Swiss Re AG

Good morning or good afternoon. Welcome to Swiss Re's half-year 2025 results conference call. Please note that 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 good morning or good afternoon to all of you. I appreciate you taking the time to join us today, so thank you for that. Before our Group CFO, Anders Malmström, walks you through the details of our half-year results, I'd like to start with some scene setting and brief remarks. Today, we're pleased to report a strong net income of $2.6 billion for the first half of 2025, resulting in an annualized ROE of 23%. All of our three business units delivered their fair share, and we also benefited from a solid investment result. The main driver of the fact that we were able to achieve around 60% of our full year net income target of more than $4.4 billion has been the strong underwriting contribution of our P&C businesses. Here, we benefited from relatively quiet second quarter with respect to large losses after a tough start to the year as we all know. Large losses in the second quarter were modest across P&C RE and Corporate Solutions, coming in below $150 million, entirely from main man-made events. This means that we did not consume our NADCAT budget in the second quarter. While this explains the Stronghold Mark Ratio results, we did allocate a reserve for current year losses that may not have the losses that may not have been reported to us yet by the time we closed the quarter, thereby adding an increased level of resilience to our P&C units for the second half of the year. Our P&C reserves remain resilient. The positive nominal reserving result for the first half amounted to around $300 million with the majority in P&C RE. I'm happy with the outcome of the renewals of this year in P&C RE. Market participants largely maintained the discipline on terms and conditions. Overall pricing is still attractive, with the picture across lines of businesses being more nuanced, given the different stages in the cycle that each of the lines of businesses is in. This is very important to us. as not all lines are correlated, meaning there's not just one single cycle. In property, despite a decline in risk-adjusted pricing, we achieved attractive margins, particularly in the NATCAT space. It's important to note that current reductions are occurring from very healthy levels, which puts the observed pricing pressure into perspective. In casualty, we saw nominal price increases in the mid-single to double-digit range, which were largely offset by our prudent loss assumptions. And in specialty, we successfully defended our attractive margins. The outcome of mid-year renewals was consistent with those of January and April, reflecting a continued focus on underwriting discipline and prioritization of margins over top line. We increased volumes in our property and specialty lines by 5%, while further significantly reducing our casualty volumes by 27%. We achieved nominal price increases of 2.3% on our overall portfolio in the mid-year renewals, or negative 2.4% on a net basis, meaning post the impact of higher costing loss picks we have taken. Year-to-date, we have achieved 3% volume growth, while the net price change of a modest negative 1.8% is supportive of our 2025 targets and, again, reflects the overall discipline that we continue to maintain. When you combine volume and price developments, P&C REIT's new business CSM of $2.2 billion in the first six months of the year is unchanged from the same period a year ago. That's a very solid outcome. And to stress again, we have no top-line targets. The focus is entirely on maintaining healthy risk-adjusted margins and a high-quality portfolio. Life and health. Life and health really produced a solid first half result. The $839 million U.S. net income It's just above the pro rata target requirement of $800 million, so overall we're on track. We continue to have some noise from smaller portfolios where experience lags expectations, but this is within manageable levels, and we expect this to fade a few quarters into the future. Importantly, our largest portfolios, most notably U.S. Mortality, are performing in line with expectations. We continue to make progress on our costs. Our admin costs for the quarter are in line with the cost ambitions outlined during our investor event in December last year. Accordingly, we're on track to reduce our cost run rate by around $100 million this year at constant effects, contributing to the overall target of $300 million by 2027. We will break out details on this for you in the future. Now, we're confident, but we remain vigilant as we look ahead. Priority number one is to deliver on our targets. And we remain in a good place to do that with all three business units on track. And I also told you that we have a second priority. which is to increase the overall resilience of the firm. Also here, I feel we have made very, very good progress. The actions we have taken on in-force reserves in P&C RE and Latin L3, the underwriting and reserving of new business, and to focus on operational excellence and efficiency across the firm are all part of it. We will now see what the second half of the year brings. as we enter the peak of the wind season. The macro environment remains uncertain with abundant risks around us. To all of this, our focus on underwriting excellence is unchanged. And with that, I'd like to hand over to Anders to you, our Group CFO. Over to you.

Thank you, Andreas. And again, good afternoon or good morning to everyone on the call. I will make a few remarks on the results we've released this morning. before we go to the Q&A session. Andreas has taken you through the highlights of our overall strong first half results. Let me add a few further details. On revenues, the group's insurance revenue amounted to 20.9 billion US dollars in the first half, down from 22.2 billion dollars last year. Please note that we have adjusted last year's first half revenues down by just below $300 million to reflect the updated methodology on netting profit commissions. Last year's first half service expense has changed by the same amount with no net impact on the P&L. This provides for a better like-for-like comparison. The $1.3 billion decline has a few major drivers, most of which were already highlighted in the first quarter. The termination of an external retrocession transaction in Lightning Head 3 with no bottom line impact, which inflated last year's first half revenues by about $0.4 billion. In corporate solutions, the non-renewal of the Irish MedEx business accounts for a 0.2 billion reduction in revenues versus last year. And the decrease of 0.7 billion US dollars in P&C RE is driven by the pruning of the casualty book and increased revenue seasonality between first and second half of the year in property and general multiline. For the second half of the year, we currently expect, subject to FX movement, revenues to be higher than in the first half by around 1.5 billion US dollars. The main driver here is the seasonality of expected NatCat claims in P&T RE and corporate solutions. You will hear us continuing to stress earnings are what matters, and we continue to see good resilience here. Despite some pressure on rates across our P&T businesses, The new business CSM production of the group remained healthy at 3.1 billion US dollars in the first half of the year, up marginally from last year's $3 billion. Let me move on to the insurance service result of our businesses. In P&T RE, you will continue to notice a decline in the CSM release versus last year's period. The $1.4 billion 1.4 billion release in the first half is down from last year's 1.8 billion. The decrease is driven by the earn-through of prudent initial loss picks, including the impact of new business uncertainty allowance. Experience variance and other, as we call it, and which includes all variances relative to initial reserve assumptions, amounted to a positive $102 million in the first half. This figure was negative after Q1, largely as a result of the high large NATCAT and manmade losses. The low large loss burden in Q2 drove a positive 242 million overall experience in Q2, and this has resulted in an overall positive first half. Total first half large NATCAT losses of 556 million almost entirely from the LA wildfires, were below the first half budget of 778 million US dollars. Large manmade claims amounted to 213 million US dollars, which is still slightly higher than what we would normally expect to see in an average first half. The overall positive experience on large claims was partially offset by current year reserves we set up for attrition losses of more than $200 million that may not yet have been reported to us, which reflect a cautious stance we are taking as we enter the second half of the year. Importantly, we benefited from a positive prior year result. Nominal reserve releases in P&C RE amounted to around 250 million in the first half. In terms of the combined ratio, P&C RE's the first half results of 81.1% is well below the 85% target we have for the year, strongly hedged by the 76.3% of the second quarter. Moving on to corporate solutions, the first half CSM relief of $451 million is above last year's $440 million, driven by higher in-force margins. Experience variance and others was positive at $65 million. This reflects favorable underlying performance and a positive prior year reserving result, partially offset by an allowance for expected claim seasonality due to late reporting. Large NAPCAT claims of $60 million were driven by the LA wildfire loss of $50 million, below what we would have expected for the first half. Large man-made claims in the first half amounted to almost 200 million, which is slightly above average, offsetting the good luck on large NatCat. Proper Solutions 88.2 combined ratio for the first half compares to our target of less than 91% for the full year. So clearly a good base to take into the second half of the year. Finally, Life and Health III. The first half CSM release of $846 million is below last year's $918 million, mainly because of the assumption reviews carried out and booked in 2024. Experience variance and others amounted to negative $197 million in the first half, which primarily reflect impact of selected assumption updates in onerous business and volume updates. Overall, actual claims experience was slightly positive. We are focused on reducing the noise from some of our smaller portfolios where actual results have lacked expectations. Our goal is to achieve a neutral experience variance in the near future. Life & Health Reef net income of $839 million, as Andreas already mentioned, is just above the prorated $800 million share of our $1.6 billion portfolio. full-year target. We benefited from solid investment results with the ROI of 4.1% slightly ahead of last year's 4%. A large part of the increase is due to the realized gain we achieved on the sale of our definitive stake in Q1, which was partly offset by targeted sales on fixed income securities. Recurring income remains healthy, standing at $2 billion in the first half. Lastly, a few words on capital. We estimated the group SST ratio at 264% as of 1st of July, 2025. This is seven points higher from where we started the year. That's where I will leave it for now, and I'm happy to hand over to Thomas to kick off the Q&A.