Q4 2024 Hannover Rueck SE Earnings Call
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Ladies and gentlemen.
Operator: Ladies and gentlemen, welcome to the Hannover Rueck conference call on Animal Resort 2021. I would like to remind you that all participants will be in the listen-only mode and the conference being recorded.
Back to the <unk> conference call and it will resorts, which holds the plentiful and search and the Coca Cola.
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Speaker Change: <unk> not be recorded for publication of Buckhead.
Operator: At this time, it's my pleasure to hand over to Carl Steingel. Please go ahead.
Speaker Change: At this time, it's a pleasure to hand over to <unk>. Please go ahead.
Speaker Change: Good afternoon, everyone welcome to our earnings call on our financial results for the full year 2024 today's.
Carl Steingel: Good afternoon, everyone, and welcome to our earnings call on our financial results for the full year 2020.
Shorshak Rai: Today's speakers will be our CEO, Shorshak Rai.
Speaker Change: Today's speakers will be our CEO overshot our control.
Speaker Change: Payments youngsters at our Seattle.
Shaver: For the Q&A, we'll be joined by core Shaver and spin it off.
Claude Chévre: For the Q&A, we will be joined by Claude Chévre.
Speaker Change: And with that <unk> and <unk>.
Jean-Jacques: With that, and for the last time as CEO at Hanover Rueck, I hand over to you, Jean-Jacques, to summarize the business development of another successful year of our company. Thank you very much, Karl, and good afternoon online. I'm very satisfied with Hannover Rueck's performance.
Shaver: The last time as CEO.
Speaker Change: I hand over to you on track to summarize the business development of another successful year for our company.
Shaver: You very much.
Speaker Change: Good afternoon on the on my side.
Speaker Change: I am very satisfied with the head of the Reis performance in the 'twenty 'twenty four financial year.
Jean-Jacques: for financial year. the target of around 2.1 billion Euro. driven by favorable investment income, as well as a higher than expected reinsurance service result in both businesses. In other words, the operating performance was strong across all areas. Based on this positive development and the very healthy capitalization, we will propose an increase in the ordinary dividend. 7 euro per share complemented by a special dividend of 2 euro brings the total dividend to €9, an increase of 25% compared to the previous year. In PNC, we have successfully expanded our portfolio in an attractive market environment, resulting in a currency-adjusted growth rate in reinsurance revenue of 11%.
Speaker Change: The group net income slightly above two point to 3 billion Euro we have delivered on the increased target of around $2 3 billion euro compared to the initial target of around $2 1 billion Euro the outperformance is.
Speaker Change: Driven by favorable investment income as well as the higher than expected reinsurance service results in both business groups.
Speaker Change: The words, the operating performance was strong across all areas.
Speaker Change: Based on this positive development and the very healthy capitalization, we will propose an increase in the ordinary dividend to seven euro per share complemented by a special dividend.
Speaker Change: But two euro.
Speaker Change: This brings the total dividend to nine euro an increase of 25% compared to the previous year.
Speaker Change: In P&C, we have successfully expanded our portfolio in an attractive market environment, resulting in currency adjusted growth rate in the reinsurance revenue of 11%.
Jean-Jacques: The combined ratio of 86.6% sits very well within our target range, below 89%, reflecting the very good underlying profitability of our P&C portfolio. Furthermore, the impact of large losses was about 200 million euro below budget providing us with an opportunity. take a more cautious view on specific claims from older underwriting years, including the Russia-Ukraine loss complex. and also to grow our resilience. and reserving, at least in line with the overall growth of our book. In LycanHealth, reinsurance revenue was rather stable year-on-year, increasing volumes in morbidity and longevity were mainly offset by an accelerated runoff of our U.S.
Speaker Change: The combined ratio of 86.6% fit.
Well within our target range below 89%, reflecting the very good underlying profitability of our P&C portfolio.
Speaker Change: Furthermore, the impact of large losses was about 200 million euro below budget, providing us with an opportunity to take a more cautious view on specific claims from that older underwriting is concluding the Russia, Ukraine last complex.
Speaker Change: Also to grow our recession resiliency in the reserving at least in line with the overall growth of the.
Speaker Change: Our book of business.
Speaker Change: In life and health reinsurance revenue.
Speaker Change: <unk>, rather stable year on year, increasing volumes and morbidity and longevity were mainly offset by an accelerated runoff of our U S mortality business. Following their last recaptures connected to our in force management actions in 2018.
Jean-Jacques: mortality business following the last recaptures connected to our in-force management actions. Looking at the new business generation of 624 million Euro, we have been successful in seizing attractive business opportunities and the reduction compared to the previous year was mainly attributable to the extension of an individual large treatment. in the prior year, but also reflects our selective underwriting approach in longevity and the impact of regulatory changes on the financial solutions business in China. The profitability of our life and health business is very satisfactory. Experience variance was overall positive within all reporting categories and mitigated the reserve strengthening for pockets of our morbidity book of business, mainly in China.
Speaker Change: Looking at the new business generation of 624 million Euro we have been successful in achieving attractive business opportunities as a reduction compared to the previous year was mainly attributable to the extension of an individual large treaty.
In the prior year, but also reflect our selective underwriting approach and longevity.
Speaker Change: And the impact of regulatory changes on.
Speaker Change: On the financial solutions business.
Speaker Change: China.
Speaker Change: The profitability of our life and health business is very satisfactory.
Speaker Change: <unk> variance was overall positive within.
<unk> reporting categories and mitigated the reserve strengthening or pockets of our morbidity book of business mainly in China.
Speaker Change: With the reinsurance service result of 883 million Euro we have exceeded our target of more than 850 million Euro.
Jean-Jacques: With a reinsurance service result of €883 million, we have exceeded our target of more than €850 million. The return on investment of 3.2% was also very satisfying. Strong ordinary income is mainly driven by a combination of higher interest rates and a strong operating cash flow of 5.7 billion euros. Additionally, the moderate impact of impairments on real estate of €37 million compared favourably with our expectations, the change in ECL, as well as the change in fair value recorded in the P&L, had a minor impact on the results. Cost efficiency, as you know, is another very important metric for Hanover Rueck, and with a group cost ratio of 3.2%, we can confirm our continued success in maintaining our competitive Altogether, the return on equity of 21.2% highlights the company's very strong earnings power and the solvency ratio of about 261% reflects our company's very healthy capital.
Speaker Change: For the business.
Speaker Change: The return on investments of three 2% was also very satisfying strong ordinary income is mainly driven by a combination of higher interest rates and a strong operating cash flow of $5 7 billion Euro.
Speaker Change: Additionally, the moderate impact of impairments on real estate of 37 billion Euro.
Speaker Change: Favorably with our expectations change in ECL as well as the change in fair value recorded in the P&L had a minor impact on the results.
Speaker Change: Cost efficiency as you know is another very important metric for ahead of the REIT and where the group cost ratio of three two.
Speaker Change: 2%, we can confirm our continued success in maintaining our competitive edge in this respect.
Speaker Change: Altogether.
Speaker Change: Return on equity of 21, 2% highlights the company's very strong earnings power.
Speaker Change: The solvency ratio of about 261% reflects our company is very healthy utilization.
Speaker Change: Our strong capitalization is also the starting points for our dividend proposal for the 2024 financial year. It gives us the necessary flexibility to act on future growth opportunities and attractive market environment, while at the same time.
Jean-Jacques: Our strong capitalization is also the starting point for our dividend proposal for the 2024 financial year. It gives us the necessary flexibility to act on future growth opportunities in an attractive market environment while at the same time paying a growing dividend to shareholders. The increased ordinary dividend of seven euro per share reflects the favorable business development in 2024 and our strong confidence in future earnings growth as the seven euro figure will be the new baseline for our targeted progressive growth in ordinary In combination with the proposed €2 special dividend, the total dividend of €9 results in a payout ratio of 47%.
Speaker Change: Paying a growing dividend to shareholders decreased 40 to a dividend of seven <unk>.
Speaker Change: Euro per share reflects the favorable business development in 2024, and our strong confidence in our future earnings growth.
Speaker Change: The seven euro figure would be the new baseline for our targeted progressive growth in ordinary dividends.
Speaker Change: In combination with the proposal to Euro special dividend. The total dividends of nine Euro results payout ratio of 47%, which is broadly in line with historical levels.
Jean-Jacques: is broadly in line with his story. The proportion of retained earnings expresses our confidence in growing our book of business profitably at double-digit return on equity also going forward. Shareholders' equity is up by 16.5%. for the period, although the overall impact from interest rates and currency movements also quite positive. The CSM increased by about 6%, mainly reflecting the new business value generated by both business groups. We're very pleased with this development as it clearly exceeds our strategic growth target of more than 2%. The risk adjustment increased by 7.4 percent, mostly due to new business. the assumption changes.
Speaker Change: The proportion of retain earnings expresses our confidence in growing our book of business profitably at double digit return on equity.
Speaker Change: Also going forward.
Speaker Change: Shareholders' equity is up by 16, 5% increase.
Speaker Change: Is it driven primarily by the group net income for the period.
Speaker Change: So the overall impact from interest rates and currency movements was also quite positive the CSM increased by about 6%, mainly reflecting the new business value generated by both business groups. We're very pleased with this development as it clearly.
Speaker Change: Our strategic growth target of more than 2%, while the CSF.
Speaker Change: The risk adjustment increased by seven 4%, mostly due to new business in P&C.
Speaker Change: Assumption changes in life and health.
Jean-Jacques: Altogether, the growth in shareholders' equity, CSM, and risk adjustment highlights an attractive value creation in 2024 and gives us a strong foundation for our earnings outcome. Our long-term ROE performance highlights the fact that we're continuously providing our shareholders with attractive double-digit returns above the cost of capital, no matter whether we look at the 5-, 10-, or 15-year average. Our ROE performance also screens favorably compared to peers. As you know, we aspire to achieve not only a high ROE, but also a less volatile ROE. As you can see in the chart on the right-hand side of the slide, comparing the 10-year ROE performance with the market.
Speaker Change: Altogether the growth in shareholders equity CSM and risk adjustment highlights an attractive value creation in 2024 and gives US a strong foundation for our earnings outlook.
Our long term ROE performance highlights the fact that we're continuously providing our shareholders with attractive double digit returns above the cost of capital no matter, whether we look at 510.
Speaker Change: Or a 15 year average.
Speaker Change: ROE performance also screams favorably compared to peers as you know, we aspired to achieve not only a high Roe.
Speaker Change: But also a less volatile Roe.
Speaker Change: As you can see in the chart on the right hand side of the slide.
Speaker Change: Comparing the 10 year ROE performance with the market.
Jean-Jacques: We continue to deliver on this ambition and in the top left quadrant, Annover Rueck is well placed. with clearly above-average ROE and below-average volatility.
Speaker Change: Continue.
Speaker Change: To deliver on this ambition.
Speaker Change: In the top left quadrant anniversary is well placed with commodity above average and below average volatility.
Speaker Change: On that note.
Clemens: On that note, I'll give the floor to Clemens for some more details on that.
Speaker Change: If the floor to commitments for some more details on the financials.
John: Thank you John and good afternoon, everyone.
Clemens: Thank you, Jean-Jacques, and good afternoon, everyone. Starting with the development in PNC re-insurance, we have successfully expanded our portfolio, resulting in an increase in re-insurance revenue of 11%, adjusted for currency as well. The increase in net revenue was even slightly more pronounced as our INS business came in very strong and the volume of our retrocession program has been reduced. As the region's market environment continues to be favourable in most regions and lines of business, the growth has been well diversified. APEC, the favorable underlying growth was mitigated by our portfolio. The impact of large losses was $1.63 billion for the full year.
Speaker Change: <unk> was the development in P&C reinsurance, we have successfully expanded our portfolio, resulting in an increase in retrans revenue of 11% adjusted for currency effects.
John: The increase in net revenue was even slightly more pronounced.
Our <unk> business.
John: Business came in very strong and.
John: The volume of our Retrocession program has been reduced.
John: Our reinsurance market environment continues to be favorable in most regions and lines of business the growth has been well diversified.
John: In APAC the favorable underlying growth was mitigated by our portfolio pruning in 2020 suite.
John: The impact of large losses was $1 3 billion for the full year the largest event in 2024 and in the fourth quarter was hurricane medicine with the net impact of 230.
Clemens: The largest event in 2024 and in the fourth quarter was Hurricane Milton. Apart from this, the large loss experienced in Q4 was benign. Altogether, net large losses were around $200 million below our full-year budget, providing us with the opportunity, as Jean-Jacques said, to take a more cautious view on specific claims from older underwriting years, including the Russia-Ukraine loss combination. Furthermore, the strong underlying profitability provided the flexibility. relation to the total reserves which have grown or we expect the resiliency to be at least stable. The analysis of Willis-Howes Watson is not fully concluded yet, but it is expected to confirm our...
John: 400.
Speaker Change: <unk> the large loss experienced in Q4 was benign altogether net large losses were around 200 million below our full year budget, providing us with the opportunity as John said to take a more cautious view on specific came from all of the underwriting years, including the Russia, Ukraine lot complex.
Speaker Change: Furthermore, the strong underlying profitability provided the flexibility to grow our resiliency levels.
Speaker Change: In relation to the total reserves, which had grown in 2024.
Speaker Change: We expect the resiliency to be at least stable.
Speaker Change: The analysis software to accounts Watson was not fully concluded yet but is expected to confirm our internal view.
Speaker Change: The actual outcome.
Poppy assessment will be disclosed as users in.
Clemens: closed, as usual, in. Overall, our reserve resiliency, and I want to stress this, should be measured including the risk. And the risk adjustment has increased now by another $143 million to around $1 billion at year-end. Last but not least, the combined ratio includes a discount effect of around 7.5%. This is still higher than the interest increase in the region's final results, but our prudent initial reserving should offset, as in previous years, that difference. The increase in the discount effect in the fourth quarter can be explained by the... is the first person to which largely happened in Longtail Line and by some true opportunists.
Speaker Change: Hey.
Speaker Change: Overall, our reserve event in C&I want to stress it should be measured including the risk adjustment.
And the risk adjustment has increased now by another $143 million to around $1 billion at year end 2024.
Speaker Change: Last not least the combined ratio includes the discount effect of around seven 5%. This is still higher than the interest accretion in the range of fondness results, but our prudent initial reserving should offset essent previous year that's different.
Speaker Change: The increase in the discount effect in the fourth quarter can be explained by the increase in reserve resiliency at year end, which largely happened in long tailed line and buy some true up effects in the calculations of the prior quarter.
Clemens: Altogether, the combined ratio of 86.6 is slightly better than our target and reflects the very healthy underlying profitability and our continued prudent reserving approach. for both new business and older underwriters. strong investment result in PNC primarily stems from the improved ordinary income. The increase is mainly driven by higher interest rates, supported by higher volume. The amortization of our inflationary bonds added $149 billion. and Herman on real estate, spoke about this in Q3. They are at $37 million now, so moderate also compared to our initially planned... The currency result, as part of the other result, was mainly impacted by the strengthening of the US dollar in the fourth quarter.
Speaker Change: Together, the combined ratio of $86 six was slightly better than our target and reflects the very healthy underlying profitability and our continued prudent reserving approach.
Speaker Change: For both new business and all of the underwriting year.
Speaker Change: The strong investment result in PMT promptly stems from the improved ordinary income.
Increase is mainly driven by higher interest rates supported by higher volumes from our strong operating cash flow.
Speaker Change: Amortization of all inflation of the bonds at a $140 9 million.
Speaker Change: Impairments on real estate spoke about that.
Speaker Change: In Q3.
Speaker Change: But they are.
Speaker Change: 37 million now saw moderate also compared to our initially planned number for the year.
Speaker Change: The currency resigned as part of the other result was mainly impacted by the strengthening of the US dollar in the fourth quarter.
Clemens: amount to minus 143 million Euro. So this is really a swing by almost 250 million Euros compared. Altogether, the EBIT more than doubled.
Speaker Change: And demand from minus 143 million Euro. So this is really a screening by almost 250 million euros compared to the previous year.
Speaker Change: Altogether, the EBIT more than doubled to $2 4 billion.
Speaker Change: On the next slide the main contributor to the Pnp services dedicated to see as Emily.
Clemens: On the next slide, the main contributors to the P&C Service Result has created a CSM release reflecting the 2023 and 2024 renewals in a very attractive market environment. The rather high release in the second half of the CSM includes some catch-up. due to a more prudent release in previous quarters. Importantly, I really want to note this, this does not have any impact on the overall level of profits because the higher CSM release is offset by a quite conservative reserving approach for the current year and a negative one. Apart from this, the negative experience variant also includes the offset of the tailwind from higher discounting versus heavy.
Speaker Change: Reflecting the 22003 and 2024 renewals in a very attractive market environment.
Speaker Change: Rather high relieved in the second half of the CSM include some catch up effects.
Due to a more prudent release and previous quarter importantly, really want to note that this does not have any impact on the overall level of profit.
Speaker Change: The higher <unk> offset by a quite conservative reserving approach for the current year and a negative experience variance as you can see here.
Speaker Change: Apart from this the negative experience there and also includes the offset.
Speaker Change: Of the tailwind from higher discounting the CP.
Speaker Change: As mentioned earlier, our P&C runoff result reflect a positive development in most lines of business, but also some individual negative development, including large losses like the Italy hail events from 2023.
Clemens: As mentioned earlier, our P&C runoff results reflect a positive development in most lines of business, but also some individual negative developments, including large losses like the Italy hail events. and also provisions for the Russia-Ukraine. Furthermore, the increase in resiliency is having an impact on the runoff result. quarter, which would be higher without this balance sheet. The last component from new business, as you can see, is quite low concerning the attractive rate environment in P&P. The moderate decrease in the CSM in 2024 is connected to the previously mentioned catch column. On a normalized basis, the CSM would have...
Speaker Change: And also <unk>.
Speaker Change: Provisions for the Russia, Ukraine conflict.
Speaker Change: Furthermore, the increase in resiliency is having an impact on the run off.
Speaker Change: Particularly in the fourth quarter, which would be higher without these balance sheet strength.
Speaker Change: The last component from new business as you can see is quite low confirming the attractive rate environment in P&C reinsurance.
Speaker Change: The moderate decrease tend to see is <unk> in 2024.
Speaker Change: He is connected to the previously mentioned catch up effect on a normalized basis.
Speaker Change: <unk> would have increased in 2024.
Speaker Change: So, let's move on to life and health.
Clemens: So let's move on to life and health. Reinsurance revenue remained rather stable as expected. Underlying growth in morbidity and longevity has largely been offset by the loss of our U.S. mortality book. of our Enforced Management Action in 2000. reach on services that are fully in line with our expectations with favorable contributions. obesity, the result has mainly been impacted by further strengthening of the reserves for critical illness businesses. Furthermore, a client insolvency in the third quarter resulted in a negative one-off impact of 37%. million euro connected to a financing treaty with this. The investment result mainly reflects the good ordinary income, as mentioned earlier, the change in fair value of financial instruments had a positive...
Speaker Change: Reinsurance revenue remained rather stable as expected.
Speaker Change: Underlying growth in morbidity and longevity has largely been offset by the runoff of our U S mortality book, which accelerated quarterly recapture connected our enforce management actions in 2018.
Speaker Change: The rates on services.
Speaker Change: In line with our expectations with favorable contributions from mortality longevity and financial solutions.
Speaker Change: In mobility the result.
Mainly been impacted by further strengthening of the reserves for critical illness business in China.
Furthermore, our client and solvency in the third quarter resulted in a negative one off impact of that.
Speaker Change: <unk>.
Speaker Change: Kevin made in euro connected to a financing treaty with discounts.
Speaker Change: The investment results, mainly reflect the good ordinary income as mentioned earlier the change in fair value of financial instruments had a positive impact.
Clemens: of 57 million euros, partly offset by a negative 30%. Both effects should be seen as nonlinear. Altogether, our Life & Health Business Group reported EBIT of €934 million, an increase of 7%. Looking at the drivers for the reinsurance services are both the CSM release and the risk adjustment release. are within the expected range. for our critical illness business in China. This partly mitigates the negative impact from the loss component of 439. The new business class component was a minor 6 million. driver for the change and loss component. was the reserves pensioning in morbidity and the aforementioned current insolvency affecting the finance sector.
Speaker Change: 57 million euros, partly offset by a negative 36 million impact from the valuation.
Speaker Change: Participation.
Speaker Change: Both effects should be seen as nonrecurring.
Speaker Change: Altogether, our life and health business group reported EBIT of 934 million.
Speaker Change: Increased.
Speaker Change: Okay.
Speaker Change: Looking at the.
Speaker Change: Driver for the reinsurance coverage in both the C assemblies and the risk adjustment release.
Speaker Change: Within the expected range experienced variances of 204 million Euro is driven by a favorable claims experience across different lines of business.
Speaker Change: And also by enforce management actions for our critical in his business in China.
Speaker Change: It's partly mitigate the negative impact from the loss component of fund 39 million euros.
Speaker Change: The new business component was a minus six meeting you.
Speaker Change: Main driver for the change in loss component.
Speaker Change: The reserve strengthening in morbidity and the aforementioned declined and told them.
Speaker Change: To finance accretive.
Speaker Change: Altogether, the reinsurance services on echelon as I've mentioned, it's comfortably within the target rate above $850 million.
Clemens: Altogether, the range on service result, as Jean-Jacques mentioned, sits comfortably within the target range, about 850. The new business CSM and extensions on existing contracts together amounted to 624 million euros based on a diversified contribution from Financial Solutions. mortality and morbidity. Changes in estimates had a positive impact of €415 million. The main driver here for the positive changes in estimations was our UK longevity business. and to a smaller extent recaptures in U.S. mortality. Adding positive currency effect, empty interest accretion, the total CSM increased by almost 10%. after recognizing the regular thesis. Altogether, I would like to point out that from an economic perspective...
Speaker Change: The new business CFM and extensions on existing contracts.
Speaker Change: Together amounted to 624 million euros based on the diversified contributions from financial solution.
Speaker Change: Mortality and morbidity.
Speaker Change: Changes in estimates had a positive impact of 415 million euros. The main driver here for the positive change in an estimate an estimation towards our U K longevity business and.
And to a smaller extend recaptured in U S mortality.
Speaker Change: Pending positive currency effect empty interest accretion the total <unk> increased by almost 10%.
Speaker Change: After recognizing that record TSM already.
Altogether I would like to point out that from an economic perspective.
Clemens: Assumption changes were rather neutral for Hanover E. This is because changes in estimates within the CSM offset changes in estimates resulting in a loss component affecting the pH, P and L for the current period. This highlights the benefit of having a diversified portfolio.
Speaker Change: Assumption changes were rather neutral.
Speaker Change: This is because changes in estimates within the C. As an offset changes in estimates, resulting in a loss component affecting the PSTN.
Speaker Change: While the current protocol.
Speaker Change: You noted.
Speaker Change: Imperative principal embedded in December.
Speaker Change: This highlights the benefit of having a diversified portfolio.
Speaker Change: Sure.
Speaker Change: On the next slide.
Clemens: On the next slide, the development of our investments. I think it's fair to say it was, again, very satisfactory. The ordinary investment income is strong. Several factors played a role here. The asset volume increased based on a strong operating cash flow. In addition, the reinvestment yields are still nicely above our average portfolio yield, with a continued positive impact on our returns from fixed income. The contribution from inflation-linked bonds was at €149 million. and finally the contribution for alternative investment. real estate, private equity, and infrastructure investments increased as well. The impact from ECL and the overall valuation at fair value through P&L had only a minor for our real estate investor.
Speaker Change: The development of our investments I think it's safe to say was again very satisfactory ordinary investment income strong several sectors take a rolling here. The <unk> volume increased based on our strong operating cash flow. In addition to the reinvestment yields did nicely above our average portfolio yield.
Speaker Change: The continued positive impact on our returns from fixed income securities.
Speaker Change: Contribution from inflation. These bonds was at 149 million euros.
Speaker Change: Finally, the contribution from alternative investments, so real estate private equity infrastructure investment increased the.
Speaker Change: The impact from ECM as the overall valuation at fair value through P&L had only a minor impact.
Speaker Change: Our real estate investments, we recorded moderate impairments of 37 million euros, driven by decreasing valuation.
Clemens: or the moderate impairments of 37 million euros driven by decreasing value-added costs. for some objects. You may remember that we had... cautionary view as mentioned earlier already in the third quarter so based on the year-end information the actual impairments were actually slightly lower and overall lower than We're turning one end back.
Speaker Change: Some uptick may remember.
Speaker Change: We have taken a cautionary reviews mentioned earlier already in the third quarter. So based on the year and inflammation in the actual impairments were actually slightly lower and overall lower than expected in our guide. So all in all the return on investment of 3.2% hit.
Speaker Change: Well above our Cooper to 8% target.
Speaker Change: So to conclude my remarks, the results for the financial year 2024.
Clemens: So, to conclude my remarks, the result for the financial year 2024. 2024 also marks the first year of our current strategy cycle and all targets according to our strategic financial ambitions have been met. Top and bottom lines are growing nicely, providing strong basis for the coming years.
Speaker Change: The very healthy underlying profitability.
Speaker Change: <unk> thousand 24.
Speaker Change: So remark.
Speaker Change: The first year of our current strategy cycle and all targets. According to our strategic financial ambition has been met top and bottom line are growing nicely, providing a strong basis for the coming year.
And on that note I'll hand back to you for the comment on the outlook.
Jean-Jacques: On that note, I'll hand back to you, Jean-Jacques, for the comments on the output. Thank you very much, Clemens. I can be relatively brief on the outlook because I already commented on it about a month ago when Sven and I were presenting the successful outcome of our January renewal. The positive development fully supports our planning for 2025 financial year and I can confirm our guidance again today without any changes. For the group net income, we aim to deliver around 2.4 billion euro. We have already provided our initial view on the L.A. wildfires last time, and they are not triggering any review of our targets for the full year, so I can also confirm that.
Speaker Change: Thank you very much.
Speaker Change: <unk>.
Speaker Change: It can be relatively brief on the actuals because that already commented on it about a month ago and Sven and I were.
Speaker Change: Presenting the successful outcome of our January renewals.
Speaker Change: The positive development fully supports our planning for 2025 financial year, and I can confirm our guidance again today without any changes.
Speaker Change: For the group net income we aim to deliver around $2 4 billion Euro we have already provided our initial view on the wildfires.
Wildfires last time.
Speaker Change: They are not triggering any review of our targets for the full year. So I can also confirm this.
Speaker Change: Today.
Jean-Jacques: Hanover Rueck is well positioned for 2025 and beyond. 2024 was another successful year for the company and our balance sheet strength has further improved from an already high level. The market environment remains supportive and our earnings continue to grow. So against this backdrop, I feel very comfortable heading over to Clermont in April and I have no doubt. together with the executive board will lead the company to further success and sustainable value creation for our shareholders.
Speaker Change: Category is well positioned for 2025 and beyond 2024 was another successful year for the company and our balance sheet strength has further improved from an already high level the market environment remains supportive and our earnings.
To grow.
Speaker Change: So against this backdrop I feel very comfortable heading over to climb ends in April and I have no doubt that he.
Speaker Change: Together with the executive Board.
Speaker Change: We'll lead the company to further success and sustainable value creation.
Speaker Change: Our shareholders.
Speaker Change: This concludes my remarks, and we would be happy to answer your questions. Thank you very much.
Jean-Jacques: This concludes my remarks and we would be happy to answer your questions. Thank you very much.
Speaker Change: Ladies and gentlemen, we will now begin the question answer session anyone wishes to ask a question May Press Star then one on the touch tone telephone.
Operator: Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and then 1 on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and then 1 at this time.
Speaker Change: So when he returned to confirm as I've entered the queue.
Speaker Change: If you wish to remove yourself from the question you May Press Star then two.
Speaker Change: Participants are requested to use only handsets were asking a question and normalize. The question May Press Star then one at this time.
Michael Hapner: And we have the first question coming from Michael Hapner from Berenberg, please go ahead. Thank you so much for another set of amazing results. I only have two questions.
Speaker Change: And we have the first question coming from line of Michael Hoffman up on bedroom Beck. Please go ahead.
Speaker Change: Well listen all that good good good afternoon. Thank you so much so another thats an amazing yourself.
Speaker Change: I only have two to two questions.
Michael Hapner: One is kind of nosy and the other one is I don't quite understand. The nosy one is you're one of the few reinsurers which actually participate directly I think in a quota share basis in German Motor. So I just wondered if you can provide the latest in terms of pricing and outlook there. Particularly I think you're the main reinsurer, the market leader.
Speaker Change: One is kind of.
Speaker Change: Another thing and the other one is.
Speaker Change: Yes.
Speaker Change: It doesn't quite understand.
Speaker Change: One is.
Speaker Change: One of the few reinsurers, which actually participate.
Speaker Change: Correct can you think of the quota share.
Jim: Basis, and Jim. So just wanted if you can provide the latest in terms of pricing announcer.
Jim: Do you think youll have made reinsurers.
Jim: Nathan.
Michael Hapner: And the second is on pricing from memory and my memory has always failed me so apologies if I get it wrong. Renewal pricing was down 2.7%. The wildfires are give or take, I mean if they're in the middle of the target range around a third of your full year budget. And you're still guiding profits being up. I know there's a lot of conservatism built in, in the 2024 results. So if you strip that out of course you would have some buffers.
Jim: The second.
Speaker Change: He is on the pricing for memory and my memory is always tells me.
Jim: If I got it wrong.
Jim: Pricing was down two 7% the wildfires.
Jim: I mean, if I may.
Jim: Middle of the target range.
Jim: The fuel for your budget and you're still guiding profits being up I know, there's a lot of conservatism built in in the 2020 full results.
Jim: I'll just close here with us.
Jim: But maybe you can explain why you remain so confident despite these two negatives.
Michael Hapner: But maybe you can explain why you remain so confident despite these two negatives. Thank you.
Michael Hapner: Michael, could you repeat the first question because we did not just audible was bad. Oh I see, it's me. Sorry, sorry. I was muttering.
Speaker Change: Michael could you repeat the first question because we did not test.
Jim: <unk>.
Speaker Change: Let's see if my sorry, sorry.
Jim: However, luxury.
Michael Hapner: So really simply, German Motor, you're the one reinsurer who underwrites German Motor. So I just wondered if you can provide an update on how much uplift you will get and how much the rate rises were and how much uplift it means to you. Thank you.
Jim: Really simply gentlemen mode.
Jim: I mean, sure who underwrites Jim.
Jim: Just wanted to if you can provide an update on how much uplift you will get.
Jim: And how much the rate rise and how much uplift. This means thank you alright, great. Thank you.
Jean-Jacques: Very good, thank you. On the German motor side, both insure us, but also re-insure us for all the examples of loss. coming from 24. you know that the performance of the business challenges with the levels of inflation that we could observe in the market. we fully expect. the territory.
Jim: Okay.
Jim: On the German moda sides.
Jim: And for Us, but also reinsurance for the excess of loss business.
Jim: <unk> increased.
Jim: Our rates coming from from 24.
Jim: I know thats being.
Jim: Performance of the business.
Jim: Should we had challenges with.
Jim: The levels of inflation that we could observe in the market, particularly on the <unk> side of things so with the additional.
Jim: Rate increases that could now be achieved during the 2025 renewals.
Jim: We fully expect that.
Jim: The businesses back into profitable.
Jim: Tory.
Jim: Meeting our hurdle rates for that final.
Jim: When it comes to the questions on the question on guidance.
Jean-Jacques: When it comes to the question on guidance, I mean, it's early in the year, we've clearly exceeded... budget for the first quarter of 2025, which is 435 May. On the other hand, the range we gave on the California wildfires and... range is still valid, I mean there's still also a long way to go to utilize our full year. So from that point of view, we just feel it's too early in the year to make a full review of our assumptions. If there's still quite a bit of budget ahead and then as we explained also in the past from a balance sheet strength point of view, that if required.
Jim: And it's early in the year.
Jim: We have clearly exceeded.
Jim: <unk>.
Jim: For the first quarter of.
Jim: 2025, but just $435 million.
Jim: On the other hand.
The range, we gave on the California wildfire.
Jim: Yes.
Range is the weather.
I mean, there's still also a long way to go to utilize our full year budget was which was $2 1 billion.
Jim: So.
Jim: From that point of view, we just feel it's too early in the year, which will make a full review of all assumptions.
Jim: So quite a bit of a budget.
Jim: And then as we explained also in the past.
Jim: Yes.
Jim: So looking at this.
From a balance sheet strength point of view if required.
Jim: We would try to get to the guidance for numbers.
Jean-Jacques: try to get to the guided four numbers.
Jim: If that makes sense at the time also drawing for example.
Michael Resiliency.
Kamran Hussain: Blyat, thank you We have the next question coming from the line of Kamran Hussain from JPMorgan, please go ahead. Good afternoon.
Speaker Change: Thank you.
Speaker Change: The next question comes from line of <unk> Hussain from J P. Morgan. Please go ahead.
Speaker Change: Boy.
Speaker Change: Afternoon.
Speaker Change: Two from me I guess is for awesome.
Kamran Hussain: Two for me, and I guess before I ask them, Jean-Jacques, I know we kind of mentioned a while ago, we're just wishing you all the best for the next chapter. From everyone at JV, we've really enjoyed our interactions with you, going back to when you kind of took over back in 2019. So thanks so much. Based on what we can see, you're definitely leaving the business in good health and excellent hands.
Speaker Change: Jack I know you kind of mentioned.
Wishing you all the best in the next.
Speaker Change: <unk> really enjoyed our interactions with you.
Speaker Change: Kind of talking about so when you kind of took over back in 2019. So thanks very much based on what we can say youre definitely leaving the business in good health in excellent hands. So thank you and looking forward to the next chapter for both you answer.
Kamran Hussain: So thank you and looking forward to the next chapter for both you and for Hanover Rueck.
Kamran Hussain: The first question that I have is just on the reserve resilience. Just really interested in kind of where you see the resilience overall thinking about, including the risk adjustment relative to historical levels and how you expect it to develop from this point forward. Just thinking this through in my head, there should be some growth every year. You're booking the current year really prudently, just looking at your comments on the experience variance in PNC. So kind of how do you expect that to develop from this point forward and should that grow from here on? And at any point, if I look back over history, 2015, 16, you kind of pointed to like a topping out on reserves and probably had to show a bit more of the profits.
Speaker Change: The first question I have is just on the reserve resilient.
Speaker Change: Just really interested in kind of where you see the resilience overall thinking about.
Speaker Change: Included in the risk adjustment relative to historical levels.
Speaker Change: How you expect it to defend that from this point forward just thinking this through my head that should be some growth every year.
Speaker Change: You're pushing the currently really prudently just taking your comments on the experiments fragrance and patency.
Speaker Change: Kind of how would you expect that to develop from this point forward and should that grow from here on.
Speaker Change: And at any point, if I look back over history.
Speaker Change: 2015, and 16, you kind of pointed to like a topping out.
Speaker Change: Sudden probably had to shed a bit more of a profit. So I'm interested in kind of what you think that is correct.
Kamran Hussain: So I'm interested in kind of where you think that's going.
Kamran Hussain: The second question is just around, there's been a bit of a press discussion about Viridium. I'm sure you don't want to comment on it specifically, but if there was a theoretical exit of something that you owned, what do you think you'd do with proceeds? Return or reinvest or how would you think about that?
Speaker Change: The second question.
Speaker Change: Just to round. This has been a bit of press discussion about for iridium.
We don't want to comment on it specifically, but if there was a theoretical exit of some of the owned what do you think you'd do with proceeds return or reinvest or how would you think about that thank you.
Jean-Jacques: Thank you. I'll start with the reserve question, and it's perfectly right, I think, in contrast to the previous accounting regime we now have on top of it. Clearly, not only we, but also, you know, most of the rating agencies. for the robustness of the risk adjustment on top of what we've in the leak. So if we just look at 2023 numbers, you know, just as a reminder for benefit of everyone. with a power of roughly 2.1 billion. If you add the risk adjustment at year-end 2023 to it, that would bring you to an absolute level.
Speaker Change: Hey, Manav, it's Kevin I'll take I'll start with the reserve question and its property raised I think in contrast.
Speaker Change: The previous accounting regime, we now have on top of it.
Speaker Change: And clearly not only we but also.
Speaker Change: Most of the rating agencies and I can confirm that for some of that debt.
Speaker Change: See the risk adjustment really at future profit. So it is part of that capital, which I think is a proof point.
Speaker Change: Sure.
Speaker Change: For the robustness of the risk adjustment on top of lumpy.
Speaker Change: In the in the Lake.
Speaker Change: So if we just look at 2023 number.
Linda: Linda for benefit of everyone that.
Linda: We were at the peak.
11 with tell us what Buffy.
Roughly $2 1 billion.
If you ask the risk adjustment at year end 2023 grade that would bring you to an absolute level.
Linda: Off of around 3 billion euros.
Jean-Jacques: of around 3 billion euros that compares to a nominal reserve level end of 2023. roughly $42 billion, I would guess that would bring you to a number slightly above $7 billion. compare it to the resiliency that we have carried clearly with this much smaller book 30 years ago, where we probably were at a peak level of 8%. On the one hand, a very strong... really strong resiliency level in our reserves, that's for sure. At the same time, we still believe that there is still room for growth, for growing that both nominally but also in relative terms. We do feel comfortable, very comfortable, with the actual reserve levels.
Linda: Comcast were nominated reserve near the end of 2023.
Roughly 42 billion.
Linda: That will bring you to a number slightly above 7% relative for the for the E&P level and if you compare it to the resiliency that we get carried T&D business model volatile.
Linda: Years ago, where we probably were at the peak level of 8%.
Linda: This is on the one hand very strong.
Linda: Really strong resiliency levels in out of the depths for sure at the same time, we still believe that there is still room for growth for growing that both nominally but also in relative terms.
Linda: We do feel comfortable very comfortable with the actual reserve level again, the risk adjustment have now increased to $1 billion.
Jean-Jacques: Again, the risk adjustments have now increased to a billion. to reflect the nominal level of our resiliency as per the will of Thomas Watson, again disclosed in May. Also, in absolute terms, of course, to have... at least in line with our book. And as you've seen and also heard from my comments, we do believe that we have also clearly prudently... most current underwriting years that haven't found their way. who will tell us. So we do believe that those numbers will materialize over time. As always, Kamran, we will always have a look at year-end at this.
Linda: And that you would expect at a level of our resiliency absolute of towers Watson again disclosed in May also in absolute terms of costs have increased at least in line with our book.
Linda: And.
As you've seen and also heard from my comments, we do believe that we have also clearly prudent sea.
Linda: Most current underwriting years that haven't found their way into our resiliency, both our internal estimates as well as quickly to tell us lipton.
Linda: We do believe that those numbers been materialize over time as always Kamran EBIT always have a look at year end at this but again.
Linda: The relative levels should be.
Linda: And then it's been mentioned if there is a given year as we've also shown in the past we.
Jean-Jacques: willing but also able to utilize some of that reserve. our long-term target. I don't think the bottom...
Willing, but also able to utilize some of that.
To meet our long term target.
Linda: I don't think Gabon.
Jean-Jacques: On iridium, yes. You know, this is... Without a doubt about it, there's a sales process going on. The sales process is led by the maker shareholder. And clearly, I can't comment on this, what we are going to do about our share. I do want to clarify, though. For our I4S group financial statement, we have taken from a valuation standpoint the fair values through OCI approach for this stake in Beryllium. So in any case, this will not have any impact on our P&L, so on our I4S group earnings. is just born.
Linda: Yes.
Linda: No doubt about it densities process going on to say, it's closer to flat by the major shareholder.
Linda: And.
Linda: Yes.
Can't comment on these.
Linda: We're going to do about our our share I do want to clarify though.
Linda: I will comment on that in any case.
For our <unk> group financial statement.
Linda: We have taken from a valuation standpoint to have values through OCI approach for this stake in <unk>. So in any case, we did not have any impact on our P&L. So on our <unk> earnings.
Linda: Just for clarification.
James Schack: Thank you.
Linda: Thank you.
Linda: Okay.
Linda: Okay.
James Schack: The next question comes from the line of James Schack from City, please go ahead. Thank you and good afternoon.
James Shuck: The next question comes from line of James Shuck from Citi. Please go ahead.
John Zach: Thank you and good afternoon, John Zach Thanks for me best of luck for the future.
James Schack: Jean-Jacques Sain from me. Best of luck for the future. You still feel like the new CEO from my perspective. I don't know whether time's gone by so quickly, but thank you for your help.
James Shuck: Do you still feel like the fed.
My perspective.
John Zach: Time has gone by.
John Zach: Quickly, but thank you for your help.
James Schack: I had three questions, please. So the first one, just looking at the increase in SCR from P&C underwriting risk, that was up 0.8 billion year on year. That's quite a large increase and I presume part of that is because you've taken on lower retro than in the past. But I'm kind of getting mixed signals from other parts of the business. The structured premium in 24 was up 58% and it's a big number, but the PMLs are up significantly too. I just look at the, for example, the US windstorm, I think the PML is up 30% year on year.
Speaker Change: Had three questions. Please.
John Zach: So the first one.
Speaker Change: Looking at the increase in SCR.
Speaker Change: The underwriting risk that was.
Speaker Change: 8 billion.
Speaker Change: Year on year.
Speaker Change: That's quite a large increase.
Speaker Change: <unk> part of that because you've taken on the lower right.
Speaker Change: In the past, but I'm kind of getting mixed signals from other parts of the business.
Speaker Change: <unk> premium and 24 was up 58%.
Speaker Change: And it's a big number but the <unk> are up significantly too I just look at the example, the U S. Windstorm I think the P&L is up.
Speaker Change: 30% year on year, So I'm, just kind of keen to understand what drove that increase and that's where it's coming from and really to kind of if you were able to provide any indication.
James Schack: So I'm just kind of keen to understand what drove that increase in SCR, where it's coming from, and really to try, if you're able to provide any indication of the kind of expected profit from allocating that increase in SCR, that would be very helpful. I don't know whether you want to express that in relation to the new business CSM for a 25 outlook or some other metric, but any insight there would be helpful. Secondly, on the discrete Q4 combined ratio in P&C RE82.5, just struggling to understand this a little bit, because you mentioned that this kind of negative runoff result in Q4, we can see that through the experience variance.
Speaker Change: <unk>.
Speaker Change: The kind of expected profit from allocating that increase in SCR that'd be very helpful that you want to express that in relation to the new business CSM.
Speaker Change: 25 outlet cool or some other metric, but any insight there would be helpful.
Speaker Change: <unk> on the <unk>.
Speaker Change: Q4 combined ratio in P&C re ATT five just struggling to understand.
Speaker Change: I missed a little bit because you bet you mentioned that this kind of negative runoff result in Q4, we can see that through the experience there and it looks like kind of a 200 many of those sites.
James Schack: It looks like kind of over 200 million or so in Q4 discrete, you've added a little bit to the buffer perhaps. So where's that? I don't know, I mean, one quarter is obviously volatile, but if I start kind of making adjustments that 82.5, I start to get a very low number indeed. So what's wrong with doing that sort of calculation? Where do you kind of view the normalized level of combined ratio in Q4, please?
Speaker Change: And in Q4 discrete you've added a little bit to the buffer perhaps.
Speaker Change: What is that.
Speaker Change: I mean, one quarter is obviously volatile, but if I start kind of making adjustments the ATT five I start to get a very low number indeed.
Speaker Change: What's wrong with doing that sort of calculation, where do you kind of view the normalized level of combined ratio in Q4. Please.
James Schack: And then finally, just on the nominal runoff, reserve runoff before risk adjustments, I'm looking at the claims triangles on a net basis. It's unusual, but there's 95 million adverse development across all years. You may have alluded to this in some of your opening comments, and obviously it's not a big number in the context of 14 billion of reserves, but you are seeing adverse development in 2018 and 2023. I presume that's connected to Russia and Italian hail, but if you could just clarify what's happening there, please.
Speaker Change: And then finally.
Speaker Change: Just on the.
Speaker Change: The double.
Speaker Change: The nominal runoff reserve runoff before risk adjustments, so I'm looking at the claims triangles on a net basis.
Speaker Change: It's unusual but.
With $95 million adverse development across all years.
You may have alluded to in.
Speaker Change: Some of your opening comments.
Speaker Change: Not big number in the context of 14 billion of reserves, but you are seeing adverse development in 2018 than in 2023, I presume that is connected to rupture in Italian hail, but if you could just clarify.
James Schack: Thank you very much.
Speaker Change: What's happened exactly thank you very much.
James Schack: James, good afternoon, Steven. So starting with the SCR, I don't have the numbers in front of me, but really just top of my head. So the increase in overall SCR in 2024 of roughly $1 billion stems in equal parts from an increase in P&C underwriting risk, as you mentioned, but also there's a strong increase. I just want to mention it also on the market risk side, the increase in P&C underwriting. I'm just looking sort of at the technical numbers and then I'll give some background. clearly by an increase in NAPCAP capacity, related also to our overall business goals, and by an increase in reserve.
Speaker Change: Thanks, Good afternoon, Kevin So starting with the SCR I don't have the numbers.
Speaker Change: But maybe just top of my head so the increase in overall SCS in 2010 before.
Speaker Change: Roughly 1 billion stems that equal parts from an increase in P&C underwriting risk as you mentioned, but also there is a strong increase just want to mention it.
Speaker Change: On the market risk side.
Speaker Change: The increase in P&C underwriting risk and just look looking sort of at the technical number.
I'll give some background.
Speaker Change: <unk> can also stepping so increase in P&C underwriting is that clear.
Speaker Change: Clearly by an increase in Nat cat capacity.
Speaker Change: Related also to our overall business goals and by an increase in reserve risk.
James Schack: The latter will be driven by both business growth and loss development, of course. Just for the sake of completeness, the increase in market risk driven by higher volumes of real estate violations. income, the stronger U.S. dollar will also have contributed to the increase. market growth further in comparison to life and health. I think the diversification benefit is likely. number driven standpoint, I think the message here is clearly the underlying business growth on the property catch side has been strong. and where this is full. offline so so gross as well as on the retro side you know that we had on the Renewal 1.1.2025 will have added impact.
Speaker Change: That will be driven by both business closed and locked investment of course.
Speaker Change: And just for the sake of completeness the increase in market rates driven by higher volumes in real estate private equity and also fixed income.
Speaker Change: The stronger U S. Dollar will also have contributed to the increase in this number and also within the P&C underwriting risk.
Speaker Change: And as the dominant category.
Speaker Change: And market growth.
Speaker Change: The comparison to life and health.
Speaker Change: I think the diversification benefit this slightly reduced compared to year end 'twenty.
Speaker Change: That's really just from a technical standpoint, I think the message is clear the underlying business growth on the property cat side has been strong.
Speaker Change: Okay.
Bose: This is bose.
Speaker Change: Top line.
Speaker Change: So grass.
Speaker Change: As well.
Speaker Change: The retro side, you know that we had already.
Speaker Change: Our fashion right.
Speaker Change: Thank you Paul with also the substantive decrease.
Speaker Change: Yes.
Speaker Change: On the renewal at 112025 will have added impact here in the SEC.
James Schack: because that is the plan, what we had taken. also goes into the SCR calculation here. You're not too much. I mean, I think you covered that well. uh... hot market on the world in year 2023. in the World Bank. On the combined ratio, just a couple of general comments. Clearly, you know, this is Orbiter here and we overall look, of course, at the reserve position. mentioned earlier, we came The last budget, around 200 million below the budget, this really, James, provided us with the opportunity to take a more cautious view on specific claims from all the underwriting years, including Russia-Ukraine, and some of that happened, that reserve strengthening on Russia-Ukraine did happen over the course of the year, yes.
Speaker Change: What we have baked into the plan.
Speaker Change: So it goes into the calculation.
Speaker Change: And I don't know if you want to.
Speaker Change: Anything on probably on the growth.
Speaker Change: Property cat side.
Speaker Change: You are not too much but I think you covered that well.
Speaker Change: We have used the.
Speaker Change: Hot markets.
Speaker Change: <unk> and volume and that's also available.
Speaker Change: On a luck in year 2023 to grow the incoming cat portfolio quicker than the.
Speaker Change: General portfolio.
<unk> was also growing and thats.
Speaker Change: Payments in combination with us adjusting our went from buying.
Speaker Change: 195% renewal, which was baked into the <unk>.
Yes.
Speaker Change: And what about you.
Speaker Change: Perfect.
Speaker Change: On the combined ratio just a couple of general comments clearly obviously at year end, we overall look of course at the reserve.
Speaker Change: Our positioning and as mentioned earlier.
Speaker Change: We came in with a large loss budget around 200 million below the budget.
Speaker Change: Really change provided us with the opportunity to take a more cautious view on specific claims.
Speaker Change: All of the underwriting year, including Russia, and Ukraine. Some of that happens that is outstanding.
Speaker Change: It happened over the course of the year, yet, but also we took a bit more prudent view also in Q4.
James Schack: He took a bit more food. You also. Thank you. And again, the growth in the resiliency level here becomes better. for all that leads to the number. We should not forget that when we look at the overall combined ratio for the year that we have disclosed, we have continued to manage the tailwind from interest rates. That's another 1.5. on the combined ratio. see historically that we have not changed. our combined ratio targets as dynamically probably as others over the course of the reinsurance cycle and this continues to be our approach going forward. That being said, I do feel very comfortable with our lower than 80-80% combined ratio target, not only for 2025, but really and also in scenarios...
Speaker Change: And again the.
Speaker Change: The growth in the <unk> come off that.
Speaker Change: Thank you.
Thank you Paul.
Speaker Change: Considering all of these clearly the underlying combined ratio should not be too far from the published number for the whole year.
Speaker Change: Better clarity for Q4.
Speaker Change: Again, given all of these impacts et cetera.
Speaker Change: That leads to the number we should not forget that when we win.
Speaker Change: Look at the overall combined ratio for the year that we've disclosed.
Speaker Change: We have continued to manage the tailwind from interest rate so.
Speaker Change: Desktop between discounting and EP.
Speaker Change: Another 1.5 ish percentage.
Speaker Change: Percentage points on the combined ratio.
Speaker Change: And general statement.
Speaker Change: That we see historically that we have.
Speaker Change: Changed.
Speaker Change: Our combined ratio targets as dynamically.
Over the course of the reinsurance cycle and this continues to be our approach going forward that being said I do feel very comfortable with our.
Speaker Change: Lower than 88% combined ratio targets not only for 2025, but really also for the medium term and also into Navios has mentioned earlier.
Speaker Change: With decreasing interest rates.
James Schack: lower, lower discount, in fact.
Speaker Change: Our discount.
Speaker Change: Perfect.
James Schack: On the claims triangles, so again, on the runoff result, the PNC runoff result, again, as mentioned earlier, they do reflect a positive development in most lines of business. We have, in some individual cases, had negative developments. You mentioned it, James. Italy hailed. It's one driver. Russia. Ukraine is a large driver. And then, as always, we will have done some reserve strengthening here and there, also in some long-tail lines and casualty lines, et cetera. and happy to share any further details, really, when we look at the reserve study in May. It's a bit too early, really, to look at it.
Speaker Change: On the claims trying it.
Speaker Change: So again on the runoff result, the run off of the P&C run off with.
Speaker Change: Again as mentioned earlier, they do reflect a positive development in most lines of business.
Speaker Change: We have.
Speaker Change: Some individual cases at negative developments you mentioned it teams into the Hainan is one drive on Russia, Ukraine is about to driver and then as always we will have done some reserve strengthening here and they also have some long tail lines and casualty lines et cetera.
Speaker Change: And happy to say that any further detail really when we look at the reserve study.
Speaker Change: It's a bit too early really to look at.
Speaker Change: Okay.
James Schack: lines of business, but we will just close.
Speaker Change: Lines of business, but you guys disclosed in.
Speaker Change: In may when we release the flip side.
James Schack: Thank you very much.
Okay. Thank you very much.
Shanti Kang: You're welcome.
Speaker Change: Youre welcome.
Shanti Kang: The next question comes from line of Shanti Kang from Bank of America. Please go ahead. Hi, I think it's taking my questions. So you highlighted additional reserve prudence across 2024 and your reinsurance service result was still pretty solid beat.
Speaker Change: The next question comes from line of Sean <unk> from Bank of America. Please go ahead.
Sean: Hi, Thanks for taking my questions.
<unk> highlighted it is shneur is that credence post 2024 annual reinsurance service, so it's still pretty solid.
Shanti Kang: So just trying to understand the sentiment behind that, if the reserve actions reflect a shift in your risk perception or if they're more about proactive strengthening going into 2025. And then perhaps a follow on from that is just how should we think about prior year development across 2025 and beyond given the reserve additions made today. Could we assume that there'll be better PYD as a result?
Sean: Just trying to understand the.
Sean: The sentiment behind that the reserve actions reflect a shift in your risk perception or is that more about proactive strengthening going into 2025.
Sean: Then.
Sean: Perhaps a follow on from that is just how should we think about prior year development.
Sean: 2025, and beyond given the reserve additions made today could we assume that there'll be better as a result.
Shanti Kang: And then the last question is just on your affirmed net income guidance. What do you think are the biggest execution risks that could shift that either higher or lower as the year continues? Thank you. I'll start probably with the runoff result mentioned earlier, it's driven by a couple of factors. Clearly, the runoff result usually is a...
Sean: And then the last question is just on your net income guidance.
Sean: Do you think are the biggest execution risks that could shift that either higher or lower.
Sean: Year continues thank you.
Sean: Yes.
Sean: Stop property with the run off of it.
Sean: As mentioned earlier its driven by couple of effector clearly the run off was a hugely.
Sean: Is it positive.
Sean: Say, a mid triple digit positive number that we would expect I would say.
Shanti Kang: Why Do You Think Europe Is A New Population? The biggest movement clearly here is... Pretty Russia. loss complex where we have added substantial reserves. or that has found its way here into the runoff result. Clearly, we do expect, again, normally a mid-triple-digit normalized runoff result also as we go in. for more information. also going forward when we look at our reserve studies. So this is really, these are all really... Look at the run-up to that.
Sean: The movements here.
Sean: Really attributable to a couple of larger.
Sean: Losses that we've seen we mentioned, Italy is one example.
Sean: Because there are few other accomplish that we had done some reserve strengthening the biggest movement clearly here is.
Sean: The Queen.
Speaker Change: Trading in Russia.
Speaker Change: Complex, where we have added substantial reserves in 2024 that has found its way into into the runoff result, clearly we do expect again.
Normally a mid triple digit normalized runoff result, also as we go into 2025 of course subject to any further movement and then anything else is really about the reserve strengthening which we will then fully disclose.
Speaker Change: And also going forward.
Speaker Change: Our our study.
Speaker Change: So this is really really good.
Speaker Change: Ingredients.
Speaker Change: Run off of that.
Shanti Kang: On the net income question, I'm not sure if I really fully understood or fully caught the question. Would you mind just reminding us of the second question? Yeah, so I was just thinking, I know you guys guided to that, for example, on the basis that large losses would be within your budget, so I'm just curious to know what the execution risks are to that net income guidance either being higher or lower across the year? Yeah, I mean, as Sven said, you know, there's still the expectation that all our guidance is always under the subject of...
Speaker Change: On the net.
Speaker Change: Income question I'm, not really fully understood.
Speaker Change: Cause the question would you mind to remind me just reminding us of the second question.
Yes. So I was just thinking I know you guys guided to that for example on the basis that large losses would be within your budget. So just curious to know what the execution risks.
Speaker Change: Net income guidance, either being higher or lower of course, yes.
Speaker Change: Yes.
Speaker Change: <unk>.
Speaker Change: Dave.
Speaker Change: As stated the expectation so our guidance is always under the subject of.
Shanti Kang: of Our balance sheet strength, as mentioned earlier, so we are always willing... and able to utilize some of the reserves. So at this time, therefore, Jean-Jacques clearly stated is there's no reason for us. That's great, thank you.
Speaker Change: Of that we don't have any material deviations from the budget.
Speaker Change: We have clearly increased.
Speaker Change: Large loss budget to now $2 1 billion so that reflect both.
Speaker Change: Our growth on the growth.
The net loss loss budget.
Speaker Change: There is clearly also San mentioned.
Speaker Change: Which always comes into the equation with our balance sheet strength has mentioned earlier.
Speaker Change: So we are always willing.
Speaker Change: And to able to utilize some of the reserves. So at this time, therefore, John Zak clearly stated is Theres no reason for it.
Speaker Change: Yes.
Speaker Change: Time of the year to think about our guidance at all so we are fully committed.
Speaker Change: We will be able to meet all of our top.
Speaker Change: That's great. Thank you.
Nino Froland: The next question comes from 9offminutes Malhotra from Mediobanker. Please go ahead. Good afternoon, George-Arch and Clemens, and again, my wishes, George-Arch. I still remember when you joined, we discussed reserves. And I think we should maybe start with that question again from my side.
Speaker Change: The next question comes from Menno <unk> Malhotra from Mediobanca. Please go ahead.
Speaker Change: Good afternoon, guys rock anthem anthem, and again my wishes Jess.
Speaker Change: When you joined with the customers.
Richard: And I think Richard maybe start with that.
Speaker Change: And again from my side.
Nino Froland: So the first question is just again, just, you know, you know, the the and maybe more for Clemens, maybe the reserve resilience, so the 7 percent, which is reserves plus R.A. So resilience plus R.A. divided by reserves. that number. Is it likely that it and go up. What do other stakeholders think about this? I'm thinking of auditors or others. and other stakeholders in this, because probably, you know, just again, a little bit more that when you say you added to Ukraine. Is it because you saw, you thought something about aviation or anything or is it just the opportunity to take part?
Richard: So the first question is just again.
Richard: Yes.
Richard: <unk>.
Richard: And maybe more of a payment maybe needs evolve resilient for the 7% vicinity.
Richard: Got it.
So the CGM.
Richard: Divided by the Doe.
Richard: That number is.
Richard: Is it likely that Jake.
Richard: That would go up one.
Richard: I wonder whether stakeholders think about this.
Richard: Thank you.
Richard: Okay.
Richard: Thanks, Glenn let people.
Richard: On the stakeholders because.
Richard: Obviously.
Speaker Change: Just again, a little bit more of that when you say you're ready for Ukraine.
Richard: Because you saw you talk something about the aviation.
Richard: Are they typically opportunistic.
Because we had low large losses.
Richard: And looking forward.
Richard: No that's no.
Richard: Second thing is just.
Richard: Okay.
Nino Froland: The real estate write down was much lower than you feared and again back to you know the topic of How are you looking at the private market world?
We undertake write down was much lower than you did.
Richard: And again back to the top.
Richard: Michael.
Richard: How are you looking at the private market.
Nino Froland: Are there still some concerns about write-downs or you think the situation is getting better on that front? Thank you. Yes, when it's on the resiliency level... In general, I'll let Sven probably add... and Rochelle. on aviation, to comment on that, what was our thinking around those strengths. And to be clear, that conflict has not been part of the resiliency in the past and is also not part of our resiliency. So we're talking about mainly IVNR here when it comes to Ukraine, Russia. So on the resiliency level, I just wanted to, that's why I always stress this, that we see the resiliency of the PNC really as a...
Richard: I just didn't have concerns about write downs.
Richard: The situation is getting better on that front. Thank you.
Richard: Yes.
Richard: Inventory levels in general.
Richard: S spend probably add to the specific Ukraine.
Richard: <unk>.
Russia.
Richard: So on aviation to comment on that.
Richard: Our thinking around those strengthening.
Richard: And to be clear.
Richard: That contract has not been part of the resiliency in the past and is also not part of our.
Richard: So we are talking about mainly <unk> and avia when it comes to Ukraine, Russia. So on the resilient 11.
I just wanted to deploy I always stress is that we see the resiliency of the P&C really.
Nino Froland: conjunction of the Willis-Towers-Watson report, which technically, you know, is referring to our reserving compared to the view of Willis-Towers-Watson on our mainly liability for incurred claims. So for the big part, they always stress that we should also take the risk adjustment into the equation, which is more, I would say, a technical calculated number and very much reflects our business. So that's now a billion on the risk adjustment. We started with the Towers-Watson report last year, 2.1 billion, and that number will go up. based on the initial discussions that we had with British Towers Boston. So if we think along the lines of, let's say we end at the range of 7 to 7.5% of relative resiliency level, I think there's still room to grow that number in a given year, but we are not planning any extraordinary...
Richard: That's the conjunction of the Willis Towers, Watson report, which technically.
Richard: Yes.
Richard: He is referring to our reserving comfort compared to a view of where they tell us.
Richard: Our mainly liability claims so for the big part.
Richard: We should also take the risk adjustment into the equation, which is more I would say the technical calculated number and very much reflect our business growth. So thats now the <unk>.
Richard: And on the risk adjustment, we started with the Willis Towers Watson report last year, $2 1 billion and that number will go up.
Richard: Yes.
Richard: Based on the initial discussions that we have to look for to tell us. If we think along the lines of let's say we ended the range of 7% to 75% of relative within 11, I think there's still room to grow that number in a given year.
We are not planning any extra ordinary.
Nino Froland: impact here, so I'd say that is a resiliency level where we feel absolutely comfortable with in relative terms. And again, if there is, in a given year, that earnings provide for that, we would still be willing and able. on that level we feel comfortable. Russia, Ukraine, when you might want to add. a bit more color on the overall thinking of our reserve strength over the course of the year. We are happy to do that. I mean the situation is largely unchanged when we look at this complex. the non-aviation path. All the lines of business on the non-aviation side are behaving according to our original expectations.
Richard: Impact so so I'd say that is resilient to levels, where we see absolutely comfortable with.
Richard: In relative terms.
Richard: And again.
If there is.
Richard: In a given year.
Richard: Good morning provide for that we would still be willing and able to increase that number even further but again.
Richard: On that level, we feel comfortable.
Richard: On Russia.
Richard: Russia.
Richard: <unk> you might want to add.
Richard: I'll give a bit more color on.
Richard: On the overall.
Richard: The strength over the course of the year.
Yes.
Richard: Sure happy to do that.
Richard: The situation is largely unchanged.
Richard: When we look at this complex.
Yes, the aviation and non aviation path.
Richard: All the lines of business on the non aviation saw.
Richard: Behaving according to <unk>.
Richard: No expectations.
Nino Froland: and we are certainly well within our original reserves when it comes to that side. On the aviation side, we still have the situation that we can only work on a loss scenario-based assumption, because we don't really have anything from our seeding companies on that side. On the other hand, we could see... trade press, and then of course also talking to our clients and checking where they are, that there was activity over the last couple of months when it came to commercial solutions between insurance companies and leasing companies. And so in that situation, and given that we had underutilized our loss budget for the year, we decided to increase the level of work we are doing on this claim.
Richard: Yes.
Richard: So if you will within our original resorts when it comes to that side.
Richard: The aviation pause as soon as the situation that you can only work on the loss scenario base.
Richard: Assumption.
Richard: Because we don't really have any anything from our ceding companies on that side on the other M C.
Richard: In the trade press.
Richard: Talking to our clients checking where they are.
Richard: And there was activity over the last couple of months.
Richard: Two commercial solutions between insurance companies and.
Richard: Do you think companies.
So in that situation that given that we had on the utilized lots.
Richard: Lots of budget for the year.
Richard: We decided to increase the level of prudency in our scenario based.
Richard: Look we have to weigh on this play is not driven by paid claims not paid.
Nino Froland: It's not driven by paid claims, it's driven by reserves received through a teamed account. I mean, all of this is still well within our original reserve position. from three years ago, but given that we sense that there is more going on on the settlement side, we wanted to be in a position. You see this as a more prudent approach at year-end to address this specific loss complex and overall you mentioned how other stakeholders view our resiliency level. I think this is a volatile business. of the first quarter, as we are seeing now. So we always argue, we are still, you know, this is best estimate.
Hi.
Richard: Yes.
Richard: We received through the account.
Richard: And all of this is still well within our own channel.
Richard: Our reserve position.
Richard: Three years ago.
Richard: But given that we are.
Richard: Mogul more going on on the settlement side.
Richard: We wanted to be in a position to be.
It's possible.
Richard: Okay.
Richard: Impact on all of that.
Richard: All right.
Okay.
Richard: See this is a prudent approach at year end to address specific loss complex.
Richard: And overall you mentioned, how other stakeholders view, our 11 I think this is a volatile business.
<unk>.
Richard: In the first quarter as we are seeing now so so we always argue we ask this is best estimate.
Richard: With the idea of a range of possible estimate which suits our business model.
Nino Froland: upper range of possible best estimates, which suits our business model, particularly our Hanover Rueck model, how we look at the combined ratio over the cyclist.
Richard: Our animal model, how we look at the combined ratio over the cycle as I mentioned earlier, that's very much.
Nino Froland: On real estate or generally on our alternative investments, yes, I think we, both 2023 and 2024, we had anticipated or volatility of our investment results. fact that particularly these funds, so real estate and products, these are better. We did expect fair values coming down, that has not really happened. on the private equity side and in those instances where it has, it has... mostly compensated by stronger returns, so the overall impact. Clearly it's a reduced income, but not to the extent we had hoped. famous tool for the real estate side A higher number, having said this, is on the direct real estate portfolio we have 37 million of write-downs.
Richard: Real estate are generally on the alternative investments, yes, I think we.
Richard: Both banks and its fee in 2024, we had anticipated.
Richard: More volatility of our investment reside.
Richard: Due to the fact that particularly.
Richard: So real estate and private equity.
Richard: Tons of value to.
Richard: Through the P&L.
We didn't expect.
Richard: It's coming down that has not really happened on.
On the private equity side and in those instances we have it has it has been.
Richard: Mostly compensated by stronger returns.
Richard: So the overall impact.
Richard: Clearly have reduced income.
Richard: But not to the extent we had expected same is true for the real estate side.
Richard: You would have expected.
Richard: Number having sat on the direct real estate portfolio.
Richard: $7 million of write Downs as mentioned early on the indirect side, that's probably another five so we landed 70 ish.
Nino Froland: Indirect flight is probably another 35, so we'll end it at that. would have actually expected more, so we have a cautious view when it comes to new investments, so I wouldn't... We are always a bit prudent when we clearly look at our investment income for the next year, but I would consider our guidance. The Roebuck Guidance for 2024, also for investment income. plan to reduce our exposure, both in private equity and greater state. On the contrary, we select... I'd look at opportunities. here and there at non-private equity use should really... Okay, thank you very much.
Richard: But we would have actually expected more.
Richard: So we have a cautious view when it comes to new investments so I wouldn't.
Richard: We've always.
Richard: We are always a bit prudent when we look at our investment income for the next year.
Richard: I would consider our guidance.
Okay.
Richard: Sure.
Richard: Rather realistic, but overall I think.
Richard: The robust guidance for 2024, or so far investment income so as for <unk>.
Richard: Looking at this market, we don't plan to reduce our exposure both in private equity and greater uptake on the contrary, we selectively on the direct to site.
Richard: Look at opportunities.
Hearing.
Richard: Non private equities.
Richard: Should we expect a steady growth of our private equity exposure with our without us.
Richard: Okay. Thank you very much.
Will Hardcastle: The next question comes from the line of Will Hardcastle from UBS, please go ahead. Thank you. And just to echo everyone else's comments, thanks very much, Jack. You'll very much be missed here. The first one is, I'm sure investors are pleased to see the 25% year-on-year uplift in dividend distribution. I guess, can you just give a bit more cover on how you determined that level? Maybe I'm being greedy here, but I might suggest that a less than 50% payout ratio is lagging some other larger European reinsurers. You've got a really confident outlook. You've got high stock of solvency.
Speaker Change: The next question comes from the line of will the op cost from UBS. Please go ahead.
Speaker Change: Thank you and just to echo everyone else's comments. Thanks, so much Jack you will very much be missed here.
Speaker Change: The first one is I'm sure investors are pleased to say the 25% year on year uplift and dividend distributions.
I guess can you just give a bit more color on how you determine that level, maybe I'm being greedy here, but I suggest I might suggest that less than 50% payout ratio is lagging some of the larger European reinsurers, you got really confident outlook, you've got a high stock of solvency I guess, what would make you consider raising that distribution payout further in.
Will Hardcastle: I guess, what would make you consider raising that distribution payout further in the future?
Will Hardcastle: And the second one is just linking to the reserve resilience. You linked it there with the liability reserve growth. I think there's been times where you've tried to get us to look away from that in the past and think about it in absolute terms. I guess, why are we now coming back to thinking about it as a percentage of liability reserves? And you mentioned there 8% in the past. Am I right in thinking that's probably going back to about 2018? And I think before that, it was higher than that. Should we think that that 8% sort of level is the upper end?
Speaker Change: Our future and the second one is just linking to the reserve resilience you linked it there with the liability reserve growth.
Speaker Change: I think theres been times, where you've tried to get us to take away from that in the past and think about it in absolute terms.
That's why we now coming back to thinking about it as a percentage of liability reserves and you mentioned there are about 8%.
Speaker Change: In the past I am I right in thinking that's probably going back to about 2019.
Speaker Change: And I think before that it was higher than that should we think 8% sort of level is the upper end. Thank you.
Will Hardcastle: Thank you.
Jean-Jacques: I'll take up the dividend question, particularly because I've been tweaking arms with them in the past few months. But in short, there's an element of judgment, of course, particularly on the earnings outlook, on the growth opportunities, and that's the starting point for us. And there, we are of the view that we have a favorable outlook, particularly in P&C, even though there is a little bit more rivalry among the main incumbents, we still see some good pockets of growth, very well priced, and this is really the starting point for the discussion. And then we wanted to give a hike on the overall dividend to send a signal of confidence.
Speaker Change: I'll pick up the dividend.
Speaker Change: <unk>, particularly because I've been tweaking arms.
Speaker Change: So in the past few months.
Speaker Change: In short there is an element of judgment of course on particularly on the.
Speaker Change: On the earnings outlook on the growth opportunities.
Speaker Change: Starting point for us.
Speaker Change: And there we are of the view that we have a favorable outlook, particularly in P&C, even though there is a little bit more rivalry among the main incumbents, we still see some good pockets of growth are you well priced.
Speaker Change: And.
Speaker Change: This is this is really the starting point for the discussion and then we wanted to give.
Speaker Change: Hi on the <unk>.
Speaker Change: Overall.
Speaker Change: Dividend to send a signal of confidence.
Sven: So we were around the 45-48 percent. We ended up with 47 percent being out, which we believe is a good indicator. It's very much aligned with... and then the rest is really getting to round numbers I suppose. But I think it reflects the fact that we want to show that growing trajectory and as long as we feel there are attractive well-priced opportunities for growth then we will take that option first.
Speaker Change: So we were around 45, 48%, we ended up with 47% payout, which we believe is a good indicator, it's very much aligned with that.
Speaker Change: The path.
Speaker Change: And then the rest is really getting to around numbers I suppose.
Speaker Change: But I think it reflects the fact that we want to show.
Speaker Change: That growing trajectory and as long as we feel that is attractive well priced.
Speaker Change: <unk> for growth then we will take that option.
Sven: Yes, well, and to complete that, probably, that arm twisting was for a reason, I can tell you, because as Jean-Jacques mentioned, you know, we spend a lot of time, a lot of time, a lot of time with the clients and brokers over the last couple of years as part of our... and myself, we saw a lot of clients across the globe and broke it. consistently the message of that there is plenty of opportunities for us to grow the business further and you know in all seriousness The capital is well-placed to support that growth and really, you know, continue that path of growth.
Speaker Change: Yes, well into a complete that probably that.
Speaker Change: Im twisting west for a reason I can tell you because there Sean Zach mentioned, we've spent a lot of time.
Speaker Change: If time allows time with clients and brokers over the last couple of years as part of our transition John Jacko lifestyles, we saw another clients across the globe and brokers.
Speaker Change: And we've received consistent with the message of that there is plenty of opportunities for us to grow the business further.
Speaker Change: All seriousness I think.
Speaker Change: Yes.
Speaker Change: <unk> is well placed to support that growth and really.
Speaker Change: Continue that path of.
Speaker Change: Producing.
Sven: a double-digit ROE and return it by that way to our shareholders. That's very much the philosophy and that's really the reason why we haven't changed the payout ratio going forward.
Speaker Change: Double digit roe's and and return it by that way too Alex Yao.
This is very much the philosophy and Thats really the reason why we haven't changed the payout ratio going forward.
Jean-Jacques: On the resiliency level, I try to recall sort of, you know, the comments in the context of our absolute reserve number. I think, you know, particularly in the years... 19, 20, 21, etc. I mean, we've grown our business quite substantially. And when you look at the reserves, of course, you know, they were driven by that growth of our underlying business, but also with a couple of large losses, you know, when I look at the COVID claims in 2020, et cetera, on the P&C side. So that has probably inflated the reserve level on a nominal basis a bit.
Speaker Change: On the resiliency level.
I try to recall is sort of the comments in the context of our absolute reserve number I think.
Speaker Change: Particularly in the sort of 19, 2021 et cetera, I mean, we've grown our business quite substantially.
Speaker Change: When you look at the reserves of costs.
Speaker Change: And by that growth of our underlying business, but also with a couple of large losses and when I look at the Covid claims in 2020 et cetera on the P&C side, so that would have probably inflated.
Speaker Change: <unk> level on a nominal basis.
Right.
Jean-Jacques: stronger than the resilience. embedded in that reserve would find their way into the Witte Talos. because that's only happening with a time lag of, let's say... The most recent underwriting years haven't even found their way into the research study. cautious on comparing the nominal resiliency levels with the nominal reserve levels in that context. and I think as we probably a bit more normalized view now, I think the peak we probably had, when I recall it correctly, around 2015. were around. which again was on a completely different book and it was eight and a half percent.
Speaker Change: Stronger than the resiliency embedded in that process would find their way into the way to tell us about.
Speaker Change: Because that only happening with the timeline.
Speaker Change: Let's say two to three years properly so the underwriting the at the most recent underwriting yet haven't even come their way into the reserve study.
Speaker Change: I would take the comment.
Speaker Change: Cautious on comparing the nominated resiliency levels with denominated reserve level in that context.
Speaker Change: And I think as we've property bitten off more normalized you know I think the peak, we probably had when I recall it correctly around 2015, I'd say, where we were at around 8% leased.
Speaker Change: Again, what's on a completely different book.
Speaker Change: And it was eight 5%.
Jean-Jacques: So, on a completely different... Clearly, when we are approaching 7.5%, we will see what the outcome of the study is. Again, it's not a fully academic exercise, but this is clearly a level where we...
Speaker Change: So on a completely different book clearly when we are approaching seven and a half.
Speaker Change: Percent.
Speaker Change: We will see what the outcome of the Hawk study.
Speaker Change: Again.
Speaker Change: It's not a fully academic exercise, but this is clearly an area, where we see as I recall.
Jean-Jacques: That's great. Thank you for that. And just to confirm, I always thought it was just the most recent underwriting year that sort of didn't filter into that resilience number. Sounds like it's two or three. Is that right? Yeah, it's probably, you know, I don't know the exact number, but it's not only one underwriting year. It's actually more than that. In Long Tail Lounge, you would actually wait probably two, probably in some instances, actually three underwriting years to really put this up as a resiliency. We wanted really just trying to stabilize and to have a firm view on That's great, thank you.
Speaker Change: That's great. Thank you for that and just to confirm I always thought it was just the most recent underwriting years that sort of didn't filter into that resilience number it sounds like it it's two or three is that right.
It's probably.
Speaker Change: I don't know the exact number but it is not only one underwriting yes, it's actually more than that in voluntary launches with actually wait probably.
Speaker Change: Two property in some instances actually three underwriting years to really put this up with E&P, we want liquidity lost clients to stabilize and to have.
Speaker Change: You want to be with us.
Speaker Change: That's great. Thank you.
Chris Hartwell: The next question comes from line of Chris Hartwell from Autonomous, please go ahead. It's been a long morning. I just wanted to come back to Will's question on the payout ratio on the dividend. I get that you want to redeploy that and some of the other comments that you made, but how do I square that with the growth outlook that you have? 7% wouldn't absorb a huge amount of additional capital for your top-line growth targets. Just trying to square the payout ratio with the growth ambition. Secondly, over the last couple of years, the CSM growth has been pretty rapid, yet you still guide to 2%.
Speaker Change: The next question comes from the line of Chris Hospital from Autonomous. Please go ahead.
Speaker Change: Okay.
Speaker Change: Good morning, sorry, good afternoon.
Speaker Change: It's been a long one.
Speaker Change: Just wanted to just have you sort of come back to Will's question on the on.
Speaker Change: The payout ratio on the dividend.
Speaker Change: I guess, the one sort of redeploy that sudden.
Speaker Change: Somebody out the comments you made.
Speaker Change: But how do I square that with.
Speaker Change: The growth outlook that you have 7%.
Speaker Change: Absorb a huge amount of additional capital topline.
Speaker Change: Topline topline growth targets, so just trying to square the payout.
Speaker Change: Payout ratio with with the growth ambition.
Speaker Change: And secondly also.
Speaker Change: So over the last couple of years in CSM growth has been pretty rapid surprisingly rapid yet you still guide to.
Chris Hartwell: Can you help me understand why the forward CSM growth is that low versus what we've seen before? What are you not expecting?
Speaker Change: I believe 2%.
Speaker Change: If you can help me understand why the.
Speaker Change: The forward CSM growth phase.
Speaker Change: Is that low versus what we've seen before what are you expecting or what have you.
Speaker Change: Not expected to recur.
Speaker Change: Thank you.
Chris Hartwell: Yeah, Chris, I'll start with the payout ratio and really I think when we think about growth or investing some of those retained earnings, we think about P&C, of course, and we really want to have room for maneuver and take any advantage of market opportunities, as Sven said, still in an attractive market environment. We also think about life and health. There is plenty of growth opportunities in life and health in the pipeline, so clearly that's another element. Also, I mean, you know, we've positioned our investment portfolio a bit more on the prudent side, really to position ourselves for any market volatility, so there might be opportunities actually to...
Speaker Change: Yes, Chris.
Speaker Change: The payout ratio and really I think when we think about growth or investing.
Speaker Change: <unk> retained earnings we think about P&C of course, and we really wanted to have room for maneuver.
And take any advantage of market opportunities.
Speaker Change: In an attractive market environment. We also think about life and health there is plenty of growth opportunities in life and health in the pipeline. So clearly that's another element also I mean, you know we've positioned our investment portfolio a bit more.
Speaker Change: The prudent side.
Speaker Change: Really to position ourselves for.
Speaker Change: Or any market volatility so there might be.
Speaker Change: Opportunities actually too.
Chris Hartwell: say to invest some of that I call it dry powder in the credit space, or even in listed equities, you know, more on an opportunistic basis. So really to support the gross. our assets under management, you know, again, as I mentioned earlier, we've seen another year of very, very strong operating cash flow. and that will be invested, so it's really just to give us room for manoeuvre. And then, you know, also on the hybrid side, you know, there's... an opportunity not to replace the hybrid that is due at mid-year, so this is really part of the equation and then we will revisit that position at year-end 2025.
Speaker Change: Let's say to invest some of that dry powder.
Speaker Change: In the credit space or even in listed equities more on an opportunistic basis, so really.
Speaker Change: To support.
Speaker Change: The growth in <unk>.
Speaker Change: Our assets under management again as Andrew mentioned.
Speaker Change: We've seen another year of very very strong operating cash flow.
Speaker Change: And that will be invested.
Speaker Change: So it's really just to give us room for maneuver and then also on the year on the hybrid side.
Speaker Change: There is an opportunity.
Speaker Change: That's not to replace.
Speaker Change: The hybrid is due mid year. So this is really part of the equation and then we will revisit that position.
Yes.
Speaker Change: 2025.
Chris Hartwell: So on the CSM growth, yes, well, Chris, so I'd say the CSM growth that we put out as a strategic target, we said, well, you know, there's at least 2% per year over the strategic cycle. That was our strategic target. And it is really just a message. I mean, you see that clearly our business on the P&C side is growing, but that overall CSM growth is very much fueled also by life and health. a commitment that over the strategic cycle, we want to grow our life and health business going forward. That is a way of, because as we always said, the revenue under IFRS 17 is a very useful KPI for capturing the growth in PNC, but still not for life and health.
So on the CFM growth yes.
Speaker Change: Chris So I'd say, the <unk> growth that we put out that the strategic target, we said well.
Speaker Change: At least 2%.
Speaker Change: The year over the strategic path that with our strategic ambition that we put out.
It is really just a message I mean, you see that clearly our business on the P&C side is growing but that overall CFM growth. It's very much fueled also by life and health.
Speaker Change: It's clearly a commitment that all of the strategic cycle, we want to grow our license business going forward.
Speaker Change: It's a way because as we always said the revenue under <unk> is very useful API, capturing the growth in PMC.
Speaker Change: For life and health and this is particularly true I believe for our portfolio.
Chris Hartwell: And this is particularly true, I believe, for our portfolio. where we have a very pronounced financial solutions business where mainly the margin is only captured in the revenue, so not a good indicator for the growth of our business. So that was the rationale behind it when you put out the 2%. I think when we look at both the new business, CSM, over the most recent years, which has been very healthy, but that business is, as we all know, very transactional. M growth that we've seen over the recent period. When we do assumption updates, we have rather seen that our reserving has been more on the prudent side than Lysen has, which we would have expected, and overall, we see more positive assumption updates that are puking the CFM than by default.
Speaker Change: Where we have a very pronounced financial solutions business.
Speaker Change: Mainly the margin is only captured into revenue. So another good indicator indicator for the growth of <unk>. So that was the rationale behind it.
Speaker Change: We put out the 2%.
Speaker Change: When we look at the both the new business.
Speaker Change: Over the most recent years, which has been very healthy.
Speaker Change: But that business as we all know very transactional I think.
Speaker Change: A huge contributor to the CFM growth that we've seen over the recent period.
Speaker Change: Is that.
When we do assumption updates we have rather seen that our reserving has been more on the approval side in life in house, which we would have expected and overall.
We see more positive assumption updates.
Speaker Change: A few thing this year and then vice versa.
Chris Hartwell: which is Hyde Park. Our assumptions but I would say both on the CSM for new business, which if transactional can be lumpy, as well as the CSM that stems from sumption update, I wouldn't expect that in any. and that's why we put out a bit more cautious guidance. before 2025, but we will see how it goes. again, particularly after a very strong CSM development in. I hope that answers the question.
Speaker Change: I think a quick.
Speaker Change: Message in terms of how we view our assumptions, but I would say both on the CFM for new business, which is transactional can be lumpy as well as the CFM that stems from assumption update.
Speaker Change: Wouldn't expect that in any given year.
Speaker Change: And then we have some very strong development in 2023, and then 2024, we've been a bit more cautious on a given financial guidance for 2025, and Thats why we put out a bit more cautious guidance.
Speaker Change: For 2025, what we will see how it goes.
Ken: Ken, particularly after a very strong season and development in 2000.
Ken: I hope that answers the question Chris.
Henry Hatfield: The next question comes from line of Henry Hatfield from Morningstar, please go ahead. Good morning, good afternoon, sorry. Thank you for taking my questions. I was just wondering if you could talk a little bit more about the top-line growth in poverty and casualty. in the Americas and the EMEA region, what in particular was driving that, and then in the life and health, could you just kind of... with us today. Just starting with the top-line growth on P&C, I mean in 2024 we certainly still saw prices increase. and in the Mayas, to ask for more limits on their reinsurance structure, that was certainly still a feature in 2024.
Speaker Change: The next question comes from line of Andrew We had seen from Morningstar. Please go ahead.
Andrew We: Good morning, good afternoon, sorry.
Andrew We: Thank you for taking my question I was just wondering if you could.
Andrew We: Talk a little bit more about the topline growth in property and casualty.
Andrew We: Within the Americas and the EMEA.
Andrew We: EMEA region in particular was driving that and then.
Andrew We: Life and health.
Andrew We: Could you just kind of.
Andrew We: Miami will confirm whether the U S mortality U S mortality.
Andrew We: Friday of the Springer Manav is now finished.
Andrew We: And perhaps talk a little bit about whether that was any experience variance within U S mortality business.
Andrew We: Yes.
Andrew We: So starting with the topline growth on P&C.
2024.
Andrew We: Certainly still saw prices increase.
Andrew We: Underlying volumes.
The business written by our ceding companies.
Andrew We: Also increased.
Andrew We: Because we're at the tail end of the inflationary environment. So on the volume.
Andrew We: The increasing from some insurers.
Andrew We: On point of view.
Andrew We: Plus.
Andrew We: Leading companies also decided both on the Americas and EMEA to opt for more limits on the reinsurance structure.
Andrew We: So we still didn't feature in 2024. So those were the main drivers for the EMEA us.
Henry Hatfield: So those were the main drivers for the Mayas and Americas. If you look at the 11% for the entire business... Of course, we must not forget the particularly strong growth we had in our structured and ILS unit, where particularly on the structure side, we have seen strong demand not only for the traditional surface relief kind of quarter-share structures, but also more excess of loss demand for spring-rated business or multi-year, multi-class business. dealing with the traditional increased retention levels, so that was part of the growth story. And then on the ILS side, we had a very successful year in our catastrophe bond activities when it comes to transformation.
Andrew We: Americas.
Andrew We: Look at the 11% for the entire business group.
Andrew We: Multiple kit.
Andrew We: The particularly strong growth within our structure.
And you want it.
Andrew We: Particularly on the structural side.
Andrew We: We have.
Andrew We: <unk> seen strong demand not only for the traditional telcos.
Andrew We: Lead time off.
Andrew We: Ownership structures.
Andrew We: Also.
Andrew We: A lot of demand for spring.
Andrew We: Yes.
Andrew We: The business.
Andrew We: With each additional increased.
Andrew We: <unk> levels.
That was part of the growth story, and then on the ILS side.
Andrew We: It's a very successful year.
Andrew We: Sure.
Andrew We: People aren't activities when it comes to the transformation.
Henry Hatfield: and the like, so those are the main ingredients of growth in orchards.
So those are the main ingredients of road.
Andrew We: Maybe 24 years.
Henry Hatfield: Yeah, and many thanks for your question on life on Earth. Very happy that I got the question on life on Earth. So, U.S. mortality, I can confirm that the issues that we had in the past are resolved. And you were mentioning also the experience variances. And you see in our presentation that we had positive experience variances this year of 204. And they're mainly coming from all the lines of business, including, by the way, U.S. mortality. So, we see experience variances, but positive. Great. Thank you very much.
Andrew We: Yes, many thanks for your question on <unk>.
Andrew We: I got the question of LIFO headwinds U S mortality I kind of confirm that issue.
Andrew We: We had in the past.
Andrew We: Resolved.
Andrew We: And you were mentioning also the experience variances.
Andrew We: In our presentation that we had positive experience variances. This year of 204, and they are mainly coming from all the lines of business, including by the way U S mortality experience and.
Andrew We: Positive experience.
Todd.
Andrew We: Okay.
Andrew We: Alright, Thank you very much.
Michael Hattener: We have a follow-up question coming from Michael Hattener from Bergenberg. Please go ahead. I'm very lucky. So, one is indeed a follow-up on the life, because if I look at your guidance 875, and I take the 889 figure and I add the 37 kind of insolvency number, which presumably is not repeated, I get already to, this is just 2024, to well above the 875.
Speaker Change: We have a follow up question coming from line of Michael Knott.
Andrew We: Please go ahead.
Andrew We: Okay.
One is indeed, a follow up on the life Cos.
Andrew We: If I look at your guidance 875, and I take the ASIC line.
Andrew We: <unk> thousand seven kind of influencing number which presumably is not repeated.
Andrew We: I guess, it's already to 2024.
Andrew We: <unk> 75.
Michael Hattener: So, I just wondered if you can give us a little bit more on how you, I know the question has been asked in terms of CSM, but maybe you can ask it in terms of this number as well.
Andrew We: So just wondering if.
Andrew We: If you can give us a little bit more.
Andrew We: On.
Andrew We: Another question has been asked in terms of CSN, but maybe.
Andrew We: In terms of this number as well.
Michael Hattener: And the other question is also on PNC growth of 7%. The 7% feels low given the way you're commenting about how you want to keep powder dry and stuff. Can you talk a little bit about how much you would expect from the renewal still to come up relative to the 7.2% I think you had in January?
Andrew We: And the other question is also on growth on P&C growth of 7%.
Andrew We: Field level, given the way you're commenting about how you want to keep powder dry and stuff.
Can you can you talk about a little bit about how much you would expect from the.
Andrew We: <unk> still to come up with.
Andrew We: Since I think January thank you.
Michael Hattener: Thank you. Maybe your first question on the guidance of our re-insurance services was if I got it right, it was the RSR, right? Your question was where it comes from compared to the re-insurance result of right now, correct? One thing that you need to see is that we cannot plan, we don't plan for positive experience variances. The experience variances that we're showing here in our plan are mainly zero, so if you take them out then you end up with a lower figure automatically, so that's the reason why you cannot expect a positive experience variance and then a much more positive re-insurance result from one year to the next.
Andrew We: Yes.
Speaker Change: Maybe first question on the on the guidance of our reinsurance terms yourself, if I got it right.
Andrew We: Right.
Speaker Change: Your question was.
Speaker Change: Where it comes from compared to the reinsurance or is the result of right now correct.
Speaker Change: Yes, one thing that you need to see is that we cannot we cannot plan. We don't plan for positive experience experienced violence et cetera.
Speaker Change: In our plan.
Speaker Change: So if you take them out then you end up with a lower figure automatically.
Speaker Change: So that's the reason why you cannot expect positive experience with <unk>.
Speaker Change: And.
Much more positive.
Speaker Change: Obviously, it does from one year to the next.
Michael Hattener: I was going to say, but Johanna, for me, I think you live positive experiences, that's why it's almost like...
Speaker Change: Okay.
Johan: But johan.
Speaker Change: No.
Speaker Change: I think your dream you live positive experience.
Speaker Change: So I'm just.
Speaker Change: Yes.
Speaker Change: It's almost like.
Michael Hattener: The answer you've given me would be, I would understand if it came from a weaker maybe French competitor, but from you, it's almost like you're speaking from a different company, that's why. But anyway, I take the comment. We are not the Germans, as you know, it's in our blood.
Speaker Change: The answer you've given me it would be would be.
Speaker Change: I would understand if it came from a weaker maybe competitor.
Speaker Change: It's almost like you're speaking from a different company, that's why but anyway.
Speaker Change: I take the comment.
Speaker Change: There are no northern Germany.
Speaker Change: No.
Speaker Change: Yes.
Speaker Change: Blood.
Speaker Change: Yes.
Michael Hattener: Yeah, but maybe, let me have another go then please, if I may. On US mortality, what are you seeing at the moment? Have we bottomed? Because I see the change in estimates is longevity in your CSM, so that's the opposite of mortality, so that feels like mortality is getting worse, but I don't know. But is there a change in the US? Are people starting to live longer again? So the change in estimates that you're seeing on the mortality and longevity side, that's something that we communicated on the UK. So in the UK, we have seen a change in the mortality, let's say mortality improvement, so we have less strong mortality improvement in the UK than what we thought, which led then to positive assumption changes on the longevity business in the UK and obviously to negative assumption changes on the mortality business in the UK.
Speaker Change: Hi.
Speaker Change: Well, maybe let's.
Let me have another go then please if I may on.
On U S mortality what are you seeing at the moment is that have we.
Speaker Change: Boston because.
Speaker Change: Because I see.
Speaker Change: The change in estimates as longevity in your CSM. So thats the opposite for mortality, so thats looks feels like what kind of six 6%.
Speaker Change: Getting worse.
Speaker Change: But.
Has that changed in the U S.
Speaker Change: Are people starting to live longer again.
Speaker Change: So the change in estimates that youre seeing on the mortality and longevity.
Speaker Change: That's something that that's what we communicated on the UK.
In the U K, we have seen a change in the amort.
Speaker Change: <unk>.
Speaker Change: Let's say some modest improvement so we have less strong mortality improvements in the UK than what we thought which led to positive assumption changes on the longevity business in UK, and obviously too negative assumption changes on the mortality business in the UK, we don't see anything similar right now in the U S.
Michael Hattener: We don't see anything similar right now in the UK.
Michael Hattener: Thank you. Well, on the revenue guidance for P&C, I mean, the year has started well. I mean, as we reported for the general renewals, which is 60% of our traditional treaty business, we managed to grow by 7.6%. We also had a good 1.1% for the structured activities. This is not part of the temporary reporting we are doing. So, I mean, let's wait and see. It's early in the year, let's particularly wait what the April Renewals bring. So, as we sit here today, I would say that the likelihood of us achieving the 7% has certainly increased after the January Renewals.
Speaker Change: Thank you.
Speaker Change: Well on the revenue guidance for P&C.
Speaker Change: Yes.
Started well.
We reported two meaningful for the general renewals with just 60% of our traditional <unk> business.
Speaker Change: Managed to grow by seven 6%.
Speaker Change: We also had a good one one.
Speaker Change: For the structure.
Speaker Change: Activities, which was not part of the.
Speaker Change: Our reporting we are doing.
Speaker Change: So.
Speaker Change: Let's wait and see it's early in the year, particularly with what the April renewal spring.
Speaker Change: So good.
Speaker Change: As we sit here today, I would say that the likelihood of achieving the 7%.
Speaker Change: Increased after the January renewal.
Michael Hattener: and let's revisit that once we have a few more renewal days. Brilliant, thank you.
Speaker Change: Let's revisit that once we have a few more renewal dates.
Speaker Change: Behind us.
Could it potentially be a chance.
Speaker Change: Going over and above the 7% portfolio.
Speaker Change: Thank you.
Nino Froland: The next question comes from Nino Froland, sender from OdoBHF. Please go ahead. First of all, Jean-Jacques, all the best for your future and thanks for the good discussions to the last few years. Much appreciated. Now coming to the questions on life and health, please. You were quite positive for the growth outlook of the segment. Looking at 2024, new business was down by around 15%. You also mentioned there are some problems, regulatory problems for financial solutions in China. Maybe you could comment on how this is going on. And also longevity business might be quite competitive out there.
Speaker Change: The next question comes from line of Paul <unk> from <unk> BHF. Please go ahead.
Speaker Change: Good afternoon, Tripadvisor Zac, although best for your future and thanks for the good discussion as to the last few years much appreciate it.
Speaker Change: Now coming to the questions on life and health. Please.
Speaker Change: We're quite positive for the growth outlook of the segment looking at 2024, new business was down by around 15%.
Speaker Change: You also mentioned some programs the regulatory program for financial solutions in China, maybe you could command Colo business going on.
Speaker Change: And although our longevity business.
Speaker Change: Might be quite competitive out there.
Nino Froland: So where is your positive stance on future growth coming? Maybe that would be my question. Thank you. Yeah, thank you very much. So maybe just quickly on these figures, on the new business CSM figures. I mean, as Clemens, by the way, said already, our business is very transactional. So one or two more deals changed his new business CSM dramatically. So that's something that you need to see. So whether we do a deal in December or January, it's going to change these figures completely, because we're looking into one year after the other. So very transactional, so a lot of changes there.
Speaker Change: Yes.
Speaker Change: Positive stance on future growth coming maybe that would be my question. Thank you.
Speaker Change: Thank you very much so maybe just pick on these figures on the on the new business <unk> figures.
Speaker Change: Payments by the way I said already our business very transaction, so one or two more deals change.
Speaker Change: Changed as new business CSM dramatically. So that's something that you need to see so.
Speaker Change: What do we do it.
Speaker Change: Remember our January it's going to take US completed recently, we're looking into one year. After the yogurt. So every transaction so a lot of changes there.
Nino Froland: So I wouldn't interpret too much into the absolute figure that we have there. Still, if you take the new business and the renewed business and the promulgations that we have been doing, we're still at a very healthy 600-plus million euros, which is positive. You were mentioning the China FS situation. You're right. There is a regulatory change in China, something that we know for a few months now, which means for us finally that we need to change our financial solutions that we're providing our clients with. While previously we have been providing solutions which were increasing the available capital for our clients, we now need to provide solutions which decrease the required capital for our clients.
Speaker Change: Interim read too much into the absolute figure definitely out there Steve is you take the new business the renewable business Center.
Speaker Change: Additionally, the foundations that we have been doing we're still at a very healthy 600 plus million euros interest which is positive.
Mentioning the China situation, you're right there is a regulatory change in China.
Speaker Change: It's something that we know for a few months now which.
Speaker Change: Which means for us finally that we need to change our financial solutions solutions that we're providing our clients with.
Previously we have been.
Speaker Change: Providing solutions, which.
Speaker Change: Which we are increasing the available capital for our clients, we now need to provide solutions, which decreased required coffee for all clients that this is a totally different couple of D. We are working on so thats why our view on that.
Nino Froland: And this is a totally different cup of tea. And we're working on this. So that's why our view on the absolute amount of profits that we can generate out of the financial solutions side in China are, let's say, more conservative at this stage. But we're working on a solution there. And last but not least, you were mentioning the longevity situation. One thing which led, by the way, to a little bit less CSMU business this year was the lack of a big, big longevity transaction. Typically in the UK. This is due, as you said, to competition that we're seeing.
Speaker Change: The amount of profit that we can generate out of the financial solutions side in China are let's say more.
Speaker Change: More conservative at this stage, but we are working on a solution there.
Speaker Change: And last but the least you were mentioning the longevity situation.
Speaker Change: One thing, which led by the way to a little bit less CSM new business. This year was the lack of a big big longevity transaction typically in the UK.
This is due as you said just the competition that we're seeing.
Nino Froland: And we feel that the margins that we were able to do with some of these large transactions were just not reaching the hurdle rate for us. So we decided not to write them. And that's also one of the reasons that we have. So on the longevity side, I think we're getting back, but also there. And that may be also the answer to the previous question. We're pretty, let's say, prudent in terms of how much new business we're going to be able to write out of these large transactions.
Speaker Change: We feel that the margins that we were able to do with some of these offshore transactions. We're just not.
Speaker Change: Reaching the hurdle rate for us so we decided not to write them.
Speaker Change: That's also one of the reasons.
Speaker Change: On the longevity side I think we're getting back.
But also there and that's maybe also the answer to the previous question.
Speaker Change: We are pretty let's say prudent in terms of how much new business, we're going to be able to write out of these lines of business.
Operator: Okay, thank you. As a reminder, if you wish to register for a question, please press star and the one on your telephone.
Speaker Change: Okay. Thank you.
Speaker Change: As a reminder, we should register for question. Please.
Ivan Bogmat: The next question comes from the line of Ivan Bogmat from Barclays. Please go ahead. One question from me would be quite general. I mean we're observing some fairly tectonic shifts, I think, in the European competitiveness, in the fiscal rules in Germany, so I'm just wondering if you could get your general thoughts on the underwriting opportunities that investment super cycle may present for you or maybe what changes to the investment portfolio you would anticipate in that respect. And second question, a lot less general. In your guidance for 2025 for investment results, do you anticipate some specific impairments on real assets?
Ivan: Next question comes from Ivan <unk> from Barclays. Please go ahead.
Ivan: Hi, good afternoon. Thank you very much for.
Ivan: So one question from me would be quite general I mean, we are observing some fairly dramatic shift I think in the European competitiveness in the fiscal rules in Germany. So I'm just wondering if you could give us your general thoughts.
Speaker Change: Underwriting opportunities that investment Super cycle May present for you or maybe what changes to the investment portfolio.
Ivan: I would anticipate.
Speaker Change: And that with respect and second question.
General.
Speaker Change: And your guidance for 2025 for investment result, do you anticipate some specific impairments on real assets. Thank you.
Ivan Bogmat: Thank you. I will start probably with the last one on alternative assets or real estate private equity. I would say overall we have been realistic in our assumptions. created a bit more prudency in 2023 and 2024, I wouldn't say that that is the case for 2025. Also, no specific impairments or write-downs or dramatic surveys. in our real asset portfolio. Maybe generally, Jean-Jacques speaking, I'm not sure you were referring only to the investment side or the underwriting side on the general shift. as a general response, I would say on both sides. We are quite agile and if we see opportunities, we go for it, so that's the specificity of the reinsurance business model to be really able to...
Speaker Change: Probably with the last one.
Speaker Change: On the alternative assets real estate private equity we have.
Speaker Change: I'd say overall, we've been realistic in our assumptions again.
Speaker Change: Make it a bit more prudency in 2023 and 2024.
Speaker Change: I will say that that is the case for 2025.
Speaker Change: So no specific.
And or write downs or dramatic changes.
Speaker Change: In our asset portfolio.
Speaker Change: In 2025.
Speaker Change: Maybe general manager John.
Speaking I'm not sure you were referring.
Speaker Change: Donnelley.
The investment side or the underwriting side on the general shift.
Speaker Change: Yes.
Speaker Change: As a general response I would say on both sides.
Speaker Change: What quite agile and <unk>.
If we see opportunities we.
Speaker Change: Go for it.
Speaker Change: Specificity of that the reinsurance business model to be really able to.
Yes.
Ivan Bogmat: track changes, shifting trends, and then capture these opportunities. So that's what we're going to do. I think in spite of the different views on climate change at the current stage in the international political arena, I still believe. The Energy Transition is going to take place and that's a good example where we can capture opportunities of both. I really I don't expect any dramatic change in our investment strategy. As Jean-Jacques said, I think we have flexibility in the investment portfolio to take advantage Again, that's a lot of flexibility, but clearly our investment philosophy, you know this, is no bets on interest rates, no bets on currency.
Speaker Change: Track changes shifting.
Speaker Change: Trends.
Speaker Change: Then capture these opportunities so that's what we're going to do.
Speaker Change: I think in spite of.
Speaker Change: The different views on.
Speaker Change: On climate change at the current stage in international politics.
I still believe that.
Energy transition to take place.
Speaker Change: A good example, where we can capture opportunities in both.
Speaker Change: In terms of investment contribution, but also in terms of underwriting development. So so.
Speaker Change: But again that agility to react to trends is really a key success factor.
Speaker Change: And subject to terms of course.
Speaker Change: Capturing.
Speaker Change: Capturing these opportunities.
Speaker Change: Okay.
Speaker Change: Does this answer your question Ivan.
Speaker Change: It was a very general questions I suppose.
Speaker Change: Work at better better formulary again next time.
Speaker Change: Yes.
Speaker Change: Let me look forward to it.
Speaker Change: Yes.
Speaker Change: Just on the investments I don't expect any dramatic change in our investment strategy as John said I think the effects ability in the investment portfolio to take advantage of any opportunity, we'll react to any changes in how we view credit <unk>.
Speaker Change: Hey, Bob.
Speaker Change: Again, that's another for flexibility, but clearly our investment philosophy.
Speaker Change: No bets on interest rates and all based on currency. So this is all going to happen in the context of asset liability management.
Ivan Bogmat: So this is all going to happen in the context of asset-live. Thank you very much both.
Speaker Change: Thank you very much guys.
Jean-Jacques: There are no more questions at this time. I would now like to turn the conference back over to John Jack Henshaw for any closing remarks. I will reserve the last minute registration for a minute. I'm sorry. Yeah, thank you. Sorry to jump in. I just thought that if there's no time, but you know, just one thing, two things at least. One is, Clement, I mean, knowing you for the last few years as well, is it a fair assumption that the agenda would remain one of continuity or or do you plan to review more and then maybe come to the market with some more plans later in the November with the new dealership from your side?
Speaker Change: Yes, no more questions at this time I would now like to turn the conference back over to John Jackson for any closing remarks.
Speaker Change: The last minute.
Britain: Britain stretch for a minute about holter I'm sorry from Mediobanca. Please go ahead.
Speaker Change: Yes, thank you sorry to jump in.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: One thing to think that this one is.
Speaker Change: I mean.
Speaker Change: For last few years as well.
Speaker Change: Fair assumption that.
Speaker Change: Hey, Jim we're debating what else can.
Speaker Change: Any deal.
Speaker Change: Or do you Glenn too.
Speaker Change: The few more and then maybe come to the market.
Speaker Change: Mobile data again in October November.
Speaker Change: Yes.
Speaker Change: The dealership.
Jean-Jacques: So that's very quick. Looking for a quick comment there. And next is just, you know, in the past I've asked a few times and it's entirely my fault to not pick it up yet, but when the US dollar strengthens, why does Hanover Rueck have a negative effect? if you don't mind, if it's possible to explain that. Thank you. It is just on the latter to get this sort of probably, you know, we've seen and I alluded to it with the strengthening of the U.S. dollar, we've seen P&L impact on the P&C side. That swing was quite dramatic year on year.
Speaker Change: So that's a pretty quick.
Speaker Change: No.
Speaker Change: Looking for a quick comment.
Speaker Change: Jim.
Speaker Change: In the past about 15th Avonex and <unk>.
Speaker Change: Picking up yet but.
Speaker Change: When the U S dollar strengthened.
Speaker Change: We have a negative effect.
Speaker Change: Good morning, guys.
Speaker Change: Yes.
Speaker Change: Great. Thank.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: To get the sort of probably we've seen and I alluded to it with the strengthening of the U S. Dollar we've seen P&L impact.
Speaker Change: On the P&C side, Thats being was quite dramatically year on year.
Jean-Jacques: for the We do this on an economic basis. So we really try to do ALM and currency matching based on our solvency tools. So one of the impacts that you then see in the accounting is that you still have an account. that are treated as monetary. income but there are also many assets that are treated as non-monetary items and they are not revalued through the P&L. And that is very much true for our private equity, for our real estate portfolio, et and that's why you have an imbalance. makes it a bit difficult, I should say this with my CFO glasses, to steer the results of course, but it provides a bit of volatility as we have seen in our case.
Speaker Change: For the.
Speaker Change: Hello digit number given financial year.
Speaker Change: Steve.
Speaker Change: Dave again.
Speaker Change: As we have very strong currency matching.
Speaker Change: We do this funding economic basis, so we really try to do.
Speaker Change: And currency matching based on our solvency tumor.
Speaker Change: So one of the impacts that you then.
Speaker Change: Counting that you still have an accounting mismatch.
Speaker Change: As true in India.
Speaker Change: Accounting regime.
Speaker Change: 2017, because the rest of the asset.
Speaker Change: Treated as monetary.
These are mainly fixed income, but there are also many assets that are treated the nonmonetary items not revalued through the P&L.
Speaker Change: Very much true for our private equity for our real estate portfolio et cetera, where any changes in.
Speaker Change: Currency.
Speaker Change: Not coming through the P&L and that's why you have an embedded.
Speaker Change: Makes it a bit difficult.
Speaker Change: I'd say this.
Speaker Change: CFO glasses to steer the results of course, but it provides a bit of volatility we have seen in our 2021, but it's really not something.
Jean-Jacques: but it's really not something that we see at an economic level. On the strategy, look, you know, I've got to talk about looking at Jean-Jacques right now. Look, I mean, we've been working for five years now, Jean-Jacques and myself, with this executive board team. We are just behind one year of our strategy, which we've all worked on together, which we've developed together. So we are all very happy, you know, with the strategy. We're happy with the targets that we achieved. So for us, as an executive team, and for me personally, clearly... I'm very grateful for the trust.
Speaker Change: That we see I think economic.
Speaker Change: I'll make that clear.
Speaker Change: Change.
Speaker Change: One on the strategy.
Speaker Change: But.
Speaker Change: I would talk about looking at Jones Act right now.
Speaker Change: Look I mean, we've been working for five years now so I'm talking myself with his executive team.
Speaker Change: We have just behind one year of our strategy, which we've all worked on together, which we've developed together.
Speaker Change: So we are all very.
Speaker Change: Happy with the strategy, we're happy with the target that we achieved.
Speaker Change: So for us as an executive team and for me personally to clearly.
Speaker Change: I'm very grateful for the trust.
Jean-Jacques: but I clearly, I see this as a privilege, personally, but it's clearly a message. continue on this trajectory. on the ROE, and this is all about being absolutely stringent on executing our strategy and, you know, continuing the path that we've done in the past. So don't expect any revolution, a bit of acceleration here and there, clearly, you know, as we are faced with market challenges, but that's really just the somewhat different Hannover E-Wave. It's clearly something that is top of mind.
Speaker Change: But I clearly.
Speaker Change: <unk> personally, but it's clearly a mandate to continue on this trajectory.
Speaker Change: Outperformance on the ROE.
Speaker Change: And this is all about being absolutely spending on executing our strategy and continuing.
Speaker Change: The path that we've done in the past so don't expect any resolution.
Speaker Change: A bit of acceleration here and clearly as we as we are faced with market challenges, but thats really just somewhat different Hana theory.
Speaker Change: Thats helpful.
Operator: Okay, thank you. There are no more questions at this time.
Speaker Change: Okay. Thank you.
There are no more questions at this time now I'd like to turn the conference back over to John <unk> for any closing remarks.
Jean-Jacques: Now I would like to turn the conference back over to John Jackinshaw for any closing remarks. Well, thank you very much, once again, for covering the ground very well. Thank you also for the kind words. It has been a big journey and part of the real pleasure I've had over the years was the dialogue with all of you. You're challenging questions, but it helps us to validate our thinking. really our acid test and something very, very useful to our thinking, to our strategy. I leave Hanover Rueck with an excellent feeling, again, satisfactory results in 2024, increasing resilience.
Speaker Change: Well. Thank you very much once again for covering the ground very well. Thank you also for the kind words it has been a big journey.
Speaker Change: Part of the real pleasure I've had over the years with the dialogue with all of you.
Speaker Change: We're challenging question, but it's helped us.
Speaker Change: To validate our thinking has been really our acid test in something.
Speaker Change: Hey, useful to our thinking to our strategy.
Speaker Change: As you've had already with excellent feeling again satisfactory results in 24, increasing resilience theres a fortress balance sheet here to create optionality to capture growth opportunities.
Jean-Jacques: There is a Fortress banner sheet here to create optionality, to capture growth of... but also to make sure that we can deliver on targets. I almost speak like a shareholder as we go, but I'm very confident personally about the outlook in my current role but also for the future. The team has a good blend of fresh perspective but also strong DNA in this somewhat different philosophy which we are going to nurture in the future. So all the best. Thank you very much for all your support and for the dialogue. And I wish all the best to the team as well.
Speaker Change: But it also.
Make sure that we can deliver on the targets are almost speak like a shareholder.
Speaker Change: As we go but.
Speaker Change: But I am very confident personally about the outlook.
Speaker Change: In my current role, but also for the future of the team.
Good plan.
Speaker Change: Fresh perspective.
But also a strong DNA in this somewhat different.
Speaker Change: <unk>, which we are going to nurture and the infrastructure. So all the best Thank you very much.
Speaker Change: All of your support and for the dialogue and our.
Speaker Change: Wish all the best to the team as well.
Operator: I'll be an active listener going forward for the next meeting. I will take you up on the long-term shareholders. With that, we close the call. Thank you, everyone.
Speaker Change: An active listener.
Going forward.
Speaker Change: The next.
Meetings. Thank you guys.
Speaker Change: I would take you up on the long term shareholders.
Speaker Change: Yeah.
Speaker Change: With that because the call. Thank you everyone.
Speaker Change: Okay.
Speaker Change: Okay.
Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yeah.