Swiss Re AG

Good morning or good afternoon. Welcome to Swiss Re's half-year 2024 results conference call. Please note that today's conference has been recorded. At this time, I would like to turn the conference over to Andreas Berger, Group CEO. Please go ahead, sir.

Thank you very much and good morning or good afternoon to all of you. Thanks for joining us today. I'm very happy to join you for my first results conference call. As the Group CEO of Swiss Re, you know that I started officially 1st of July. I can just repeat again, it's a real privilege and I'm excited to lead this remarkable organization with more than 160 years of rich history under its belt. So before we dive into today's results, I'd like to share just a few introductory thoughts on what I believe is important for the next months and quarters. The message is, The key is to reinforce the positive momentum that we have built. We achieved our financial targets last year and also returned to growing the ordinary dividend earlier this year. Therefore, our immediate goals for Swiss Re remain unchanged. We're fully focused on delivering on our 2024 financial targets and we're focused on enhancing the overall resilience of the Swiss Re group. Regarding our 2024 financials, the strong first half year 2024 showed a net income for the group of $2.1 billion that we published today. And this shows that we're well on track and all our businesses are actually well positioned. But again, a bit of caution. We're well aware that we have a large part of this year still ahead of us, and especially in respect of natural catastrophes. We're entering the hurricane season as we speak, and you know Q3 is the most active part of the year. So we remain vigilant and focused on our goals. Enhancing the Swiss Re Group's resilience is not a day job done in one day, but it's actually an ongoing journey. Swiss Re has always been very resilient in respect of capital strengths. So what do we mean actually by resilience beyond that capital strength? We look at it related to our ability to deliver on our targets and goals consistently. So at the heart of it, it's about successful underwriting and everything that relates to that. In particular, focusing on our clients, rigorous portfolio steering, disciplined underwriting decisions, and setting prudent initial loss assumptions that take into full consideration an appropriately informed view of future loss trends. Successfully executing on this will benefit actually our earnings and the sustainable strength of our reserves. As a result, you can expect we believe this will lower our cost of equity. The CSP and CREs renewals were actually a very good example of this. showing a consistent portfolio strategy combined with prudent pricing and initial loss picks. We increased our loss assumptions across the board by 11%, on top of the 13% increased last year. I've taken additional reinforcing actions, for example, by having introduced a reserving uncertainty allowance, as we reported already, on new business across all our P&C businesses. Remember, we started the course earlier and P&C reinsurance now joined beginning of the year. And this more prudent new business reserving approach will obviously benefit reserving strength sustainably. With respect to overall P&C in-force reserves, our goal is to sustainably position our P&C reserves at the higher end of the best estimate range. And I will come back to you what this means in detail and where we stand in due course. The most important drivers of success over time will be good underwriting and prudent initial loss assumptions reinforced by the uncertainty allowance we have introduced, and I was talking about it just now. So we believe, in summary, that we are on track and that we are on the right track. Now, in life and health re-business, Amongst others, we significantly reinforced our enforced mortality assumptions, and that was in advance of the transition to IFRS in 2022 and 2023, with a clear goal to account for potential medium-term pandemic impacts, thereby increasing the resilience of Life and Health 3 CSM, the main driver of Life and Health's recurring earnings under IFRS. We're also working hard in other areas to make this company more resilient. You've heard about our exit decision on IPTQ. The IPTQ withdrawal is proceeding as planned. Our first half results include a write-down to zero of all related intangibles that we held on our IFRS global group balance sheet. Lastly, a few words on our capital management priorities. they remain unchanged. Our capital position is very strong. Our primary focus is therefore on growing the regular dividend based on underlying earnings. And if we accumulate excess capital over time with limited opportunities for deployment, we will, of course, return it to shareholders. After a little less than two months in my CEO role, these are my initial thoughts. You would appreciate that I can't give you a full-blown strategic plan with priorities for the future. We do a rigorous assessment of the current situation, and we look into the future with a positive outlook. So that's the message that I can give to you now. I can only stress again how motivated and excited I am to lead this great, great company. Now, with that, I hand over to John, John Dacey, for a summary of our presentation. half-year 2024 results. John, over to you.

Thank you, Andreas. And again, good afternoon or good morning to everyone on the call. I'll make a few remarks about the release that we put out this morning for the half-year results under IFRS. First and foremost, as Andreas indicated, we're pleased with the half-year results. The net income of $2.1 billion puts us on track to achieve the full-year target of more than $3.6 billion. Also, as Andrea said, we're keenly aware that we also have another two quarters to go, but it's reassuring that all the businesses were contributing to the strong first half results. The PNC REIS first half combined ratio of 84.5 reflects the discipline underwriting of the teams, but also the low large NACAT experience. While the market experience ensured NACAT losses of $60 billion in the first half, The majority of these losses related to smaller events that were assumed by the primary industry. More than 90% of those losses were caused by what we refer to as secondary perils. As a result of the nature of this cat activity in the first half, our own losses for large cat events came in below $100 million, so around $600 million That was $600 million below what we might have expected for the first half budget of large NACAP losses. Given the low amount and the fact that there is some uncertainty of where the ultimate claims will end up, we decided to put up an additional $300 million of IBNR reserves for the current year in the second quarter. This allowance obviously helps in case of heightened loss activity in the remainder of the year, where we seasonally expect larger reinsurance relevant events on average, but also we'll deal with the potential creep of losses that we might have seen in the first half of the year. The more than $300 million of allowance makes up the majority of the $0.5 billion of reserve actions in the property and specialty lines. Within that, we also added reserve to selected prior year losses, including the Italian hail storms from last year. which we did in the first quarter of this year. In addition, we increased U.S. liability reserves by around $650 million in the first half. Our share of IBNR reserves remains high and slightly higher than a year ago in this line of business. All these reserving actions are consistent with our ambition to enhance the overall resilience of the portfolio. And looking at new business, in the July renewals, we achieved the premium volume growth of 7%, probably in line with January and April renewals. We continued to focus on the growth opportunities in property and specialty, where the premiums grew 11%. We remained cautious on the casualty, and on the most recent renewals, we further pruned the U.S. liability book by 26% year-on-year, bringing the reduction 21% year-to-date. On LIFE and L3, we reported a net income of $883 million in the first half of the year, driven by our in-force margins and the recurring investment income. Our book benefited from the positive claims experience in the U.S., although this was more than offset by assumption updates we undertook related to owner's contracts, mainly in the EMEA region. Following an overall successful first half of 2024, LIFE and L3 is on track to achieve its full year net income target of around $1.5 billion. Corporate Solutions continues to deliver quarter after quarter, with a half-year combined ratio now at 88.7%, reflecting a strong underlying business performance. The benign man-made experience in the first half was offset by an allowance for potential claim seasonality, which we would expect later in the year. Corporate Solutions is on track to achieve the full-year target, again, of lower than 93%. Finally, with the announcement we made in May 2024 that we plan to withdraw from IPTICU that Andreas referenced, the group results from one-off impairments of goodwill and intangibles, again, as he said, of $111 million. will drive the loss for the first half year to $180 million, and that's what's driving the negative result in group items. The return on investments was strong throughout the first six months of the year, with an ROI of 4.0%. The higher contribution of recurring income increased about $300 million year over year. while the reinvestment yield for the second quarter stood at 4.8%, continuing to benefit higher interest rates. Lastly, Andreas mentioned the strength of the group's capital position. We'll provide the exact number of July 1st SST with the Q3 results. What I can say at this point of time is that mid-year we remained above 300% for an SST ratio. And with that introduction, I'd hand it over for Thomas, who will help navigate us through the questions. Thank you, Andreas.