Hannover Ruck SE

Good morning, everyone, and welcome to our earnings call on our results for the first nine months of 2025. And as usual, our CEO, Clemens Jungstifel, and CFO, Christian Emmelingmeyer, will provide a pre-overview of the business development so far in 2025. And afterwards, Clemens will present the updated outlook for the current year, and as usual, will provide an initial guidance for the financial year 2016. For the Q&A, we will be joined by Claude Schaefer and Sven Althoff. And with that, I hand over to you, Kevin.

Thank you, Karl, and good morning from Hanover. So, on the first slide, the business performance in the first nine months was very satisfactory. The group net income of 1.96 billion euros reflects a strong underlying profitability and additional positive tailwind from currency translation and from tax, adding up to more than 400 million euros. The low tax rate, particularly in the third quarter, is mainly connected to the newly enforced change in the German corporate tax, resulting in a corresponding release in deferred tax liabilities. This not only left us in a comfortable position to increase the group net income guidance to around 2.6 billion euros for the full year. In addition, we used the extra level of profits to further strengthen our company's balance sheet. We have added significant prudency to our P&C reserves. We've taken a more cautious view on certain pockets in our life and health portfolio, and we have realized more than 300 million euro losses in our fixed income portfolio. All of this improves our already strong balance sheet and our confidence in future earnings growth. In P&C reinsurance, we have continued to grow our portfolio in an attractive rate environment. As in the first half, the refinement in the calculation for the non-distinct investment component does have a negative base effect on reported growth numbers. As it does not impact earnings, this is no cause for concerns at all, also not when comparing to our 7% growth target. So on an adjusted basis, the growth is close to 10%, and therefore clearly ahead of the 7% mark. The favorable underlying growth is also reflected, as you can see, in the increase in our new business CSM to now 2.6 billion euros. The large loss experience in Q3 was rather benign, particularly on the NatCap side. Hence, the overall impact from large losses was well below our budget for the first nine months. But as you know, as usual in this situation, we have booked the full year-to-date budget. Therefore, The reported combined ratio does not reflect the benign large losses. On the contrary, we have actually used the overall positive results situation to add further prudency to our P&C reserves with a corresponding effect on the reported combined ratio. Nevertheless, the reported 86% is well in line with our target, pointing to an even better underlying number. In life and health reinsurance, the revenue is growing moderately. The new business generation increased by 16 percent to 575 million, including a favorable contribution in the third quarter. The reinsurance service result of 671 million euros reflects the overall positive business development and confirms that we are well on track to deliver on our target for 2025. The ordinary investment performance was very satisfactory. Against the backdrop of another strong quarter, including the positive tax effects, we have decided to accelerate the loss realization in our fixed income portfolio. After around 60 million euros in the second quarter, we have realized another 260 million euros in the third quarter to improve future investment returns and to increase the flexibility in our investment portfolio. Hence, the return on investment of 2.8% is deliberately below our target for the full year. Finally, the capitalization remained strong with a solvency ratio of 259%, In the third quarter, the operating capital generation was slightly above $1 billion. We have also been successful in deploying capital, so the recognition of planned growth for 2026 had an impact of around six percentage points on the solvency ratio. Furthermore, the quarterly accrual of foreseeable dividends, including the update of our dividend strategy, impacted the solvency ratio by minus 4.5 percentage points. Model changes had a minor positive impact. On the next slide, the shareholders' equity increased by 2%, driven by the strong nine-month results. A mitigating factor is a negative impact from currency translation within the OCI. The CSM increased by 2.1%, mainly reflecting the new business generated by both business groups. Again, also here partly mitigated by negative currency effects. The risk adjustment decreased by 7.8%, mainly driven by some model refinements in P&C, as well as a negative currency effect and a new retrocession in life and health. Altogether, the performance of both business groups and our strong balance sheet, including the CSM and including the risk adjustment, gives me considerable confidence in current and future earnings growth. The return on equity of 22% is a further confirmation of our success. And on that note, I'd hand over to you, Christian.

Yeah. Thank you, Clemens, and good morning, everyone, also from my side. So on the next slide, our P&C business is growing nicely on a diversified basis, including a strong contribution from structured reinsurance. The top line growth in the first nine months is masked by the refinement in our accounting, resulting in a one-off effect when comparing the 2025 revenue to the previous year. Excluding this base effect, the FX adjusted reinsurance revenue would have increased by 9.5%, clearly supporting the target achievement. Importantly, there is no impact on earnings due to corresponding effects in the service expenses. Furthermore, the accounting impact on reported growth should decline in the fourth quarter. In the third quarter, the ending refinement continued to have an impact. Additionally, the timing of bookings for some larger treaties had an impact on the reported Q3 revenue. In this respect, we expect some catch-up effects in the fourth quarter. The combined ratio of 86% is well within the target range below 88%. The impact from large losses was €459 million below budget, which has nevertheless been booked in full as usual. The unused budget should be sufficient to cover the expected losses from Hurricane Melissa, meaning that full Q4 budget is available for other losses in the fourth quarter. As Clemens explained, the underlying profitability was even stronger in light of the additional balance sheet strengthening with an increase in reserve prudency. However, we have added less to the reserve resiliency in Q3 compared to the previous quarters and have instead decided to use the better than planned result for active loss realization in our investment portfolio. The reason is that we feel very comfortable with the current level of reserves and saw a good opportunity to lock in higher interest rates to improve the contribution from investments in the years to come. Finally, the combined ratio includes a discount effect of around 9.5%. As usual, the increase in prudency for our reserves is biased towards long tail lines with a higher level of discounting. Overall, the discount effect is still higher than the interest accretion in the reinsurance finance result, but we continue to be very prudent on the reserving side as an offset. The investment result reflects an increased ordinary income and a loss realization for fixed income of around 320 million. The currency result was significantly positive at 219 million euro, driven by the weakening of the US dollar over the course of the first half year. The main contributor to the P&C service result is the CSM release, reflecting the recent renewals in a very attractive market environment. As in 2024, the CSM release includes smaller catch-up effects due to a prudent release in previous periods. The experience variance includes our prudent reserving on the business earned from current underwriting years. The runoff result has been positive in most regions and lines of business, but as explained, we have used the strong underlying profitability and the overall strong results situation to add additional prudency to our reserves. This is the main reason why we are reporting a negative runoff result of minus 465 million euros. Apart from this, the runoff result also includes our updated view on the Russia-Ukraine aviation loss and a moderate increase in the best estimate for some pockets of US liability business. the loss component from new business is quite low, confirming the attractive rate environment in P&C reinsurance. The CSM growth of 7% reflects the favorable market environment and our success in the renewal period in 2025, resulting in a strong new business CSM of 2.6 billion euro. On the next slide, In life and health, reinsurance revenue increased by 2.2%, adjusted for effects. The revenue increased in financial solutions and longevity. In traditional business, revenue moderately decreased, mainly in Greater China. The result for the nine months of 2025 is based on favorable underlying profitability. Furthermore, the experience variance was positive in all reporting categories. Assumption updates for honoris business and a more cautious position with regards to our morbidity business had a negative impact in the reporting period. Altogether, the reinsurance service result of 671 million euros is fully in line with our full-year target. The investment result reflects a good ordinary income from fixed income and the negative impact of an equity participation of around 30 million Euro in the third quarter. Altogether, the EBIT contribution from our life and health business group was 645 million Euros. On the next slide, looking at the IFRS components of the service result, the CSM release is the main profit driver and within the expected range. The same is true for release and risk adjustment. The experience variance is clearly positive, based on a diversified contribution by line of business. The main drivers for the loss component are assumption changes for onerous business and morbidity. This is particularly driven by the critical illness business in Greater China, where we have updated our assumptions and took a more cautious positioning, reflected in an increase in the risk adjustment. As Claude highlighted at our recent investors day, one should focus here on a more holistic and economic view on assumption changes and experience variance. Adding up the positive assumption changes in the CSM and the change and loss component, as well as the experience variance, the total deviation from initial assumptions of our diversified portfolio is positive here today. The CSM development on the right side is clearly impacted by currency effects. The CSM generation which includes the new business CSM and extensions on existing contracts, amounted to a favorable €585 million, based on a diversified contribution from financial solutions and our traditional business. Changes in estimates are driven by updated assumptions for our longevity business. Altogether, the total CSM would have increased by 5.2%, excluding the currency effects, nicely ahead of our 2% target. On the next slide, the development of our investments was very satisfactory. The ordinary investment income reflects the continued rollover in a higher-yield environment and a strong operating cash flow. Inflation-linked bonds contributed 110 million euros. Additionally, the contribution from alternatives was very solid, And as explained, we have used the overall results situation to accelerate the realization of losses in our fixed income book in the third quarter. In total, we are looking at the realized fixed income loss of €324 million for the first nine months. The corresponding higher locked-in interest rates will support the further increase in investment income in the coming years and a lower level of unrealized losses will increase the flexibility for asset managers, both helpful in the overall trading environment. The impact from the change in ECL and the fair value of financial instruments remain moderate. All in all, the return on investments of 2.8% is deliberately steered below the initial 3.2% target due to the realization of losses in our fixed income portfolio. So, no concern at all as the main group target for 2025, the net income, is not only maintained, but has even been increased, including an adjusted lower target for the ROI. At this point, I would like to point out that depending on the business development in the fourth quarter, I would not rule out further opportunistic steps with an eye on the remaining level of unrealized fixed income losses of more than 2 billion euros on our balance sheet shown at the bottom of the slide. Apart from the strong movement in fixed income, you can see that the unrealized gains within the OCI have changed materially in the category Others. This reflects the sale of our stake in Viridium, concluding a highly successful financial investment for Hanoverit. To conclude my remarks, the business performance in the first half of the year was very satisfactory. The positive impact from currency and tax has been used to further strengthen our balance sheet and improve future investment returns. We are well positioned to deliver on our increased target for 2025. And on that note, I'll hand back to you, Clemens, for the comments on the outlook. Thank you, Christian.