Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München

Thank you, Moritz, and good morning and welcome to everyone to Munich Re's Q3 earnings call. Today I have the pleasure to introduce two speakers to you. As always, Christoph Jureka, our CFO, for his last quarterly earnings call as the Group CFO before taking over the Group CEO role next year. And a warm welcome also to Andrew Buchanan. CFO of Reinsurance. Most of you know him anyway. He will be the group CFO as of next year. Andrew will support us during the Q&A session. Now I hand it over to Christoph for his opening remarks.

Thank you, Christian, and good morning also from my side. It's always a pleasure being here, and I'm pretty sure I'll miss all of you, but I'll still be around. As always, I start with my introductory remarks. Munich posted another particularly pleasing net result this quarter. As you all have seen, €2 billion in Q3 and the drivers are similar to those of the previous quarter. We have a good underlying performance across all lines of business and coupled with an exceptionally strong technical result contribution in P&C, reinsurance and GSI. We have very high net earnings at Ergo, including net positive one-offs, as well as also a very high investment return. Overall, with a net result of 5.2 billion euros after nine months, we are running clearly ahead of our pro-rata full-year guidance. In all segments, we are comfortably on track to meet or even exceed our full-year targets. Let's look at the Q3 earnings drivers in more detail, starting with the investment result. The return on investment of 4.1% continued to benefit from benign global equity markets and overall positive fair value changes in reinsurance, while the investment result of Ergo was boosted by the first-time consolidation of Next Insurance. The reinvestment yield of 4% remains above the group's running yield, providing further support for its upward trajectory going forward. Turning to the business fields, let's start with reinsurance. The life and health reinsurance, total technical result of 314 million euros, came below the pro rata annual ambition, driven by negative biometric experience across major markets. This offsets the positive experience we posted in the first quarter and is not an indication of a negative trend in our portfolio or generally deteriorating mortality. This aside, the total technical result developed as expected in terms of the release of CSM and risk adjustment and benefited from strong new business and the impact for management actions. The result from insurance-related financial instruments, which includes our Finn Marie business, grew nicely over the quarters and performs according to our expectations. Overall, after nine months, the total technical result is within the range of the Pro Rata full-year guidance. The stock of CSM increased despite strong currency headwind due to favorable new business development providing a sound basis for continued high total technical result going forward. In P&C reinsurance we posted an outstanding Q3 result with a combined ratio of 62.7% which benefited once more from very low major losses. The release of the loss component of almost 2 percentage points is in line with the neutral overall change we anticipate for the full year. Reserve releases amounted to the expected six percentage points in the combined ratio. And I'm particularly pleased that the underlying performance remains strong with a normalized combined ratio of just below 79%. After nine months, the normalized combined ratio is very much in line with our guidance for the full year, while the actual combined ratio of less than 70% is even well ahead of plan. Please allow for an additional remark on insurance revenue. The decline we have been observing during the course of the first nine months is on the one hand driven by currency effects, mainly due to the US dollar. On the other hand, it is the consequence of deliberate business decisions we took in the latest renewals to safeguard a high profitability of our portfolio. we remain prepared to reduce business which does not meet our requirements with respect to prices and even more so as regards terms and conditions. Beyond that, the further downward revision of our full year top line guidance in Q3 is also related to premium adjustments including changes in the NDIC calculation. The negative currency impact on the top line applies in particular to global specialty insurance. Hence, rather technical headwinds obscure the fact that the business continues to grow nicely at the mid single digit rate on an underlying basis. As regards profitability, GSI posted a strong performance in Q3. The first nine months combined ratio of around 86% is better than the full year guidance, thanks not least to a pleasingly low combined ratio of 82.8% in Q3, which benefited from a low level of major losses. In primary insurance, Ergo came in with an extraordinary strong net result of €304 million in Q3. This result includes a few positive and negative one-off effects, such as the first-time consolidation of Next Insurance and the impact of the German tax reform, all in all leading to a net positive effect of around €50 million. Adjusted for this effect, The net result is slightly ahead of the quarterly run rate, underscoring the strong underlying performance. Overall, Ergo is well on track to achieve its full year guidance. Ergo Germany posted a net loss of 21 million euros in the third quarter, driven by high tax expenses because of the corporate income tax reform. From 2028 onwards, we will benefit from gradually decreasing tax rates. The technical performance in life and health remained strong, mainly driven by lower claims in the PAA business. The CSM release was fully in line with expectation, while the stock of CSM decreased, mainly due to model and assumption changes in long-term health. The P&C business achieved a good technical result with a combined ratio of 88.7% at the level of our full-year guidance. Ergo International reported an extraordinary strong net result of €324 million. The first-time consolidation of Next Insurance provided a gain in the investment result. Underlying, the segment continues to deliver a strong performance. The technical profitability in life and health was pleasing. And the P&C business delivered a strong total technical result overall. and a combined ratio of 88.7%, better than the full year guidance. Turning to capital management. The group's economic position remains very strong. The Solvency II ratio increased to 293% in Q3. Strong operating performance and the issuance of subordinate debt overcompensated the consolidation effect of Next Insurance, accounting for around 10 percentage points as expected. I would like to conclude with the outlook for the full year 2025. Based on the drivers I described before, we expect €1 billion lower insurance revenue in reinsurance compared to our last guidance we gave in August. Obviously, this reduction mainly affects P&C and GSI. In contrast, the profitability KPIs of both segments are much better than anticipated. Therefore, the outlook for the combined ratios improves to 74% for PNC and 87% for GSI. After standing clearly ahead of our pro rata full year guidance after nine months, we are of course very optimistic to achieve 6 billion euros net income in 2025. In the last quarter of this year, we will reassess reserve uncertainties as part of the annual reserve review as usual. Our actual versus expected analysis shows a pleasing continuation of an overall very favorable reserving trend. However, we might opportunistically use the so far better than expected financial development and any benefit in case of lower large losses also in Q4 to even further strengthen our reserve potency, potentially also at the cost of a higher normalized combined ratio. We anyway plan to realize disposal losses in our fixed income portfolio to support the running yield going forward. These measures are all fully in line with our long-term oriented financial steering approach, targeting a steadily increasing and smooth earnings trajectory. We will present our new midterm ambition on December 11th. With this, I am at the end of my opening remarks, and I'm looking forward to answering your questions. But first, I hand back to Christian.

Thank you, Christoph. We can go right into Q&A. Please limit the number of your questions to a maximum of two per person, and if you have follow-up questions, please rejoin the queue. Thank you.