Strategy 13

Impact on QBE's business model and value chain

Climate-related physical risks

Increased frequency and severity of weather-related events: Climate change is expected to increasingly impact the frequency and severity of weather-related natural catastrophes. These risks are continually assessed through catastrophe modelling and underwriting analysis, which inform the Group's underwriting and reinsurance strategy, as well as the calibration of the catastrophe allowance within the business plan. QBE considers business activities as vulnerable to climate-related physical risks where they are significantly exposed to catastrophic weather events and contribute materially to the Group's annual catastrophe claims cost within net insurance service expenses and net insurance contract liabilities. Classes most impacted include property and property-related product lines, with varying impacts across perils and regions. In property classes, QBE's peril exposures are most significantly driven by hurricanes, tropical cyclones, convective storms, windstorms and floods across North America, Europe and Australia. As an indicator of relative exposure within the claims profile, the modelled aggregate net annual average loss (AAL) for climate-related perils for 2026 is $654 million and represents approximately 5% of the Group's 2026 plan net claims.

Following the exit of underperforming property portfolios and recalibration of retained property lines, QBE has experienced catastrophe losses at or below its established allowances in recent years. Other product lines that may be exposed to physical climate risks were not considered to be vulnerable where structural features such as coverage design or regulatory protections exist to limit susceptibility to volatility from these events, or where historical claims experience indicates that such events are not a primary driver of financial performance. This includes North America Crop, where the predominant product structure provides revenue protection to farmers.

Effects on Business Model and Value Chain

Value Chain Integration: Santos' business model integrates climate considerations across the value chain:

Input Stage:

• CTAP expenditure: $136m
• Intellectual capability in CCS technology
• Capital allocation framework that includes decarbonisation projects

Early-stage Activities:

• Geothermal exploration and direct air capture initiatives
• Low carbon fuels development
• CCS projects for Santos operations and potential third-party services

Production and Processing:

• Integration of CCS at Moomba facility
• Decarbonisation initiatives across operations
• Carbon credits generation (907,872 ACCUs received)

Marketing and Customers:

• Supply of lower carbon fuels to customers
• Carbon credits (ACCUs / SMCs) as new revenue streams

Business Model Evolution:

• Infrastructure-led growth model focused on building around existing infrastructure
• Potential establishment of commercial third-party carbon management services business
• Development of new low carbon fuels as energy markets and customer demand evolves
• Integration of decarbonisation across the first horizon of strategy

Our business model and value chain

We source crude oil (domestic and international) for domestic refining, and refined products from international refineries.

Value Chain Process:

1. Procurement/Supply

• Domestic and imported crude oil
• Imported refined products

2. Domestic Refining

• We refine crude oil into usable products – including petrol, diesel, jet fuel and specialty products at our Geelong Refinery

3. Primary Distribution

• We transport refined product to bulk storage fuel terminals by pipe or ship
• Pipelines and Shipping

4. Storage

• Terminal storage
• Terminals are typically located near major metropolitan, industrial and mining centres (closer to end customers)

5. Secondary Distribution

• We transport product from terminal to retail sites and commercial end customers
• Pipelines, Shipping, Trucking

6. Fuels Marketing

• Commercial customers (Commercial & Industrial)
• Retail customers through retail & convenience sites (Convenience & Mobility)
• Fuel and convenience items are sold to retail customers through a nation-wide network of retail & convenience sites

Viva Energy operates through three distinct business units:

Convenience & Mobility – Australia's largest convenience retailer. Viva Energy owns and operates the largest fuel and convenience network in Australia under OTR, Reddy Express and Liberty Convenience brands. Together, these brands offer a comprehensive fuel and convenience offer, with many stores including quick-service restaurants and a broad range of fresh food alongside traditional convenience offers.

Commercial & Industrial – a resilient engine of value. Viva Energy provides tailored energy solutions for customers across a diverse range of commercial and industrial sectors. Our value-led, customer-focused strategy leverages our national network of infrastructure to ensure reliable supply of fuels and specialised products and services to meet the evolving needs of our customers.

Energy & Infrastructure – refining, importing and delivering energy to Australians for more than 120 years. Viva Energy owns and operates a strategically located Refinery and broader energy infrastructure at its Energy Hub in Geelong, Victoria. This infrastructure, critical to managing a reliable and competitive supply of traditional and new energies, is supported by a network of nationwide import terminals, distribution facilities and expert supply chain capability. As the future energy mix evolves, we will continue to develop our Energy & Infrastructure business, leveraging core capabilities to develop new energies for our customers.