Swiss Re AG

Good morning or good afternoon. Welcome to Swiss Re's nine-month 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 Andrea Berger, Group CEO. Please go ahead.

Thank you very much, and good morning or good afternoon to all of you. I appreciate that you're taking the time today to listen to us and also to engage into a hopefully very vivid Q&A. Before our group CFO, Anders Malmström, walks you through the details of our nine-month results, I'd like to start with some brief remarks as usual. After another strong quarter with a profit of $1.4 billion, we're pleased to report an net income of $4 billion for the first nine months of 2025, corresponding to an annualized return on equity of 22.5%. This puts us very well on track for our full year net income target of more than 4.4 billion US dollars. We benefited from exceptionally strong P&C results in the third quarter, helped by a low burden of large claims. These amounted to around 200 million US dollars in the quarter, well below expectations across P&C REIT and corporate solutions. The result of the second consecutive benign large loss is that both our P&C units are tracking well ahead of their respective targets. This is the principal reason why we're in such a good position at this point in the year. You've heard me stress our two key priorities, and they are unchanged. deliver on the more than $4.4 billion U.S. group net income targets, and secondly, increase the group's overall resilience to improve long-term delivery. Now on resilience. This journey started with a complete turnaround of corporate solutions and the implementation of a new reserving philosophy, which we subsequently extended to a P&C RE two years ago. We also successfully addressed P&C REIT's in-force U.S. liability reserves last year. This year, we've been focused on further improving the resilience of the third business unit, Life and Health Re. After three quarters, Life and Health Re net income stands at $1.1 billion U.S., which is actually a quite solid result. and a very important contribution to the group's earnings. But Lachlan Hale's results have been too noisy. As mentioned at our half-year results, we continue to focus on reducing volatility in smaller portfolios. Their experience has lagged expectations, thereby producing negative variances to our expected results. These negative variances are unacceptable. as our largest portfolios, including U.S. mortality, perform in line with expectations. In the third quarter, we therefore decided to partially accelerate efforts to strengthen the resilience of the in-force book based on detailed reviews of underperforming portfolios. Some of these are still ongoing and will be completed at the end of this year. We have full confidence in reaching the group's net income target of more than 4.4 billion U.S. dollars of the year. But given where Life and Health Re stands at after three quarters, and given our focus on resilience, we feel it is prudent to flag that in a base case, we're likely to fall short of the 1.6 billion U.S. dollars Life and Health Re four-year target. We will do what's required to get this business to produce results closer to expectations. At this point, and I emphasize, we do not expect significantly outsized impacts from Life and Health Re in the fourth quarter relative to Q3. So you heard me emphasizing not. We will update you on this on December 5th at our management dialogue event, and we're looking forward to that. Let me also briefly touch on new business CSM generation across our segments. We remain focused on disciplined underwriting as profitability continues to be our priority. To re-emphasize again, we don't have a top-line target. New business generation remains resilient with a new business CSM of 3.9 US dollars, billion US dollars for the first nine months. slightly down from last year's $4.2 billion. The decline versus last year partially reflects the more challenging pricing environment that we're facing in some lines of business in the P&C business, but also in corporate solutions. It also reflects our continued focus on portfolio quality, including the setting of proven initial loss assumptions. Overall, we're still satisfied with the margins we're able to generate across the businesses. Importantly, we continue to maintain discipline on terms and conditions and attachment points. I look forward to presenting further details on our group priorities at the upcoming Management Dialogue event on December 5th. On that date, we'll also announce our financial targets for 2026. I'll be joined by our group CFO, Anders Malmström, to provide an update on key topics across our businesses, followed by then an extended Q&A session. I think with that, I'm happy to hand over to Anders to give you more flavor.

Thank you, Andreas. And again, good afternoon or good morning to everyone on the call. I'll make a few remarks on the results we released this morning before we go to the Q&A session. Andreas has taken you through the highlights of our overall strong results for the first nine months of the year. Let me add a few further details. On revenues, the group's insurance revenue amounted to 32 billion US dollars in the first nine months, down from 33.7 billion last year. The 1.7 billion decline has a few major drivers, most of which were already highlighted in the first half of the year. At Q2 2025, that indicated that group revenues in the second half would be around 1.5 billion US dollars higher than in the first half. In line with this guidance, Q3 revenues were around 600 million US dollars higher than the average quarterly revenue in the first half of the year, reflecting the increased claims seasonality. While Q4 is also projected to be higher than Q1 and Q2, we now expect revenues in the second half to be slightly below the 1.5 billion US dollar previous estimate, primarily due to our continued focus on portfolio quality in P&C RE. As you have heard from us by now, we do not manage for top line. Let me move on. to the insurance service result of our businesses. In P&TV, you will continue to notice a decline in the CSM release versus last year's period. The $2.1 billion US dollar release in the first nine months is down from last year's $2.7 billion. This decrease is driven by the earn-through of prudent initial loss picks, including impact of new business uncertainty allowance and slightly lower margins. Experience variance and other, which captures all variances relative to initial reserving assumptions, contributed positively by $549 million in the first nine months, including $447 million in the third quarter alone. This quarter's positive experience was mainly attributable to large NABCAD losses that came in $678 million below expectations, bringing year-to-date favorable NAPCAT experience to $900 million. In addition, P&C Re benefited from a one-off risk adjustment release in the third quarter in the amount of $170 million. Against this very favorable backdrop in the third quarter, we selectively added to both current and prior year reserves. Year-to-date, we have added around $300 million to our current year reserves in P&G RE. Nominal prior year reserves releases stand at around $150 million for nine months, which means we added around $100 million in the third quarter. Please note, that no further actions have been necessary on the U.S. liability portfolio we strengthened a year ago. On the back of all the pieces I just described, P&C Re reported a very strong combined ratio of 71.3% in the third quarter, resulting in 77.6% for the first nine months, well below the 85% target we have for the year. Moving on to corporate solutions. The nine-month CSM release of $668 million is above last year's $628 million, driven by higher in-force margins. Experience variance and other was positive at $111 million. This reflects favorable large loss experience and a positive prior year reserve result. partially offset by an allowance for potential late claims reporting. Large NatCat claims of $60 million came in below expectations for the first nine months, while large man-made claims of $282 million were slightly above, partially offsetting the favorable NatCat experience. Corporate Solutions continues its track record with a nine-month combined ratio of 87.1%, below our target of less than 91% for the full year. Finally, on life and health reinsurance, as Andreas mentioned, we decided to partially accelerate our efforts to strengthen the resilience of the Inforcebook, following detailed reviews of underperforming portfolios. This resulted in negative assumption updates hitting the P&L in the amount of around 400 million U.S. dollars for the first nine months. There were 250 million U.S. dollars in the third quarter. The large majority of the third quarter's impact related to selected health business in the EMEA and AMZ regions. The fact that this hits P&L mostly reflect the onerous nature of these portfolios under IFRS, and this makes it particularly important that we strengthen them sufficiently. We have also seen negative claims and volume developments of approximately 250 million U.S. dollars year to date, primarily in the third quarter. Q3 was mostly driven by the Americas region, which had a relatively poor quarter in terms of experience, driven by volatile large claims. Importantly, overall year-to-date claims experience in our largest portfolios, which includes the U.S. mortality, which was strengthened before our transition to IFRS, continues to perform in line with expectations over the first nine months. Despite all of the actions and impacts, Life Intel 3 has produced a net income of 1.1 billion U.S. dollars in the first nine months, with 218 million achieved in the third quarter. While some of the assumptions reviews also affected our CSM balance, in addition to the P&L, our CSM overall remained unchanged at U.S. dollar 17.4 billion. compared to year-end 2024, supported by attractive and prudently priced new basis and favorable FX impact. A few words on investments before concluding with SST. We benefited from a strong investment result with a return on investment of 4.1% ahead of last year's 3.9%, supported by strong recurring income standing at $3.0 billion in the first nine months. We estimate the group's SST ratio at 268% as of 1st of October 2025, 11 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. Thank you, Andreas. Thank you, Anders. Hi to you from my side as well. As usual, before we start, if I could just remind you to limit yourself to two questions, and should you have a follow-up question, please kindly rejoin the queue. With that operator, could we start with the first question, please?