Scor Shs Prov Regpt

Good morning, ladies and gentlemen, and welcome to the SCORE Quarter 1 2024 Result Conference Call. Today's call is being recorded. There will be an opportunity to ask questions after the presentation. In order to give all participants a chance to ask questions, we kindly ask you to limit the number of your questions to two. At this time, I would like to hand the call over to Mr. Thomas Fawcett. Please go ahead, sir.

Good morning and welcome to this core Q1 2024 results conference call. My name is Thomas Fossard, Head of Investor Relations. I'm joined on the call today by François de Varennes, Deputy CEO and Group CFO, Jean-Paul Konechente, PNC CEO, as well as other COMEX members. Can I please ask you to consider the disclaimer on page two for the presentation? And now I would like to hand over to François de Varenne. François, over to you.

Thank you. Thank you very much, Thomas. And good morning, everyone. I'm very pleased to present this Q1 result today. As usual, I will focus on figures, excluding the mark-to-market impact of the option on scores on shares. I have four key messages for you today. First one, strong performance from two out of three engines. We continue to deliver strong earnings this quarter with an adjusted net income of $176 million, translating into a return on equity of 15.5%. This performance is achieved thanks to our PNC and investment activities, while our life and health business faces adverse experience variance this quarter. Second key message, acceleration of the result build-up in PNC. With this strong set of results, we have been able to accelerate the reserve buffer buildup in PNC, both on short and longer tail lines, in line with our commitment taken in Q2 last year. This is a choice of the management to accelerate the reserve bid up in the combined ratio this quarter. Third message, strong net capital generation from our PNC business. We improve our capital position to a level of 215% at the end of Q1, up by six points compared to the end of last year, while our economic value is up 4.1% at Constant Economics. The solvency ratio improvement reflects our strong level of capital generation after capital deployment and dividend accrual. This capital generation is mostly coming from our P&C activities, On the economic value growth, we believe that we are on the right track to deliver our 9% full-year target. Fourth message, key message this morning, very satisfactory April renewal, confirming the 1.5 point improvement in the non-writing ratio. We are very satisfied with the 17% growth in PNC premium during the April renewals achieved with still attractive margin. Jean-Paul will provide more color on this later in the presentation. Let's focus first on P&C. P&C delivers very strong results over the quarter. The new business CSM stands at a high level of 651 million, supporting by strong January renewals with attractive margins. Please note that last year, the new business ESM was negatively impacted by the cost of a multi-year contract, a retrocession contract, which was front-loaded in Q1 2023. Looking at the P&C insurance revenue, it is up 3.8% at constant FX. We continue to see here the effect of the portfolio right sizing that we performed in 2023. However, its weight will gradually decrease quarter after quarter. Hence, The P&C insurance revenue growth rate is expected to normalize over time when the share of the 2024 premiums in the business mix will increase. Let's now look at the combined ratio. It stands at 87.1, in line with our expectation, and is supported by a low NADCAT ratio of 7.2%, well below our 10% budget. This NatCat ratio includes the impact of an upward revision of the Italian airstorm market loss. I tell you, we are very satisfied with our attritional ratio of 78.8%, which incorporates a significant level of reserve buffer in addition. Part of that buffer is included in a conservative loss estimate on the Baltimore Bridge event. For this complex loss, we have taken a prudent view in our estimate in line with the conservative approach adopted for the French Riot and Yuri Kenyan. Corrected from these management choices, so buffer on short tail line and on long tail line, we therefore confirm the positive trend in our attritional loss performance. Let's now comment on the discount impact. Over Q1, we observe a discount impact of 6.3%, which includes the one-off effect of a large commutation on a PNC contract for 3.3 points. Without this large commutation, the discount impact would have been at minus 9.6 points. For 2024, we have revised our discount effect expectation between minus 7.5 and minus 8.5, following an update of the yield curve, while maintaining our combined ratio assumption of below 87. This will allow for more flexibility in our reserve bidder strategy in 2024. Let's now focus on life and health. The life and health business generates a satisfactory new business ESM of 112 million in Q1 without any large transaction. This compares to a very strong Q1 new business ESM last year, which was supported by an exceptionally large deal. You know that large deals can be lumpy by nature. And for the rest of 2024, we remain confident on the new business CSM as we have a decent pipeline of large deals. Life and Health generates an insurance service result of $72 million in Q1, lower than we had expected. The CSM amortization reaches $93 million and the risk adjustment $27 million, broadly in line with our expectations. However, we record mortality claims in the U.S., which are visible in the experience variants this quarter. There can be volatility in experience across quarters and claim reporting effects. We are carefully monitoring our U.S. mortality portfolio and its underlying assumptions constantly. We are working on improving the profitability of the enforced business. In respect of Onero's contract, we have this quarter the opposite effect compared to Q4. We have a positive impact of 20 million. Similar to the last few quarters, it is driven by changes in risk adjustments rather than by movement in expected claims on the business, but with a positive outcome this quarter. After PNC and Life and Health, let's now move on to investment. We continue to benefit from an excellent performance on the investment side, with a regular income yield reaching 3.5% this quarter and a reinvestment rate at 4.7%, in line with our guidance communicated during the full year 23 results. The relatively short duration of our book enables us to benefit faster from still elevated interest rate environments. Let's move to the economic value. Over Q1, the economic value is up 4.1% at Constant Economics, reaching 9.6 billion. We are on track to achieve an expected growth of 9% for the full year. There is a bit of seasonality in this economic value growth as we historically generate a large part of the PNC new business in Q1. Our economic value increases to 54 euros per share at the end of Q1. Our economic financial leverage ratio has reduced this quarter compared to Q4 thanks to the economic value growth, and it is now closer to 20%. With that, I'll hand over to Jean-Paul, who will provide more insight into our strong April annuals.

Thank you, François, and good morning, everyone. I'd like to briefly share with you the outcome of the score April 1st renewals. As a reminder, these represent less than 15% of the reinsurance portfolio, but is a key renewal for Asia with roughly 60% of the Asian premium renewing. Following the slowdown of hardening trend we observed in January 2024, reinsurance conditions have stabilized for the April 2024 renewals. Property CAT space experienced a slight softening, especially in Japan. However, the price decrease was limited, while in the meantime, the reinsurance terms and conditions remain attractive. In this positive environment at April 1st renewals, score P&C reinsurance improved the quality of the book and very significantly increased premium compared to last year, plus 17% excluding agricultural lines for which the renewals are very late. We continue to deliver on the three building blocks of our forward 2026 strategy namely first leveraging our recognized in-house expertise, we have continued to grow our alternative solutions portfolio, almost doubling the premium renewed at April 1st. As in January, the renewals have been driven by solvency transactions, focusing on capital relief quota shares with low economic capital consumption. They have been focused on Asian markets with modern property as the main lines of business. Second, taking advantage of the current favorable market conditions, we have continued to further diversify our portfolio, growing in attractive segments. Our portfolio grew across all specialty lines of business, particularly in marine and energy, engineering, and IDI, with an overall 22.8% year-on-year growth as per our Forward 2026 strategic plan. The non-U.S. casualty also grew by 19%, mainly from India and Japan. Third, in line with our underlying discipline, we have maintained a prudent approach to climate-exposed business and U.S. casualty. Climate risk remains a major issue for our industry, and risk aversion is still high, leading to continued demand for catastrophe risk protection. This has been accelerated by high inflation translating into higher insured values and continued above-average insured losses. This additional demand for capacity which is not currently being met by alternative capital, has kept catastrophe prices close to the peak of the cycle at the April renewals, and we expected to sustain the hard market for the remaining renewals of 24 and 25. Japan remains an important contributor to these renewals and has seen modest rate decreases, but still at an adequate level overall. A team achieved successful April renewals in the U.S., and we will continue to see growth if market conditions remain favorable while keeping the exposures growth in CAT underweight relative to other segments. For U.S. casualty, we continue to see improvements in the primary underwriting of many of our clients and some improvements in the reinsurance terms and conditions with commissions coming down by a maximum of 2%. Two points. However, we do not believe that these improvements are sufficient to offset lost cost inflation, which we expect to run way above 10% per year for most casualty segments. As a result, we continue to keep a flat capital allocation to U.S. casualty, supporting selected key clients, but remaining cautious and overall underweight. While growing in our preferred lines of business, you should expect a continued reduction of the relative weight of property cap and U.S. casualty in our overall portfolio. As shown in the graph on the right-hand side of page 19, the 2017 growth was achieved from both renewed business and new contracts. We recorded price improvements during the April renewal very similar to those in January, with a 3.2% price increase, among which 6.3% from non-proportional business. In addition, our recognized expertise in the market on alternative solutions, credit insurity, and cyber, and the adequacy of terms and conditions enabled us to continue to write new business while improving the year-to-date net technical profitability of our portfolio by an estimated 1.5 points, excluding alternative solutions. In conclusion, I'm very confident that as we enter the next renewal seasons, the underlying discipline of the market will be maintained. and will continue to enhance the quality of our portfolio, leveraging our strong client relationships and successfully delivering on the ambitions of our Forward 2026 plan. With this, I'll pass it back to Thomas.

Thank you very much, Jean-Paul. On page 19, you will find the forthcoming schedule events. With that, we can now move to the Q&A session. Can I remind you to please limit yourself to two questions each? Operator, can we get the first question?

Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. We will pause for just a moment to allow everyone an opportunity to signal for questions. We do have our first question from Freya Kong from Bank of America.

Hi.

Your mic is open. Please go ahead.

Hi, good morning. Thanks for taking my question. On the CSM and risk adjustment releases in life and health, I think the run rate was a little lower than expected, well, lower than last year. Can we get some color on what's driving this? And secondly, on U.S. mortality rates, Your comments seem to suggest ongoing negative variances are possible. What are the trends that you're seeing on this book, and can you take action on the CSM instead? Thank you.

Thank you. Thank you, Freya, for your two questions. So the first one on the amortization rate. So the annual amortization rate for Q1 is 6.8. Are we comfortable with the 8% guidance? I would say yes. If you look at the release of CSM and the risk adjustment release, it's in line with our expectation. We see it at $120 million in Q1, so implying $480 million if annualized and with no addition of financial contracts. And as mentioned, we have a few of them in the pipeline. So this compared to a CSM release of 7.6% in 2023. So for 2024, I would say it's still early days, and we will monitor closely over the coming quarter. But I would say at this stage, we are confident of the fact that we should be close to our guidance. The second question was on the experience variant on life. So let's be clear, maybe I explain a little bit what is happening this quarter. Again, we are under IFRS 17. So under IFRS 17, due to the way we report, it is natural that we observe some volatility quarter after quarter. So we had positive expense variance in 2023 for a total amount over the year of $140 million. it could be also negative some quarters. So there is nothing surprising by the fact sometimes it's positive, sometimes it's negative. It can happen, I would say, both ways. The experience variance is coming mostly from two elements. The first one is we have a negative claim experience in the U.S. mortality, and that's what we observed this quarter. On top of it, on top of this negative claim experience, We detect elements of conservatism in the claims development pattern. Indeed, we have taken a cautious approach in the way we recognize claims. And during the COVID period, there was material distortion between claims reporting. As we have emerged from the COVID period and claims patterns again evolve, we have consciously taken a conservative approach on how we project these claims in the future. So this element of conservatism will be reviewed by Yaron. Maybe, Frida, you can maybe explain a little bit more what we observe on the claims reporting effect.

Yeah, thank you, Francois. So what happened was that during COVID, both claims reporting from clients and our own claims processing periods have lengthened. We have then at the time reflected this in the way we extrapolate from reported claims for past quarters to the expected ultimate claims load by assuming that there will be more claims reported in later periods for those previous quarters of death. As Francois said, we have maintained this extrapolation method in our claims factors for the time being, even though clients have recently re-accelerated the way they report claims and also our own processing has become faster again. So as Francois said, that is something which we will review that later this year and see whether there's a readjustment needed to something which is closer to how we estimated ultimate claims load before COVID. And maybe also just to touch on your other question, what type of trends we are seeing, first of all, This is experience in one quarter. We wouldn't look at this as indicating a trend that is something which would have to emerge over a longer period. We're very carefully monitoring claims experience at a granular level by client, by treaty, and we have options to remediate underperformance where that is sustained and action is necessary. And we have taken those actions quite decisively over the past years, and we continue to manage our in-force business very actively. We have options to increase premium rates. We can work with clients to adjust premium structures. We can agree on termination of treaties for in-force of a new business. So there's a variety of actions which we can take, and we have a significant team which is very focused on managing our enforced business very actively and making the adjustments which are necessary.

Wait, so can I just clarify, are you seeing, I guess, an acceleration of reporting, which has driven this negative variance and no real underlying trends to be aware of?

We wouldn't look at this as a trend. This is one quarter's experience. There is an element of adverse claims experience for one particular quarter of dates of death, namely Q3 2023, which has come through in Q1 this year. But we believe that there is also an influence of the changes in claims reporting, as we just described, which is probably amplifying this effect somewhat, and that is something we'll look at later this year to see whether there's an adjustment needed.

Okay, thank you.

Next question, please.

Our next questions come from Will Hardcastle from UBS. Your line is open. Please go ahead.

Oh, thanks, everyone. First of all, on the PNC reserve buffer build in the quarter, you mentioned some is perhaps in there for the Baltimore loss. But is there any chance you can give us any sort of guide or range of what that's been outside of that as well, just so it can help us to back out our attritionals for the quarter? And then just coming back to that life experience variance, I guess on the second part of claim settlement timing, it sounds like you're expecting a reversal of this come year end. Is that right? Then on that U.S. mortality, is it just one quarter's data that's come in and therefore that's made you make an adjustment? I guess what I'm trying to get to is what can make us feel that this is a one-times event and done, or what is it that could make us be more concerned that this could extrapolate?

Thank you, Will, for your two questions. So the first one on the PNC buffer, I remind you, the strategy we put in place with Thierry since July last year. So with determination, and we communicate each quarter on the strategy, we add buffer. So the way we add buffer, on short tail line, we open a large event quite high in our book, which means with a prudence in the estimate. And on longer tail line, We add the buffer, so we allocate more reserves and the famous buffer. It's a choice of the management this quarter, given the strong performance of the PNC activities, to do both. We did both. So on Baltimore, we opened Baltimore at 62 million net, which includes almost 35% on this amount of buffers. So it's 4.4 points of a combined ratio. So you could say that the amount of prudence on Baltimore at this stage, it's almost 1.5 points of the combined ratio. On top of this, we added buffer on longer tail line as planned. And it's above the number of the short tail line. So which means we accelerate this quarter the buffer strategy. I don't say we are doing this every quarter. But given the excellent performance of PNC this quarter, especially coming from the strong discount impact and from the low CAAT ratio, we accelerated. And again, here, this is a choice of the management. So if you normalize the combined ratio, the published one is at 87.1. If you normalize for the CAAT ratio, we have a strong discount impact. And that is mostly explained by a large commutation. And if you also normalize the discounted pack to the new level, we expect for 2024, which is minus 8%, you are at a combined ratio of normalized of 88.1. You could see we have some seasonality in the expense ratio. We do believe that almost 50% of the impact of Q1 should disappear, and we expect an expense ratio for the full year around 7 points. So if you normalize for this effect, Then you take the short-term buffer I mentioned in Baltimore, we are well below 87, excluding any buffer. So we are fully in line with the expected attrition loss ratio on PNC. Your second question on life and health, is it, I mean, the end of the question is binary, is it a one-time event or not? I would say that it is still early in the year. So there can be volatility, as we discussed, coming from the reporting effect or the pure claims in the mortality portfolio. So let's not read too much in just one quarter for such a long-term business. We have, as explained, some elements of conservatism in the claims development pattern that will be reviewed later this year. But it is true that with a miss in Q1, we are becoming more dependent on the fact that we need a positive business development in the next three quarters to reach the 500 million target of ISR for life analysis. But let's be clear. We are not happy with this performance this quarter, and we carefully monitor our U.S. mortality portfolio and its underlying assumption. Frieder mentioned it. we will undertake, if necessary, action to improve the underlying profitability. It can be done through management action, and management action are really part of the business model, especially in the U.S., and through management action, we can increase our rates with our seeding companies, and that's part, really, of the business model to improve the underlying profitability. We are also actively assessing the portfolio and its underlying drivers of performance. We regularly review experience and assumptions, and we take action when necessary. And you will remember a call, I think it was in July last year, and we were speaking, Thierry and I, about P&C. We mentioned that we were not satisfied with the attritional loss ratio a couple of quarters ago, and we took the corrective action. And today, I mean, we tell you, we are happy with the P&C attritional ratio. we will apply the same determination to life and health or to any other matter of rising as soon as we detect something with determination we will act to improve the profitability thank you our next questions come from james chuck from city your line is open please go ahead

Hi, good morning. Thanks for taking my questions. I wanted to ask about the multi-year retrocession contract that impacted last year on the PMC e-business value fees. This is the first time I've heard of it and I'm just keen to understand what kind of risk transfer is happening because kind of connected with that is also the commutation that you did in the period. What kind of risk transfer actions are you undertaking here? What more might we expect either this year or in future years, please? That's my first question. I'm reluctant to use up my other question on this, but I think I'm going to have to. The mortality charge on U.S. light again. I'm sorry to interrupt. go over it again, but I'm just getting a bit mixed messages what you're saying when it comes to the year-end review, please, because on the one hand, what you're saying now is that you are being conservative in terms of recognizing the claims patterns and the payment patterns. On the other hand, you're saying, well, we're going to have another look at this at year-end. Does that sort of suggest that you're being conservative at this point, and therefore, on balance, it's more likely that you reverse out some of that conservatism at year end or does this suggest that when it comes to year end that you might extrapolate off that and therefore we might expect further charges? Thank you very much.

Thank you. Thank you, James. I will start by the finance view and then Jean-Paul will complement on description of what we did both on the multi-year retrocession contract and documentation. So on the multi-year contract, it was booked in Q1 2023. with most of the costs booked in Q1, and you saw it, and that was a significant impact, and that's a four-year contract. On the commutation, so that's a commutation with a large client, so again, Jean-Paul would describe it, the financial impact that you see in the account is the final one. So since, just to explain the mechanism, when you have a large commutation, so the reserves that are on balance sheet are transferred again to the client, So you have then an automatic impact on the discount impact, and you see it this quarter. It's quite high, but this impact is compensated in EFI almost one for one. So you see on the combined ratio just one leg and not the other leg, which has the opposite sign in EFI. So that's why if you normalize the combined ratio this quarter, please normalize excluding this large commutation. Maybe Jean-Paul, more flavor on the two contracts?

Yeah, on the retrocession contract, it's a structured retrocession program that we entered into last year. So as Francois explained, a lot of the cost was accounted for last year in Q1, but that's why you see the seeded premium between 23 and 24 being stable because from an accounting point of view, it's just performing as normal. So the impact is really on the new business CSM In Q1 last year. In terms of the program that was commuted at year end this year, and that, you know, accounted for in Q1 2024, it was an alternative solution transaction that we underwrote a number of years ago, which the client viewed as being too favorable to the reinsurer and had the option to commute and took that option.

Thank you, Jean-Paul. On your second question on the U.S. mortality, let's be clear. I mean, the point that we mentioned on the reporting effect or the level of conservatism we could have today, as mentioned, we see it. We need still a few quarters to confirm if this is a trend or not. And this will be confirmed by the end of the year with the annual review. So Please wait the annual review before we can confirm if this is a trend or just also just a lag for a given quarter. But again, we start to see it for two quarters in a row. So we are working on it. On top of this, expect ads for PNC. And we do it also on the live side at the end of the year. We have the annual review of all the life and health reserves. And we will take action, again, in both directions, if necessary, to maintain our reserve at the best estimate level as each year. Thank you for that.

Can I just ask quickly about the multi-year contract? Yes, you can. My question really was just about risk transfer in general. I didn't hear anything in what you said about what that multi-year contract actually entailed. and whether you're looking at further risk transfer actions, please. Thank you.

So, you know, as you know, we buy our retrocession on January 1st. So this was, again, a multi-year contract entered into last year that was across different lines of business. When we bought our retrocession on January 1st this year, We bought slightly more retrocession overall than last year because of favorable market conditions. And we're not expecting to buy any more retrocession during the year, except for our cap on the renews in June this year.

Okay. Thank you so much. Thank you, James.

Our next question comes from Trisonas Spiro from Barenburg. Your line is open. Please go ahead.

Hi there. I have a question on the PNCV combined ratio guidance, 87%. It looks like now you sort of assume an 8% discounting in that combined ratio guidance. However, the actual discounting was around 9.6%. So I guess maybe can you help us square the 1.5, 1.6 point difference between the two Is this really sort of the kind of amount of buffer you expect to have and the flexibility in that? Is that the right way to think about that? The second question is on Brazil. I know you made some large changes there in your exposure over the last couple of years. Maybe can you remind us your position here and maybe comment on whether you have any sort of exposure to the floods and agricultural side of things? Thank you.

Thank you for the two questions. I will take the first one. So both the normalization or guidance on the combined ratio and what is happening on the discount impact. So on the discount impact, you know that it's quite complex and every quarter we have a question on this. It's a complex topic. The discount impact is depending on yield curve, currency mix in the portfolio, business mix on the cash flow pattern, and also movement on reserves. And we see this impact every quarter, and it could be more pronounced here and there. The minus six point, I would say between minus six and minus seven guidance was computed on the yield curve at the end of 2022. So when we prepared the plan in the first half of 2023, So here you have the latest update of what we think could be the discount impact in 2024. So that's updated with the most recent yield curve or most recent view on the cash flow pattern and the business mix. So it should be between minus seven, I would say on an average, it should be minus 8% in 2024. We decided not to change the guidance or the expectation on the combined ratio. So we maintain a combined ratio guidance at 87 or below, including buffers. Why? Because you know that there will be a downward pressure on the discount impact with a decrease of interest rate. We expect in 25 and 26, the discount impact to be a little bit lower so we prefer to say we maintain the guidance over the plan and probably it will help us or it will accelerate or facilitate the buffer strategy in 2024 so we should put more buffer let's say it's more simply we should put more buffer in 2024 than expected due to discount to the discount impact Now, I mean, again, the way we see it, so here, I mean, the way we pilot the combined ratio and the buffer strategy, that's really linked to what I said. So now we take us, we take as reference point an average discount impact of minus 8 points. Again, normalized for CAT, 10%. normalize for the discount impact, exclude the large commutation. Again, on the expense ratio, we think there is a little bit of seasonality. Don't take Q1 2023 as the reference point. That was the initialization of the first quarter on the RFRS 17. So take more the full year 2023 for the expense ratio. It's 6.6%. Here, it's almost one point above in Q1. We see some seasonality with front-loading of some expenses in Q1. My expectation is an expense ratio around seven points. So if you normalize for this and you include the buffer, we will maintain the guidance of 87. And it works in Q1. On Brazil, I give the floor to Jean-Paul.

Thank you, Francois. So as you know, the situation is still developing and assessments on the ground are difficult as loss adjusters cannot really reach certain allegations. When we look at the event from, you know, there's potentially two areas that were exposed, our agro book and our SPS book. On the agro, you know, we've taken significant remediation action. So, you know, exposures have been much reduced. In addition, the floods happen in between harvesting seasons, so there should not be a major event for agros. We don't expect that. On the SPS side, we're looking at large, you know, the Porto Alegre is a big industrial area of Brazil. We're looking at, you know, what facilities have been affected and, you know, any BI losses. But it's a bit too soon for us to know. But overall, the expectation would be to, you know, for this event to be a small to medium-sized cat event.

Next question, please.

Our next question comes from Vinny Malhotra from Mediabank. Your line is open. Please go ahead.

Yes, good morning. Thank you. Well, to be honest, my two queries have been addressed multiple times. I'll just try to ask one or two things just to clarify. And, you know, one is if you look at the positive in the P&C, this new business CSM growth, I know, could you just help to adjust for that one Q multi-year effect, so multi-year retrocession effect, so 1 to 23. So, in other words, what would you say the underlying growth of new business CSM? And second thing, and again, apologies again, but just to get the sense, the 71 million is is it a safer of life experience variance and the the faster recognition how is it is it a safe guesstimate that about half of each effect in other words the actual experience from the q3 as was mentioned and then these faster settled faster claims is about equal and and just on the same line i'm just still curious just because clients are reporting sooner, why should that mean the claim is worse? I'm just curious. Sorry for that ignorance.

Thank you. Thank you, Vinit, for the two questions. So the first one, I will be quick. So on the PNC, the growth of the new business on the PNC side, so you see a quarter compared to last year, 50% growth. Again, so the explanation is linked, of course, to the significant growth of the new business and the renewal of 1.1. As we discussed, Q1 was negatively impacted by the initialization of this multi-year retrocession contract. If you adjust for this effect, the growth is 19% Q1-23 compared to Q1-24 instead of 50%. and that's really realistic and in line with what we renewed at 1.1. On your second question, on life and health, again, we could have three... I mean, it's too early. That's the first quarter we see this. We had positive experience variance. So Thierry and I, as soon as we detect something, we look, we understand, and we take action if and where necessary. There could be volatility, and we take it, There could be this reporting effect. We are checking if this is a trend, and if this is a trend, we will adjust, and it would be good news for score and for India at the end of the year. And there could be also a review of, I would say, underlying assumption, and we review the experience this quarter again to detect if this is something that is just normal mortality or not. So it's difficult to quantify. I can't say 50%, 50%. Let's take a few quarters before we really understand what is in the account this quarter. We are investigating further the root causes of Q1. Okay. Thank you.

Okay. Thank you.

Our next question comes from Kamran Hossain from JP Morgan. Your line is open. Please go ahead.

Hi, good morning. Sorry, definitely doing this topic to death on the life and health side, so apologies. The question I had is, I mean, I guess, you know, given... the kind of negative claims trends you've seen, and then, you know, obviously what appear like conservative assumptions on kind of claims reporting. Can I just ask, how often for most of the clients do you get updated on these trends? Have you seen anything in management data since quarter end that would make you come to a slightly different conclusion from what you've seen in the first quarter? And the second question is on the same topic. I just want to confirm my understanding, but I think on the IFRS 17 transition, you changed some life and health assumptions. Just looking back at 2022, you know, the first IFRS 17 result that you reported this time last year was pretty negative on the life side. So I assume some of that was transition and kind of assumption changes. So I just wanted to make sure that my understanding was right. Thank you.

So the first question may be Frieder, on the reporting effect.

So we get very frequent claims reporting from clients. This can be monthly or weekly claims reports. Sometimes large claims are reported individually. So this is not coming in bulk, but we have a steady flow of claims reporting from clients, and we settle claims also on an ongoing basis. So there is not any type of cliff effect in the reporting. This is something which emerges over several quarters and is monitored very closely by us.

On your second question, you saw it when we prepared the transition to IFRS 17. So we took some action to change. Keep in mind that transition of IFRS 17, there was almost continuity in the PNC reserves. Under IFRS 17, we have to rebuild everything. So it was not a transition. It was a recomputation with a different methodology of all the reserves. So that's why you had this effect in Q4 2022, just before the official transition to IFRS 17. Again, at the end of... At the end of this year, we will do the annual review like we did in Q4 2023. So then that's the, like in PNC, we have this annual review of the reserve on the life and health side. As discussed today, we will review if there is an element or not of conservatism in the claims development pattern that we see in Q1 and again, but we did this last year and we will do this again at the end of the year. We will review the experience and the assumption, and again, we will take action when and if necessary.

Can I just follow up? I think the second part to my first question was just around any trends you've seen in the data since quarter end. I don't know if you've got that to hand, given that you kind of have weekly or monthly reporting.

It's a bit early to say we'll update you at the next quarterly call on this.

Thanks very much. Again, to detect a trend after one or two quarters, we need a little bit more time.

Perfect.

We start to see something. What I say is that we start to see something, but before we could say it's a change of pattern, it's a trend. We need additional quarters, and we think by the end of the year, we could have a conclusion on this.

Perfect.

Thanks very much.

Next question, please. Our next questions come from Daryl Gore from RBC. Your line is open. Please go ahead.

Hey. Good morning, everyone. I'm sorry, my two questions are still on the U.S. mortality stuff, but hopefully you asked me something that someone else hasn't asked yet. So can you talk about maybe the levers that you have to help reach your sort of 500 million service results targeted for you? I'm thinking about sort of the reserve buffers that you have in life and health. Is that still available? How much is that? And can you remind us if you have Any retro protections in place for the mortality book? Secondly, I'm assuming that the impact has not yet been reflected within the solvency. And if so, could you get a feel for, you know, what might the impact be? Maybe a sense of, you know, what share of all reserves that is exposed here? Thank you.

So on the first question, Dérald, on the 5 million target for full year, we have a miss. As I mentioned it, we have a miss in Q1. So we need more positive expand variants in Q2, Q3, and or Q4 to reach the target. As discussed, we have also the capacity to put in place management action with our clients in the U.S., which means to increase prices. That's a normal process. It's not new. We have been over the last few years doing this, and we will continue. And we will see also if we need to review again, based on the experience, the underlying assumption of the portfolio at the end. then we could have good guys, bad guys, but good guys and bad guys, I know it for a given quarter and not in advance because that would be in the account if I knew it. On the second point on solvency, Fabien?

This has been fully reflected in our own funds, so it's in the solvency ratio that we published. It's included.

And can you say how big was that? Okay.

I don't have this figure and we wouldn't publish it, but since we kind of re-estimate and for Q1 we do a solvency ratio calculation as a bit of a roll forward from year end, but taking into account all the claims movement that we observe, obviously, and that gives the solvency ratio that we publish.

So to say differently, I mean, everything is taken into account on the solvency ratio. The six points that you see are Most of the growth is explained by the integration of the VNB of the 1-1 renewal on the PNC side. So there is a strong capital generation of PNC. A positive one, net of the claims that we see in Q1, but still a positive one from alive. And we have a market variance that is limited to one or two points this quarter, in line with the sensitivity we published.

Yes, and very quickly to confirm. What is the size of the overall reserves of this U.S. mortality book that we're looking at here, please?

I don't think that's something we communicate on, but no, I will check with the team.

Just on the question on retro, yes, we have a range of retro programs in place covering the U.S. book and other parts of our global life and health reinsurance book. This comprises per life Retrocession to limit the per-life retention we hold on individual lives, quota share retrocessions, and a CAD program covering us against local events which could affect a larger number of lives.

Next question, please.

Our next question comes from Freya Kong from Bank of America. Your line is open.

Thanks for taking the follow-up. Can I just ask on the net marketing guidance for P&C from your renewals? I think at 1.1, you said this was around one point improvement after considering business mix changes. Given that you've shifted more into alternative solutions and specialty, is it still the same? and in terms of growth for later year renewals, should we expect around the same sort of levels? Secondly, on the tax rate outlook for the year, what drove the better tax rate in Q1, and is the outlook still 30%? Thank you.

Thank you, Freya, for the two questions. So on the first one, Given the price change that we see in the April renewal, keep in mind April renewal, that's only 10% of the portfolio. We confirm what we said at the beginning of the year after, I would say, the bulk of the renewal at 1.1. We expect and pricing terms and conditions are there to maintain our expectation of an improvement of the underwriting ratio of 1.5 points, excluding the effect of alternative solutions. If this is your question, that's excluding the alternative solution impact. On the tax rate, we have a good tax rate, 24% this quarter. We maintain at this stage the assumption of 30% for the full year and the rest of the plan. It's a little bit too early to see if all the... measure that we take to protect and to utilize the French TTA that we've got will lead to a quicker revision of this guidance. So I prefer to maintain the 30% at this stage. But I would say we are on good track on the tax ride.

And in terms of the expectation for the upcoming renewals, we still see good opportunities in the marketplace. So it's a bit early, but we remain bullish on the renewals remaining for the rest of 2024.

Can I just ask on the underwriting ratio improvement, including alternative solutions, what's the margin outlook?

We maintain the guidance of 87. So the 87 guidance includes the effective alternative solutions as well as the buffers, as Francois explained.

We mentioned during the presentation of the strategic plan the type of volume we would like to reach on alternative solutions during the next three years.

Okay, thank you.

Ladies and gentlemen, this does conclude today's Q&A. At this time, I would like to hand the call back to our speaker for any additional or closing remarks. Thank you.

Thank you very much. Thank you very much, everyone, for attending this conference call. The IR team remains available for any follow-up questions you may have, so please do not hesitate to give us a call. As a reminder, this call will hold its Q2 results call on the 30th of July with a call this time at 2 p.m. CET. I wish you a good AP Friday, and this concludes our call. Thank you, everyone.

Bye. Good afternoon, everyone, and thank you very much for your presence today.

This does conclude today's call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.