Swiss Re AG

good morning or good afternoon welcome to swiss three annual results 2024 conference call please note today's conference call is being recorded at this time i would like to turn the conference over to andreas berger group ceo please go ahead thank you very much and uh good morning or good afternoon to you all depending on where you're sitting um appreciate you taking the time to join us today and before

I will hand over to Group CFO John Dacey, who walks you through the details of our 2024 full-year results. I'd like to start with some brief remarks and observations. 2024 has been a very important year, an important year for Swiss Re and its employees. Our results for the year show that we are on right track. On the back of a solid fourth quarter, We've delivered a net income of 3.2 billion U.S. dollars and a return on equity of 15%. We achieved our goal of positioning P&C reserves at the higher end of our best estimate range. This was enabled by the decisive actions we took in the third quarter last year. As a reminder, we added 2.4 billion U.S. dollars on a nominal basis to U.S. level 2 reserves in the third quarter and 3.1 billion throughout 2024, positioning our overall PNC reserves at the 90th percentile of our best estimate range. We're pleased to have addressed the prior year drag on earnings, as a lot of you have told us also before. We already benefited from our strengthened position in the fourth quarter, where PNC risk result included approximately 100 million US dollars from net reserve releases on a nominal basis. That's a good sign, although we will continue to guide to a neutral reserving result in 2025 and ultimately then let future results speak for themselves. With P&T REIT's InfosBook now in a much better place, we're also pleased by the new business generation at the January renewals. We achieved volume growth of 7% driven by increases in property and specialty lines, partially offset by our continued cautious stand in casualty. We're locked in positive nominal price increases of around 3%, precisely 2.8, most pronounced in casualty lines, while cautiously increasing our loss picks by 4.2%. Approximately 70% of these loss updates reflect a prudent view on inflation, particularly in casualty, while the remaining 30% represent adjustments based on updated model views. When taking into account yield levels, so that means the discounting effect, the economic margin achieved at the recent renewals is broadly in line with last year's. With the January renewals, we have locked in about 50%, I think it's exactly 53% of our P&C RE treaty book. Now to corporate solutions. Corporate Solutions had another very strong year, outperforming its combined ratio target of less than 93% by achieving a 89.7 combined ratio. I think it's the 18th consecutive quarter of consensus beats, so very good results. But we do not take Corporate Solutions' consistent results delivery for granted, and we'll continue to focus on delivering to our customers, brokers, have the underwriting discipline, and also top-notch claims management in place. That's what we're all about and thinking about. Now, let me turn to Life & Health We. First of all, we're happy that we delivered on our 2024 US$1.5 billion net income target. Despite the negative impact on assumptions strengthening, we undertook on honoris business. That was during the year and some negative experiences mostly related to smaller portfolios. I'm sure we're going to come to that in a moment. As a result of this noise during 2024, similar to P&C RE, we decided to more forcefully address pockets of volatility in the in-force book. We completed this in the fourth quarter, broadly in line with what we estimated at our management dialogue event at the in December last year. The assumptions update have resulted in a 6% reduction of life and health risk CSM balance. It's important to note here that these updates were anticipated during our 2025 target setting process, so it should increase the resilience of life and health risk results going forward. That completes my summary of the 2024 financial year, but overall, I'm really satisfied with the progress made and the underlying earnings power of the company. The latter allows us to propose a dividend increase of 8% to the upcoming AGM, delivering against our stated objective of growing the dividend over the next three years by at least 7% per year. Now to 2025. The priorities are clear. delivering a net income of more than 4.4 billion U.S. dollars. Across our organization, we continue to make progress in becoming a leaner, faster, and more effective firm. These efforts are expected to result in a 300 million U.S. dollar reduction in our operating cost run rate by 2027. And thanks to all the efforts made in 2024, we anticipate achieving a 100 million reduction already this year. 2025 has started with a major catastrophe in the form of the devastating LA wildfires. I just want to extend our heartfelt sympathies to everyone affected by this event. It will require the efforts of many, including insurance, reinsurance companies, and all services provided in the ecosystem you know, to support here. In our case, our preliminary estimate currently proceeds a loss of less than 700 million US dollars based on an industry market loss of approximately 40 billion US dollars. Above all, this is part of the business we're in. That's what we're here for. And we're here to assist affected communities in their recovery and rebuilding efforts. Now in closing, I'd like to thank our employees for their dedication and hard work, our clients and partners for their trust, and also our shareholders for their continued support, which was demonstrable effort and evidence in also the share price development. Together, we're on the journey to close the gap to number one. We've made great progress. It's not a sprint, it's a marathon, and in closing, I would like to take a little moment to also express my sincere gratitude to John Dacey, our group CFO. He's been CFO for the last seven years and part of the group executive committee for more than 12 years. John's dedication and strategic vision, tireless efforts, and I would say, I love his humor. This has left a lasting impact on our organization. We'll miss you, John, and in particular, You know, when you step down at the end of next month, your leadership specifically was pivotal in guiding us through the challenging transition to IFRS. Everybody who went through this transition will know what I'm talking about. And thank you for that. And those moments definitely will celebrate, John. So over to you with more details. Thank you.

Thank you, Andreas. And good afternoon or morning to everyone else on the call. A few remarks, and I'll try not to be redundant to Andreas's introduction, but I think it's worthwhile setting the stage on a couple of positions. So again, the net income of the group is $3.2 billion for 2024, 15% return on equity, $1.1 billion in the fourth quarter. We did a nice recovery, I think, from the third quarter. When we did take the reserve in charge, it forced us to miss the target we'd set at the beginning of the year of 3.6 billion of net income. But we came close, and I think it shows the underlying strength of all the businesses, including PNC RE. For the same reason PNC RE missed its target of less than 87% combined ratio with a full year combined ratio as reported of 89.9. The reserving actions in the third quarter counted for approximately 10 percentage point reduction. So not too hard to do the math of where we might have landed otherwise. In 2024, PNC reported actual large matcat losses of $1 billion, significantly below the budgeted $2 billion expectation. This was helped by some good luck, but as important, if not more importantly, underscores the disciplined underwriting approach, especially with respect to secondary perils. In the fourth quarter specifically, large losses related to natural catastrophes amounted to only $185 million for PNC Re, whereas approximately $150 million was attributable to Hurricane Milton. This compared to a budget in the quarter of $500 million. Corporate Solutions, as Andreas described, delivered another outstanding performance for 2024. The full year combined ratio is 89.7, outperforming the target of below 93, and the strong underwriting and stringent portfolios continuing to evidence themselves. Life in L3, as Andrea said, a little more complicated story, but delivered its net income target of 1.5 billion US dollars. The result reflected the strong recurring investment result and the CSM release given the large enforced book. These elements allowed us to offset the negative experience variance of around $800 million, where more than $500 million was the result of assumption updates that we did on onerous blocks of business throughout the year. As we flagged in December in London, during the fourth quarter, we accelerated our regular assumption reviews on those portfolios where we saw experience deviating from expectations. Those updates were across lines and geographies, including on EMEA health businesses. We also reassessed portfolios that were performing broadly in line with expectations, like the mortality book in North America. We took the opportunity to add some caution in the assumptions, and this has resulted in the reduction of the CSM balance by about $1.1 billion in the quarter, $1.3 billion for the full year. In addition, the U.S. dollar strengthening in the fourth quarter further impacted the CSM, and for the full year, the impact of this was about 600 million U.S. dollars. These updates are fully reflected in the 2025 net income target that we've put out of $1.6 billion for the life and health segment. The return on investments rose materially from 3.2% in 2023 to 4.0% in 2024, driven by a substantial increase in the recurring income, which grew by approximately $500 million compared to the previous years. Our reinvestment yield remained strong in the fourth quarter, reaching 4.6%. However, the impact of the recurring income yield was muted primarily due to the maturity of some higher-yielding investments during the same period. Finally, the capital position remained strong, with a group SST ratio of 257% as of the 1st of January of this year, above the target range of 200 to 250%. The decrease versus the mid-year group SST ratio of 284 is largely a result of the reserving actions we took in Life and Health RE, and to a small degree P&C RE, the accrual of the dividend, modest increases in deployed risk capital, and some other impacts, including unfortunately the foreign exchange impact, which also affects the calculation of the SST. As Andreas mentioned, we are confident that all the businesses are well positioned for 2025. And accordingly, we've reaffirmed today the financial targets that we originally announced in December. The group continues to aim for net income of $4.4 billion. Again, it sounds redundant, but I think it's useful for you to hear it from every dimension of the business. Also, after taking the expected impact from the LA wildfires into account. And last, maybe on my personal note, Andreas, thanks for the kind words. It's been a privilege to work at Swiss Re and alongside the dedicated colleagues inside this great company. I'm confident the company is in excellent hands with my successor, Anders Malmström, and I look forward to seeing it continue to thrive. With that, I'll hand over to Thomas to manage the Q&A, of which I'm guessing there'll be a few.