Q2 2025 Hannover Rueck SE Earnings Call

Moritz (Call Operator): Ladies and gentlemen, welcome to the Hannover Rück SE Q3 conference call on Q2 2025 results. I am Moritz, the call operator. I would like to remind you that all participants will be in a listen-only mode, and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Axel Bock. Please go ahead, sir.

Ladies and gentlemen, when it come to the huddle for re conference call on Q2, 2025 results I'm off the coast call operator, I would like to remind you that all participants will be in a listen only mode. At the conference is being recorded the presentation will be followed by a question answer session. You can register for questions.

Anytime by pressing star one on your telephone.

Assistance. Please press Star NGL the conference must not be recorded for publication of broadcast.

This time, it's a pleasure to hand over to accept book. Please go ahead Sir.

Clemens Jungsthofel: Good morning, everyone, and welcome to our earnings call on behalf of your results 2025. Today's speakers are Clemens Jungsthöfel, our CEO, and Christian Hermelingmeier, the CFO of Hannover Rück SE. For the Q&A, they will be joined by Claude Chèvre and Sven Althoff. With that, I hand over to you, Clemens.

Good morning, everyone and welcome to our earnings call on behalf of our results 2025.

Today's speakers are our CEO and John Hamilton, My elder CFO of Fanapt Murray.

Well the Q&A they will be joined by Claude Tampa, and then also with that I hand over to you cleanup.

CurrScore (Conference Host): Thank you, Axel. Good morning from Hannover. I am pleased to report that the business performance in the first half of 2025 leaves us very well positioned to deliver on our profit target for the full year. The group net income of €1.3 billion reflects a strong underlying profitability and additional positive effects from currency translation and from tax. As we had not planned for such positive effects, to be explicit, this left us in a very comfortable position where we could use the extra level of profits to further strengthen our company's balance sheet. We have added additional prudency to our P&C reserves. We have taken a more cautious view on certain pockets in our life and health portfolio, and we have realized some losses in our fixed income portfolio.

Thank you.

Good morning from Hanover.

So I'm pleased to report that the business performance in the first half of 2025 leased us very well positioned to deliver on our profit target for the full year.

The group net income of $1 3 billion euros reflects our strong underlying profitability and addition to the positive effect from currency translation and from tax.

As we had not planned for such positive effect to be explicit this left us in a very comfortable position, where we could use the extra level of profits to further strengthen our company's balance sheet.

We have added additional prudency to our P&C reserves.

We've taken.

A more cautious view on certain pockets in our life and health portfolio and we have realized some losses in our fixed income portfolio.

CurrScore (Conference Host): All of this improves our already strong capability to manage volatility, deliver on targets, and to pay a steadily increasing dividend. In P&C reinsurance, we have continued to grow our portfolio in an attractive rate environment. As explained at our Q1 conference call in May, the refinement in the calculation for the non-distinct investment component has a negative base effect on reported gross numbers. As it does not impact earnings, this is no cause for concern, also not when comparing to our 7% growth target. On an adjusted basis, the growth is in the double digits, clearly ahead of the 7% mark. The large loss experience in Q2 was rather benign, particularly on the net cut side, mitigating the significant overshoot of the budget in Q1. Hence, the overall impact from large losses only slightly exceeded the budget for the first half of 2025.

All of this improves our already strong capability to manage volatility deliver.

Deliver on targets.

And to pay a steadily increasing dividend.

In P&C reinsurance, we have continued to grow our portfolio in an attractive rate environment.

As explained at our Q1 conference call in May.

Find men and the calculation for the non distinct investment component has a negative base effect on reported gross numbers.

It does not impact earnings this is no cause for concern.

Also note when comparing to our 7% growth target.

On an adjusted basis the growth is in the double digits clearly ahead after that 7% Mark.

The large loss experienced in Q2 was rather benign, particularly on the Nat cat side.

Mitigating the significant overshoot of the budget in Q1, and the overall impact from large losses only slightly exceeded the budget for the first half of 2025.

CurrScore (Conference Host): As mentioned, we have used the overall positive result situation to add further prudency to our P&C reserves with a corresponding effect on the reported combined ratio. Nevertheless, adjusted for the large loss impact, the reported 88.4% is in line with our target, clearly pointing to a better underlying number. In life and health, reinsurance revenue remained rather stable. More importantly, the new business generation was clearly positive at €365 million, supporting our growth targets for the overall CSM. The reinsurance service result of €445 million reflects the overall positive business development and a precautionary increase in the risk adjustment for morbidity business in China. Altogether, we are well on track to deliver on our target for life and health for 2025. The investment performance was very satisfactory.

As mentioned, we have used the overall positive results situations to at the prudency to our P&C reserves with a corresponding effect on the reported combined ratio.

Nevertheless, adjusted for the large loss impact the reported 88, 4%.

Line with our target clearly pointing to a better underlying number.

In life and health reinsurance revenue remained rather stable more importantly, new business generation was clearly positive at $365 million supporting growth targets for the overall CSM.

The reinsurance service result of 445 million reflect the overall positive business development and a pre cautionary increase in the risk adjustment for morbidity business in China.

Altogether, we are well on track to deliver on our target for life and has for 2025.

The investment performance was very satisfactory the return on investment of three 3% is in line with the target despite around $60 million in active realization of fixed income losses in the second quarter.

CurrScore (Conference Host): The return on investment of 3.3% is in line with the target, despite around €60 million in active realization of fixed income losses in the second quarter. Finally, the capitalization remains strong with a solvency ratio of 261%. The decrease versus Q1 is mainly driven by the redemption of the hybrid bond, some smaller model changes, and the next step in our quarterly accrual of foreseeable dividends. Furthermore, the additional prudency in reserving is dampening the operating capital generation in P&C. Shareholders' equity decreased by 6%. Major driver here is the negative impact from currency translation. Economically, our asset liability matching is very good, not only for duration but also for currency. However, an accounting asymmetry is artificially splitting the valuation impact of the weakening U.S. dollar, leading to a positive P&L effect and a negative OCI impact.

Finally, the capitalization remained strong with a solvency ratio of 261%.

The decrease because Q1 is mainly driven by the redemption of the hybrid bond some smaller model changes and the next step in our quarterly accrual of foreseeable dividends.

Furthermore, the addition of prudency in reserve.

Serving is dampening the operating capital generation in P&C.

Shareholders' equity decreased by 6% major driver here is the negative impact from currency translation economically our asset liability matching is very good not only for duration, but also for currency.

However, an accounting asymmetry is artificially splitting the valuation impact of.

The weakening U S dollar leading to a positive P&L effect and the negative OCI impact.

CurrScore (Conference Host): The CSM increased by 3.8%, mainly reflecting the new business generated by both business groups, partly mitigated by negative currency effects. The risk adjustment decreased by 9.2%, mainly driven by some model refinements in P&C, as well as negative currency effects and a new retail session in life and health. Altogether, the performance of both business groups and our strong balance sheet, including the CSM and risk adjustment, give me considerable confidence in current and future earnings growth. The return on equity of 23% in a period with a large loss experience around the expected level is further confirmation of our success. On that note, I will hand over to you, Christian.

The <unk> increased by three 8%, mainly reflecting the new business generated by both business groups, partly mitigated by negative currency effects.

The risk adjustment decreased by nine 2%.

Mainly driven by some model refinements in P&C as well as negative currency effects and a new retro session in life and health.

Altogether.

The performance of both business groups.

And our strong balance sheet, including the CSM and risk adjustment gives me considerable confidence in current and future earnings growth.

The return on equity of 23% in a period with a large loss experience around the expected level.

Its further confirmation of our success.

On that note I'll hand over to you Christophe.

Christian Hermelingmeier: Yeah, thank you, Clemens, and good morning, everyone. Our P&C business is growing nicely on a diversified basis, including a strong contribution from structured reinsurance. The top-line growth is slightly below our 7% target for the full year. As Clemens mentioned, the reported number is impacted by a refinement in our accounting. However, this modification was not fully reflected in the first half of 2024, resulting in a one-off effect when comparing the revenue to the current year. Excluding this base effect, reinsurance revenue would have increased by more than 10%, clearly supporting the target achievement. Importantly, there is no impact on earnings due to the corresponding effects in the service expenses.

Yes, Thank you <unk> and good morning, everyone.

Our P&C business, it's growing nicely on a diversified basis, including a strong contribution from structured reinsurance.

The topline growth is slightly below our 7% target for the full year.

As Kevin has mentioned the reported number is impacted by a refinement in our accounting. However, this modification was not fully reflected in the first half of 2024, resulting in a one off effect when comparing the revenue to the current year. Excluding this base effect reinsurance revenue would have increased.

By more than 10% clearly supporting the target achievement.

Importantly, there is no impact on earnings due to the corresponding effects in this service expenses.

Christian Hermelingmeier: Furthermore, the accounting impact on reported growth should decline over the course of the year, and I would still expect that the reported FX adjusted growth will also end up in line with our target of at least 7%. The combined ratio of 88.4% includes a moderate negative impact from large losses, ending up 41 million euros above our budget. As Clemens already explained, the underlying profitability was even stronger in light of the additional balance sheet strengthening with an increase in reserve prudency. Finally, the combined ratio includes a discount effect of around 9%. As usual, the increase in prudency for our reserves is biased towards long tail line with a higher level of discounting. Overall, the discount effect is still higher than the interest decrease in the reinsurance finance result. As explained before, we have been very prudent on the reserving side as an offset.

Furthermore, the accounting impact on reported growth should decline over the course of the year and I would still expect that the reported FX adjusted growth will also end up in line with our target of at least 7%.

The combined ratio of 88, 4% includes a moderate negative impact from large losses, ending up 41 million euros above our budget.

Clements already explained the underlying profitability was even stronger in light of the additional balance sheet strengthening with an increase in reserve prudency.

Finally, the combined ratio includes the discount effect of around 9% as usual the increase and prudency for our reserves is biased towards long tail lines with a higher level of discounting overall, the discount effect is still higher than the interest accretion in the reinsurance finance result, as <unk>.

<unk> before we have been very prudent on the reserving side as an offset.

Christian Hermelingmeier: The favorable investment result primarily stems from the increased ordinary income from fixed income securities and very solid returns from alternative assets. For the sake of completeness, the amortization of our inflation-linked bonds added 69 million euros. Furthermore, we have used the opportunity offered by a strong result overall to moderately realize hidden losses on our fixed income portfolio. In Q2, this effect amounted to around 60 million euros. The currency result was significantly positive at 232 million euros, driven by the accelerated weakening of the U.S. dollar over the course of the first half year. The main contributor to the P&C service result is the CSM release, reflecting the recent renewals in a very attractive market environment. As in 2024, the CSM release includes smaller catch-up effects due to a prudent release in previous periods.

The favorable investment results, primarily stems from the increased ordinary income from fixed income securities and very solid returns from alternative assets.

For the sake of completeness, the amortization of our inflation linked bonds added 69 million euros.

Furthermore, we have used the opportunity offered by a strong result, overall to moderately realized hidden losses in our fixed income portfolio in.

In Q2, this effect amounted to around 60 million euros.

The currency result was significantly positive at 232 million euros.

Driven by the accelerated weakening of the U S dollar over the course of the first half year.

The main contributor to the P&C service result is to see them release, reflecting the recent renewals and a very attractive market environment.

In 2024 Dcs M release includes smaller catch up effects due to our prudent release in previous periods.

Christian Hermelingmeier: The experience variance mainly reflects our prudent reserving on the business earned from current underwriting years and the overshoot of our large loss budget. The run-off result has been positive in most regions and lines of business. As explained, we have used the strong underlying profitability and the overall strong result situation to add additional prudency to our reserves. This is the reason why we are reporting a negative run-off result of minus €419 million. Apart from this, the run-off result also includes our updated view on the Russia-Ukraine aviation loss and a moderate increase in the best estimates for some pockets of U.S. liability business. The loss component from new business is quite low, confirming the attractive rate environment in P&C reinsurance. The CSM growth is mainly determined by the successful renewal period in 2025, resulting in a strong new business CSM of €2 billion.

Experience variance mainly reflects our prudent reserving on the business earned from current underwriting years, Andy overshoot of our large loss budget.

The runoff result has been positive in most regions and lines of business, but as explained we have used the strong underlying profitability and the overall strong results situation to add additional prudency to our reserves. This is the reason why we are reporting a negative run.

Result of minus 419 million euros.

From this the runoff result also includes our updated view on the Russia, Ukraine aviation loss and a moderate increase in the best estimates for some pockets of U S liability business.

The last component from new business is quite low confirming the attractive rate environment and P&C reinsurance.

<unk> growth is mainly determined by the successful renewal period in 2025, resulting in a strong new business CSM of 2 billion euros comp.

Christian Hermelingmeier: Compared to the previous year, the number increased moderately. This development mirrors our renewal reporting: growth at slightly lower risk-adjusted prices and a reduced session rate to our retail program. Let's now move on to life and health. Reinsurance revenue was rather stable, increasing by 0.3% adjusted for FX. The revenue increase in financial solutions and longevity was offset by a decline in traditional business in greater China and the U.S. The new term "traditional business" refers to our combined mortality and morbidity business, reflecting a change in our internal reporting lines. The result for the first half of 2025 is based on favorable underlying profitability with a positive experience variance in all reporting categories. This strong basis allowed us to take a more cautious position with regards to our morbidity business, in particular in greater China.

Compared to the previous year, the number increased moderately.

This development mirrors, our renewal reporting.

Growth at slightly lower risk adjusted prices and reduced session rates to our retro program.

Let's now move on to life and health Green.

Reinsurance revenue was rather stable increasing by <unk>, 3% adjusted for FX.

The revenue increase in financial solutions, and longevity was offset by a decline in traditional business in greater China and the U S.

The new term traditional business refers to our combined mortality and morbidity business.

Reflecting a change in our internal reporting lines.

The result for the first half of 2025 is based on favorable underlying profitability with a positive experience variance in all reporting categories. This strong basis allowed us to take a more cautious position with regards to our mobility business in particular in greater China.

Christian Hermelingmeier: Altogether, the reinsurance service result of €445 million is fully in line with our full-year target. The investment result mainly reflects good ordinary income from fixed income. Altogether, the EBIT contribution from our life and health business group was €470 million. Looking now at the IFRS 17 components of the service result, the CSM release is the main profit driver, and the release in Q1 is within the expected range. The risk adjustment release has normalized after an extraordinary low release in the first quarter. The experience variance is clearly positive, based on a diversified contribution by line of business. Looked at in isolation, the experience variance for the second quarter was negative. This is connected to our U.S. mortality business and includes an adverse impact from large claims.

Altogether, the reinsurance service results of 445 million.

It's fully in line with our full year target.

The investment result, mainly reflects good ordinary income from fixed income.

Altogether, the EBIT contribution from our life and health business Group was 470 million Euro.

Looking now at the <unk> 17 components of the service result.

It's M release is the main profit driver and the release in Q1 is within the expected range.

The risk adjustment release has normalized after an extra ordinary low release in the first quarter.

Experienced variance is clearly positive.

Based on a diversified contribution by line of business.

We looked at in isolation the experience variance for the second quarter was negative. This is connected to our U S mortality business.

And includes an adverse impact from large claims.

Christian Hermelingmeier: Overall, this should be viewed in connection with the first quarter, where we have recorded a positive impact from the same business. Overall, the developments are within normal quarterly volatility and not connected to any underlying trend. The main driver for the loss component is our morbidity business, particularly the critical illness business in greater China. Here, the negative impact is not based on new trends resulting in assumption changes, but rather the overall level of profitability allowed for a more cautious positioning, reflected in an increase in the risk adjustment. With a more holistic and economic view on assumption changes and experience variance, I would like to point out that both the sum of assumption changes in the CSM and the loss component, as well as the experience variance, are positive in the first half of 2025. This again confirms the overall cautious initial assumptions in our diversified portfolio.

Overall this should be viewed in connection with the first quarter, where we have recorded a positive impact from the same business.

Overall developments within normal quarterly volatility and not connected to any underlying trend.

Main driver for the loss component is our morbidity business, particularly the critical illness business in greater China.

Here, the negative impact not based on new trends, resulting in assumption changes.

Rather the overall level of profitability allowed for a more cautious positioning reflected in an increase in the risk adjustment.

With a more holistic and economic view on assumption changes and experience variance I would like to point out that both the <unk>.

Some of assumption changes in the CSM and the last component as well as to experience variance are positive in the first half of 2025.

This again confirms the overall cautious initial assumptions and our diversified portfolio.

Christian Hermelingmeier: The CSM development on the right side is clearly impacted by the currency effects. The CSM generation, which includes the new business CSM and extensions on existing contracts together, amounted to €365 million, based on a diversified contribution from financial solutions and our traditional business. Changes in estimates are driven by updated assumptions for our longevity business. Altogether, the total CSM would have increased by 3.8%, excluding the currency effects, so nicely ahead of our 2% target. The development of our investments was again very satisfactory. The ordinary investment income reflects the continued rollover in a higher yield environment and a strong operating cash flow. Inflation-linked bonds contributed €69 million. Additionally, the contribution from alternatives was very solid.

You see us and development on the right side is clearly impacted by the currency effects.

<unk> generation, which includes the new business CSM and extensions on existing contracts together amounted to 365 million euros based.

Based on a diversified contribution from financial solutions, and our traditional business change.

Changes in estimates driven by updated assumptions for our longevity business.

Altogether. The total <unk> would have increased by three 8% excluding the currency effects. So nicely ahead of our 2% target.

The development of our investments was again very satisfactory the ordinary investment income reflects the continued roll over in a higher yield environment and a strong operating cash flow.

<unk> bonds contributed 69 million Euro <unk>.

Additionally, the contribution from alternatives was very solid.

Christian Hermelingmeier: In light of the positive currency result and a rather low tax rate in the second quarter, we decided to also strengthen our balance sheet on the investment side and took the opportunity to moderately realize some losses in our fixed income book. The income from the change in ETL and the fair value of financial instruments remained moderate. All in all, the return on investment of 3.3% is slightly above our 3.2% target, despite realizing around €60 million in losses in our fixed income portfolio. At the bottom of this slide, you can see that the unrealized gains within the OCI have changed materially in the category "Others." This reflects our participation in Viridium Holding AG, accounted as an asset held for sale. You have probably seen the latest news on this topic.

In light of the positive currency results and rather low tax rate in the second quarter, we decided to also strengthen our balance sheet on the investment side and took the opportunity to a moderately realized some losses in our fixed income book.

The income from the change in ECL and the fair value of financial instruments remained moderate.

All in all the return on investment of three 3% is slightly above our three 2% target despite realizing around $60 million in losses in our fixed income portfolio.

At the bottom of this slide you can see that the unrealized gains within the OCI has changed materially in the category others. This reflects our participation in vanadium accounted as an asset held for sale.

You have probably seen the latest news on this topic, we have decided to sell our entire stake later in 2025, concluding a highly successful financial investment for Hanover.

Christian Hermelingmeier: We have decided to sell our entire stake later in 2025, concluding a highly successful financial investment for Hannover Rück SE. To conclude my remarks, the business performance in the first half of the year was satisfactory. The positive impact from currency and tax has been used to further strengthen our balance sheet. We are well positioned to deliver on our targets in 2025 and in our continued positive earnings trends going forward. On that note, I will hand back to you, Clemens, for your comments on the outlook.

To conclude my remarks, the business performance in the first half of the year was satisfactory the positive impact from currency and tax has been used to further strengthen our balance sheet.

We are well positioned to deliver on our targets in 2025.

Our continued positive earnings trends going forward.

And on that note I'll hand back to you Clemons for comments on the outlook. Thank you Christiane.

Clemens Jungsthofel: Thank you, Christian. The mid-year renewals, I would say, lined up well with the trends reported in January and in April. The market environment is characterized by an increase in reinsurance capital and a willingness to deploy this capital in an attractive market environment. The resulting increase in competition has created some pressure on pricing, most pronounced in property CAT. Renewals in other lines of business are more stable. Casualty pricing in the U.S. was stable or up slightly, supported by the underlying rate increase in primary business. The overall risk-adjusted change in price was minus 2.9%. Terms and conditions, though, as well as attachment points, remain broadly unchanged. Overall, the rate and accuracy remain attractive, and we continue to expand our portfolio on a diversified basis.

So the mid year renewals I would say lined up well with the trends reported in January and in April the market environment is characterized by an increase in reinsurance capital and a willingness to deploy this capital in an attractive market environment.

The resulting increase in competition has created some pressure on pricing most pronounced in property cat.

When you lose in other lines of business are more stable casualty pricing in the U S was stable or up slightly supported by the underlying rate increase in primary business.

The overall risk adjusted change in price was minus two 9%.

Terms and conditions, so as well as attachment points remained broadly unchanged.

Overall, the rate and accuracy remains attractive and we continue to expand our portfolio on a diversified basis.

Clemens Jungsthofel: Looking at the outcome of the mid-year renewals, this has been masked by a reduced placement for a large individual treaty in the U.S. Adjusted for this, the premium growth would have been 4.5%. On top of this, we benefited from favorable demand for structured reinsurance, posting double-digit growth in the first half of 2025. To summarize the year-to-date renewals in 2025, Hannover Rück SE has grown the premium volume by 5.4%, despite the reduced volume from one large treaty. The underwriting year 2025 marks the third consecutive one in a very attractive market environment. The quality of our portfolio and the business we earn going forward will remain strong. As the results of the first half year fully support our expectation for 2025, we've kept our guidance unchanged. We continue to expect growth in P&C revenue of at least 7%.

Looking at the outcome of the mid year renewals. This has been masked by a reduced placement for large individual treaty in the U S.

Adjusted for this the premium growth would have been four 5%.

On top of this we benefited from favorable demand for structured reinsurance posting double digit growth in the first half of 2025.

To summarize the year to date renewals in 2025.

Anna Marie has grown the premium volume by five 4% despite the reduced volume from one large treaty.

The underwriting year 2025.

The third consecutive one in a very attractive market environment.

The quality of our portfolio and the business, we earn going forward will remain strong.

As the results of the first half year fully supports our expectation for 2025, we've kept our guidance unchanged.

Continue to expect growth in P&C revenue of at least 7%.

Clemens Jungsthofel: On an underlying basis, we are very well on track, while on a reported basis, including the aforementioned accounting impact, we might end up closer to the target. The combined ratio is expected to come in below 88%. The large loss experience in the first half year was close to expectation. This means that we have almost a full budget available for the second half. Additionally, the overall level of prudency and the added amount in Q1 and in Q2 provide considerable confidence in our target delivery. The life and health service result is expected to come in above 875 million, and we are targeting a return on investment of at least 3.2%. Altogether, we are highly confident that we will achieve our net income guidance of at least €2.4 billion. This concludes my remarks, and we would be happy to answer your questions.

On an underlying basis, we are very well on track.

On a reported basis, including the aforementioned accounting impact we might end up closer to the target.

Our combined ratio is expected to come in below 88%.

The large loss experience in the first half year was close to expectations. This means that we have almost a full budget available for the second half.

Additionally, the overall level of prudency and the added amount in Q1 and in Q2 provide considerable confidence in our target delivery.

The life and Health service result is expected to come in above $875 million and we are targeting a return on investment of at least three 2%.

Altogether, we are highly confident that we will achieve our net income guidance of at least $2 4 billion euros.

This concludes my remarks, and we would be happy to answer your questions.

Moritz (Call Operator): Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press the star and one button on their touch-tone 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 two. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question comes from Michael Hutner from Berenberg. Please go ahead.

Ladies and gentlemen, we will now begin the question answer session anyone who wishes to ask a question May press star and one button on your 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 two participants are requested to use only handsets when asking a question.

Anyone who has a question press star and one at this time one moment for the first question. Please.

And the first question comes from Michael Huttner from <unk>. Please go ahead.

Michael Hutner: Yeah, good morning. Thanks a lot. I had two questions there, numbers. The first one is on Sonsi. I just wondered if you could give us the detailed breakdown of the move from 272 to 261. I guess the more detail we have, the better to understand it because that is the number which I cannot square at all. On Viridium, I am looking at slide 13. I see the others, and you highlighted the difference in participations would mostly be the Viridium coming out of it. So plus 355 to minus 58, that is kind of, I guess, a 410 million gain. I just wondered if that is the gain you would expect, and how will that be booked? Is it part of your $2.4 billion profit target? How much cash will you get? Thank you.

Thanks, a lot.

Two questions.

Numbers.

The first one is on I just wondered if you could give us the detailed breakdown of the move from.

Two seven to 261.

Yes.

I guess the more detail, we have the better the better to understand it because thats, the number which I can't square.

That's all.

And then on the regions.

I'm looking at slide 13, and see the others and you highlighted the difference.

Yes.

Patients would mostly be the iridium coming out.

355 to minus 58.

I guess $410 million gain I just wanted the fact is again you would expect and.

How will that be booked is it part of your two point.

4 billion profit targets.

How much cash would you get thank you.

Claude Chèvre: Yeah, thanks, Michael, for your questions. The first, if I got it right, concerning the delta in the solvency two ratio, can I elaborate a bit on that? Half of the 11 percentage points difference is just related to the repayment of the 500 million euro hybrid bond. This was communicated before and as expected. The second half of the movement is quite a mix of different effects. Some, of course, growth-related impact, minor model updates, spread movement, and updating of the underlying data. You have to consider that our very prudent reserving approach dampened a bit the operational owned funds generation. This is also reflected here in the solvency ratio.

Yes, Thanks, Michael for your questions. The first if I got the drive to concerning the Delta in the solvency II ratio can elaborate a bit on that so half of the 11 percentage point difference is just related to the repaint.

And of the 500 million Euro hybrid bonds. So this was communicated before and as expected.

And the second half of the mood movement is quite a mix of <unk>.

Different.

<unk> effects. So some of course gross related.

Impact minor model updates spread movement and updating of the underlying data and you have to.

Consider that our very prudent reserving approach them EBIT operational owned funds generates generation. So this is also reflected here in the solvency ratio.

Michael Hutner: Just on that, could you give us a little bit more? Any numbers on these things would be so kind, but I understand if you would rather be vague.

Just on that would you could you give us a little bit more.

Any numbers on these things.

But I understand if you drove a piece.

Rick.

Claude Chèvre: Consider them all to be in a low single-digit space. There is really none of them outstanding. This is, from my point of view, really the quarterly volatility in an internal model when you rerun it. Nothing standing out there.

Yes.

So consider them all to be in the low single digit space. So there is really none of them outstanding. This is from my point of view really the quarterly volatility.

Turning to model when when you rerun it so nothing standing out there okay. Okay.

Michael Hutner: Lovely. Okay.

Clemens Jungsthofel: Michael, on Viridium, you have pointed at the number. I do not have an exact number off the top of my head, but the overall gain will be in, I would say, the mid-triple-digit million area. That is due to the accounting regime, the accumulated value and gain in the OCI. As we have opted for valuing this investment through the OCI and not through the P&L, this will be basically a recycling from OCI to retained earnings straight away. This will not touch our P&L. This is not part of our 2.4 billion guidance. In terms of cash, sorry, Michael.

Michael.

Radium you've pointed at the number I don't have an exact number off top of my head, but but the overall gain will be in I would say the mid triple digit million area.

And that is due to the accounting regime, the accumulated value and gain in the other comprehensive income.

As we have opted for valuing this investment through the OCI and not through the P&L. This will be basically a recycling from OCI to retained earnings straight debate. So this will not touch our P&L. So this is not part of our $2 4 billion guidance.

And in terms of cash I'm, sorry, yes, thats exactly sorry.

Claude Chèvre: Yeah, that's exactly. Sorry.

Clemens Jungsthofel: No. In terms of cash, that is largely the amount our book value has been in the double-digit area. I think clearly the fair value on our IFRS balance sheet, as mentioned, but that is largely the cash that we will receive.

And in terms of cash that's largely the amount our book value is.

<unk> has been in the double digit area.

Think clearly the fair value on our balance sheet as mentioned.

Largely sort of the the <unk>.

Cash that we that we will receive.

Michael Hutner: Can you help me on that? I don't know where to look for this other item you just mentioned.

Can you help me on that.

I know where to look for this other item you just mentioned.

Clemens Jungsthofel: The cash position you will not see in our half-year financial statements, I think. It is part of the overall cash flow, of course, and that will show up in our operating cash flow.

Yes.

Cash position, you won't see an hour and hour half year financial statements I think so it's part of the overall cash flow of course and that will show up in our cash flow and our operating cash flow.

Michael Hutner: I understand, but just to give, I do not know how to ask the question, how much cash will you get? I think that is the best way I can ask it.

I understand that.

Just to get it.

I don't know how to ask a question on how much cash would you get so I think thats the best way I can ask it yet.

Clemens Jungsthofel: Given that it's a double-digit accrued book value on Viridium Holding AG, it's mainly the number, the triple-digit million number that I alluded to earlier, Michael, is roughly also the amount of cash that we will get.

Given that it's a double digit accrued book value on <unk>, it's mainly so the number sort of the triple digit million number that I alluded to earlier Michael is roughly also the amount of cash that we will get.

Michael Hutner: Brilliant. Sorry, I was a bit sick. Thanks a lot.

Alright.

Thanks, a lot.

Clemens Jungsthofel: You're welcome.

Youre welcome.

Moritz (Call Operator): The next question comes from Andrew Baker from Goldman Sachs. Please go ahead.

And the next question comes from Andrew Baker from Goldman Sachs. Please go ahead.

Michael Hutner: Great. Thank you for taking my questions. First one, just on P&C Re. You have alluded yourself that the underlying combined ratio when you sort of normalize for prudency taken in current year reserves, the run-off result versus a normalized assumption, obviously large losses versus budget is running very favorably versus your planning target. As we think about the rest of the year, obviously I appreciate it will depend on losses, but just assuming large losses are in line with budget, should we expect you to show any of this underlying combined ratio strength into earnings, or will your preference continue to be to sort of strengthen the balance sheet and look more towards that 88% combined ratio level? That is the first. The second one, just on the Russia-Ukraine reserve. Can you just remind me, or I guess tell me what the reserve stands at now?

Alright. Thank you for taking my questions first one just on P&C re I mean.

We've alluded yourself the underlying combined ratio when you sort of normalize for prudency taken and currency was a one off versus a normalized assumption obviously large loss address budget is running very favorably versus your planning target.

Think about the rest of the year.

I appreciate would depend on losses, but just assuming large losses are in line with budget should we expect you to show any of this underlying combined ratio shouldn't into earnings or will your preference continues to be to sort of strengthen the balance sheet and looked more towards 8% combined ratio level.

First and then the second one just on the Russia, Ukraine Reserve.

Can you just remind me I guess tell me what the reserve stands at now and then also was the increase just prudence or any specific new information that you've had in the period. Thank you.

Michael Hutner: Also, was the increase just prudence, or was it a result of any specific new information that you have had in the period? Thank you.

Silke Sehm: I will start with the second question, Andrew. Our aviation reserve on Russia-Ukraine is in the mid-triple-digit region. The reason why we have now increased this number by a low triple-digit figure is related to the decision of the High Court in the UK. We still have the situation that we do not have reserves given to us by our seeding companies for the most part. Therefore, our reserving is based on a scenario analysis. Given the ruling in the UK, we have somewhat adjusted our assumption on the average settlement values across all claims and how these are split across the all-risk coverage and the whole war coverage. That adjustment in our scenario analysis led to a low triple-digit increase, and the overall loss still stays in the mid-triple-digit region.

I'll start with the <unk>.

Second question Andrew.

So our aviation reserve on Russia, Ukraine.

And the mid Triple digit region. The reason why we have.

Now increased this number.

Low triple digit figure.

As relates to the decision of the high court in the U K.

Still have the situation that we don't have.

<unk> given to us by our ceding companies for the most part.

Therefore, our reserving is based on the scenario analysis.

And given the ruling in the U K, we have somewhat adjusted our.

<unk> on the average settlement will use across all claims and how these are split.

Across the.

All of this coverage and the whole wall coverage.

And that adjustment in our scenario analysis led to a low triple digit increase.

The overall loss still stays on the midst of triple the region on the P&C saw it's about I'm sure Christian and claimants will add to that.

Silke Sehm: On the P&C side, but I am sure Christian and Clemens will add to that, it is of course too early to tell. It all depends on how the losses fall. You know that we do our reserve study in the fourth quarter, and taking all of this together will then put us into a position. How much are we going to let through into the P&L at this stage? All we can say is that we are happy with our guidance of being below 88% for the full year, and the rest depends on both the reserve study and the major loss experience.

Of course too early to tell it all depends on how the losses fall.

That we do a reserve study in the fourth quarter and taking all of this together.

We will then put us into a position.

How much.

Are we going to lead us through the.

Into the P&L at this stage all we can say is that we are happy with our guidance of being below 88% for the full year.

And.

The rest depends on both the reserve study.

Sure loss experience.

Moritz (Call Operator): Great. Thank you. The next question comes from Shanti King from Bank of America. Please go ahead.

Alright, thank you.

And the next question comes from Sean Kang from Bank of America. Please go ahead.

Shanti King: Hi, morning. Thanks for taking my question. I just had one question on the P&C reserve strengthening. I was just wondering if you could possibly quantify how much that contributed to the combined ratio for this quarter or this half of the year, or perhaps if you cannot give the exact figure, if you could frame it in terms of what the impact would have been without having booked the additional prudency on the combined ratio. The second question is just on the increase in the risk adjustment relating to China morbidity. Could you just give us an update on these lines and the philosophy going forward of how that drag is going to continue? I know that you guys have taken action here in the past, so just what has changed now to kind of warrant that further increase would be helpful. Thank you.

Hi morning, Thanks for taking my question I just had one question on the P&C reserve strengthening so just wondering if you could possibly quantify how much that contributed to the combined ratio for this quarter or this half of the year.

Perhaps.

If you can't give the exact figure if you could frame it in terms of what the impact would have been without having that data.

The additional prudent on.

The combined ratio and then the second question is just on the increase in the risk adjustment.

I think the China mobility could you just give us an update on <unk>.

On these lines in the philosophy going forward of how that drug is going to continue and I think you guys had taken action here in the past.

What has changed now to kind of warrant that further.

Increase would be helpful. Thank you.

Claude Chèvre: Thanks for your questions. Maybe I start with the P&C reserve strengthening. If you look at our run-off result of $419 million, as Clemens just at the beginning already mentioned, you could assume that by the running business, we would see a positive impact here and a positive run-off result. Even if we consider the Ukraine reserve strengthening that Sven just mentioned, it would still be above zero, so non-negative. The rest, as you know, we do not have a fully detailed reserve study at this point of the year, but just to give you a feeling for the volume, this could be the today estimated amount of prudency built up. If you start with the 88% combined ratio, you could deduct a couple of percentage points, but it is too early to be really precise here.

Yeah. Thanks for your questions and maybe I'll start with the <unk>.

P&C reserve strengthening if you look at our run off reserves of 419 million. So <unk> adjusted the beginning already mentioned and you could assume that by the running business, we would see a positive impact here in the positive runoff result, and even if we can.

Cedar <unk>.

Crane reserve strengthening that spend just mentioned it would still be above zero on non negative and the rest and as you know we do.

Do not fully detailed reserve study at this point of the year, but just to give you a feeling for the volume.

This could could could be.

Today is day to day estimated demand of prudency built up so if you start with the 88% combined ratio you could deduct a couple of percentage point, but it's too early to be really precise here.

Clemens Jungsthofel: That's maybe on your question on China. We haven't seen observed any negative trends or any additional more claims in this portfolio. It's simply that we have had very good results, as Christian and Clemens already alluded to, in life and health, and this allowed us to take just a more prudent approach with this portfolio. That's why we increased the risk adjustment.

So maybe on your question on China.

We haven't seen observed any negative trends or any additional more claims in this portfolio. Its simply that we have had very good results as <unk> already alluded to in life and health and this allowed us to take us the more prudent approach with this with this portfolio. So that's why we increased the risk adjustment.

Shanti King: Thanks. Just on that, what is the kind of time horizon you are expecting that to continue, those additions? Can you conceptualize that for us, or is it still quite unknown?

Thanks, and just sorry, just on that how what's the kind of time horizon, you're expecting that to sort of continue that presentation.

And can you kind of conceptualize upfront or is it still quite online.

Clemens Jungsthofel: The point is that on life and health, you are always on the best estimate assumption. So, in principle, what we have done right now is our best estimate, but as you know, best estimate is always 50-50. I cannot give you any time horizon on this one.

But the point is upon license is youre always on the best estimate assumption. So in principle, what we have gone right now with our best estimate, but as you know best estimate is almost 50 50.

So I cannot give you any time horizon on this one.

Shanti King: Okay, thank you.

Okay. Thank you.

Moritz (Call Operator): The next question comes from Cameron Hussain from J.P. Morgan. Please go ahead.

And the next question comes from Kamran Hossain from Jpmorgan. Please go ahead.

Cameron Hussain: Hi, good morning. I just want to come back to the kind of underlying profitability and what the implications are. I guess given the math, I think at Q1, you said 100 triple-digit positive development should happen every quarter. So you take the 400 million, you add a couple of hundred million on for each quarter, you take off Russia-Ukraine, you are probably like 500 million for the first half. So it gets you to a kind of low 80s combined. I am just really interested in kind of the philosophical view about this within Hannover Rück SE. Clearly, there is a material gap between your targets, so the better in 88, and kind of where you are actually writing the business. When do you start to close that gap? Is this something where you have got the EBIT target, obviously, kind of 5% growth out to 2026?

Hi, Good morning, I, just want to come back to the.

Kind of underlying profitability and kind of what the.

<unk>.

I guess given the markets.

I think Q1, you said 100 triple digits.

Since developments should happen every quarter.

Take the 400 mandate and you'll have a couple hundred million on for each quarter.

For our sheet, creating appropriate $500 million.

So I guess, you said kind of low eighty's combined.

Just ratings.

Under the philosophical view about this will then highlight our rate.

Jamie that's a material gap of trading to a target.

That's through an 8-K.

And kind of where you see Washington business when do you start to close that gap.

Something where you've got the EBIT target, obviously, 40% growth.

Out to 2020, so no need to kind of get paid in gaming, but more at this stage.

Cameron Hussain: So no need to kind of dip in and do a little bit more at this stage. Just interested in kind of views on that. Then the second question is just on the reinsurance treaty that you kind of flagged. What kind of treaty it was that you gave up and why in particular you decided to come off this business. Thank you.

Views on that.

Second question is just on the reinsurance treaty that you kind of flagged.

Kind of what kind of <unk>, what you gave up in volume in particular, he just wanted to circle to come off.

Thank you.

Silke Sehm: Yeah, Cameron, I will start with the second question. This was a U.S. proportional treaty. The ceding company was what you call an insurtech. It could have been written in the structured bucket because the risk transfer on that transaction was not very significant. We wrote it in the traditional basket. The reason why we have less revenue coming from that contract is the fact that the ceding company significantly increased their net retention on the quota share. When you look at the session that is remaining, we could actually increase our share. From a market share perspective, you could argue we even increased, but overall the session reduced significantly. Without that, we, as we said, would have grown by 4.5% at the 1st of July, which gives you an idea about the potential size of the loss premium.

Hey, Cameron I'll start with the second question.

So this was a U S proportional treaty the seeding company.

It was what you call and insure tech.

It could have been written in the <unk>.

Structured buckets, because the risk transfer on the transaction was not very significant the.

Rather than the traditional basket.

Reason why.

We have less.

Revenue coming from that contract is effect.

The ceding companies significantly increased.

Net retention on the quota share when you look at the session that is remaining we could actually increase our share. So from a market share perspective, you could argue even increased but overall the session reduced significantly.

And without that.

We as we said we would have grown by four 5% at the first of January.

As of July renewals.

Which gives you an idea about the potential size of.

The Los premium, but as I said, we could also have written that off.

Silke Sehm: As I said, we could also have written that on the structured size, which also means that from a reinsurance service result point of view, the margin on this, as it is a risk remote quota share, was not significantly high. So we do not expect a significant impact on our reinsurance service result capabilities.

The structured saw us, which also means that from a reinsurance service results point of view.

The March numbers.

Is it as a risk remote quota share was not significantly higher so we don't expect a significant impact on our on our reinsurance service resource capabilities.

Claude Chèvre: Regarding Cameron, your first question. First of all, to comment on your back-of-the-envelope calculation, this sounds plausible to confirm that. Looking forward, as said, we have to stay prudent here. We will wait for the hurricane season and the loss development. In Q2 or November, we will look at this, where we stand, and then it is time to decide if there is an impact or where to go ahead.

Regarding your first question. So first of all to comment on your back of the envelope calculation sounds plausible.

To confirm that.

Looking forward as said we.

I have to stay prudent here, we will wait for the hurricane season, and the loss development and in Q2 or in November we will look at this where we stand and then it's time to decide if there is an impact or where to go with.

Cameron Hussain: Sorry, I was probably more thinking about not 25 because I know you are quite a long way through the year just in terms of what that might mean into next year. I know you are not going to give guidance until Q3, but just philosophically, is there any incentive for you to kind of push the EBIT a little bit harder than I guess the 24 to 26 target suggests?

Sorry.

Probably more thank you about 25 because.

Quite a long way through the year just in terms of what that might maintenance Tonight.

We give guidance in Q3, but just philosophically if there are any incentive fee.

The EBIT that hardware.

The 24 to 26 targets.

Claude Chèvre: I guess I have to disappoint you here, but unfortunately, the same comment refers to that. We think it is not the time to already give an outlook on that.

Yes.

I guess I'll have to have to disappoint you here, but.

Unfortunately, the same comments.

Refers to that so we think it's not the time to already give given the outlook on that.

Okay.

Moritz (Call Operator): The next question comes from Chris Hartwell from Autonomous. Please go ahead.

And the next question comes from Chris <unk> from Autonomous. Please go ahead.

Michael Hutner: Good morning. Just a couple of questions from me. First of all, on the life side of the business, there seem to be quite a few moving parts within that. I was wondering if you could help me understand a little bit around some of the sources of volatility. U.S. mortality, I am assuming, is the same type of thing that we have seen emerge from some of your peers, but I wonder if you could just comment a little bit more on why you are experiencing that. Also, on the CSM change on longevity. I think you mentioned earlier in your opening remarks that you have a new retrocession on the life side. I was wondering if you could maybe let us know what that is going to help with. That is a big first question, of course.

Good morning couple of questions from me.

First of all on the.

On the life side of the business seems to be quite a quite a few moving parts within that I was wondering if you could just help me understand.

And a little bit around some of the sources of volatility in the U S mortality I'm, assuming it's the same type of thing that we've seen emerge from some of your peers. So I wonder if you could just comment a little bit more on why you're experiencing that.

And also on the on the CSM change on longevity and actually I think you mentioned earlier.

Renewal and in your opening remarks that you have a new retrocession.

So I was wondering if you could maybe.

Let us know what that is going to help with.

First question of course.

Michael Hutner: The second question is just really keeping on the philosophy subject on the investment side this time. Obviously, you have taken $60 million of real-life losses. It is a very, very small drip in the ocean of what the ultimate unrealized loss position is on the fixed income book. I was kind of wondering really on this philosophy of taking that. I presume there is a benefit on the other side of that through the reinvestment rate. I was wondering if you can maybe help understand where that is moving to and effectively the benefit to that. Thank you.

Second question is just really.

Sort of keeping on the.

Philosophy subjects on the investment side this time.

You've taken 60 million of realized losses.

It's a very very small in the ocean or what the ultimate.

Realized loss position is on the fixed income book, So just kind of wondering radium.

Philosophy of taking that.

And I presume there is a benefit on the upside of that through the reinvestment Brian. So I was wondering if you can maybe help understand where that's moving.

And effectively the benefit to that thank.

Thank you.

Claude Chèvre: Maybe I start with the last one. Good question. So it is not a change in philosophy, but as towards quarter end, we could already see that we would have another very positive, at least very positive accounting FX result under IFRS, and the tax ratio would be quite low. We just took the opportunity because of the overall good result to start realizing here these 60 million. As you said, it is reinvested immediately. So the running yield in the book will go up, and we will see the returns then in the future. So it is just a shift of that, and we think this is the right environment to do this. Will this continue? This depends on the overall development. So it is not the target at all. It is a reaction to the overall high profitability we saw in all the business groups.

Let me start start with the last one good question.

So it's not a change in philosophy, but S towards quarter end.

We could we could already see that we would have another very positive at least very positive accounting.

FX reside under IRS and detects ratio would be quite low we just took the opportunity because of the of the overall good results to.

Start realizing here this $60 million and as you said, it's reinvested immediately so the.

Running yield in the book will go up and we will see the returns then.

In the future. So it's just a shift of that and we think this is this is the right environment to do this.

We will discontinue this depends on the overall.

Development. So it is not the target at all it's a reaction to the overall high profitability, we saw in all the business groups.

Claude Chèvre: This is just one option to reduce the hidden losses. Let us see what the next quarter looks like.

And this is just one option too.

Would you see hidden losses.

So let's see.

Next quarter looks like.

Michael Hutner: Yes, and maybe on the life and health side. First of all, what Christian Hermelingmeier also said in his introduction is that you need to always look into experience variances, the loss component, and change in estimates together because it is mainly the same concept. If the three together are positive, then you know that our best estimate assumptions are very positive. On experience analysis, or sorry, on the experience variance in Q2 standalone, you are right that it was negative, and you are absolutely right that we were suffering the same as some of our competitors, which was some volatility on the mortality book in the U.S. It is not due to any trend, any negative trend that we are seeing, but it is a few bigger risks that cost us a bit of money. You could say it in a way, the wrong people have died.

Yes, maybe on the on the life and health.

First of all I mean, what Chris had also said in his introduction is that you need always to look into the experience variances the loss component and change in estimates together because it's mainly the same concept.

The three together are positive and you know that.

Best estimate assumptions are very positive now on experience analysis.

Jones variance in Q2, Standalone you are right that it was negative and you're absolutely right that we were.

We're suffering the same as some of our competitors, which are some volatility on the mortality book in the U S. It's not due to any trend of negative trend that we're seeing but it's a few bigger risks.

That cost us a bit of money. So you could say it in a way the wrong people have died the people with a higher sum assured have died in this quarter and that led to this negative experience funds from the U S mortality.

Michael Hutner: The people with a higher summer short have died in this quarter, and that led to this negative experience variance from the U.S. mortality. On the change in estimates in Q2, it is, as you said, also it is mainly due to the longevity business. You need to see that the longevity book is quite big, and minor changes in best estimates lead to these changes in estimates, which appear to be quite big. It is not a trend that we are seeing. We are not expecting these changes of estimates for the next 10 years being positive every single quarter, but it is really that we check, we analyze our portfolio once a year, and we go treaty by treaty. When we see slight positive deviations, then we see this positive change in estimates.

The change in estimates.

In Q2, it's as you said also it's mainly due to the longevity business you need to see ethanol <unk> book is quite big and minor changes in best estimates leads to these change in estimates which appear to be quite big. So it is it is not a trend that we're seeing we're not expecting this range of estimates for the next 10 years being positive.

Every single quarter, but it's really that we checked.

We analyze our portfolio once a year, we go treaty by Treaty on when we see slight positive deviations then we see this positive change in estimates.

Michael Hutner: The last one was on a retro call, I think. Clemens Jungsthöfel, do you want to take that one?

The last one was on the on a retro colonising payments do you want to take that one.

Clemens Jungsthofel: It was just a retrocession on one portfolio that we have, and that had an impact on the KPIs in that sense. It was just one retrocession contract that we have implemented in life and health.

So it's just a retro session on one portfolio that we have and that had an impact on.

On the Kpis in that sense. It was just one retrocession contract that we have implemented and lifestyles.

Michael Hutner: Okay, thank you very much. If I can just come back to that first question on the reinvestment return, I am wondering if you could just let me know where the reinvestment rate is relative to the running yield, please. I do not know whether that is somewhere in the disclosure. I have not seen that yet.

Okay. Thank you very much sorry, if I could just come back to that first question on the reinvestment return I'm wondering if you could just let me know where the reinvestment rate is relative to the running yield. Please I don't know, but somewhere in that disclosure I haven't seen it yet.

Claude Chèvre: Yeah, absolutely. Happy to do that. We are at a running yield of 3.4%, and the reinvestment yield is around 4.1 percentage point.

Yes, absolutely happy happy to do that so we are at.

Running yield of three 4% and the reinvestment.

It is around four one percentage point.

Michael Hutner: Lovely. Thank you very much indeed.

Thank you very much.

Okay.

Moritz (Call Operator): The next question comes from Wilhard Castle from UBS. Please go ahead.

And the next question comes from William Hoffman from UBS. Please go ahead.

James Schoch: Morning. Thanks for letting me take the questions. I guess, first of all, just what is the thinking on the P&C retro at this juncture? Are you more likely to increase or decrease your assessment rate in a declining pricing environment, but what you still consider a very strong margin availability? The second one is, you know, there were two post-events disclosed in the report, and you have discussed Viridium Holding AG, so thanks for that. The second one is related to German tax reduction. I guess, are you able to discuss what percentage of your earnings get paid this way or any sort of impact and timing of how this would feed through earnings? Thank you.

Good morning. Thanks.

Let me tell you the questions I guess first of all just what's the thinking on P&C retro at this juncture are you more likely to increase.

Decreases in some rate and that was the declining pricing environment.

Still considered a very strong margin stability.

The second one is to post event as disclosed in the report and you discussed the Iranian sanction that.

The second one is related to German tax reduction.

Are you able to discuss what percentage of your earnings get paid this way or any sort of impact and timing of how this would be through earnings. Thank you.

Silke Sehm: On the P&C retro side, we are currently in the planning phase for next year. Our base assumption is that when it comes to our property and specialty protections, we will buy more or less exactly what we have purchased in 2025. There is no intention to buy significantly more or less. Of course, we will observe the market, and if we should find later in the year that the pricing offered by the retro market is particularly attractive, we may buy a little more. Of course, also the retro pricing is fully dependent on how the rest of the year is going to perform from a major loss point of view. Therefore, a base assumption is we are going to place what we have placed in 2025 again.

Well on the P&C retro side, we are currently in the planning phase for next year, our base assumption is.

When it comes to our property and specialty predicts protections, we will buy more or less exactly what we have purchased in 2005, So no no intention to.

By significantly more or less.

Of course, we will observe the market.

And if we should find later in the year that the pricing offered by the retro market is particularly attractive. We may we may buy a little more but of course also the retro pricing is fully dependent on how the rest of the year is going to.

From a major loss point of view. So therefore base assumption is we're going to place what we placed in 2025 again.

Claude Chèvre: will take that one with the potential tax impact. To clarify on this, nothing is considered in the Q2 figures for that legal change we have in Germany. I do not have the exact share of the taxable income here at hand, but as we write a lot of business out of Hannover, you can consider this to be substantial. As we book deferred tax liability, and for the future, we have this one percentage point reduction per year over five years. We expect that this will have a positive impact. We will see this in the second half of the year. We are working on the exact calculation, so we are ready to disclose and book this.

I'll take that one with the potential tax impact.

To clarify on this nothing is considered in the Q2 figures for that legal change we have in Germany.

I don't hefty.

<unk> share of the taxable income here at hand, but as we write a lot of business out of hangover you can consider this to be substantial and as we book deferred tax liability and for the future. We have this one percentage point reduction over.

Per year over five years.

We expect that this will have a positive impact we will see this in the second half of the year. We are working on the exact calculation. So we are ready to disclose.

Disclose and book this.

Moritz (Call Operator): The next question comes from Ian Pearse from Exane BNP Paribas. Please go ahead.

And our next question comes from Ian Pearce from Exxon BNP Panning Bob. Please go ahead.

Cameron Hussain: Hi, good morning everyone. Thanks for taking my questions. The first one is just coming back to the solvency, the sort of six-point negative organic capital generation or ex-debt movements in the solvency. Can we just get some more detail? We really cannot square this. You know, you flagged a few small headwinds from model updates from booking growth, but you clearly made some good profits in Q2. You have written some profitable business. The IFRS framework allows for prudency a lot more than the Solvency II framework does. So it feels like there must be something a bit bigger than what you are alluding to as a headwind. So can we just get a bit more detail on the moving parts on that number? The second one is on the 7% P&C revenue growth guidance. So 6% on a constant currency basis in H1.

Hi, Good morning, everyone. Thanks for taking my questions. The first one just coming back to the solvency just want a six point negative organic capital generation.

Debt movements maintenance and the solvency can we just get some more detail because we've really trumps quantity.

You flagged a few small headwinds from model updates.

Okay, great but.

You've clearly made.

Good profit. Thank you Jay you've written is a profitable business.

Framework to allow for a period and see a lot more than two framework.

So it feels like there must be something a bit bigger than that.

And what you're sort of alluding to it as a headwind. So can we just can you just get a bit more detail on the move.

Any thoughts on that number.

On the second one is on the.

Seven.

The revenue growth guidance.

<unk>.

Call it constant currency basis H one.

Cameron Hussain: The renewal volumes are obviously down in the June-July renewals. If you could just give us some confidence as to why you think you will get there, particularly with the accounting change as well and how much of a headwind that is expected to be in H2. Thank you.

Volumes, obviously down in the June July renewals.

Can you just give us some confidence as to why you can why do you think you'll get that particularly with the.

On the accounting change as well and how much of a headwind that is expected to be an edge to it. Thank you.

Claude Chèvre: On the first one, the ex-debt 6% impact, maybe to give more view on that. Yes, there is a positive operating profit blowing into or in the direction of the owned funds, but on the other hand, you have to consider that we have to deduct the pro-rata dividend. This balances out to a certain extent. The big impact, besides all this low single-digit point I already made, it is really the reserving and the run-off loss that you saw. This also is reflected under Solvency II. The reserve is increased. The reserve risk on that is calculated via Solvency II. This is the main or one of the substantial impacts that reduces the otherwise positive capital generation that you related to.

So on the first one.

The <unk> stepped a 6% impact.

Maybe to give gifts.

But more view on that so yes, there is a positive operating.

Our profit.

Flowing into our in the direction of the owned funds, but on the other hand, you have to consider that we have to deduct the pro rata dividend. So this this balances out to a certain extent and then the big impact Besides all of this.

Low single digit.

Points I already made is really do reserving and the.

Runoff loss that you saw this also is reflected under solvency II.

The reserve is increased the reserve risk on that is.

<unk> solvency II.

So this is the main.

One of the substantial impact.

<unk> reduces the otherwise positive.

Generation debt.

Related to.

Silke Sehm: Yeah, on the premium development P&C, as you can see on the outlook slide, we have grown from an underwriting year perspective on the traditional side by 5.4%. We keep growing double-digit on the structured side. From an underwriting year perspective, this is there or thereabouts when it comes to the 7% calendar year, financial year guidance. The tailwind we are certainly getting is from underwriting year 2024. As you have seen on our slide, the underlying growth has been double-digit. The only reason why it is showing up at 6% is the accounting change we did last year on the non-distinct investment component, the variable commissions in a proportionate business. We expect that the effect from that change is going to reduce in the second half of the year, so that overall, we are confident that the 6% will move towards the 7%.

Yeah and on the premium development P&C.

I see on the outlook slide.

We have grown from an underwriting perspective.

On the traditional side.

Five 4%, we keep growing double digit on the structured side. So from an underwriting perspective. This is all about balance when it comes to the 7%.

Calendar year financial year guidance.

And.

The tailwind, we're certainly getting us from underwriting year 'twenty four.

So as you have seen on our slides.

The underlying growth has been.

The double digit.

So the only reason, what's showing up at 6% of the accounting change we did last year on the non distinct investment component so the variable commissions.

The proportion of business and we expect that the effect from that change.

<unk> to reduce in the second half of the year. So that overall, we are confident that.

6% will move towards a 7%.

Moritz (Call Operator): The next question comes from James Schoch from City. Please go ahead.

And the next question comes from James Shuck from Citi. Please go ahead.

James Schoch: Hello. Thanks for taking my question and good morning. My questions, two things. Sorry to do this, but I wanted to return to the solvency roll forward since Q1 into Q2. I listened to your answer just then, but I am still confused. You mentioned positive earning funds generation in the quarter, but then you deduct the pro-rata dividend, and that gets you roughly kind of neutral-ish, which I find surprising because the OFG, certainly on a full-year run-rate basis, should be well in excess of the dividend. You then mentioned that the reserving and the run-off losses need to be deducted from that as well, which seems to be double counting because it is either deducted already from the OFG or you deduct it afterwards. I kind of end up in the same place that Ian is at.

Hello, Thanks for taking my question and good morning.

<unk>.

Okay.

Sorry to do this.

Was it a return to the solvency.

Since Q1 into Q2.

And I listen to your answer just ended I'm still confused.

You mentioned positive earnings generation in.

In the quarter that I need to take the pro rata dividend and that gets you roughly kind of neutral ish, which I found surprising because the RFT certainly on a full year run rate basis should be well in excess of the dividend.

You had mentioned it.

Is there anything in the runoff losses need to be deducted from that as well it seems to be double counting because it's either deducted already from the LFG.

Afterwards, I kind of end up in the same place.

James Schoch: That is, I cannot reconcile a six-point decline in Q2, excluding the debt. The only piece that is kind of left to me is growth. I am kind of keen to see, you know, has there been a material step up in the growth expectations or the expected increase in the SCR for the year ahead? Perhaps you could have another go at reconciling that. I would find that helpful. Secondly, the growth that you are putting onto the books now, as it was last year, is coming a lot from structured business. I think that is what is giving you the confidence in the top-line growth outlook. You mentioned over 10% in structured in this period. I guess another way of asking questions is kind of, you know, are there any mixed effects when you think about the combined ratio?

Pat.

And that is I cant reconcile six.

The decline in Q2.

Excluding the debt.

Any piece, that's kind of that's to me is is growth.

And I'm kind of keen to see it hasnt been a material step up in growth.

Expectations or the expected increase in the SCR for the year ahead, but perhaps you can have another guy with reconciling that I would find that helpful.

And then secondly.

Yeah.

The growth that youre, putting on to the books now.

As it was last year is coming a lot from structured.

Business. So I think that's what's giving you the confidence in the top line growth outlook, you mentioned that 10% construction.

In this period.

I guess, another way balancing asking questions kind of.

Are there any mix effects.

You think about the combined ratio such as structured come onto the books.

James Schoch: Does structured come onto the books at a higher rate than the rest of the treaty book? Ultimately, what I am trying to get at is, for a P&C reinsurance company, is growth getting harder to come by? The P&C reinsurance CSM, new business CSM growth was plus 7% in the period. Are you still confident that you can grow that at similar sorts of levels next year? Thank you very much.

At a higher rate than the rest of the Treaty book ultimately what I'm trying to get at is.

For a P&C reinsurance company is guys getting harder to come by the P&C re CSM business CSM branches plus 7%.

In the period, so you're still confident you can grow that similar sorts of levels next year.

Very much.

Silke Sehm: Yeah, I am happy to start with the second question. We are growing stronger in structured, but I would argue that with 5.4% in the underwriting year, we keep growing strongly also on the traditional side. The impact under IFRS 17, unlike IFRS 4, of a more pronounced growth in structured is not diluting. For example, the combined ratio, most of the growth in structured is coming from proportionate business where we have significant seeding permission structures, which is the way how to minimize the risk transfer under those contracts. Therefore, from an IFRS revenue point of view, it is considerably less compared to the old IFRS 4 premium view. What the margin is staying, of course, the same in the reinsurance service results. Therefore, from a combined ratio point of view, we do not expect a dilution from a stronger growth trajectory in the structured business.

Yes, I'm happy to start with the second question so.

Growing stronger and structured.

I would argue that was five 4% in the underwriting year over year, we keep growing strongly off on the traditional.

Syed.

But the impact on the RFS 17, Unlike <unk> four of a more pronounced growth in structure.

Multi loading for example, the combined ratio.

Most of the growth in structured is coming from proportional business, where we have significant.

Ceding Commission structures, which is the way how to minimize the risk transfer under there.

Those contracts. So therefore hormonal iff's revenue point of view.

It's considerably less compared to the old Fas for premium view.

What's the margin this thing of course the same.

Insurance service results. So the pro forma combined combined ratio point of view, we don't takes back the dilution from our stronger growth.

Trajectory in the structured business and the same goes for this CSM generation.

Silke Sehm: The same goes for the CSM generation.

Claude Chèvre: Regarding solvency, and thanks for the opportunity to clarify again here, you are completely right. The owned funds or the profit generation is not completely neutralized or balanced. This is not what I meant. It is dampened. There is an effect. As you also pointed to, of course, the SCR is also increasing. We talked about the growth. You have to take all the accounting effects from the non-distinct investment component. We see under IFRS out of the equation. It is a double-digit growth in the P&C business. This leads, of course, to a higher SCR. I have to repeat here, this is really a quite substantial list of different points, like also update in the spreads. The prudency booking, as I elaborated on, we have a small impact from currency. We have minor model updates and data updates. We have the growth impact and the hybrid.

And regarding our solvency and thanks for the opportunity to clarify again here as youre completely right. So the.

<unk> funds or the profit generation is not completely neutralized our balance this is not what I meant dampened.

And so there is an effect.

But as you also.

Pointed to of course, the SCR is also increasing I mean, we talked about the growth you have to take all the accounting.

Effects from the non distinct investment component, we see under offer as out of the equation. So it's a double digit growth in the P&C business and this leads of course to a higher CR, but I have to yes.

Yes.

<unk> here.

This is really quite substantial list of different points like also update in this spreads the prudency booking as I elaborated on we have a small impact from foreign currency, we have minor model updates and data updates we have to gross impact anti hybrid so it's really several things and not.

Claude Chèvre: It is really several things and not the one big point that is changing here, the solvency ratio.

One big point that is changing here the solvency ratio.

Moritz (Call Operator): The next question comes from Vinit Malhotra from MedioBanker. Please go ahead.

And the next question comes from <unk> Malhotra from Mediobanca. Please go ahead.

James Schoch: Yes, good morning. Thank you. I have two questions, please. The first one is on the growth. The 5.4% Sven Althoff, you mentioned, and I agree with you, it seems to be a bit stronger than some of the peer group. I am just curious whether you think there is any line you are winning some share, or do you have a different view from the market in some areas? That is the question on where this is coming from. The second question is on the purpose of the higher reserve buffer. I understand that you have the ability because of the Q2 being very low last quarter. Also, if I go back to Q1, you had mentioned that some of the reserve buffers are to manage the cycle.

Yes. Good morning, Thank you.

Two questions. Please.

The first one is.

On the growth so the five 4%. So when you mentioned and I agree with you it seems to be a.

A bit more.

But stronger than some of the peer group.

I'm just curious whether you think.

Any.

Any lines.

Winning some share or.

Have a different view from the market in some areas. So thats the question on where it's coming from.

And second question is.

On the on the <unk>.

The higher reserve.

Our Buffalo I understand that you have the ability because of the Q2.

Being very low last quarter.

Also if I go back to one Q you had mentioned that.

On I think you had mentioned that.

Some of the reserve buffers is to manage the cycle now.

James Schoch: With such a higher level of reserve buffer buildup, is it because you think the cycle is turning a bit quicker, or it has nothing to do with that? I am just curious about the purpose of this much stronger reserve buffer than expectations. Thank you.

Such more.

A higher level.

Brenda.

Is it because you think the cycle is turning.

Quicker or it has nothing to do with that.

So I'm just curious about that.

So much stronger buffer than expectations. Thank you.

Sure.

Silke Sehm: The growth in it is really coming from almost all of our segments. It is very diversified. The main driver continues to be the underlying growth of our seeding companies. Even if we keep our shares the same, we often can show some growth. We keep growing our net cut risk appetite a little bit, where in many parts of the world, we are underweight, and we still, despite the softening in rates, feel that we are in an attractive rate environment. This is an area where we have a little stronger growth than the 5.4%. Other than that, with maybe the exception of APEC, where the premium volume is more stable, we are really showing growth in all the segments. The most pronounced, as we said, is on the structured side.

Well the growth.

Is really coming from almost all of our segments. So it's very diversified to the main driver continues to be the underlying growth of our ceding companies.

So even if we keep our shares the same.

We often can show.

Some growth, we keep growing our Nat cat risk appetite.

A little bit.

Many parts of the World, we are underweight and we still despite the softening in rates feel that we are an attractive rate environment. So this is an area where.

We have a little stronger growth than the five 4%.

But.

Other than that with maybe the exception of APAC, where the premium volume. This more stable, we're really showing growth in all the segments of the most pronounced as we as we said.

On the structured side.

Sven Althoff: a very pleasing situation, from that point of view that it's not only coming out of one basket, but that it's a true reflection on our global diversified portfolio.

So very pleasing situation from from that point of view that it's not only coming out of one basket, but that is a true reflection on our global diversified portfolio.

Moritz (Call Operator): The Nasdaq region is somewhere U.S.-driven or EMEA-driven, you think?

And the NASDAQ region. This summer.

And then on EMEA.

Sven Althoff: Well, it's again, I mean, global development. There's some growth in the U.S. as well, definitely, but we are also growing in the rest of the world. So it's not one region in particular, but the U.S. is a growth area for us as well, as we still feel that the rating environment that is offered for U.S. CAT business is attractive despite the first reductions.

Okay.

Again.

I mean, the global development.

So there's some growth in the U S as well.

Well definitely but we're also growing in the rest of the world. So it's not one region in particular.

But the U S as a growth area for us as well so we still feel that the rating environment that is offered for U S cat business.

Active despite the first reductions.

Thank you.

Clemens Jungsthofel: Regarding your question on the steering of buffers and the cycle, there is no change in the philosophy, how we deal with this to be here, on the prudent side to be able to cover the volatility, of course, from large losses, but also from the cycle and deliver stable results. We have to see and have in mind this is just one quarter, and this is a long-term, mid and long-term, steering philosophy and policy, and this is not changing because of three months. Let's see how the year develops, and then we can take our conclusions where we stand and how much room is to maneuver.

And regarding your question on the.

Steering of our buffers in the cycle. So there is no change in the philosophy of how we deal with this to be here on the prudent side to be able to cover the volatility of course from large losses, but also from the cycle and deliver stable results.

We have to see and have in mind. This is just one quarter and this is a long term mid and long term steering philosophy and policy and this is not changing because of three months. So let's see how the year develops and.

Then we can take our conclusions, where we stand and how much room is to maneuver.

Moritz (Call Operator): Great. Thank you very much.

Great. Thank you very much.

Okay.

CurrScore (Conference Host): The next question comes from Michael Hartner from Björn Beck. Please go ahead.

The next question comes from Michael Huttner from gone back. Please go ahead.

Christian Hermelingmeier: My lucky day, sorry about that. I am still on the video. We will see someone's impact. Then the other question, and I think it has pretty much been asked in many different ways already, but maybe this way is slightly different. Your peers have all mentioned that they are earning through the 2024 pricing, so not 25, so not the lower, the more the higher. I just wondered whether the many adjustments you have made in terms of reserving, etc., is effectively to correct for what I would regard as over-earning. It is probably not the right term, but earning 2024 profit levels, which are probably not going to occur for a while. Thank you.

Sorry about that.

Stefan I think you will see some impact and then the other question I think it's pretty much been us in many different ways already but maybe.

Display is slightly different.

Your peers have mentioned that the earnings.

Earnings for the 2020 for pricing, so not 25% lower than more of the higher so I just wondered whether the mini adjustments you've made in terms of reserving et cetera.

Actively to correct for what.

Regardless of earning.

Probably not right, but earning 2020 full profit levels, which are probably not going to recur.

Thank you.

Clemens Jungsthofel: On the first one, the solvency impact of Viridium, I do not see a substantial impact from that. We just changed the investment into cash at the balance sheet. This is just shifting between the categories, so no substantial impact standalone.

So maybe maybe on the first one solvency impact of Iridium I don't see a substantial impact from that so.

We just changed the investment.

Into.

Two into cash.

Cash at.

At the balance sheet. So this is just shifting between the categories. So no substantial impact.

<unk> Standalone.

Okay.

Sven Althoff: On the P&C underwriting environment and how this is earning through, as Clemens and Christian said, the headwind we really had this half year was from the currency and partly also from the tax side. This has triggered certain adjustments in our reserve positions. The earning of the underwriting year 2024 and the profitability coming with this is very much in line with our original expectations. The tailwind we are talking about is really coming more from the currency and from the tax side.

Well on the P&C.

Sure.

Underwriting.

The environment and how this is earning through.

Yes.

And Christian said I mean the.

The headwind, we really had.

This is half year was from the currency and partly also from the tech slot.

So this has triggered certain adjustment in our reserve positions.

The learning of the.

Underwriting year 2024.

Profitability.

Coming with US is very much in line with our original expectations. So so the tailwind we are talking about is really coming more from the currency and from from the tech side.

Christian Hermelingmeier: Brilliant. Thank you.

Thank you.

CurrScore (Conference Host): The next question comes from Henry Heathfield from Morningstar. Please go ahead.

And the next question comes from Henri <unk> from Morningstar. Please go ahead.

Michael Hutner: Oh, good morning. Thank you for taking my questions. I was just wondering if you could talk a little bit about the risk-adjusted pricing. It has been increasing from 2.1% in the January renewals to 2.4% and then 2.9%. I was just wondering if you could elaborate a bit on how much that is impacted by the shape of the renewals, if at all. For the second question, in Q1, the running yield was, I think, 3.5%, reinvestment of 4.3%, and the return on investment 3.5%. In Q2, that has come down. The return on investment has come down to around 3.3%. I was just wondering if you could talk a little bit as well about your confidence around the return on investment target of 3.2% and you meeting that at the year-end. Thank you.

Good morning, Thank you for taking my questions.

I was just wondering if you could talk a little bit about the risk adjusted pricing.

It's kind of increasing from two 1% in the January renewals to four and then two nine and I was just wondering if you could kind of.

Elaborate a bit on how much that's impacted by the shape of the shape of the renewals Brady.

<unk>.

And then on the second question.

And in the first quarter Theyre running yield was.

I think three five reinvest in the $4 three.

And the return on investment and $3 five on then.

In the second quarter, that's come down the return investments come down to around three three.

And so I was just wondering if you could talk a little bit as well about your confidence around the return on investment target three meeting at the year end. Thank you.

Sven Althoff: On the P&C pricing side, the situation throughout the year has not really changed in the sense that outside property CAT, the business is plateauing at a very high level. Very few reductions on the pricing side. Terms and conditions are stable. Retentions are stable. That was also true for the mid-year renewals, where we continue to see a softening in terms and conditions when it comes to price in property CAT. Of course, the mid-year renewals are particularly heavy in peak territories like the U.S. and Australia. Here on the excess of loss side, we did see high single-digit or lower double-digit reductions throughout most of the renewals, with the exception, of course, for the U.S. with those programs that had an impact from the California wildfires. They, of course, did see some increases. That mix of the portfolio has resulted in the minus 2.9%.

On the P&C pricing side.

In the situation throughout the year has not really changed in the sense that outside property cat.

The business is plateauing at a very high level.

So very few reductions on the pricing side constant conditions are stable retention so stable.

And that was also true for the midyear renewals.

Where we continue to see a softening in terms and conditions.

It comes to price.

In property Cat and of course, the midyear renewals.

Particularly heavy in peak territories like the U S.

Australia and here on the excess of loss we.

We did see high single digit or.

Or lower double digit reductions throughout most of the renewals the.

The exception of course for the U S.

Those programs.

Had an impact from the California wildfires. They of course did see some increases.

And that mix of the portfolio.

<unk> has resulted in the minus two nine.

Sven Althoff: The fundamental situation is still the same that for the most part of the business, we are talking about rather stable renewals at a high level with pressure on pricing, but not retention, not terms and conditions on the property CAT side.

But.

Fundamental situation is still the same thats for the most part of the business. We are talking about rather stable renewals at a high level.

With pressure on pricing, but not retention not terms and conditions on the property cat side.

Clemens Jungsthofel: Looking again at the investment results. As you said, we have a 3.3% return on investment for the first half year. If I just take out the $60 million of active realizations, this is just a shifting through the accounting. We would have had 3.5%. As also mentioned already, we have a reinvestment yield slightly above 4%. If there are no surprises or substantial shifts in capital markets, I have no reason to think that we should not meet our target of at least 3.2%.

Looking again at the investment.

So.

As you said we offer three three.

Return on investment for the first half first half year, if I just take out the $60 million of active realizations. This just a shifting through the accounting.

We would have had three 5% as also mentioned.

Already we have a reinvestment yield slightly above 4%. So if there are no surprises are substantial shifts in capital markets.

I have no reason to think that we should not meet our target of at least three point.

2%.

CurrScore (Conference Host): Thank you. The next question comes from Darius Sorkas from KBW. Please go ahead.

Thank you.

And the next question comes from Daniel Soft cough cough first half from <unk>. Please go ahead.

Claude Chèvre: Hi, yeah. Thank you for taking my questions, just two, please. I am really sorry to come back to Solvency 2, but I am still a bit confused. Are you telling us that including the prudence added, the net operating capital generation matched the dividend accrual in the quarter? Are you able to tell us what the gross capital generation was or a rough idea how it compares to 2024 plus half? The second question is on life and health reserve additions. You carry reserves at best estimate, but clearly, you have added to the risk adjustment. Are you happy with the stock of risk adjustment right now, or should we expect that you may continue to opportunistically add to this going forward because of all the inherent uncertainty in some other portfolios? Thank you.

Hi, thank.

Thank you for taking my questions. Just two please I'm really sorry to come back to Steve, but I'm still a bit confused are you, telling us that including the prudence.

Net operating capital generation matched the dividend accrual in the quarter.

Are you able to tell us what the gross capital generation was rough idea how it compares to 2024.

Yes.

The second question is on just the life and health.

Physicians so.

Kevin.

Sort of best estimate.

But.

You've added to the risk adjustment.

Are you happy with the stockholder Mr. Chestman right now or should we expect that you may continue to opportunistically add to this going forward because of all the inherent uncertainty in some of the portfolio. Thank you.

Clemens Jungsthofel: Coming back to Solvency then again, and sorry if I confused some of you. To reiterate that, the dividend accrual, the pro rata is not offsetting the complete operating profit generation here. You have to consider here that, especially that we only accrue the ordinary dividend here. This is not what I meant. To clarify that again, this is not the case here. I think I do not have to repeat all the several influences on Solvency.

Yes, coming back to solvency then again.

And sorry, if I confused some of you so to reiterate that.

The dividend accrual the pro rata is not offsetting the complete.

Operating.

Profit generation here and you have to consider here.

Sure.

And especially that we only accrue crude the ordinary dividend here and this is this is not what I meant to clarify that again. This is this is not the case here and.

I think I don't have to repeat all the several.

Influences on solvency.

Christian Hermelingmeier: Yes, on your life and health questions on the risk adjustment, this is really pure prudency that we are adding here. Whenever we can, we will continue to add prudency into our risk adjustment. Risk adjustment ultimately is going to become results, obviously. It is just a question of timing when the results are going to be shown.

Yes.

Next question is on the risk adjustment I mean, this is really pure prudency.

Adding here.

Whenever we can we will continue to add prudently into a risk adjustment risk adjustment ultimately it's going to become results. Obviously, it's just a question of timing when the results are going to be shown.

Okay.

CurrScore (Conference Host): The next question comes from Jochen Schmidt from Metzler. Please go ahead.

And the next question comes from Jan Schmidt from Metzler. Please go ahead.

Claude Chèvre: Thank you. Good morning. I have one question only for taxes. You mentioned a potential gain in the second half. Would you consider to use this hedge room to realize, for example, some losses on fixed income, or would the potential tax gain just lift net income? That is my question. Thank you.

Good morning, I'll ask one question only for Texas, you mentioned a potential gain in the second half that you consider to use this headroom to realize for example, some losses on fixed income or would the potential tax gain just lift net income. That's my question. Thank you.

Clemens Jungsthofel: I think that is too early to tell. First, let us see how big the impact really is. We expect a positive one with the tax liability and the lower tax rate in the future. This should be the direction, but let us see how this works. Then let us see the overall result development, and then we can see if there is room to maneuver.

I think thats thats too early to tell for US, let's see how big the impact really is as said, we expect a positive one and there was a tax liability and the lower tax rate in the future. This should be the direction, but let's see how this works and then let's see the overall results development and then we can see if there is room to maneuver.

Sure.

Claude Chèvre: Thank you.

Thank you.

CurrScore (Conference Host): Ladies and gentlemen, as a reminder, anyone who wishes to ask a question may press star and one. The next question comes from Emmanuel Musiot from Intesa Sanpaolo. Please go ahead.

Ladies and gentlemen, as a reminder, anyone who wishes to ask a question you May press Star Antoine.

And the next question comes from <unk> <unk> from.

Paul Please go ahead.

Silke Sehm: Hello. Hi. Thanks for taking my question. The first one is on the structured reinsurance growth. You said 10% growth, and I was wondering what proportion of your book is in structured reinsurance solutions nowadays and what is essentially the key driver of demand here, given most companies nowadays have a strong balance sheet. Is this perhaps related to the softening cycle? What do you think is a sustainable trend, a sustainable rate of growth for this line of business? If you can remind me what is the capital absorption for this growth contributor. Another one, perhaps not an easy one. A few years ago, basically, you topped your reserve buffer and were not able to add to redundancy significantly. I am wondering how far are you from that point, if you can give some guidance, please.

Hello, Hi, Thanks for taking my question.

The first one is on the structure of the stack.

Reinsurance growth.

You said, 10% growth and there was wondering what proportion of your book is in construction solutions Nowadays and what these are essentially the key driver of demand here given most companies Nowadays I have a strong balance sheet is this perhaps related to the shopping cycle.

And then what do you see it as a sustainable trend and sustainable rate of growth for this line of business and if you can remind me what is the capital absorption for these.

To do so and then another one perhaps not an easy one.

Years ago.

Ali you talked you reserve buffer and we are not able to us redundancy significantly.

Sure.

I'm wondering how far are you from that point, if you can give some guidance. Please.

Sven Althoff: I would start with your first questions on structured reinsurance. This is a lower double-digit percentage of our overall portfolio on the P&C side as measured by revenue. When it comes to your question, is this a sustainable area for growth? The answer to that, from our point of view, is a clear yes. More and more seeding companies are embedding this into their overall capital planning. They are running sophisticated internal capital models, whatever the solvency regime they are in. It is just an alternative way of how to capitalize the company and the underwriting side of things.

I'll start with your first questions on structured reinsurance.

So this is.

A lower double digits percentage of our overall portfolio on the P&C side as measured by revenue.

When it comes to your question is this a sustainable area for growth.

The answer to that from our point of view is a clear yes.

I mean.

More and more ceding companies.

Embedding this into the overall capital planning.

<unk>.

Running sophisticated internal capital models.

Whatever the solvency regime theyre in.

So it's just now turn out of way of how to capitalize.

The company.

The underwriting side of things so that that demand will not go away.

Sven Althoff: That demand will not go away, where there is a certain degree of cyclicality included, certainly in relation to the higher retention levels, which we have seen in the market since the underwriting year 2023, because this is potentially giving seeding companies a concern from a frequency earnings volatility point of view. There are excess of loss structures available that can deal with that volatility over time. To the extent that the retention levels are holding up, also in the future traditional reinsurance renewals, that demand will stay intact in case the market should be prepared to write the traditional business at lower retention levels. This demand may slightly drop, but the most significant part of our structured reinsurance business is coming from the capital management solvency-related side of the equation, in any case, where we see that demand to continuously grow.

There is certain degree of Cigna secret.

<unk> included.

Certainly in relation to the higher retention levels, which we have seen in the market.

Since the underwriting year 2023, because this is potentially.

Giving ceding companies are concerned from a frequency earnings volatility point.

Point of view and excess of loss structures available that can deal with that.

The volatility over time, so to the extent that the retention levels are holding up also in the future.

No.

Insurance renewals, that's demand will stay intact in case, the market should be prepared towards the traditional.

The business at lower retention levels.

Demand may slightly drop.

The most significant part.

Our structured reinsurance.

Business is coming from the capital management solvency related side of the equation in any case, where we see that demand to continuously grow.

Yes.

CurrScore (Conference Host): Yeah.

We got.

Clemens Jungsthofel: Pardon?

Pardon.

Silke Sehm: No, no, I was just reminding you about the reserves, if you can answer that, please.

No no I was just reminding you about the reserves if you can answer that please yes.

Clemens Jungsthofel: Yeah, if you could please say that again because we could not understand here every part of your question regarding your reserves.

If you could please.

Say that again, because we could not.

I understand here every every part of your question regarding the reserves I.

Silke Sehm: Yeah, I think it was 2015, and you were not able basically to add substantially to your reserve redundancies. So I was wondering whether you are close to a situation like that or there is still a little bit of room ahead to add more to your reserve buffer to your redundancies.

I think it was 2016 and you are not.

Able basically to add substantially to your reserve redundancies.

So I was wondering whether you are close to a situation like that or there is still room to add more to your reserve redundancies.

Redundancies.

Clemens Jungsthofel: Yeah, now I got it. Thanks for repeating this. I do not see that we are hitting here a certain limit. Of course, this has all to be managed within the different regimes we have to apply. But I do not see that we are already limited there in a remarkable extent. This is still manageable from my point of view.

Yes, no I got it thanks for repeating this so I don't see that.

We are hitting here a certain limit of course this has to be managed within the different regimes to we have to apply but I don't see that.

We are already limited there and remarkable.

Remarkably extent.

So this is still manageable from our point of view.

Silke Sehm: Okay, thank you very much.

Okay. Thank you very much.

CurrScore (Conference Host): The next question comes from Michael Hartner from Björn Beck. Please go ahead.

And the next question comes from Michael Huttner from Baird. Please go ahead.

Christian Hermelingmeier: Thank you so much. It is the last one. Germany P&C Motor is turning around incredibly fast. Is that part of the reason you are so confident on the margins? Could you maybe give some light here, please? Thank you.

So much in Scotland, and Germany, P&C mergers turning round incredibly fast.

Is that part of the reason you sort of confidence on the margins.

Could you maybe give us some light please thank you.

Yeah.

Sven Althoff: Well, I mean, German Motor, of course, is turning around, as you say. It is part of the overall portfolio. It is not a dominant part of the portfolio, but of course, it is supporting both our revenue growth ambitions and our overall profitability ambitions. So it is baked in, but it is only a part of the overall portfolio. So it is not carrying the global portfolio because at this stage, as you can see from the still rather low loss component which we are showing in the first half of the year, the business is still rated attractively on a global basis across product lines.

Well I mean, the German mode.

Of course is turning around as you say, it's part of the overall portfolio, it's not the dominant part of the portfolio but of course.

Supporting both our.

<unk> growth ambitions and overall.

Profitability ambitions. So it's all it's baked in.

But it's only a part of the overall portfolio so not carrying.

The global portfolio because.

At this stage as you can see from the still rather low loss component.

Sure.

In the first half of the year.

The business is still rated the <unk>.

Actively.

On a global basis across product lines.

Christian Hermelingmeier: Brilliant. Thank you very much.

Brilliant thank you very much.

CurrScore (Conference Host): Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Clemens Jungsthöfel for any closing remarks.

Ladies and gentlemen that was the last question I would now like to turn conference back over to <unk> for any closing remarks.

Clemens Jungsthofel: Yes, thank you all very much for your questions. We fully appreciate that these numbers need a bit of effort to look through this. It gives an indication, I hope, as we have been able to deliver the message that we have applied prudency really across our profit engines, not only because the underlying results in P&C and in life and health were very strong already. Also, the investments are faring well. As Sven reiterated again, we really had the tailwind from taxes and from currency, which we did not just want to let fall through to the P&L this early in the year. On P&C, it is really that we have added again substantial prudency. Just philosophically, because we have heard that question rightly a couple of times, that has not changed at all.

Yes. Thank you all very much for your questions.

We fully appreciate that these numbers need a bit of effort.

Look through this gives you an indication I hope as we have been able to to deliver the message that we have applied prudency really across our profit engines not only because the underlying results in P&C and in life and has a very strong already also the inverse.

<unk> are faring, well and then <unk> reiterated again, we really have the tailwind from Texas and from currency, which we didn't just want to let flow through the P&L. This early in the year. So.

On P&C is really that we have added again substantial prudency and just.

Philosophically because we've heard that question rightly a couple of times that has not changed at all and just to remind you. The way we look at our combined ratio and the way we look at our guidance on the combined ratio is very much through the cycle mid to long term. So the fact that even if we go into softer market in <unk>.

Clemens Jungsthofel: Just to remind you, the way we look at our combined ratio, the way we look at our guidance on a combined ratio is very much through the cycle, mid to long term. The fact that even if we go into softer market environments, this combined ratio will most likely remain where it sits at the moment. Therefore, it is really our philosophy to look through the cycle when it comes to that. On life and health, just a reminder, I think this quarter as well, that there is an imperative between loss component and CSM.

<unk>. This combined ratio will most likely remain where it sits at the moment. So therefore, it's really our philosophy to look through the cycle when it comes to that online.

On life and health.

Just just a reminder, I think this quarter as well that there is an parity between last component and see it and I think it's fair to say that in the first six months of this year as well in the in the recent financial years, we've been able to demonstrate that if you sum those two up if you look at the result of CSM and.

Clemens Jungsthofel: I think it is fair to say that in the first six months of this year, as well in the recent financial years, we have been able to demonstrate that if you sum those two up, if you look at the results of CSM and loss component, hence our experience has been on the positive side, which I think is an indicator to your question, and Claude alluded to it, that we are more on the prudent side, even excluding the risk adjustment, more on the prudent side in our best estimate setting. The risk adjustment, of course, adds a layer of prudency. All that allows us to deliver on our target through the cycle. I think this first six months have been able to even increase that capability to deliver on our targets and to manage really mid-long term through the cycle.

And last component, hence our experience has been on the positive side, which I think is an indicator to your question include alluded to it that we are.

That we are more on the prune side, even excluding the risk adjustment more on the prudent side in our best estimate setting and then the risk adjustment of course <unk>.

Who wouldn't see.

All of that allows us to deliver on our targets through the cycle.

I think this this first six months have been able to even increase that capability to deliver on our targets and to manage.

Really mid long term.

Clemens Jungsthofel: Thanks again for your questions and have a good day.

So thanks again.

Questions.

Have a good day.

CurrScore (Conference Host): Ladies and gentlemen, the conference is now concluded. Thank you for choosing CurrScore, and thank you for participating in the conference. You may now disconnect your lines.

Ladies and gentlemen, the conference is now concluded. Thank you for choosing chorus call and thank you for participating in the conference you May now disconnect your lines Goodbye.

Yes.

Yes.

Yes.

Okay.

Okay.

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Okay.

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