Coface Sa

Thank you very much. Good evening. Welcome, everybody. Thank you for joining on the hot summer evening like this for our report on the mid-year 2026. You will have seen from the numbers, we had another strong quarter of execution in what I would qualify as a pretty tough environment at COFAS. Just reminding everybody of the headlines, net income at $108 million or close. solvency at 194%, so a very strong position. We had a quarter in Q2 where we saw a relative rebound of volumes versus the first quarter, so insurance premiums grew 1.4% versus a negative 1.3% in Q1, and I'll explain a little bit more in the next pages where that comes from. Most of the operating metrics, as you will see, have been strong. The retention is close to record at 93.6%. Pricing is negative, but above historic average at minus 1.3. We continue to grow business information double digits, including the total parameter. The organic growth is 12% for the semester and 19.1% with the acquisition of Cedar Rose. Debt collection growing almost 32%. And also good news on factoring, which is up 3.5%. After many quarters I was subdued of subdued performance, I would say, in the current economy. I think the other good news for the quarter is the losses. The net loss ratio is better by 2.7 points versus last year at 37.4. That brings a strong combined ratio, which is stable at 71.3% for the first half. The net cost ratio is increased by 2.7% as we continue to deliberately invest in line with our strategic plan. And I'll go through more of that detail in the next pages. If we step back a little bit, we are now past mid-plan for COFAS, two and a half years into Power the Core. and we'll take a look at our main financial targets but we are reconfirming these and actually over the last two and a half years we have beaten all of our metrics combined ratio return on average tangible equity solvency and the payout ratio we as you know we evolve in an environment which is both slower growth and also an acceleration in digital and AI and connectivity we know that at this point what matters most for us is the long-term value creation with the BI business versus short-term profitability so we think that the the guidance we've given around the 50 basic points ROHE contribution in 2007 and 27 is now irrelevant we are planning to however adjust the 2027 dividend which will be paid out in 2028 upwards to compensate for the difference. As I said, net income at 108, annualized ROAT at 10.9% with a strong solvency at 194%, which is almost 20 points above the upper range of our targets. We've appointed two new directors, the board on the ARCH representation, Hugh Sturgis, who is president and CEO of ARCH Insurance International, and Christine Todd, who is a chief investment officer at ARCH Capital. So two strong appointments here, insurance professionals through the COFAS board, and a lot of continuity on the ARCH side. on page five just remind everybody of the financial targets that we had set for power the court and I again I'll say it this is these metrics these goals were how we plan to position the company over the over the course of the plan to be able to deliver and if you look at the actuals in blue versus the targets you see that we've actually done better The average combined ratio for the first two and a half years is at 72.2, which is way lower than the 78% we had targeted undiscounted in the plan. As I mentioned, our solvency is about 20 points above, actually 21 points above the upper limits of the range that we targeted, the 155 to 175. We continue to pay out over 80% of our profits to shareholders on a regular basis and maintaining a high level of profitability through this cycle. And the ROATE to date is at 12.3%. And I'll just remind everybody that obviously this is influenced by the high level of equity that we retain in the business. So I would again qualify this as overperformance with us versus the plan that we had in place. On page six, I just wanted to give you some perspective on the market. On the left-hand side, this is not news, but putting it in a graph like this, I think highlights where we stand, are the global corporate insolvencies index that we've developed to represent what's going on in the world. And you see that where we are in the cycle is actually at a peak in the last 13 years. We thought things would stabilize a little bit this year, but actually the events in the Gulf keep putting pressure on companies. So we see continued increases in insolvencies. You see the drop that happened after COVID when governments flooded the economies with, I would say, free money. So that had a dampening effects on insolvencies. And then there's been normalization since. And we've gone back to, I would say, a much more normal behavior here. But the point is we are at a tough place in the cycle. And on the top right hand, I think I just want to illustrate also the slowdown in the economy is weighing on our core markets here. It is not often that we see negative growth in our core markets in Europe, like the UK is down five and a half, Germany, five percent, France, four and a half, Netherlands, almost a percent or a half percent. and then the traditional growth engines in the TCI markets, which are Spain and Italy, are still growing, but at much lower rates. Italy has been a growth engine for this industry for many, many years and is now growing 3%. So my main comments here is global insolvencies at a decade-high level, premiums under pressure in our key markets, and that explains also why These low volumes drive intense competition and you still have pressure on prices. There's a lot of needs for companies to invest and catch up in AI, make sure they stay up to the pace of what's going on in the market. So we see a tendency, and that's true across all of our businesses, of large companies to delay large purchase decisions, whether it's in TCI or BI or others. And yet, I would say that COFAS is outperforming on both volumes and margin. And I think that's just that. I wanted to put that in perspective of what the markets look like. On page seven, we have a regular update on CSR. I think I've already highlighted in the last quarter, one, the key achievements that we've had in 2025 versus the interim goals that we had set for ourselves. And then the message is we pretty much beat every single target that we had set for ourselves. And I also highlighted the 2030 goals, new goals that we set, further improving our performance on the key pillars. What I can say is on responsible insurer, we continue to weigh carefully how we invest the portfolio to continue to drive down the carbon emissions carried by that book. So the efforts continue. And in terms of being a responsible employer, Our key goal here was to have 40% women in the top 200 jobs in the company. Now, what's happened over the course of the last few years is we've added 1,000 jobs in the data, tech, and digital space. And these are typically areas which are male-dominated. So for us to maintain that ratio requires work, and we're really thoughtful and proactive in that area. And then as a responsible enterprise, we want to further reduce our own carbon emissions. And the focus right now is on responsible IT and procurement. So we're working our providers hard to make sure that they also do what's required to lower the emissions that are linked to them in our own accounting. And obviously we are switching all of our fleet of vehicles and things like this to 100% electric and renewable energies. In terms of the culture, we have an EcoVetis rating which puts us in the top 23% of companies that they rate. A few years ago we had a really strong MSCI rating as well. I think there's space here continuing to work on the way we report our business and the actual efforts that are ongoing in the business to continue to improve the way we meet the reporting needs of these agencies and continue to strengthen our rating. So not much to report, but the work continues. Let's go to page nine. So this is my, I think, 40-second presentation to this group. So the format, as you see, doesn't change quarter on quarter. I'll just comment on page nine that, as I said, total revenue is up 0.8%. A better quarter in Q2 than we had in Q1 with insurance revenue for the first semester up 0.1%. Our other revenues continue to drive the growth of the business at almost 9%. We spoke about Disney BI growing 12% organic and 19% with Cedar Rose. confirms actually that we are able to grow these acquisitions and we we make them the we see a clear uptick from being integrated into the cofast network third-party debt collection up at 32 factoring having a good quarter and in q2 was almost 5% which as you know we were mainly a factoring business in Germany and in Poland and obviously there's been a lot of work going on in that space and things seem to be rebounding a little bit good performance on fees broadly stable, I would say, in terms of percentage of fees on premiums in a market which has a strong tendency to give away the fees in order to win the business. So I take it as a sign that our clients are willing to pay for the services that we provide alongside the insurance policies. On page 10, we have the usual breakdown by region. I think what you see here as a headline is is subdued growth around the world. I mean, clearly that affects a lot of areas, but it affects more Europe, I would say, than the rest of the world. You see almost zero growth in Western Europe, almost the same in Central Europe. Slightly better news, actually, in Northern Europe, which includes Germany. And I already mentioned that within Germany, factoring has been doing pretty well. met in Africa has traditionally been a growth engine for us and it is still growing but at much lower rate we used to see more like five six percent growth on a regular basis so we're down to two percent we see that the Gulf region is holding up remarkably well I think the government's in the in the area are pouring money on the economy in an effort to sustain growth and that's affecting us and Some FX in North America, but I think overall, outside of AI, a quite flat economy. I think the good news is more in the emerging markets. So you don't see it here in these numbers because we have tough comparisons for the first half of 2025. But underneath those numbers, there are good growth momentum in Asia. I think this is the place where I think a lot is happening today in the world. Latin America still growing much less than before but there's a disproportionate amount of that business which is actually driven by European contracts with an extension in Latin America so but when you look at it I think at this stage a lot of the growth in the world around the world is driven by emerging markets on page 11 we show the usual metrics of our performance you see that new business is almost at a record and I think that They almost is because, as I said, we see large deals being slower. Companies are investing in AI, trying to save costs, trying to manage the situation in the Gulf and putting off where they can decisions that are not absolutely critical. In terms of retention, we're near a record, and that's been now for years quite stable. Prices are still negative, but they're a little bit better than they were last year and generally speaking in the last few years. And then the activity that we get from our own clients business growth is quite subdued at 1.5%. So that's really not exciting, but I think that reflects the world economy here. On page 12, we have an update on the risk. I think the good news is that you see the sequence on the top left of the quarterly loss ratio before reinsurance. including claims handling expenses, and the story is really flat, quarter on quarter. When you look into the details here, you see that the number of claims is back to 2019 levels, so pretty stable. The amounts have grown because there's been quite a bit of inflation since 2019, and that's reflected in an average amount, which is up by 4.6%. At the same time, we've seen still pretty good severity with a limited number of large cases that have come to hit us. So keeping our fingers crossed here, I think the business is executing. We haven't changed our reserving policy. We have opened the new vintage at a level of 81.2%, which you see as historically reflects, I would say, the political and economic uncertainty. So it's pretty conservative. And then we have enjoyed continued strong releases from the prior vintages here with almost 44% throwback from the prior vintages. So I would say happy to not have much to report on the risk side actually. You can see that on page 13. I'm not actually going to spend any time here because there's really not that much to talk about. And so I will just skip that one and go to page 14. where we have the quarterly numbers. It's an easier sequence to follow. And again here, there's really not that much going on. A very slight uptick in Western Europe. That's because of the COFAS geography. We have actually Senegal in the COFAS Western Europe segment. And as you know, that's a country that's going through a little bit of a challenge right now. But outside of that, there's really nothing going on in the rest of the world. Latin America has volatility. I think every quarter, every single quarter, I comment on that. And there's no news here. But frankly, on the risk side, there's not much to talk about. On page 15, we talk about the cost. So as we've seen, the premiums are a bit better for the quarter. The cost is still growing 3.4% quarter on quarter. But for those of you who have been here for a long time, this is the second best quarter in 22 quarters in a row, so in five years. So we've highlighted how the cost increases are slowly coming down quarter over quarter, and that's true again this quarter. And if you look at what makes up the increase in the cost ratio on the top right-hand side, you see there's still 0.6 points that is driven by the difference in cost inflation versus premium inflation, but that's coming down, as I said. and the rest is really deliberate investments we're making. I mean, the business is performing and we are investing deliberately according to our plan in sales for trade credit insurance and connectivity and data and technology and BI and debt collection. So that's two points, I mean, cost increase. And we get 0.8 back this quarter from the increase in sales that we have in the services area. I can say that these investments are really important. They position us differently. They make us better at managing the core business, insurance, and I think it's the right choice in an environment which otherwise is quite subdued and not easy. So that's what I have to say on cost, and I'm going to pass it over to Fala to talk about the rest of the pitch.

Thank you, good evening everybody. So let's go now to page 16 on Huenshun's site. We can see that the premium sessions rate is stable compared to first half last year, 27.7, while the claim sessions rate has increased from 23.3 to 26.5. You know that our quota share I think is divided by, there's two sections, right? On the DCI side, the quota share is 26%, on our specialties, which is single risk and bonding, the quota shares at 50%. So it's really driven by the mix of our business, and we have been able to some of the reserves that we put, naming, I think I can name it, the Senegal one, for instance, 50% of reserve going back to the reinsurers, that tract is increased. So as a result, I think we have the reinsurance income or loss for us, but income for them has moved from 52 million last year to 46 this year. Leading us to the next page, the net combined ratio you see is very good, one at 71.3, very stable compared to half year last year with a decrease in the net cost ratio and a decrease, similar increase, decrease in the net loss ratio. from a Q2 perspective from Q2 29 to Q2 36 has a decrease from 74 to 72.4 and remember the last year the 41.1 there are some noises in terms of accounting related to the FX where you have a little bit more in the loss net loss ratio and the I would say the FX gain will sit in the financial income This year, I think it's a little bit back to normal, but still, I think we have a very good net loss ratio. Let's move to the next page. I think it's page 18 now, financial portfolio. The market stands at 3.3 billion, 190 million after the payment of our dividends of 186 million at the end of May. Asset allocation-wise, no changes really with a high level of cash as usual. 14% of assets held in cash or very liquid assets. In terms of return on investments, you can see that if you look at the first line, which is the recurring income for an investment portfolio before again and again on sales and a lot from sales moving from 52 million to 53 with an accounting yield moving from 1.7 to 1.8. This is half year, of course. As usual, I would comment on the FX impact, of course, less than last year because the US dollars and related money has not moved or a little bit less volatile this year than last year. The minus 2.4, I think it's just two elements here. The first one, of course, we have the usual hyperinflation accounting in Turkey, stands for minus 8 million at half year. And then you have the unrealized gain on FX, 5.6. Usually offset, you can see that in terms of geography of booking with the unrealized FX loss of 9 million in the insurance finance expense line. Nothing more to be added. I think it's on this page. So we can move to the next one. So the half-year net income at 107.8. down 13% compared to last year, the same period. I think it's a little bit better than if you want. The net income was down 13.7. So we're improving on this front as well. Lead us to the next page, page 20. We turn on average tangible equity. I start with the equity. We're moving from 2,213,000,000 euros to 2,166,000,000. We paid our dividend and we accounted for the net income of the period. And then they have managed changes related to interest rate movement, but not very significant, lead us to a decrease of our return on average tangible equity from 11.4 at the end of full year 25 to almost 11% at half year 26, of course, with the decrease of our net income compared to last year. For this quarter, you know that management, so this balance sheet, total balance sheet at 8.9 billion euros. We commented on investment portfolio at 3.2. The factoring assets, 3.5, is reflecting the increase of our factoring activities backed by the factoring liabilities, which is, of course, the refinancing that we have in front of this. book value per share 14.5. I think we're trading at almost 16. I think we're at 1580 something, which is above this level. And then we can move to the next page, which is the summity ratio moving from 197 at the end of December last year to 194. You can see that the capital requirements have decreased the summity ratio by 11 points. offset by the on-front generations, which is a good performance of our business. This is just showing that we are financing our organic growth with the level of balance sheet that we have. On the right-hand side, as usual, you have the two types of stress tests. The first one from the financial market shocks. you know we have already commented that previous quarters the portfolio is pretty much de-risked now so we have we can really we can cope with all the financial market shocks and then the crisis scenarios the one 15 and one in 20 again we will be above the upper range of our comfort zone in in in the shock scenarios if we move to the next page page 24 just laid out how the 194% of submissive ratio is made up, 2.7 billion of submissive to own funds to be compared to the 1.4 billion of capital requirements. That's pretty much it, so very, very strong again in terms of balance sheets within 194% of submissive ratio.

if the fallback to that yeah just just to wrap it up I think I mentioned this so the we're in a slow growth environments we have a lot of certainty out there I mean the story in the Strait of Hormuz continues to evolve almost by the hour but we don't see at the stage what the outcome is going to look like I think a lot of companies are dealing with this It's going to create longer, higher interest rates. It's going to create some inflation. It's going to create slower growth, and we see that at play. Obviously, for Europe, it's not easy. Emerging markets are doing a little bit better. There's the AI craze going on with a lot of investments, a huge amount of investments going into that space, which also creates a need for companies to invest correlatively. In that environment, I think we have a really strong performance with a 71% combined ratio, which is well below our through-the-cycle targets. We are seeing a little bit better quarter in terms of growth for insurance and continued growth in our services activities for non-insurance activities. I think we feel good about the strategy and the choices we've made. the economy is weaker than we anticipated the data stuff is going faster than we anticipated but at least we got we got the direction right uh we're beating our financial targets that we had set for the business after the uh after the plan is completed so we're doing that already uh and we've re we're reaffirming all these targets we are however prioritizing I would say long-term value creation or mid-term value creation in BI versus the short-term profitability, because I think that business continues to see needs in terms of investments and building up at scale. We're going to compensate the difference, which is a few cents by share, in the payout that will be made in 28 for the 2027 dividend. And that's pretty much it. I think we had discussed that a couple times before in a prior call. So No big news here. And with that, I'm going to leave it open for questions.

Thank you. If you would like to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster. Thank you. We'll now begin with the first question, which is from Michael Hutner from Berenberg. Please go ahead.

Fantastic. Thank you very much. And well done for better revenues and better margin. I have three questions. The first one is on the dividend. Can you compensate? I don't quite understand what compensate means. If income isn't there, how do you compensate with dividend? I don't quite understand. I don't understand. Does it mean I should add an extra bit to my dividend or assume it's growing? I'm puzzled. The second is on the business information. So the growth was 12% in Q2. I was hoping for something around 15%. And I'm just wondering, is this a structural slowdown? I know that with Cedar Rose the acquisition you're at 19 so the underlying is fine but I was a bit puzzled by that and then my last question I didn't pick it up what is in Western Europe which is so bad I couldn't make it up thank you okay well maybe you want to take the dividend question it's fairly straightforward

You know, 0.5 ROATE means, I think, four or five cents per share.

Yeah, per share.

Right? So we're just going to increase the dividend by four or five cents per share to make sure that the dividend pay down to shareholders is the same as if we had reached the target. That's it. Understood. Okay.

Okay.

Okay. yeah in terms of in terms of Western Europe that one is a so we you want to go yeah I think they are the this is this is the country where Senegal is on this the country itself is on the restructuring and we have some exposure there and you know it's not to be sure yeah that's go fast geography I'm sorry about this we actually changed the name of that region to call it Western Europe Africa

West Africa West Africa something like this or whatever so there's a piece there's a little piece of stuff in there it's not major it just happens to to be there you know so we we we booked some some reserves some reserves there I think there's been 10 million it's it's it's the whole country is under restructuring so you can go you know it can it can last a couple of a couple of years but you know still you know see it would be it would be I think supported by the IMF. You have the Club of Paris restructuring team around this. And we just follow this. And as I said, you know, it's a single risk, so it's highly, in terms of quota share, it's highly relationship.

Okay.

So on your second question which was be I growth yeah we we've had we've been attuned to 15 percent I don't know for quite a bit of time it is a bit slower this time I think what we see is as I said large companies delaying decisions that we thought they would make faster so I think the environment plays a role into this whether that structural or cyclical is for anybody to this guess I mean if you can if you can read what's happening in the Gulf and let me know What I see, though, is that it continues to grow. There's demand for what we do. I always said, because I think this happened a couple times in the past, that I wouldn't take a quarter as a sign for long-term trends. But nevertheless, there is a slowdown. And at the same time, I think we need to continue to invest to put this business on a good footing in an environment and digital, which is moving quite fast. There's a lot going on. I'm not going to tell you guys about AI because you probably hear it on every single pitch. That's being made by every single company around the world, so that's true as well for CoFast. The good news, I think, is that we are doing quite a bit in that space. We have a data lab that's now 50 strong. We have 1,000 people in BI, so that's giving us capabilities that we didn't have before, and we feel good about that.

Thank you. Thank you.

Thank you. We'll now move to our next question. This is from Benoit Valliol from OdorBHF. Please go ahead.

Yes, good evening. Thank you for taking my question. In fact, they are only related to business information. I'd just like to better understand, I mean, what has changed compared to what you had in mind when you have presented your strategic plan. At that time, I think that you expected organic growth, which is broadly in line with what you have achieved. I mean, you are today at 12% Q1, Q2 this year. So maybe I'm wrong, but just to understand. I mean, do you believe that in the end, your organic growth is a bit faster than what you had in mind at that time, which explains really what you need to invest a bit more than what you had in mind? Or does it mean that, I don't know, maybe this business is a bit more costly than what you had in mind? And linked to this, there is a point I don't really understand on this business. So you plan to be breakeven, if I understand, next year. Maybe still a bit too early, but does it mean that you plan also to be breakeven in 28, 29? I mean, and we have to wait many years before reaching profitability on this business? Or do you believe that it's only maybe delayed by one or maybe two years? this also yeah sorry I know I just like to understand also the benefit of scale in fact because it's all my question behind all that it means that to cap to 1 million euro more revenues you need to invest 1 million euro more in cost and honestly I believe that as a point of size at which you must have to have some benefit of scale and it seems that it's still not the case

so just to understand I mean do you believe that once again you just delayed by one or two years or not really yeah so a few things so we have started this thing from scratch in tens of countries at the same time right so yes we have some more size now we have a hundred million of turnover or something like this whatever but the scale that we have in each individual country is still very very small I mean we're talking about a a market that is, I don't know, 15 billion or 16 billion, something like this. So we're barely making a scratch at this stage. So I think just to put things in perspective, I mean, when it comes to achievement of scale, we are still very, very, very small, right? The second thing we learned is that from the surveys we did with investors, everybody tells us we will not get any recognition for value until we reach a certain size, and that's not 100 million. it's going to be bigger. So there's no question for us that value creation means, as you said, reaching scale, which means reaching scale market by market. And we see a lot of opportunities coming up for growth, but also a lot of changes in technology, which means the technology spend is probably going to be bigger than we thought. And that's not actually news for any business right now. I think everybody's spending more on technology than they thought they would, but that also impacts us, particularly in BI, which is a technology-driven business. So there's some of that going on as well. So AI is coming fast. We have to be there. There's a lot of stuff going on. We're still planning to run that thing at the quasi-neutral impact on the P&L, plus or minus, whatever. But I think it's more important for us to continue to grow and to keep on par with the market's evolutions than it is to just, you know, try to make a buck. And I understand your point. Yes, there is a place at which we need to prove that scale matters, but I don't think we're there yet.

Okay, so not before a few years. And yes, I understand this compensation in terms of dividend and payout ratio, so it's for 2027. initially I mean once again you target a breakeven this year and plus 50 bps on ROT 2027 so we might have imagined that 50 bps could move to I don't know two tenths of bps higher in 28 and so on going forward from your point of view composition will be on 27 for 50 bps and at this stage you believe that could be the same for the next year

Yeah, but so we haven't gone that far because our plan is 24, 25, 26, 27. So by the time we get to those stages, we'll have a new plan, right? So I'm not going to anticipate what we're going to say there. We're going to study this. We're going to do all the right diligence as you would expect us to do. So we limited our view to 27 because that's the end. That's the last year of Power of the Core, and then we'll have to come up with a new one. I don't know if it'll have three words or four words or two words in the title, but I think we're going to revisit the whole thing, right? Which you would expect us to do. So we haven't gone further than that. I don't know if that answers your point.

An additional question, if you may. Just regarding solvency, So your solvency was at 194%, so still well above your group's target. It has been well above your group's target for years now. It seems that in the end, group's target is more, I would understand, capital requirements from regulators and what you had in mind. I mean, could you be tempted to some extent to reduce your business solvency margin? Because it has been very resilient despite your own challenging environment over the three years, thanks to your strong underwriting policy and risk management policy. But do you believe that you need such a high level of buffer versus what is a target range, we can call the target range?

Well, I mean, let me, before Falah jumps in, let me just remind what we said, I think, over the course of the last 10 years, which is, the solvency level is a choice between several different constraints, right? One is what we agreed with the regulator, which is 155 to 175, and where we put our guidance stores. The second one is ratings. The third one is security of our reinsurers, the requirements of the banks that fund us, particularly in factoring in other areas. you know the view the view that our clients have of us etc etc so there's a lot of different things that go into trying to figure out where we should be positioned and thought maybe you want to you want to add something to this well I think the two things the first thing is that of course this label is is comfortable but it also allows you know when we say that we want to we want to compensate in 2017

will use this as well. You can see that we are using it to grow our business. I think that's also one of the reasons why we, I'm not saying that we're cautious, but we just give us some room to grow internally and externally. And today it's internal. You can see that it's 11 points from four years, 25 to half years. And if we didn't have this level of comfort, you know, this is also, you know, some freedom of how we want to drive the business. And then, as you can see, that we have already made some two acquisitions last year. This allows us to go externally as well. We have the same question mark discussion, Benoit, I'm pretty sure, in a couple of quarters. but I will have always the same answers to you.

Yeah, we've already said this. So we're disciplined about capital allocation. I think I've had 10 years of that question. Actually, not 10 because the beginning was a little bit rough, but let's say eight or seven after we went through the major turnaround in the beginning. What we want to do is we want to be able to grow comfortably our core business And when you look at what happened after COVID, we had an inflation surge and we were happy to have capital because a 15% increase in premiums means a 15% increase in capital, right? So God knows where the world's going. That gives us complete flexibility there. Second, we want to be able to do acquisitions if there are some that make sense. So we're not going to grow for growth's sake, but we are going to grab opportunities if they make sense to us. We know that in BI and services, the multiples are much higher. We do not want to pay top dollar for big businesses, but we are happy bringing in BRICS that help build the fort. And third, when we have too much, we return it to shareholders, right? So that's what we've done consistently. We've shown the dividend distribution of COFAS over the years, and it's been pretty substantial.

And for year 20, well, for year 25, we distributed 84%.

Yeah. OK. Thank you very much. Thank you. We'll now take our next question. This is from Pierre Shedville from CIC. Please go ahead.

Yes. Good evening. Not many questions left. Maybe regarding reserve release, we have the impression that you have some leeway there again still and I was wondering if we could expect this reserve to be continuously released in the coming quarter in your view and more generally I can see that most financials banking or insurance companies are progressively improving their targets when reality, if I can say, is better than expected. Things that you don't do. And at the end of the day, I was wondering if it's really useful for us, for the financial community, to compare your current loss ratio, for instance, or combined ratio with your target because there's such a big big gap between them but it seems that the target seems irrelevant and I was wondering why you don't adapt these targets a little bit more often when you see that they are so so far away from the reality and I was wondering if preparing your next plan you are thinking of that thank you very much yeah we've had that discussion by the way

I think again in the past when we every time we did a plan we every time we've done a plan we've improved our target so far right but the issue with our business and those of you everybody here on the call knows this is it's cyclical or it's subject to economic variations and and so the It's not easy to define a confidence interval for that number based on the cycle. We can do it through the cycle on average, and the cycle is kind of a theoretical definition. I think we're showing it here on this page where we have 13 years of insolvency, so you see we're at a peak. Are we at the peak? I don't know. It very much depends what happens to the world. If the AI bubble bursts, plus the Gulf of Hormuz, plus the Red Sea is closed off, And there's a raging war in the Middle East. I think you're going to see some sporty stuff. And if everything is kicked down, the can keeps being kicked down the road, then everything's fine. So hard to say, you know, and I think that's that's so we are we are prudent. We we we give benchmarks which are improving over the years. We I think we over deliver. That's been our story, at least up so far. And we operate by very consistent principles, which is we're going to do the smart thing for the medium term. We're trying to do value creation. We're not going to go growth for growth's sake. We're not going to try to reach a number for the sake of reaching a number. We're going to do what we believe makes sense in the medium term to position this business to continue to be a really good business going forward.

Thank you. Thank you. As a reminder, if you would like to ask a question, you can press star 1 and 1 on your telephone. We will now take our next question. This is from Michael Hutner from Berenberg. Please go ahead.

I had some little silly questions. Tax, 27%. I had in mind your run rate was a little bit lower. I just wondered what it means. I think it was very helpful, the appendix. So you showed Q1 was 26%, Q2 28%. did with what what's what's the right number to use going forward it seems to be nudging up and the second is some it kind of maybe the opposite my colleagues I I I I see the positive in everything but the end did it if any way that you can quantify that the investment that you're making in NBI and and stuff how much is that is benefiting the loss ratio because ultimately at the moment that's that that is what's driving the business I suspect it's quite a bit, but there's no way I can do it from the outside. You can probably do it a little bit better. Then I have a really silly question. What's the TNAV number? I know you give it per share, but I'm always worried about multiplying numbers, whether I'm rounding too much. maybe I know you you don't like to give forward-looking and you being very cautious but you did have in Q2 versus consensus and Q1 a better loss ratio and a better volume it feels like I mean we've reached the bottom but I don't know but maybe you can give us a feel for you know what you're seeing right now thank you well I think your last question relates to the cycle I mean in

frankly, it's anybody's bet. I mean, if you give me the scenario, I'll tell you, but the scenario moves all the time. I mean, we had a war that nobody had seen coming, then everybody believed the war was over, then the war is back on again, and you tell me, you know, you tell me where it's going. I think we, time will tell where this goes, if AI is going to continue the way it is, if it's going to turn out to be profitable, if the amounts of investments that are being made are reasonable or if it's too much, if there's a bubble that's going to burst. I don't know. There's a lot of stuff going on at the same time. So to call the peak or the trough on something, I don't think it's very easy. On the transfer of know-how or technology or whatever between BI and TCI, I think it's true. I mean, I think there is there's learnings and there's capabilities that we would have struggled to pay for if it had been just with the with the TCI business and certainly not at the scale at which we're doing it you know just the fact of having a thousand people in the business focused on data just gives you a bit better understanding of data you know it's just simple I mean the marketing impact because we have now thousands of clients on BI gives us scale, gives us knowledge, gives us presence in the market and opportunities to cross-sell and stuff like this. So you're seeing that it's hard to say exactly what's going where. We know the P&L for BI, but we also know that it has a positive influence on TCI. To me, it's pretty clear.

Let's take the question on tax. Yeah, go ahead. Michael, you know that tax computation is really based on the business mix that we have in countries where you have a different tax income tax rate so that's nothing that that is unusual and that's nothing that can that has no guidance for going forward because it really depends on the jurisdictions in where we were making a money and and and our flexible income so there's nothing specific to be noticed that's all I can say and and it's just a computation from various jurisdictions or extra additions of our benefits. And you can see that if you look at quarter after quarter, it is true that the volatility is moving back and forth. What we can say is that when you look at the past, it's between 23 and 28, and will be something in between.

Okay. And Latinas?

Latinas, I think it's 2 billion euros.

2 billion euros. Okay. That's helpful. Okay.

May I ask just one last follow-up question?

The Cisco report today and the numbers of it, funding that's quite uh... quite good plenty of numbers are quite good the uh... the uh... The thing I would have wished for is a bit more investment income. Am I wrong to expect more investment income to come through? I keep thinking that if you're growing the business, you've got more reserves and more assets, and interest rates are not actually budging that much. We should see a little bit more, but it doesn't seem to come through very much.

Well, it's improving year after year, but you know that we have repositioned and de-risked our portfolio for now two years. I think it's probably we're reaching a kind of one rate. Of course, with the level of cash that we have, we have very liquid assets, 40% asset allocation on this one is probably where we can have see some opportunities on the market for the time being because the curve is reversed, you have a higher interest rate on the shorter tail of the curve than the longer one. I think this is where I'm benefiting from this, but who knows where the interest rate will go. But yes, I think we have, it's pretty much depending on the interest rate level. And increased interest rate environment is something that we we fully benefit from.

I have one last one. It was really interesting what you said about there's clearly a crossover benefit from BI and TCI. Would it be fair to say that one would more expect the benefit in terms of large claims? Because clearly you haven't had large claims in the past, I don't know, two, three years. Or is it more benefit on what I would call attritional, you know, all the little exposures?

In our industry, we obviously don't like large flames, right? I mean, that's the one thing that we're trying to avoid. It's hard to say. I think, obviously, the discipline has increased. The processes are tighter now. I think there's also probably a structural shift in the market where it's not just us improving, it's also the entire market improving and the governments being more attentive and companies being more sophisticated and having better tools and the banks tightening up their processes. So there's a whole bunch of things that are going on and playing into this. Very hard to pinpoint the details. But the general trend, I would say, is that we are we are improving the business. Digital's coming in. I mean, the amount of work that's going on in digitization, AI, and all that good stuff is quite impressive, at least from a historic standpoint. I think we are seeing quite a bit of change. I would also, though, that's more a personal reflection. I think you're going to see AI make changes, but I think it's going to be, in general, slower than people think because The challenges are human. The challenges are stability, control, governance, technology. So putting it to work in a safe way and in a sustainable way is not as simple as people think, which is good news because if we're able to invest and do some of that, then it will be a differentiator for probably longer periods.

Thank you.

thank you there are no further questions coming through so I will now hand back to the speakers for any closing comments well look we're right on time I think we're as we said halfway through the year we're in a pretty good position they of course nobody knows what the future holds the news could be coming any time But the business is sticking with its plans, got a clear strategy we're executing, and we'll take the environment as it comes. So thank you very much for your attention. And with that, I think we can close the call.