the US, in addition to being the largest infrastructure market in the world, it's also very fragmented and much happens state by state because it is a federal system. So there's a very big opportunity set that's very fragmented. So there's lots of opportunity to write smaller checks. And then you can choose the one that you like the best. So that's where we focus. And that's a program we've been running 15 years for just Manulife, and then we've opened it up to outside investors. And it's even bigger and better. A lot of the energy transition has happened because a state regulator says, "this is good for my state. This is what my residents want and let's advance it." And so during the first Trump administration, we set records for new renewable energy deployments, even though the federal government wasn't that fussed about and interested in wanting to spend time there, state regulators sure were. And they set up regulations where if you build your solar park or your wind farm here, we're going to give you a 20-year contract with the local utility. We continue to do that. We can pick 23 different states in the United States where if you put your solar park close to the edge of town, they'll give you free grid access. And you now have preferred economics because you're not competing against a 9-cent wholesale price of power. You're competing against an 18-cent delivered cost of power. So we go to the customer and say, "How about I deliver to you for 15 cents? You'll save 3 cents off of the brown power market rate and you're fully renewable." Now, that's because we're a small strategy and we can go to where regulators are giving us advantaged returns. So I think that's kind of, I guess the answer is it's a big sandbox. It's a fragmented market. Pick your spots. There'll still be plenty of opportunity.

(Mark) Do you have a sense of how much more growth potential there is with that strategy? Or is there a point where you're looking at it thinking, "Well, we’ve got till 2027 to nail something down but after that, the best is behind us”?

(John) Broad numbers, electricity mix in the United States, up until 15 years ago was about 50% coal-fired power. It had just been heavily coal-fired power for a long time. We've now been able to bring that down to like 20-25 percent. Wonderful. Gas-fired power has gone from like 20 percent to 40 percent. So we're still heavily thermal. But fortunately, renewable energy has gone from like 3 percent to like 25 percent of supply. So we can see the shift. Gas-fired power has about half the carbon of coal. We're moving coal out of the stack. Demand from data centers for electricity means we're going to need that gas-fired power for longer. But we're continuing with solar additions, wind power additions, and then battery facilities that help us make the most out of the renewable power we have. So I see all of that continuing and we're continuing with renewable energy deployments in the U.S.

(Mark) Roman, can I get your thoughts around energy transition and where you see some of the opportunities?

(Roman) Yeah, no, I mean, I think that, I mean, yeah, there's a lot of noise around this. Obviously, the whole U.S. language has sort of changed a lot around this. But ultimately, I think the hard economics in the meantime sort of actually support solar and wind, I think sort of, in my mind, in some sense, a good example of where governance subsidies, maybe in the past, have actually led to a scenario now where these technologies have developed so much that they're economically efficient to use. And I think sort of Trump and coal, the ideology might be not particularly pro-ESG, but ultimately, I think they will not do something which is uneconomic for them, which is maintain other sort of more costly energy sources just because they're not ESG. I think that would be sort of a step too far in our view. I think where we see opportunities clearly also, I think digital, I think it was already mentioned, that's the new arms race in terms of infrastructure investment. I think globally, so everybody I think wants to invest a lot in that space that I think for the first time will lead to a material increase, I think, in energy demand globally compared after flat lining for a number of years. I think that will require significant kind of infrastructure investment in all sorts of parts of sort of the energy transition chain. But I think one of the things that we are quite interested in is, for example, opportunities to partner also with hyperscalers, sort of the big tech firms like Amazon and so on, sort of power purchase agreements effectively, they want sort of renewable energy often as a source of energy also to meet their sort of net zero type of commitments and therefore they are willing to get the energy for a data center to sign sort of a long- term fixed-price kind of contract in order to get the energy and that could be interesting because that gives us sort of a sufficiently high credit quality cash flow for us to provide kind of cheap financing to effectively sort of back that renewables and investment which is sort of linked and specific to the digital infrastructure. So these areas kind of are quite intertwined here.

(Mark) I want to come back to this on a second. Just before I do, Reena, as head of manager selection, if I look in the renewables space on the London Stock Exchange, there is an awful lot of stuff sat on very big discounts and I am sure they have got some great assets in and some, not some great assets sat in some of those funds but somebody is large as Phoenix Group, like 280 billion in total. Do you ever think as a strategy? “We should just go in and buy some of this stuff up. It is trading about 50, 60p in the pound.”

(Reena) Yeah, that is a fair question. I think fundamentally that discount that you see is typical of the investment trust sector and the sector has traditionally had some cyclicality in terms of the premium discounts that it trades at. So often over time, what you are seeing in the market in the investment trust sector is a reflection of interest rates going up in the UK and so the valuation of those assets has come down. Now, what we are committed to doing is not taking tactical bets on valuations and the assets. We believe in the fundamentals of the sector as a whole and we are committed to making infrastructure investments and we are doing that through our private market allocations, be it on the balance sheet side or on the customer side. So we are committed to funds, we are investing in infrastructure equity and through those funds we are getting exposure to all the key themes that are playing out, be that digitalization, global supply chains, dismantling of global supply chains, demographics or decarbonization. So we are taking the manager's ability to be able to provide us exposure to all of these themes and trusting that to deliver into long-term returns for our policy holders.

(Mark) Are those funds that you are talking about? Are those closed-end funds, not publicly quoted?

(Reena) Yes, so VRLP is in those funds.

(Mark) What sort of length of life of a fund do you want to be? Again, I guess if it will certainly numbers out but if it was a fund with a three-year life it doesn't sound a great investment, 20 years might sound great but the flip side is the risk of what happens to all those assets over 20 years is hard to predict.

(Reena) So we are looking to invest as the sector evolves. Previously, semi-liquid funds were quite rare and now with the opening up of that opportunity set more and more providers are coming up with semi-liquid structures but previously we had to do it through closed-ended structures. Typically, the life, you would say for the closed-ended funds would be between 10 and 12 years but often enough you expected distributions to come back to you, post the investment period, so between five and seven years. The expectation was the capital would get returned over that period which you could recycle into other investments and opportunities but that's how we've evaluated in the equity space.

(Mark) John, just bring you in on digital infrastructure. What are some of the ESG implications? Because Roman touched on this growth of AI but one thing it does is it does use increasing amounts of power and it can be a matter of water. Yes. Let's call that a green liability somewhere. Does that sit on the Manulife balance sheet?

(John) It's definitely a push-pull because the artificial intelligence that it supports is making our lives richer, more efficient, more effective, faster. We know there's a social benefit there but absolutely this spiking electricity demand is a big stress on a lot of communities, and we see that in some denser population areas, I'm thinking continental Europe, restrictions on new data centers because they just don't want that intensity of electricity pull. Should data centers be moving to areas with more hydroelectric? Should they be moving to areas that are closer to rivers where there's more plentiful power and easier grid access? Yes, but then you don't get the low latency quick response time of an in-city data center. I think we're going to see some of all of the above. I would say on policy design, it's an interesting observation that Canada has abundant hydroelectric and low ambient temperatures and so would be a great place for data centers that don't need low latency quick response but they also have a carbon tax. Now you're seeing data centers being developed in Malaysia which depends on coal-fired power, but they don't have a carbon tax. So, if I don't own the thing I'm displacing, does the perfect become the enemy of the good and I can't invest in a lower carbon solution because that increases my carbon count and I don't own the thing that's getting retired? That's a segue into a different topic around how we're all evolving our goals for decarbonizing our portfolios and what's the right approach? Is it a carbon count? Is it a temperature score? But we're collectively as an industry I think we're trying to focus on nothing falling between the cracks and we want the entire economy to transition and balancing all of those things. I don't know if that resonates with you all.

(Roman) Definitely and I think there are some interesting opportunities also from this, for example the heat that's generated in data centers, I think there are technologies now that some of these heat could be used to provide district heating to some adjacent living schemes built to rent type of schemes and that's clearly more in the, for example, it would be more valuable and possible in the urban locations because that's where you could fairly immediately use that heat power. So I think that I always find it quite fascinating in that space, sort of one thing that connects to many others but in some sense also what kind of ingenious opportunities some of these challenges in some sense might create.

(Reena) I was just about to say that the laws of unintended consequences, you try to do one good thing and then there is a knock-on impact that you hope that in time you find solutions to these things but inherently I think we are as investors, as large investors, we are committed to our net zero targets, we are on a trajectory to get to net zero by 2050, we are hoping to decarbonize 50 per cent of our portfolio by 2030 and we hope our investments and our managers make those investments in a way that delivers into that aspiration.

(Mark) Do you ever, I mean again coming back to the politics of it but do you ever think, “okay we have got this contract to deliver renewable energy” and you talk through that example earlier but if you did it say to, you tie that up with a large, let's say, I don't know , say Meta, I mean I am not right, I am per se but a good illustration, and they have got a data centre and they are doing whatever, is there a danger you could get stuck in the middle of something where “the lights are going off in the town because those people have done the contract that is giving it to the big data centre up the road, what about us?”

(John) It is live right now Mark, we are seeing it right now in Ohio and it is that you have got a tension between data centre wanting to land, provide some jobs but not a ton of jobs because it is highly automated, the local government wanting to see the jobs come in but what if that causes my residential power rates to go up by 100%? Is that good for me or not? And frequently in local economic development you give the industry a discount on electricity in order to incentivize them to bring their factory to your town but it has never really made a difference on general purpose residential rates, well now it would. And then, “Can I get Meta to promise they will be here for 20 years, or might they walk away in 3 years?”, and so we are definitely seeing a push pull and I think to Reena’s point and Roman's point, sometimes that creates an opportunity where Meta wants to contract directly with us so that they never have to touch the municipal power supply and so if we can do it in the private sector and show that we solve their electricity problems, maybe that takes some pressure off residential supply.

(Reena) And coming back to the predictability of cash flows those contracted revenues are great for us because data centres are backed by a large corporate tenants with low credit risk lends itself quite well in terms of the investments that we make.

(Mark) Now we have almost out of time we have only got a couple of minutes left so I want to get a final thought from each of you, either reinforcing something that we have been discussing, a key point you want to leave us with or maybe it is a topic we have not bought up yet just give you an opportunity to set your store out of that. Roman I am going to start with you, I am going to move my way back down to the line and finish with John. So from your perspective, and everything we have chatted about today, is there anything crucial we have missed out, or anything you really want to underline from today 's discussion?

(Roman) I think we covered a broad range of topics, I think really well, so probably nothing sort of fundamental in you I would say. I think from our perspective I think infrastructure, clearly we see very much sort of has a place to stay in our portfolio if anything with this sort of overall significant increase in infrastructure that we expect to have kind of globally and also now with much more in Europe and the UK, I think we see that as interesting to provide additional opportunity for us to deploy our long-term patient capital and relative economics which are attractive but not excessive. So for us I think it is an asset class we look to an overall increase slightly over time but as an absolute cornerstone of our overall strategic asset allocation.

(Mark) Reena.

(Reena) So Mark, from my perspective, the UK investor is under allocated to infrastructure as an asset class. If you look at our peers in Canada or Australia, typically the portfolios would have between 5 and 15% allocated to infrastructure as an asset class. In the UK we're starting to commence that journey you know, for our policyholders, we have about one to two percent of the portfolios in infrastructure but there is a huge potential there. And with Mansion House 24 you know, we might be able to channel more of that into product assets and I'm looking forward to that.

(Mark) Just on that why is the Canadians or the Australians the Gold's standard I'm not having this having a pop at Australians or Canadians, they're all lovely people but just because they've got 15% why should we say if they've got 15, we'd be better than them if we had 17?

(Reena) I mean I wouldn't say better than them but look I mean, there are some secular challenges in relation to how under-invested the UK economy is in terms of our infrastructure assets, right? We've got aging infrastructure, we need more capex, people need more roads, more schools, more universities and all that investment will have opportunities to drive returns. There is a history of those investments being you know, being low risk, less volatile relative to other asset classes, having low correlations and providing better proof of concept in terms of the stability of returns through various economic cycles. So it's quite intuitive in terms of the benefits that allocation to infrastructure would bring to our portfolios.

(John) And maybe Reena, my last point is like the logic fits with lived experience. So we've got a well-developed mature infrastructure equity portfolio each of the last three years it's delivering net 11 net 12% in 25 and 24 and 23. Our large highly developed private equity portfolio is delivering like net 5 in each of those three years and every other investor I've talked to has is living a similar experience. In the high rate environment infrastructure has strongly outperformed other alternative asset classes and Reena talked about low volatility, that's absolutely true. More importantly, it's resilience that infrastructure equity portfolios show up and deliver attractive returns in the down cycles when you need them most and thats why the high allocations and why our firm keeps deploying.

(Mark) Quick final question there's more and more talk the US might be having or be close to a recession. So how did infrastructure do last time the US had a decent recession?

(John) In the global financial crisis it held up very well and met its target returns straight the way through, because so much was regulated or contracted.

(Mark) And a target return then is…?

(John) That was probably like a 10% target return for the portfolio and I'm talking about our portfolio but we're one of the top 20 infrastructure equities investors in the world, so it's probably a representative well diversified portfolio. Similarly, during the Covid shock 2020, it was our best performing alternative asset class, outperforming its target return. Similarly during the rates shock and inflation shocks.

(Mark) We have to leave it there. John Anderson, Reena Malharkhar and Roman Hederer, thank you all very much.  

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