Swiss Re AG

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Good morning or good afternoon. Welcome to Swiss Re's Annual Results 2025 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 Berge, 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. Before our Group CFO, Anders Malmström, We'll walk you through the detailed numbers. I'd like to start with some brief remarks as usual. It was a good day. 2025 has been a successful year for Swiss Re, but also for all key stakeholders, our clients and partners, our investors, but also our employees. We have two priorities. First, delivering on our group net income. and second, increasing the resilience of Swiss Re to improve the consistency of earnings delivery over time. In 2025, we delivered against both priorities, also allowing us to increase our capital repatriation to shareholders. We achieved a record group net income of $4.8 billion against our target of more than $4.4 billion U.S., and an ROE of 20%. This result reflects disciplined underwriting, strong recurring investment income, and low burden of large losses outside of the first quarter last year. At the same time, and this is equally important, we further strengthened the resilience of the group. We completed the life and health re-portfolio review. added to the current and prior year reserves in P&C RE, continued to increase initial loss assumptions well in excess of economic inflation, and applied the uncertainty load on new business across the Swiss RE Group. In addition, we achieved more than U.S. dollars, 100 million of cost savings in 2025. Therefore, we're well on track to deliver our targeted 300 million U.S. dollars reduction in the operating cost run rate by 2027. Finsiri and Corporate Solutions achieved an excellent result, supported by strong underwriting performance and lower than expected large claims. Finsiri achieved a combined ratio of 79.4%, well within its target of below 85%, while Corporate Solutions delivered a combined ratio of 86.5%, comfortably meeting its target of below 91%. Just as a reminder, the 86.5% combined ratio for Corp Solutions is calculated on a different basis than that of P&C RE, reflecting a gross revenue view and including all expenses on a like-for-like basis, Corporate solutions combined ratio would have been 80%. These outcomes reflect the actions we have taken in recent years to build the highest quality portfolio we've ever had in both P&C businesses. And against this backdrop, we entered the renewal for January 2026. The outcome was in line with expectations, with no real surprises. We executed on our priorities, first, to lead with confidence in segments where we have differentiating value propositions. Secondly, to actively manage our subportfolios to respond to the more competitive market, including prioritizing sustainable structures. And third, to grow together with our clients by offering solutions that address challenging concentration risks. While demand increased, competition intensified, especially in NatCat. Although clients selectively increased retentions, the three selectively or successfully, I should say, preserved our share of wallet. Casualty prices were up, but we remained cautious even as our repositioning actions are complete. We expect similar conditions in the upcoming renewals, always obviously subject to loss activity. What does that mean in terms of numbers? On volume, we renewed treaty contracts representing $12.4 billion U.S. dollars of gross premium in line with the business up for renewal. Overall nominal pricing was broadly flat. with mid-single-digit improvements in casualty offset by similar declines in property, particularly for NAPCAT covers. The gross premium volume developments mirror this divergence. At the same time, based on a prudent view on inflation and updated loss models, we increased loss assumptions by 4.6%, resulting in a net price decrease or 4.3 percent. Importantly, and I repeat importantly, terms and conditions remain stable. In addition, we reduced our external retro for NatCat at the 1.1 renewals as flagged already at the management dialogue in December, thereby increasing our NatCat exposures. Now turning to life and health read. In 2025, We completed the review of underperforming portfolios and took targeted actions to address related sources of volatility. The assumptions updates booked in the fourth quarter that impacted the insurance service result and CSM balance are in line with our guidance provided at the management dialogue. Despite all these actions, Life and Health III delivered a net income of 1.3 billion U.S. dollars for the full year. As a consequence, Life & Health 3 is on a much stronger footing with clearer visibility on earnings delivery. This gives us confidence in achieving the increased net income target of 1.7 billion U.S. dollars for 2026 and in Life & Health 3's ability to be the stable earnings provider to the group, covering the majority of our ordinary dividend. Our earnings were underpinned by a strong investments contribution, with a return on investments of 4% and a recurring income yield of 4.2%, providing an important and stable contribution to our earnings. We've also made substantial progress on our decision to withdraw from IPTQ, with all remaining parts now being either sold or to be placed into runoff in due course. Looking ahead, we confirmed the financial targets we communicated at our management dialogue in December. For 2026, we're targeting a group net income of 4.5 billion U.S. dollars, reflecting our confidence in the resilience of our business units, discipline underwriting, and active cycle management. In closing, I would really like to thank our employees for their strong commitment and hard work throughout the year 2025. I'd like to thank our clients and partners for their continued trust. And you, I'd like to thank you, our investors and analysts, for your engagement and support. Now with that, I'll hand over to Anders to you for a closer look at the financial details. of the 2025 results.

Thank you, Andreas, and good morning or good afternoon to everyone on the call. I will make a few remarks on the results you've released this morning before we move to the Q&A. Let me start with the insurance service result of our businesses. P&C RE reported an insurance service result of 3.6 billion U.S. dollars for 2025, significantly above the prior year level. The increase was driven by favorable experience variance, partly offset by lower CSM release, reflecting the earned through of prudent initial loss picks, including the impact of the uncertainty allowance on new business, as well as slightly lower margins. Experience variance and other, which captures deviations from initial reserving assumptions, contributed a positive $698 million in 2025. This was primarily driven by large NatCard losses that came in 1.2 billion US dollars below expectations. Against this highly favorable backdrop, we further strengthened P&C REIT's resilience by selectively adding to both current and prior year reserves. For the full year, we added about 200 million U.S. dollars to current year reserves and around 100 million U.S. dollars to prior year reserves in nominal terms. These prior year reserve additions are net of releases. We have substantial reserve redundancies on short tail lines, close to 1 billion U.S. dollars, which are recycled into longer tail lines in the form of ID&R reserves. This obviously benefits overall resilience. On the back of these actions, P&C Re reported a very strong combined ratio of 79.4% for the year comfortably achieving its full year target of below 85%. Turning to corporate solutions, the business unit delivered another strong year, achieving a full year combined ratio of 86.5% comfortably meeting its target of less than 91%. The insurance service result increased to $1.2 billion in 2025, up approximately $200 million year-on-year, primarily driven by a higher CSM release, reflecting stronger in-force margins. Experience variance and other was positive at $217 million, reflecting favorable large loss experience and a positive prior year reserving result. Partially offset by reserve additions for the current year, large NATCAT claims of $148 million were below full year expectations, while large man-made claims of $351 million were slightly above, partially offsetting the favorable NAPCAP experience. Finally, in life and health reinsurance, the insurance service result was $1.2 billion in 2025, compared with $1.5 billion for 2024, reflecting the impact of detailed reviews of underperforming portfolios concluding in 2025. For the full year, The negative assumption updates related to these reviews impacted the P&L by around $650 million, of which approximately $250 million in the fourth quarter. This is in line with the guidance provided at the management dialogue. Both the full year and fourth quarter assumption updates were focused on three markets, Australia, Israel, and South Korea. In addition, Adverse experience impacted the insurance service results by approximately 300 million US dollars for the full year, with close to 200 million dollars of the impact attributable to the markets mentioned before. Despite these actions, Life and Health 3 delivered a net income of 1.3 billion US dollars for 2025. While the assumption reviews also impacted the CSM balance, In addition to the P&L, the CSM remains robust at $17 billion, supported by prudently priced new business and favorable ethics movements. On revenues, the group's insurance revenue amounted to $43.1 billion, compared with $45.6 billion in the prior year. reflecting several key drivers that were already flagged throughout the year. As we have said repeatedly, we do not manage for top line. Earnings are what matter, and the quality and resilience of earnings continue to improve in 2025. Moving on to investments. Asset management delivered another year of strong returns with an ROI of 4.0% in line with last year. reflecting a recurring investment income of 4 billion US dollars. In 2025, we benefited from the sale of DFINITY offset by targeted losses within the fixed income portfolio. So let me conclude with capital. V3's board of directors will propose a dividend of eight US dollars per share, representing a 9% increase. thereby delivering against our stated objective of growing the ordinary dividend paid between 2025 and 2027 by at least 7% per year. On the announced buybacks, last December we added important changes to our regular long-term capital distribution policy, which focuses on growing the ordinary dividend and complementing this with a sustainable buyback that is linked to the achievement of our annual group net income target. Beyond this, we have been clear that we do not rule out the possibility of additional excess capital repatriation in the form of extraordinary buybacks. Today's announcement of one billion US dollar extraordinary buyback on top of the dividend and the 500 million sustainable buyback should be seen in that context. The 500 million sustainable buyback is here because we have achieved our group net income target. The additional 1 billion US dollar extraordinary buyback reflects all the key drivers. Firstly, we generated 4.7 billion US dollars of SST capital in 2025, despite the various actions we took to increase the resilience of the group, in particular on the life and health side. Secondly, The extraordinary buyback is consistent with our focus on managing this important phase of the P&C pricing cycle. And thirdly, the extraordinary buyback reflects our confidence in the overall resilience of the group, having successfully completed a host of actions across our businesses in the last two years. We expect to launch the buyback in early March, with completion targeted by the end of 2026. Our announced capital actions today imply a total payout of 3.9 billion U.S. dollars, or approximately 80% of our full year 2025 earnings. The group's SST ratio, including all of the announced capital actions, remains at a strong 250%. 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. As usual, before we start the questions, if I could just remind you to limit yourself to two questions. Should you have additional questions, please rejoin the line. With that, could we have the first question, please?

Sure. The first question comes from Will Hartcastle from UBS. Please go ahead.

Well, thank you. Yes, Will Hartcastle, UBS. The first one is just kind of really triangulate and work out where the starting point to think of the 26 combined ratio is. I wonder if you can try and help with some of that working out for the underlying so we can compare it to that better and 85% bridging with the 3.4 combined ratio from January. That would be helpful. And then secondly, can you talk me through the rationale of buying less retro year on year and therefore adding greater volatility? I guess it comes slightly in conflict to your added resilience. So just trying to understand why that happens. I'm trying to think that presumably return on cap, I guess, the belly of the risk as well, or is it just on the tail? Thank you.

Okay, maybe I start here. And I think your first question is the starting point of the combined ratio. And basically, I think what you've tried to figure out is what's the normalized... combined ratio off to the renewals, in a way, and then where do you get that? Look, I think if we do that, I think we obviously have to normalize for seasonality, we have to normalize for the smaller effects, and then incorporate the new information we have with the renewals, which I think we stated as being around 3% nominal. So in our view, this would bring us somewhere between 84 and 84.5, somewhere there for the year. But I think this already incorporates all the prudent assumptions that we took. When you look at our assumption that we increased the loss by 4.6%, that's significantly higher than inflation, so I think there's some call it prudency in. I think we have to earn the uncertainty load. And then at the same time, we bring the, you know, we have all the expense action. So I think this brings us well in line with the target also for 2026 to be below the 85% target that we have. Hope that helps.

On the retro?

On the retro, yeah.

I can maybe start there. I think we're not known to depend on RETRO. We have a strong balance sheet and we believe and trust our underwriting. We were using RETRO historically, yes. But when we believe that the margins, you know, remain with us and that we can deploy the capacity that we have allocated to NatCat in particular, that situation occurred and then we said, why not? you know, benefiting from it in-house. And I think this is something that is a strong statement, actually, for the underwriting that we have and the underlying quality of the book supports it. So we'll take decisions in future and to weigh up, you know, whether or not, you know, it makes sense. On the other hand, it's also important from a capacity deployment perspective not to, add to the fire, fuel, oil into the fire, because if you add more capacity in a rate-declining environment, you will actually obviously intensify the competition. And this would be counterintuitive for the stability of rate adequacy that we would like to achieve. So that's the context for this decision, and then we'll revisit it. But at the moment, we feel very comfortable with this decision.

Thank you. Will, could we have the next question, please?

The next question comes from Kamran Hussain from JP Morgan. Please go ahead.

Hi. Good afternoon. I've got two questions. The first one is on the buyback. If I think back to December and the IR day, I think, Andreas, you made quite a few references to the term kind of the lemon tree, and I think you talked about sustainability, consistency, and not wanting to squeeze the lemon tree too hard. How should I interpret those messages that you were trying to give in December and the extraordinary buyback today? Was it just 2025 was extraordinary and therefore don't think about it, don't plug that in or an additional buyback into later years because it simply is just an extraordinary set of circumstances or are you planning to squeeze things a little bit more? The second question is on life and health. So in the fourth quarter, Obviously, you had the assumption changes which were in line with your expectations. You then have some other kind of negative experience variance in the fourth quarter. How comfortable are you that the kind of negative experience variance from kind of Q126 just goes away completely? Is that what you assume and that's what we should assume? Thank you.

Yeah. Okay. Let me take the first one and second one and I can pass on to Anders on the life and health side. 2025 should not be seen as a new normal in the NatCat activities. We had a Q1 where we exceeded our budget, NatCat budget, but then we had a very benign rest of the year in NatCat. That's not the new normal. Exposure is exposure. It can happen any time. And that is reflected also in the budget that we set up. You know, we've got a budget of $2.1 billion for NatCat. And let's see. So this can happen any time. So what we wanted to do is really bring in that professional underwriting view from a technical perspective that we are managing cycles. Cycle management is what we do. And then we look at our portfolio and see what lines of business are correlating with, you know, each other, in particular when we assume certain cycle developments. We see a decline in property, in particular in CAT. And as I said before, we don't want to fuel the fire by adding more capacity to a declining market. So the quality of the rates and the rate adequacy is really important. So in that context, you should see the comments that we did in December at our management dialogue. And if you now look forward into 26 and maybe even beyond, we would see maybe similar behaviors in the 26 renewals. So let's see. But it just requires one big event, loss event, and then the whole dynamics will change. And that's the message I wanted to get across. And that's why we said don't take this as a new normal. We don't want to squeeze the lemon now. We're managing expectations in the sense of, you know, what does the market say and what do the cycles tell us? So we want to create a lemon tree here, and that's what we, you know, did in starting and continuing to do, because we need to manage the cycles and the volatility. We've got a diversification benefit through life and health, which is helping, but I think within the P&C businesses, that cycle management is key, particularly at the moment, applying disciplined underwriting.

Yeah, maybe just to reiterate back on life and health, what I already just said on the call, I think we've really finished now all the reviews. I think we strengthened the reserves significantly during that review. And then we actually look where the volatility that we had, the negative experience, where it's really coming from. Out of the 300 million U.S. dollars that we had, 200 came from these underperforming markets that we just strengthened. So I feel very comfortable now that after all that work, that we will not see this adverse experience in the future years. And look, I think now we're going to continue to just do, every year we do the updates and go through the portfolios and you will not see large movements because you do it on a regular basis. And of course, we can always have some volatility, but we feel very comfortable now that all the assumptions are set to what we have experienced and what we expect in the future years.

Thank you, Karan.

Could we have the next question, please?

The next question comes from Shanti Kang from Bank of America. Please go ahead.

Hi, thanks for taking my questions. So just on the prudence that you've added today, you mentioned the skew between shorter and long-tail lines, and I was just wondering if you could give us some color on what particular lines you addressed more heavily or if that was more evenly spread across risk lines. And then just on the renewals, I noticed that you offset some of the volume decline in property and NAPCAT with some gains in specialty and casualty. Can you just characterize the specialty lines that you felt were most attractive to grow? And also on casualty, which areas piqued your interest there? Thank you.

Okay, so maybe I'll start with the first one. The prudence, and I think very clear that we had We had on the business, we had releases of basically close to a billion, and we moved them over to the long term. And I think we evenly spread that. It's not that one particular line had a problem, because we're not talking about problems here. We're talking about strengthening resilience, so this is not one particular line that got that. And I think it's important this is all . with all that we use to strengthen the resilience.

Maybe on the renewals. In particular, you said we were offsetting property by growth in casualty and some specialty lines. On the casualty, I can specifically say It was rate developments, positive rate developments. We are not, we're still very conservative because we think it's still a market or a line of business where you have to apply prudence not only in U.S. liability but also in EMEA and Europe where you don't want to pick up through the back door the U.S. casualty or U.S. liability exposures through European treaties. In Europe particularly, the growth came from motor portfolios in particular on the cashless side. On the specialty side, I think overall, I think we were very happy with the lines of businesses. We're a bit cautious in the marine and energy space. We see very healthy situations in engineering, although competition is increasing in this line of business as well, so something to watch. And then the aviation markets, we've seen positive price changes on a normal basis. On the risk-adjusted basis, it was almost flat. So that's the picture we can see at the moment. On the cyber side, I can say risk-adjusted, we don't see a very positive picture. So we've got slight decline. So we're very prudent there in the underwriting. And you see it in the market also. that some of the players were also pulling back some capacity because we need to watch your rate adequacy.

Thank you. Sam, could we have the next question, please?

The next question comes from Andrea Baker from Goldman Sachs. Please go ahead.

Great. Thank you for taking my questions. The first one, probably a little bit of a follow-up on Ro's question, but can you help me try and reconcile the 5% year-on-year increase in cap budget with your PML losses to weather events have sort of increased 20% to 30% or so. Does this just mean that you're writing a lot of the incremental cat exposure in the higher layers, or is there something else going on here? And then secondly, on insurance revenue. So I appreciate what you're saying on the focus on the bottom line, but it has been a pretty volatile top line in 2025 and been quite difficult for us to forecast. I think you made the comment in December, and correct me if I'm wrong there, You expect the group number in 26 to be broadly flat versus 25? Is this still the case? And I guess is there any variation divisionally we should take into account? Thank you.

I think the first question was more about the cut budget. So I think the cut, the net cut budget increased, as you say, by 5% from 2 to 2.1 billion US dollars. I think the reduction in retro doesn't really impact the expected NATCAT. So, this is much more in detail. This is a capacity that we increased, but that's in detail. So, the expected NATCAT should not really be impacted by that decision. So, that's why I think it's a natural increase of 5% of the NATCAT .

Second question. The insurance revenue, I mean, look, there's a mixed items here. So, we've got the earn through of the US casualty pruning. We had some individual items, smaller items also on course. So, for instance, the MedEx book, the medical expense book on the ANH side that went to AXA from the Irish MGA that we were underwriting. So those were smaller items, and they added up, obviously, to that number.

And in terms of guidance, yeah.

I mean, we don't really give guidance in terms of revenues, but I think we mentioned many times that we don't manage to revenues, but you could probably see that the market generally grows with GDP or slightly above that.

Thank you, Andrew. Could we have the next question, please?

The next question comes from Ivan Bokmat from Barclays. Please go ahead.

Hi. Good afternoon. Thank you very much. My first question will be fully also going back to one of the earlier questions on the combined ratio developments. I'm just trying to understand, you know, as we look into 2026 and perhaps in outer years, so if 84.5 is the starting point, we can assume delivery on cost savings. which is, you know, one and a half to two percentage points, this still leaves a little bit of a balance that would push combined ratio higher, unless we assume some sustainable reserve releases. And, of course, given the buffers you create, this is not unreasonable. But maybe you can talk a little bit about that progression and how the balance sheet could be deployed at what time frame. And the second question, I wanted to ask you about renewals and the new business CSM and PMCRE. So we've had this year in 25, the growth was negative 5%. I'm just wondering, maybe you could try to separate the effects impact within that and also perhaps, you know, suggest some view into 2026 of how should that be affected by the renewals? Thanks.

Yeah, maybe let me just do here the intro and then I'll hand over to Anders. Just on the cycle management piece. So you've got two elements. the cost, obviously, and then the loss ratios to look at. And cycle management, as far as exposure is concerned, that's our day-to-day business. And we set the strong foundation now. The underlying portfolios are strong. And that's why we think we can manage those cycles very effectively. So with the bottom line view. Now, expense management is becoming part of day-to-day business. We have introduced a philosophy here that we actively obviously optimize the setup of the group that's what we did with the organization effectiveness measures and also faster decision making that translated automatically into expense savings and we're going to continue there and i'm not going to talk about the productivity gains that we're going to gets through AI because that is a new area and we haven't factored that into our plans yet. So that's the general view. And then again, we are in an extremely volatile market. That's our business. So one big event can change the dynamics completely and that would then lead automatically to a hardening of the market again. So I wouldn't rule out dynamics like that because the alternative capital that's coming into the industry, also have to then experience the losses that are coming through. And we are a long-term player with strong balance sheets, and that's what we need to manage.

So maybe just back to your question a bit on the numerical side, on the quantitative side. So I think as we mentioned before, I think you're going to get a normalized and combined ratio of below 85%. This reflects the prudent. So I think you can expect with everything else as expected that we're going to see reserve releases. And then on top of that, the expense actions that will continue. This is not over 2025. We took the first 100 this year. We're going to have another 100 and another 200 over the next two years. So that will help. And then, I mean, prices will not always go down. So I think we feel very confident and comfortable that I think we will stay – below the 85%, obviously upset any huge NatCat events. But I think it's really the combination of food and reserving, expense actions, and then disciplined underwriting. And then on the new business CSM, I mean, you know that the new business CSM will come out in Q1. I think that's when we come with the exact number. I mean, you've got now all the info how much the renewals impact the combined ratio, so that's a good proxy, but the exact number we're going to provide in Q1.

And to Iman, could we have the next question, please?

The next question comes from James Schack from CT. Please go ahead.

Thank you, and good afternoon. I just have, to begin with, just a couple of questions on some of the meeting pieces in the combined ratios. I appreciate the new business loss component is seasonal. However, the full year number is still a very large number. I think from memory you were kind of guiding to around one and a half to two percentage points as being the loss component. It's been two and a half in 24 and around three in 25. So what's driving that? 500 million negative loss component is quite a large number in the context of the overall insurance service results. It just came to get some insight into the outlook for that number. And also, if you're able to just comment a little bit on the expense ratio, which went up from 4.8 to 5.4, I presume that's just your front-ending front-loading costs ahead of the reduction and efficiency program. And then, finally, just on the group items, IPTC now largely disposed or fully in runoff I know you've guided to sort of a $150 million reduction in the loss of the Q on an annual basis. But has that been accelerated in the period? The Q4 loss in group items is a bigger amount of anticipation. So what was the XQ loss looked in Q4 in the outlook there at least? Thank you.

Okay, maybe I'll start on the first one. Again, I think your question about the new business loss component and then I mean, look, I think the way I think about this is this is really driven by the prudent loss picks, and you should then see that coming through to positive variance going forward. That's really how I look at it, because we write profitable business. It's not that we don't write profitable business. It's just the way you reserve for it becomes onerous day one, and then it releases over the two positive experience.

Maybe just on IPTQ, no, there's no acceleration. Just to remind us, we have first sold the P&C IPTQ Europe business to Allianz, and then we sold the U.S. Solutions, the sales solutions business, and that was called the lead management company that we had. And then we were busy looking at the individual portfolios, so we had a remaining EMEA Life and Health book, but also the U.S. book. And we could successfully then conclude on the U.S. book. So that's also sold. And we have the remaining piece, the EMEA Life book. And here we decided to send this EMEA Life and Health book into runoff. So that's going now into the normal runoff activities and manage runoff as we always do. and see what opportunities occur in the process.

And so there's no change on APQ guidance, which we said should be at around minus $50 million in 2027. And to the question in Q4, there's an amount of around minus $100 million related to the sales of APQ.

Could we have the next question, please?

The next question comes from Chris Hartwell from Autonomous. Please go ahead.

Hi. A couple of questions, please. First of all, just going back to the lifestyle, and I think I built an extension from Cam's question earlier. If I look at the start point of 2025 and add back the experience variance, that gets me to a much higher number than what you are implying in your 2026 target. So I was wondering if you could just help me understand maybe some of the moving parts between I guess what we saw last year and that 2026 target. And the second question, just really reflecting back on the renewals, obviously we've seen quite a significant reduction in price. You and many of your peers have confirmed that terms and conditions have remained stable. I'm just wondering what your feelings are about how much room there is or willingness there is for T&Cs as we go through this year, notwithstanding the fact that you have mentioned that the market is fairly balanced. But I just wanted to move you on sort of the outlook for terms as we go through the year. Thank you.

Yes, so maybe I'll start on the life and health side, and I think you're absolutely right. If I just take the experience variance out and add it back in, I think I get higher. Now, I think when we discussed about that before, I think the CSM release was higher than what we expected, and that's what we were guiding for, and I think that's something we discussed. I think we clearly understand this is really driven by the assumption changes themselves, but also just management actions, BAU management actions like recaptures and so on, basically drove the CSM release up. And so if I normalize for that, I get back to a CSM release of in the range of eight to nine percent. And if I then back that back to take that together with the non-repeat of the experience variance, I get back to the targets that we basically put out for life and health. That's really how to triangulate.

Just quickly on the renewals. Again, I can repeat myself. By the way, here's some good news. The broker reports all predicted a steeper decline of rates, and I think that didn't materialize. So that's the good news. So the market was still broadly constructive or professional, actually, because there's still demand, you know, but in the negotiations, the reinsurance states are pretty disciplined, and the rest will be seen for this year. I'd expect a very competitive market still, nevertheless. The next renewals are the 1st of April renewals and mainly Japan renewals. And, again, Japan is a different market, you know, and different dynamics in the markets. We had a good renewal last year, and we'll see what the renewal brings this year. And then we will have, obviously, the 1st of June, 1st of July renewals in the U.S. Those are the important data points to look at. First, I see still a constructive market. We'll have to see how the buyer's behavior is. The fact is that the buyers all need strong lead reinsurers. And you could see that the market share didn't reduce. So we didn't reduce our market share, even though the pie was shrinking, that people were taking more risk on their own balance sheets. That created another opportunity for us to go into subject solutions, et cetera. But overall, we were not signed down, so they need still strong lead capacity, lead underwriters with the expertise that gives them comfort for the next renewals.

Thank you, Chris. Could we have the next question, please?

The next question comes from Jan Pierce from BNP Tariba. Please go ahead. Jan, your line is open.

Hello. Hi. Thanks for taking my question. So the shift on net operating capital generation, so the 21 points net capital generation this year, do you view that as a relatively clean number or good starting point to use going forward obviously there's a lot going on this year in terms of clean care life and health review but is that is that a good number going forward and also does that new business strain the 0.5 in the increase in social capital include the changes in the in the retro very long because it's the 1st of January 26 number I think if you could clarify those two points that'd be great thank you

Yeah, so look, I think this is a good proxy for the carbon generation. So I think in general that was, I think, the year. I think really showed more or less. In certain areas we obviously had the assumption changes. But other than that, I think you can expect, I always try to run 25%. percentage points of net capital generation, across capital generation before repatriation. So that's a good proxy.

And then the target capital, that already includes the reduction in retro. Oh, okay.

That's already in the capital requirements. Yeah, that's already, that's all reflected, correct, yeah.

Do we have the next question, please?

The next question comes from Vinit Malhotra from MediBanca. Please go ahead.

Yes, good afternoon. I hope you can hear me. So my first question is just an apology, a bit repetitive, but I want to be clear from my side. You know, the extraordinary buyback, if you could just please elaborate what conditions we should look at as triggers or a possible trigger for another such extraordinary buyback in the future. So that's my first question on extraordinary buyback. Second question is actually on the NATCAT increased exposure. So just to be very clear, the fact that you have increased your net NATCAT exposure probably had a favorable impact on the three percentage points of the nominal combined ratio. Is that a correct understanding? Are you able to give some idea of how much benefit that was from this strategy? Thank you very much.

Okay. Maybe start again with the extraordinary buyback and maybe I just sort of emphasize what I said before. I mean, you have to the main part of the on our capital, return policies, dividend, and sustainable buyback. I would say that's the core. And then if we're in a situation where we have excess capital and we don't believe that we want to and have the opportunity to deploy it with the right return, that's when we consider an extraordinary buyback. So you can't bake that in. So you should, it's quantitative and qualitative, but that's really the way we think about it. And this was this year very clear that this qualifies.

Just quickly on Kat's question, just to clarify, the renewals are gross.

That's before retro. The information on the slide is all gross, and we show you the impact just based on that, so any changes in retro are not accounted for in that estimate of the three points. Do we have the next question, please?

The next question comes from Ben Cohen from RBC. Please go ahead.

Oh, hi there. Thanks for taking my questions. I had two questions, please. Firstly, just on M&A. Could you just sort of reiterate kind of what your priorities are there? And with regards to the deal that you announced last week, should we assume that that will achieve the targets that you have for Corso as a whole, or is there anything that you want to call out there? And the second question was just on the return on investments going forward. Do you expect that that yield will rise going into 2026? I just ask because I think there have been periods in the past, say at the end of 2024, when you had a very high reinvestment yield and actually the sort of the ROI hasn't or didn't go up last year. Thank you.

Let me take the M&A question. So our M&A priorities didn't change. We always were very clear to say we don't see at this stage any transformational M&A opportunities. But what we would look at is additions to the portfolios, and particularly in corporate solutions, we said that we are happy to add in the areas, we call them focus growth areas, that are de-correlated to the property and cap cycles. And that in particular was quite insurity, and we were very open about this. Now, we only do these bold on acquisitions when they really make sense. Here we have the opportunity to add the portfolio that QBE wanted to discontinue or divest, and that in particular is a trade credit insurity portfolio, their global portfolio with a strong presence in Australia. Why is it so interesting? Within the trade credit, within the credit insurity book that we have in Swiss Re, It added another 9,000 diversification. So all in all, very positive. And we will continue to look into those bolt-on acquisitions if they make sense and if they are in the areas that help us to further strengthen the resilience of our liability portfolios, target liability portfolios.

On the investment, so just to reiterate what we have said, so the ROI itself was 4%. The recurring investment yield is 4.2% right now. And the reinvestment yield was 4.4. So all pretty close to each other. And obviously when you then calculate how over time how this develops, yes, you bring 4.4 in, but the question is always how much actually goes out. And you can expect that this has very little impact. It should have slight positive impact. But it depends what actually matures over time. So I would expect that to remain pretty stable.

Thank you. Could we have the next question, please?

We now have a follow-up from James Shack from CT. Please go ahead.

Oh, thanks for the opportunity. I just had a couple more things, Steve. Corsos revenues in the fourth quarter were very weak, around 10%. year on year, just keen to understand that development needs. I also wanted to ask the question on the expense ratio again, which I don't think was answered last time. I just came to know it went from 4.8 to 5.4. Is that just a temporary jump? Does it go back to 4.8 and 26? And then just on your new CTO, I thought it was interesting. What are the first priorities for this chief technology officer? Thank you.

Yeah. Maybe I'll take... the COSR one and the CTO, and then maybe you can elaborate on the expense ratio. Just on COSR revenues, it's very simple. This is the portfolio of the Irish MedEx book that was taken over by AXA. And this is, to be concrete, it's 200 million. So that is sort of the decline. also had some healthy new business opportunities, particularly in the differentiating propositions in international programs and alternative risk transfer. Those were the most attractive ones. On the CTO, it's not the chief technology officer because we already have a chief data and technology officer. It is a chief transformation officer. What is this? We are in a transformation process. The company went not only on a cultural transformation, but also we were streamlining processes, increasing proximity to markets by de-layering the organization. And we do have ambitions and concrete use cases also around agentic AI. This needs to be embedded into the organization, cascade through the organizations from top to bottom, And I think here we need specific focus in particular on execution, rigor, and delivery here so that we don't increase, again, the complexity of the organization, which will end up in increased costs again. So this is the idea of this new role that we created. AI, but not only AI, is really changing the way we organize our business and the way we process our business.

Okay, and then on the expense ratio in Corso, I think we saw that increase in P&C Re, the question was on P&C Re. I thought it was on Corso.

Yeah, so in P&C Re, we have some one-off effects from year-end accruals, and it's always better to look at the full year number. Also, last year, we had an impact under the first year of IFRS of some out-of-period adjustment So we would suggest just to look at the full year 25 number as the basis.

Yeah, we have seasonality in the cost, project cost, et cetera, that are then coming in late in the year. So that's the effect.

We have the next question, please. We have time for one more.

The next question comes from Roland Pfender from OdoBHF. Please go ahead.

Yes, good afternoon. Thanks for taking my questions. Two questions, please. First one on life and health. Good to speak about your new business growth ambitions. Let's say if you strip out large deals, what would be the underlying growth target you have for 26, 27? Just to understand it a little bit better, I think it was for the year. Second question on Corso, rates are coming down. Do you need to execute cycle management here or Do you still see some growth pockets like specialty or other things which might keep growing? That would be also interesting.

Thank you. So on the growth ambition for life and health, maybe before I talk about the ambition itself, I think we have a very strong in-force business here. And the in-force itself brings us sustainable kind of new business. And I think you saw that kind of without any large transactions, we were actually able to sustain the new business, just the new business. And that's really the core here. That's important. And that's what we want to maintain, to make sure that the in-force produces the new business itself. And then on top of that, we're always looking at transactions. If they make sense, they have to make financial sense. Otherwise, we pull back. But that's, in a way, the upside. But the in-force itself allows us to keep the CSM flat.

Yeah. So on the Corsa side, in addition to rigorous and disciplined underwriting and cycle management, there are obviously business opportunities, in particular when you look at geographical opportunities. And we try to optimize, continue to optimize the setup. We partner where partnerships make sense. We have a very well-run joint venture in Brazil and in those kind of emerging markets you could expect maybe also some partnership models that we would do rather than planting the flag and have from scratch organic growth opportunities. So this is something that the team is looking at but in particular we're looking for expansions in the differentiation that we have in international programs and alternative risk transfer Return to risk, Franco, why? Because like we discussed it for the large seedings, the primary insurance companies who take up premium from the market, that same phenomenon happens with large corporates. They take on more risk on their balance sheets and they create their captives and with the captives we have a leading position in managing, helping captives at the fronting, before the captive, then within the captive, and behind the captive with reinsurance capacity. So it's a unique one-stop-shop proposition which is very successful.

Thank you, Roland. With that, we'd like to thank you all for your interest, for your questions. Should you have any follow-up questions, please do not hesitate to contact any member of the IR team. Thank you again. We wish you a nice weekend.

Thank you all for your participation. You may now disconnect.