Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München

Thank you, Moritz, and good morning, everyone. A warm welcome to Munich Reef Q3 2024 earnings call. Today, as business as usual, our CFO, Christoph Jureka, will start with his opening remarks before we will go into Q&A. With that, I hand it over to Christoph right away.

Thank you, Christian. Good morning, everybody, also from my side. It's always a pleasure to present our numbers to you. and I'll go into my introduction right away. We had a pre-release already, so you're aware of the fact that we achieved a net result of €930 million in Q3, which was impacted by above-average major losses from natural catastrophes. While the nut-cut losses are inherent to our business model and we are being paid for taking it off our season's books, prices must continue to reflect the underlying risk and incentivize risk mitigation. With another year of industry not cut losses above $100 billion, the demand remains high as clients seek protection against volatility in their books. Against this background, I'm very pleased that our underlying performance across all lines of business remains very sound and increasing diversification of our earnings profile is paying off. we were able to largely compensate for a lower Q3 result in P&C reinsurance with continued strong earnings in life reinsurance, a solid development at Ergo, and a pleasing investment return. Our overall profitability remains very strong with a group ROE of 20% after nine months, which is well above our target. Now let's look at the Q3 earnings drivers in more detail, starting with the investment result. Supported by positive fair value changes due to rising stock markets and lower bond yields, we posted an ROI of 3.6%. Our investment portfolio is proving resilient to the recent decline in interest rates. Although the reinvestment yield fell to 4.3% in Q3, it continues to exceed the fixed income running yield and support strong regular income. With a nine-month group ROI of 3.4%, we remain very well on track to deliver on our full-year guidance. In Q3, a major positive factor was the market value gains of 0.8 percentage points. Please bear in mind that we consider currency as an integral part of our investment result. And as we often use currency positions as a hedge against adverse developments, it is not unusual that the currency result is negatively correlated to market value gains in our investment result. This quarter, the good investment result was then also partly offset by currency losses of almost 0.7 percentage points. Now turning to the business fields and starting with reinsurance. In life and health, we already surpassed our initial full-year guidance for the total technical result after nine months. by almost 200 million euros, a clear success story. We continue to benefit from the strong new business growth early in the year and from positive experience across all lines of business. The ongoing pleasing development of our FinMauri business includes negative currency effects of around 80 million euros in Q3, which partly reversed the positive effects of the first half year. While the total technical result of €428 million falls short of the high level in the first two quarters, it is certainly much closer to what you would consider a normalized run rate for the business. The high CSM level of €13.5 billion provides a sound basis to continue to support a strong total technical result also going forward. Now let's turn to P&T reinsurance. In property casualty reinsurance, the combined ratio of 90.5% in Q3 was elevated due to above-average major claims of 23 percentage points. The ratio includes a discount benefit of around 8%. An interest rate-related reduction in the discount of basic losses was offset by a higher contribution from major losses. The impact of the loss component on the combined ratio was lower than expected and rather neutral, as the regular release was offset by the impact of lower interest rates. While nut-cut losses are randomly distributed over the quarters, I'm all the more pleased that the underlying performance continues to develop very favorably. Although not at the exceptionally low levels of the previous two quarters, The normalized comment ratio of 81.3% in the third quarter on the one hand reflects the earn-through of the overall improved margins, and on the other hand, as expected, business mix effects contributed to an increase in Q3 versus the first half of the year. After nine months, the normalized comment ratio amounts to 80.4%, better than our 82% guidance. As usual, we will reassess reserve uncertainties as part of our annual reserve review in Q4. Although our actual versus expected analysis shows the continuation of an overall very favorable reserving trend, we intend to use the better-than-expected development of the normalized comment ratio in the year-to-date to even further strengthen the reserve potency for new business. Hence, it seems reasonable to expect a further increase of the normalized comment ratio in Q4. Nevertheless, the full-year figure should end up slightly better than our target level of 82%. Turning to primary insurance now. Ergo delivered a net result of €164 million in Q3, somewhat below the pro-rata run rate, mainly due to elevated not-cut losses in the international segment. The German life and health business posted a pleasing net result of 73 million euros in Q3. The total technical result was in line with expectations. In P&T Germany, we saw an overall solid operating performance. The combined ratio of 86% in Q3 was affected by continuously high claims inflation in the German motor business and major losses slightly above expectations. It benefited from positive seasonality of acquisition costs which will catch up in the fourth quarter. The segment delivered a net result of 68 million euros in Q3, supported by a sound investment result. The international business was affected by major losses related to Storm Boris, which caused severe floods in Central and Eastern Europe. Excluding this effect, the Q3 net result of 23 million euros was in line with expectations. Particularly the Polish and the Austrian businesses were affected by Storm Boris, with an impact on the total technical result of minus 52 million. In addition, we saw an unfavorable claims development in our Spanish health business. The segment combined ratio was elevated with 96.1%. The overall technical profitability of the life and health business internationally was in line with expectations, also supported by a positive experience adjustment in the Belgian health business. Now just a few remarks on capital. The group's economic position remains very strong, solving the two ratio slightly increased to 292% in Q3, driven by the good operating performance. I would like to conclude with the outlook for 2024. Following our very strong development in the first nine months, we expect higher revenues and a higher net profit for the full year. In reinsurance and in ergo, we expect €1 billion higher net insurance revenue each, the latter driven by the international business. Net profit of the group is expected to exceed our full-year target of €5 billion, driven by higher earnings in reinsurance. While Ergo is expected to deliver on its 0.8 billion euros profit guidance, we no longer expect to meet the combined ratio targets. In P&C Germany, we lifted the combined ratio outlook to around 89%, which is still an attractive level given the current inflationary environment and the very competitive motor market, and also the lower interest rates. At Ergo International, we now expect a combined ratio of around 92%, taking into account elevated major losses related to Storm Boris, as mentioned, as well as the pronounced medical inflation in the Spanish health business, which is being addressed with a set of targeted measures. Based on early indications, we expect the loss from Hurricane Milton to be smaller than that of Helene. However, due to major losses above expectations in the first nine months and Q4 seasonality, we increased our combined ratio expectation in P&Z reinsurance by one percentage point to around 83%, as usual, subject to large claims development in the remainder of the year. In life and health reinsurance, we reflect a strong development year-to-date by lifting the full-year guidance for the total technical result to €2 billion. With this, I am at the end of my opening remarks. And I look forward to answering your questions. But first, I'll hand it back to Christian.

Thank you, Christoph. So we can go right into Q&A. As always, I'd like to remind you that you should please limit the number of your questions to a maximum of two per person. And then please rejoin the queue should you have follow-up questions. Thank you. Please go ahead.