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Good afternoon, ladies and gentlemen, and welcome to the SCORE Q2 2025 results conference call. This call is being recorded. There will be an opportunity to ask questions after the presentation by pressing star and one on your telephone keypad. 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 now like to hand the call to Mr. Thomas Fussar. Please go ahead, sir.

Good afternoon, and welcome to SCORE Q2 2025 Results Confirmed School. My name is Thomas Fossard, Head of Investor Relations, and I'm joined today on the call by Thierry Léger, Group CEO, François de Varenne, Deputy CEO and Group CFO, Jean-Paul Condescente, PNC CEO, as well as other COMEX members. On slide two, can I please ask you to consider the disclaimer of the presentation? And now, I would like to hand over to Thierry. Thierry, over to you.

Thank you, Thomas. Good afternoon, everyone, and thanks for joining the call today. Let me have some high-level remarks on Score's six-month performance before turning to François and Jean-Paul for more details. Overall, I'm very satisfied with the level and the quality of the results since the start of the year, with all our three businesses contributing positively. In P&C, the portfolio is in a very good state, as demonstrated by the excellent underlying nutritional loss ratio. This is the result of our Forward 2026 plan, where we target profitable and diversifying lines of business. We feel well positioned in the current market and able to continue to deliver on our strategic priorities also in going forward. We have steered our capital allocation proactively in the last six months by adapting our portfolio mix to the more competitive market we are in. On top of it, we adopted a more dynamic retrocession approach, helping us to improve our net combined ratio additionally. All these actions prove to be the right choice in the current cycle that we still view as adequate overall. In terms of P&C market outlook, at SCORE we prepare for a more competitive, more distinctive, but overall still risk-advocate market. Without major losses in the second half of the year, I expect our underwriting strategy to remain broadly unchanged. We will continue to actively steer our portfolio to the most diversifying and profitable lines of business. Our Tier 1 franchise and the still relatively low market share provide us with an attractive pipeline of new business opportunities in the coming quarters. The environment remains very volatile, particularly driven by climate change, geopolitics, and digitization. We therefore expect the demand for reinsurance to be generally up, and our teams are 100% focused on our clients and their needs. In life and health, following a good first quarter, we deliver another three months in line with our expectations. As I told you already, even if this is very positive, I want to see us deliver on many more quarters before declaring victory. In terms of numbers, the profits contribution to the group over the first six months is as expected under the Forward 2026 plan. Our life and health team under the leadership of the new Life & Health CEO, Philippe Rude, continues to execute on the three-step plan established last summer to restore the profitability of our new and in-force business. As in P&C, looking ahead, I see a strong pipeline of attractive business opportunities in Life & Health. I would like to end my introduction with two numbers. the six-month return on equity of 20.1% and our economic value growth of 10.5%, both well above our targets despite buffer building, which I regard as a clear reflection of the strength of our strategy and business franchise. François, over to you.

Thank you, Thierry. Hello everyone and thanks for joining the call today. I will now walk you through our second quarter results. Starting with a few key messages. First, Thierry and I, we are very satisfied with these results. The performance of our three business activities is strong, delivering 225 million euros of net income, a 22.6% return on equity and an economic value growth of 10.5% at constant economics. P&C performance performance is excellent. The combined ratio for Q2 is at 82.5%, well ahead of our forward 2026 assumption of below 87%. This result reflects both low CAAT claims and strong underlying attritional performance. This performance enables us to build additional material buffer in Q2. In life and health, with an insurance service result of €180 million in Q2, and the year-to-date expense variance in line with our expectation, we are on track to reach our full-year forward 2026 assumption of around 400 million ISR. Investment has another good quarter. We achieved a 3.5% regular income yield and a return on invested assets of 3.6%, thanks to our high-quality fixed income portfolio that continues to benefit from elevated reinvestment rates. Our economic value increases by 10.5% at constant economics, the translation of the good and excellent business performance. Our group solvency ratios stand at 210%, stable compared to the end of 2024. This is supported by strong net operating capital generation in the first half, net of dividend, offset by adverse market variances, and notably the volatility in FX in Q2. On June-July P&C renewals, in an environment with increased competition, we have executed in a disciplined way on our P&C strategy. We continued our growth in profitable and diversifying line of business. This, combined with our dynamic retro-buying approach, this has translated into an unchanged net technical margin compared to last year in the 2025 renewals year-to-date. Jean-Paul will provide you with more colors on the mid-year renewals later in the presentation. Overall, thanks to the quality of our results over the first six months, we remain confident about achieving our full-year objectives. Now, I will go on with more details regarding our Q2 results. Starting first with P&C. In Q2, the P&C New Business ESM is mostly stable year-on-year, excluding the FX effect. This is a strong achievement in an increasingly competitive environment. On a half-year basis, our P&C New Business ESM growth by 5%, benefiting from our strategic growth in preferred line, as well as our dynamic retrocession buying, which affects the inward business margin erosion. The P&C insurance revenue is down minus 6.6% for the quarter. The already mentioned large contract commutation impacts the Q2 growth rate by minus 6.4 percentage points, or minus 131 million euros. Excluding this effect, the insurance revenue growth is flat. Similar to Q1, this is supported by growth in reinsurance, offset by a decline in score business solutions. In reinsurance, our preferred lines continue to grow nicely, namely alternative solutions, engineering, marine, IDI, and international casualties. Together, they are up plus 9%. This is partially impacted by a negative premium revision in the agriculture business underwritten last year and our proactive actions to reduce our US casualty book. This is fully in line with our focus on profitability. We are prepared to reduce capacity or redeploy capital whenever necessary. In SCORE Business Solutions, the trend has improved compared to Q1, as the timing effect on the renewal of some contracts has not cut off nonetheless. We still see the impact from the closing of underwriting U.S. casualty business from London and Paris, and we are also impacted by a one-off refinement in NDIC calculation in alternative solution, impacting the SBA's growth by a negative 3 percentage points. Overall, the PNC insurance revenue this quarter contained some noises, while in terms of the underlying, we are doing what we promised, growing in profitable and diversified way. Moving on to the underlying performance of our P&C books. Our P&C combined ratio stands at 82.5% in Q2, benefiting from low NATCAT losses in the quarter. NATCAT ratios stand at 3.8% in Q2 and 8.2% year-to-date, well within the annual budget of 10%. In such a quarter, we take, of course, the opportunity to build additional buffers. The 77.4% reported attritional loss and commission ratio includes good underlying attritional loss performance as well as a strong level of presence. We are very satisfied with the shape of our P&C portfolio, delivering again excellent performance quarter after quarter. Now, let's have a look at the Life Finance portfolio. The Life Finance business generates a new business CSM of 136 million in Q2. This is mainly driven by the protection business, which includes some positive through-ups from the last quarter. On a half-year basis, we are well on track toward achieving the €0.4 billion new business CSM annual assumption. On insurance service results, Lycanel delivers €118 million this quarter, including some positive one-offs in the CSM amortization. On the experience variant side, this is fully in line with our expectations year-to-date. On investment, we continue to benefit from a strong performance, with a return on invested assets of 3.6% this quarter, generating an income of 210 million, despite the negative FX impact on the asset base. This comes from a regular income yield of 3.5%, as well as from a positive fair value change on our private equity investments. Moving now to solvency. Capital generation in the first half of 2025 has been very strong, more than compensating the need for continued business growth and for the accrual of the dividends. This is also reflected in our economic value growth of 10.5% at constant economic suspension compared to year-end 2024. Similar to the economic value evolution, the solvency ratio is impacted by adverse market variances, especially the volatility in F-16Q2, which offset a large part of the value creation in the first half of 2025. Nevertheless, our solvency ratio remains very strong at 2.10 in the upper part of our optimal range. Before moving to the June-July renewals, I'd like to come back on our press release of this morning on new developments on arbitration. We have been informed that Covea just filed a request for arbitration to contest the validity of the settlement agreement drawn up and concluded in the presence of the French regulator ACPR on June 10, 2021. We consider this request unfunded and we will virulently defend our rights. This request for a new arbitration comes in addition to the ongoing arbitration on the retrocession treaties initiated by SCORE in November 2022 and which has now reached its final phase. In this context, Covea has requested that the tribunal in charge of the 2022 arbitration stay or defer its decision until the outcome of this new arbitration again at a time This ongoing arbitration is reaching its final phase. We oppose this request and remain firmly committed to keeping the current proceedings within the agreed timeline for a decision to be rendered in the course of 2026. This latest development has no impact on our business, has no impact on our ability to deliver our strategic plans for 2026. We are very confident on the positive outcome of both arbitrations. With this, I will hand over to Jean-Paul.

Thank you, Francois, and good afternoon, everyone. I'd like to briefly share with you the outcome of the SCORE PNC mid-year 3D renewals. As a reminder, these represent around 14% of our reinsurance portfolio and around 10% of our global PNC business. These are highly focused on the U.S., which accounts for 50% of the SCORE premium up for renewal in June and July. Let's first take a look at the year-to-date figures. Throughout the year, we have consistently executed on a 426 strategy, growing in our preferred lines. We are showing a 6% eGPI overall growth, driven particularly by specialty lines, where the growth is at 9%, and alternative solutions at 30%. P&C lines remain stable, but with a different profile, namely reduced exposure to U.S. casualty and selective growth on property cap. This year-to-date growth has been achieved at stable expected net technical profitability with the growth in proportional treaties and the more favorable retro-market conditions helping to offset the margin erosion on the non-proportional treaties. Turning next to the mid-year renewals, these have followed a similar trend to the January and April renewals, characterized by increased competition, particularly in the property CAT space, and more marginally in specialty lines. The decrease in price has remained mostly limited to non-proportional treaties, while proportional treaties continue to get rate increases. We continue to view strong rate adequacy in most lines of business, despite the price decreases, with terms and conditions remaining broadly stable. Within the still favorable market condition environment, We continue to grow in our preferred lines while maintaining a stable year-on-year overall net technical margin. Looking in more details by lines of business, in alternative solutions, we saw a slight decrease in the June-July renewals due to the non-renewal of one large U.S. deal. That said, the pipeline of deals remains strong for the remainder of the year, confirming clients' continued demand for structured solutions. We had a strong renewal in diversifying lines driven by international casualty and marine. Marine is a line of business where we still see good price adequacy despite pressure on pricing. We've achieved the eGPI growth of 6% in property CAT, largely driven by the U.S. Despite an average rate online decrease of 10% year-on-year across a U.S. portfolio, we've released the price level of U.S. business to be adequate. This led us to increase our gross exposures on target clients, as well as to keep more net, resulting in an increase of North American hurricane net PMLs year on year. Our 2025 net PMLs still remain small compared to the industry, and we continue to take a prudent approach to climate-sensitive exposures in line with the 426 strategy. Regarding U.S. casualty, we remain disciplined and selective. While the insurance market continues to push through double-digit primary rate increases, the reinsurance market showed little to no downward pressure on ceiling commissions. As a result, we continued to see insufficient margins and took underwriting actions to protect our profitability, reducing our portfolio EGBI by 14%. Looking ahead to the January 2026 treaty renewals, we expect continued reinsurance competition on well-structured and priced programs. However, we also expect continued discipline from the reinsurance market, and we will continue to do our part, as demonstrated during these 2025 renewals. I will now hand back to Thierry for closing remarks.

Thank you, Jean-Paul and François. Let me conclude before handing over to Thomas for the Q&A. We are very satisfied with the level and quality of our results over the first six months of 2025. In P&C, we have taken proactive and strategic underwriting decisions which have enabled us to combine growth with an unchanged attractive net technical margin. In life and health, we have delivered six-month results in line with expectations and remain fully focused on the execution of our three-step plan. Thanks to our clear strategy and Tier 1 franchise, we are confident in our ability to deliver on our Forward 2026 plan. Thomas, over to you.

Thank you, Thierry. On page 21, you will find the forthcoming scheduled 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 take the first question?

Thank you. So the first question is from Andrew Baker, Goldman Sachs. Please go ahead.

Great, thank you for taking my questions. The first one on the P&C recombine ratio, are you able to just give us a sense of how much the additional buffer build was in the quarter? Really just trying to get a better sense of where the underlying or the normalised combine ratio is running. And also, just to clarify on that point, does that buffer run through the risk adjustment? And so can we use the sort of increase in the risk adjustment as a proxy for a way to back-solve it? And then secondly, just on the new Corvea arbitration, is it fair to assume that the contentious point is around the life and health re-quota share portion of the original agreement, or is it around the restrictions around Corvea's ownerships and voting rights on score shares? Thank you.

Hi, Andrew. Thank you for the question. So we'll take the two questions. So the first one, so you remember our buffer strategy that we initiated with Thierry in July 2023. We had a target two years in advance compared to our initial ambition. So the target of $300 million was reached at the end of 2024. Since we moved to... an opportunistic strategy and we add buffer when we have an excellent underlying performance of PNC or the group. That was the case in Q1. Of course, with such a low NATCAT ratio and such a good attritional ratio, as I mentioned it, the amount of buffer we opportunistically added in Q2 is material. I confirm that since 2024 we add those buffer in the risk adjustment and the IFRS. And I agree with you that the increase of the risk adjustment is maybe not one for one, but is a good proxy of the amount of buffer that we added this quarter. Another way to see it, and if you want to double check the amount you may have in mind, Look at the expanse variance. The expanse variance this quarter is negative at around minus 59 to 60 million, and you should expect that the expanse variance should be positive given the net cut ratio and the exceptional attritional performance this quarter. So you can imagine if you adjust for the cut ratio and the attritional performance and the published expanse variance, you can double-check the amount that you find using the proxy on the risk adjustment. On your second question, so let me come back. I remind you, I guess you may have some question on these new developments. We remind you that we are bound by confidentiality obligations which prevent us from sharing detailed information on any arbitration, so not only this one, but on any arbitration beyond what is strictly required under applicable law and regulations. So that's what we did in the press release this morning. You remember, just as I come back, we signed in June 2021 a global settlement agreement between Covea and SCORE. Part of this settlement agreement was the idea was to restore business relationship between the two groups. to maintain a relationship as a shareholder and to maintain a relationship as a client. So Covea is a shareholder, is a retrocessionaire, and is a client, and that was what was included in this CETEL agreement. In exchange, so retrocession agreement on life and health treaties has been signed between SCORE and Covea. So again, here, the new developments, we've just been informed that Korea has filed for an arbitration on the settlement agreement and not on the arrangement treaties, which is the current arbitration that score launch 16 months after the launch, the signature of the settlement agreement.

Great. Thank you very much. Thank you, Andrew. Can we take the next question, please?

Next question is from Shanti Kang, Bank of America. Please go ahead.

Yeah. I just had a couple of questions. First one's on P&C. So the top line is obviously softer on FX and this large multi-year commutation. So if we strip out those, how should we think about the run rate of top line going into the second half of this year? Maybe you could talk a little bit about where you're looking to grow given the pricing conditions you've seen at mid-year renewals. The second question is just on the CAVEA settlement validity contest. Have you guys provisioned anything against this or for any future action? And would any of the settlement gains that you've had in the past be used to resolve against future action or would this be sort of released? Thank you.

Thank you. I suggest Jean-Paul take the first question.

Okay. Thank you, Shauna. So on the first question, Yes, so for the rest of the year, we still have a very strong pipeline of transactions, especially on the alternative solutions. As you know, there's very little treaty business renewing between July and the end of the year. But we still have a lot of opportunities on the AS side and on the SDS side. So our intent is to continue to, you know, investigate and explore all profitable business opportunities. And, you know, we remain still very active in this aspect. In terms of guidance for the year, I think, you know, we had indicated in Q1 low single digit. I think given the renewals that we just completed in June, July, I think we should revise that guidance for 2025 to Flattish. But for 2026, we remain very optimistic still. We still have to see what the next few months hold in terms of loss activity, in terms of discussions around the renewals. And for this, I defer back to François, but it's too soon for us to really change our guidance for 2026.

Yeah, just, I mean, remember, I mean, we had a question during the Q1 call, and we said that we will give you more indication during this call. So let's say it's a miss of the assumptions for 2025. We expect growth, insurance growth, revenue growth for 2025, flattish for PNC, but we reiterate and we maintain for the entire plan the guidance for 6% that you saw in forward 2026 assumptions. On your second question, on the provision, so again, I will be a little bit generic, but I guess that through my answers, you may find what you want. As a matter of principle, provision for all material ongoing litigation arbitration are booked at best estimate under IFRS and under Solvency II. If you remember what we did in Q3 last year, we took with Thierry the opportunity of the Life and Health Actual Review to adjust position on, I would say, major material arbitration in Q2. It was on a few arbitrations, not only one, and the amount was 128 million. We reiterate the fact that we are at best estimate under IFRS and Solvency II. How we book those provisions, I think it could be interesting for you to understand how we book this provision. Again, on all material ongoing litigation or arbitration, again here as a matter of principle, our provisions are calculated based on a probability weighted multi-scenario analysis. And this is in line with market practice, with IFRS and Solvency II recommendations. And we consider when appropriate, of course, legal opinion on each litigation or arbitration. Those provisions, of course, are reviewed in detail, of course, by the audit committee, the board, but by our two auditors as well. at least at Q2 and Q4 when our accounts are fully audited. The only information I can give you, or at least two information I can share today, given, again, the confidentiality clauses we've got. Of course, if and when applicable, the multi-scenario analysis can include a cancellation scenario. And you will see tonight, we are going to publish our Alfea report on our website you will see in this Alfea report that we classify this new development on arbitration as a subsequent event so which means it has been discussed with our auditors and the provision or provision are unchanged compared to Q1 and Q4 Thank you Operator can we take the next question please

The next question is from Kamran Hossein, JP Morgan. Please go ahead.

Hi. I'm asking two questions on P&C. I'm just really interested, you know, given how well this year has gone so far for you and, you know, it kind of seems to have evened out pretty well for the rest of the market, what the view is on the renewals for the 1st of January, 2026? Clearly, your outcomes at mid-year, you know, look relatively good. relative to some of the other market commentators interested in kind of where you think that lands us for the beginning of 26. The second question is just on the PMLs. You know, for a number of years, there were decreases, particularly in the US hurricane PML. It's gone up pretty materially. And I would assume there's probably, you probably should have had an offset elsewhere from like FX. So it's gone up quite a lot. So just, intrigued kind of what's going on with the PML. Because again, if I look at your mid-year renewals, it doesn't look like you've grown that much. So just interested in kind of what's happening going on there, whether it's just a change in retro or something else.

Thanks. Thank you. Thank you, Kamran. So Jean-Paul is going to take the two questions.

Yeah, so on your first question on the outlook for January 2026, Again, it's a little bit difficult to give a clear view right now because a lot of it depends on what happens over the next two quarters. But assuming the next two quarters are free of any major loss activity, we would see an environment that we expect to be similar to what we saw at the June, July, and April, which is a competitive market for programs that are well structured and well priced. and primarily a non-proportional business and a continuation on proportional business of price increases because the loss activity on a primary level has remained unabated and still very, very active. So insurance companies are pushing through primary rates. We see rate decreases more in the non-proportional treaties. Today we see the price level is adequate And I think, you know, anticipating some more competition, we'll see to what level that competition is, but we expect, as I said, a similar market to what we saw today. Discipline from the market players, giving back some right to clients where the treaty has performed well and where the level of retentions are adequate. On your second question regarding the PMLs, So if you look, the one payroll that has been a notable increase is on North American hurricane PML. As I mentioned in my renewal speech, I think what we saw there is, you know, overall rate online decreases of 10%. Price adequacy remains, you know, very adequate in our view. And so we decided to grow our book on U.S. hurricane and also to retain more on a net basis. So that is really the driver of the increase in net PMLs for North American hurricane. For the other parallels, I'd say that the PMLs are fairly stable on a net basis.

So I guess pre-effort, because I guess the jump is about 40% year-on-year, but I guess XFX, it's more like 50%. But I guess it sounds like that's where your appetite, you think it's well-priced, and that's the decision. So that all kind of makes sense to me.

Yeah, and I think if we compare ourselves to peers, I think our PMLs still remain low compared to peers on different metrics. So we still have room for this growth.

Yeah, it's definitely a much smaller absolute number, for sure. Thanks very much.

And if I may add here, I mean, overall, in looking at the risk profile, we're still underweight in CAT, so there's no change to our risk profile. It's just that this is also very, very clear. And the other one with regard to the renewals, Jean-Paul, I think, explained it really well. We think that our strategy that is quite distinct, where we really chase profitability and profitability and diversification at the same time, it leads us to a better outcome in general than if you don't adapt such a strategy. So we are confident in one thing, whatever the market will be, we will try to make the best out of it. That's right there. Thank you, Sarah.

Thanks, Kamran. Operator, can we take the next question?

The next question is from Real Hardcastle UBS. Please go ahead.

Hey, thank you. It sounds like there was more net capital generation than you'd have anticipated in the half year. Obviously, stronger earnings perhaps as well. But at the CMD, you made the comment about two to four points cumulative net cap gen for the next two years. I guess the question is, would you still stand by this today or would you expect it to be higher? And what's been the deviation to that point if there has been a change? The second one is just coming back to this new arbitration. I appreciate your strong stance. I guess I'm just trying to sort of quantum a potential tail risk here. At the time of settlement, you gave a number of details about the eligible loan funds and SCR impacts of this. You know, it's about 500 million and 300 million for what it's worth. Clearly a hell of a lot has changed in the intermittent period with the CSM action and that comment you made about the provision there. But those numbers, would they be sort of half of what they were at the time or maybe not reduced quite that much? Just trying to quantum a tail risk. Thank you.

Thank you. Thank you, Will. So the first question on capital generation is, We have a good news this quarter. Let's look at the good news. We have a very strong capital generation. It's coming from the strong performance of the business, mostly from PNC, strong performance also of life and health under Solvency 2, and strong contribution from the investment portfolio. So we don't provide the work of the Solvency ratio at mid-year. You have to wait the end of the year. So we just give you the own funds and the SCR. If you look at the solvency ratios, we are at 210. I would say it's almost in line with the consensus. If you take into account what I'm saying on the strong capital generation, it offset mostly a big FX impact that we see in Q2. You can quantify a little bit this FX impact. We provide the work of the economic value growth, and you see the FX impact or the market variance impact, and it's similar under Solvency II. So it can give you a little bit of flavor. I don't want to give you exactly the number of points, but the flavor of the size of the good news on the capital generation side. Is it the right timing to change our assumption? Again, for what 2026 is the plan where we intend to deploy capital given the excellent margin? What we see in Q2, there is a lag between the peak of the pricing, that was probably Jean-Paul in 2024, But the margins are just very attractive and very strong since 2023. So you had underwriting year 2023, underwriting year 2024, and we start to see as well to see a little bit the effect of 2025, which means under IFRS and Solvency II, we start to see the peak of those exceptional contributions. So I guess we should see the effect a little bit more in the following quarters. On your second question, on the tail risk, tail risk is tail risk, so we consider it really as extreme tail risk. Again, remember the statement we made. We are very confident in the fact that we are going to win, to be successful on those two arbitrations. If you want to clarify a little bit, refer to our communication in July 2021, and you saw a little bit the effect in terms of liquidity and in terms of sovereignty. In terms of liquidity, I just remind you that at the end of June, we have $2.4 billion of liquidity, and the definition of liquidity at score in all our KPI, all our dashboard, internally and externally, it's cash, money market funds, and short-term investments, which means short-term treasuries. So we don't take into account in our definition of liquidity any insurance receivable. So we are confident on the liquidity side. Financially, the cancellation, if we go on the tail risk, the cancellation of the settlement agreement, so the agreement signed in 2021, would be, I would say financially, from a solvency perspective, would be relatively or pretty similar to a cancellation of the reinsurance treaties. So the risk that you priced one year ago when we discussed this could be the same, the quantum could be the same. And again... What I said a few minutes ago on the provision, it was discussed with our auditors over the last few days. You will see tonight in the Alfea report the amount of the provision after this subsequent event is unchanged. So we consider that even with a new arbitration, our provision is at best estimate under IFRS and Solvency 2.

Thank you. That's helpful.

Thank you, Will. Can we move to the next question, please?

The next question is from Chris Hartwell, Autonomous Research. Please go ahead.

Good afternoon. Just two quick questions from me, if I may. The first one is on the life side with new business CSM, particularly strong NEQ2. I was wondering if you can help me understand the underlying growth here and maybe give a little bit more colour on where that's coming from. I think you also mentioned there's a true-up that's pulling over from Q1. And I guess also if we sort of look at the half in aggregate, what does this sort of suggest, or what are you thinking about the targets that you gave with the 2026 plan? I mean, it does seem that life continues to do particularly well. And second question is on a rather tedious subject of tax, unfortunately. But the tax rate, again, was pretty low in Q2. And I'm not sure if that's entirely related or related at all to the discussions you've had before around the DTAs. So I guess if you can help me understand the tax rate and maybe why we're on the subject of the DTAs, where are you currently on the plans to increase the utilization of that? Thank you.

Thank you. Thank you, Chris. So on your first question on the new business CSM on the life and health side, so we published a new business CSM of 136 million in Q2. There is some and also a fixed impact. So we really invite you to look at the new business CSM over the first six months of the year and not specifically in Q2. What is happening, and that's why we are happy, we see a strong business, new business CSM. It's mainly driven by protection business with some true up in Q2 in respect of Q1. So that's why look again at the first six months and not specifically Q2 versus Q1. So which means on a year-to-date basis, We have been able, especially compared to what we said during the IRD of December, we have been able to retain more business than we expected. at higher margins despite our ongoing discussion with clients, especially regarding what Thierry explained during the investor day in December, so especially regarding the implementation of higher return threshold across our protection books. So this is good news. We still have access despite the fact that we increased the order. We still have access to good business and with good volume. I remind you, and you don't see yet the effect, but at least internally I see the pipeline, and I see Philippe and Raymond in the room. We have a very strong pipeline on longevity and financial solution, and we expect to see the generation of new business CSM. But we need a little bit of time to build the team and to build the relationship with the client. But the pipeline is strong, and you should see soon as well the effect of this in the new business, CSM for life and health. So the second question on tax. We changed a little bit our approach. I think I mentioned this in Q1 compared to last year. To avoid a little bit the volatility, you know that the expected tax rate, especially in France, is computed under the French tax perimeters, which means under the statutory account of SCORESI. So we are for Q1 and Q2 with a more normative approach of the effective tax rate. And we will be closer to the real one at the end of the year. We are at 28% in Q2 versus an assumption of 30% in the plan. From what I see, it's not a guarantee, but from what I see, the effective tax rate should improve in the second part of 2025. So I expect an overall effective tax rate for the group to be a little bit lower compared to what you see in Q2 on a full year basis. And it's just a translation of action we started to implement at the end of 2023, in 2024, in 2025. and I still expect to implement the last one early 2026. So I would say we are on a good path to deliver our strategy to deliver reduced effective tax rates in the future. But again, the objective was, I remind you, to protect the French DTA and one day to reactivate the amount of DTAs which are not activated on the balance sheet. So I'm pretty confident on this topic. We are on a good track.

Thank you, Chris. Can we move to the next question?

The next question is from Michael Hoffner Berenberg. Please go ahead.

Fantastic. Thank you. You've answered most of the questions I had, but I have two. I'm sure you can play new ones. Thank you so much. Thank you, Trey. So dynamic retro, can you explain what that is? It sounds lovely, but if I were to try and explain it to a client or an investor, I'd have to call up some... And then my other question is on price adequacy. So clearly, you obviously like U.S. NatCat. I mean, the growth is strong. I just wondered, can you give us a feel for how you see it? The closest I have is a comment yesterday from one of your very, very small peers, that we're back at 2023 pricing, which I think is still kind of, but this is the way they look at the world, so it's different, 18% above what they would see as kind of the minimum, but I don't know. And then my last question was really, you know, we had these two plane incidents. One was a court judgment. One was the very sad crash in India. Is that something which is relevant? Thank you.

So three questions for Jean-Paul. So Jean-Paul, how do we explain simply to a client what we mean by strategic buying retrofission?

It means that looking at the pricing environment of retro, the leveraging between proportional and non-proportional. That's what we mean. So we buy proportional 3D. with typically long-term investors, long-term partners. We buy non-proportional reinsurance as well with usually different retrocessionaires that tend to be also long-term. And depending on the pricing dynamic of the market, we have the ability to tune up non-proportional and scale back proportional or vice versa.

I understand. Okay. So my guess is this means that at the moment, because you said in your comment somewhere, non-proportional, the pricing is coming down with proportional, the underlying or the primary is holding up, that you'd be buying more non-proportional retro?

What I mentioned, that was on the reinsurance pricing. On retro, what we saw this year is the year-on-year pricing for non-proportional retro is down. Okay. And for proportional, the terms are more or less stable or more favorable to buyers. Cool. You see in both the areas kind of favorable conditions for buyers. Okay. On price adequacy of CAD business, overall right now we see decent price adequacy. We don't quantify it. or we quantify internally but don't share externally because, you know, this could be used by brokers to push through certain, you know, price decreases. But for us, you know, we still see decent price adequacy in our cat business globally and in the U.S. On your last question regarding the aviation incidents, Air India and the other one, Those remain very small events for for score that are there'll be q3 events And not sure at this stage whether they'll make the threshold of a major loss for score, so they'll be very small Thank you, Michael.

Can we move to the next question, please?

The next question is from Hadley Cohen Morgan Stanley, please go ahead Hi, thanks very much

A couple of questions, please. First point, I guess, is more of a clarification. So your risk adjustment in P&C increased from $0.7 billion at the year end last year to $1 billion at the end of the first half, so $300 million increase. Can we infer that the majority of that is buffer build based on your earlier comments, please? And then my second question is around the European Commission's report on the solvency review, which was published I think a couple of weeks ago. I think previously you've guided to around about 10 to 15 points benefit from the solvency review. Is that number still valid? And if that's the case, can you just remind us please what the what the offsets are to the benefit that you get from the risk margin, please, because I think the lower cost of capital on the risk margin is more than that in itself. So what are the negative offsets that we need to think about as well? Thank you.

Thank you. Thank you, Adlai. So your first question, so it's, The first way to assess the amount of buffer in Q1 and Q2, so the 300 million that you see, it's mostly business mix volume and buffer. So you are close to the amount. You have a little bit more than the buffer in the change, in the evolution, but you are close to the amount. On your second question, On the upcoming Solventi 2 reform, so as you said it, so the commission has just submitted its draft report for consultation. With the rest of the industry, we will answer to this. So the limit is the 5th of September. Final proposal is expected, I think, in Q3 2025. If I look at the impact of SCORE, we cannot yet communicate and quantify publicly the impact, but mostly the good news will come for us from the risk margin and the cost of capital. The negative point is, as you can expect, the non-recognition, as of today, the non-recognition of the contingent capital. So we maintain what we said in the past. So the net effect should be highly positive for SCORE. We maintain the range of 10 plus 15 points of impact on the solvency ratio, and we will update you in due time closer to the implementation date.

Thank you, Adeline. Can we move to the next question, please?

The next question is from Darius Setkauskas, KBW. Please go ahead.

Good afternoon. Thank you for taking my questions. The first one is, could you provide some color on why the attritional was so good this quarter? Also, any color on the man-made losses in the quarter? And secondly, on arbitration, do you have any idea, even if it's speculation, on why Covey is requesting the arbitration now so close to the outcome, and could it have anything to do with the emergence of new information or simply a delay tactic? Thank you.

So there's, I'll take the first question on attritional. I think what we've seen is, if I look at the underwriting reason, it's all the underwriting actions and pricing actions we've taken over the past few years. There have been large losses in the marketplace, but we haven't been heavily impacted. And on the treaty business, the low price adequacy is really what's driving the good attritional performance. So, you know, I would expect this, as we see the renewals in 2025, also from a pricing perspective being very similar to 2024, I would expect this attritional to continue to be quite good over the next few quarters.

You will remember that two years ago we were talking a lot about the attritionals. At the time, we were not so happy with the attritional, and we were very transparent that we were not satisfied with it and that it would be the first sign of a healthy portfolio once we see the attritional come down. And so now we are where we wanted to be at the time, so we are now really satisfied with the attritional. And the last point I wanted to make on this attritional is it's very sticky, so it's not something that goes away very quickly.

On your second question, Darius, as a CFO of the group, I don't like to do speculation or to make speculation or speak. I like to look at facts. I just want to share with you a few facts. Again, we are born by confidentiality obligation. But if we look at facts, and I invite you to look at facts only. Fact number one. Covea and us, we signed a settlement agreement in June 2021 in the presence of the Vice Chairman of the French Regulator, the ACPR, in order to restore peaceful relations. It's public information. Fact number two. In this settlement agreement, Covea and us, we entered into retrocession treaties on our life and health in force portfolios. And in exchange, all parties have withdrawn and waived all existing and future legal action and claims against each other. It's a fact. Fact number three, as you saw it in our URD published for the year 2022, 16 months after the signature of the settlement agreement, we initiated, we, SCORE, initiated an arbitration to request execution of this treatise. This arbitration, as I mentioned it in my introduction, this arbitration has now reached its final phase with a decision expected in the course of 2026. It's a fact. Another fact. Fact number four. COVEA just filed a request for a new arbitration to cancel the settlement agreement. And fact number five, on top of it, Covea requests that the tribunal in charge of the arbitration on the retrocession treaties defer the proceedings which would postpone the decision on the current arbitration, which, as I just mentioned, is reaching its final phase by at least two, three years. That's the fact. It's not speculation. It's not speculation. What can we say now, score? First, as I mentioned it, we will firmly oppose such postponement requests and we will vehemently defend our rights. Like for any other litigation, as we discussed it a few minutes ago, you understand that all our provisions have been booked in accordance with applicable law and are at best estimate under IFRS and Solvency II. Terry and I, we discussed this as well at the level of the Board of Directors, we remain very confident on the positive outcome of now the two arbitrations. And of course, these latest developments have no impact on our business and our ability to deliver our forward 2026 plan. So again, instead of speculation, I just invite you to look at just those facts.

That's great. Thank you.

Thank you, Darius. Can we move to the next question, please?

The next question is from James Shock, a city. Please go ahead.

Hi, good afternoon. So I wanted to ask actually about the judicial investigation, the one against the previous chairman that was announced in April 2025 in relation to some comments he made in 2022. So my question really around that is whether we expect any timing in terms of relative announcements, but more importantly, is there any implications from the outcome from that judicial investigation on the arbitration cases, i.e. If it is shown to be that he said something that he shouldn't have done, that's factually incorrect or whatever, does that have any implication for either of these two arbitrations? And kind of more broadly, should we be thinking about any D&O cover here, either in relation to both of the arbitration cases or indeed the judicial investigation? So that's my first question. Secondly, I just want to return to the P&C revenue growth point where you kind of lowered the outlook. I'm sorry to dwell on this, but it's quite a big change from where you were in April, which is when you spoke to us at Q1, and we've really only had the June-July renewals, which, as you point out, is only 14% of the book, and we've gone from guidance, and you mentioned low single-digit. My understanding was it was mid-single-digit, so let's call it 4% to 6% for 2025. We've gone from 4% to 6% to zero for the full year, but not a lot has been renewed in the intervening period, so I'm struggling to make the bridge. So you just have to understand what has changed since the comments at Q1. And if I may just squeak in another one, it's just a clarification really, but just you keep mentioning FX impact being quite a large contributor to the solvency development in Q2. But your solvency sensitivities kind of show only minus one point for a 10-point change in US dollar versus euro. So I'm struggling to see where that comes from. Thank you very much.

Thanks, James. I will take the first question on when we were placed under investigation, so last April. So again, we are under confidentiality clauses, so take what I say, I mean, with the restriction. Refer to the press release first. Refer to the press release of April 2024 when we were placed under investigation. The only point of attention on this press release, and it's important to reiterate this point, so we have been placed under examination in April 2022 for the sole reason that Denis Kessler, at the time when he was no longer the company legal representative, was allegedly involved in some of the acts of which the support association was accused by the judge. So there is no direct implication of scope. So I cannot comment. Now, is there a link between this and the new arbitration? The only thing I can say is that there are two different proceedings, two different authorities, two different trials, and with two different timelines.

Yeah. And on the DNO cover?

No comment on this one.

James, on your question on revenue outlook, again, when we were in April, there was a number of, I don't know if you want to call them exceptional, but one-off items that happened in Q2 that we had not foreseen. One was a revision, as mentioned by Francois, a revision of our eGPI in agro, which had a strong effect. We had also, as mentioned in the presentation, an accounting correction for alternative solutions on the SPS side, which accounts for roughly one point. And also, you know, we had hoped that the U.S. casualty renewals would go better than they did. So that's really, I think, the drivers of the missed this quarter. You know, as we look at the outlook for 26, you know, of course, we're looking more detail on our assumptions, but this is why we remain probably more optimistic than we've been able to achieve in 25.

Just on the FX impact to the solvency, please.

Just so the sensitivity of the FX, so remind you that we publish sensitivity of the solvency ratio to FX. We disclose as well in the URD equity and solvency to sensitivities. What we can add is that we still see a net profit sensitivity of plus, minus 10 points deviation of weakening or strengthening of the dollar of, I would say, around minus 5, minus 6 points of the net profit. What I see... Yeah, again, where are we in our journey on FX? Let's say it's an isoglass half empty or half full. I'll let you decide the way you see it. So we started our journey last year. I start to see on my side the effect of the edges we put in place at the end of 24 and early 25. So I see the contribution of those edges, especially on the solvency ratio. We still need to work a little bit to refine a little bit more the way we compute the sensitivities of the solvency ratio on the UNFAM side and as well on the SCR side. We are working on it with our team, LM team and Fabian's team, and I think everything should be done by the end of the year. Again, something that is important to reiterate is that this quarter, It's not only a weakening of the dollar, it's a strengthening of the euro against all the currencies. So it's a little bit exceptional. Usually we have plus and minuses, compensation effect that we don't see this quarter. So the effect is big, but it's the addition of many sensitivities in various currencies versus the euro instead of a high sensitivity only on the dollar. Okay.

Okay. Thank you very much.

Thank you, James. Thank you, James. And we're going to take the last question, please.

The last question is from Vinit Malhotra, Mediobanka. Please go ahead.

Yes, good afternoon. Thank you. So my first question is, you know, Terry, your comments about competition for 2026 picking up and also that the underlying, which is very strong, is likely to be sticky. Can we marry these two commentaries and assume that despite competition picking up, the underlying strength could surprise next year? That's the first question. And second question is just on the PML and the North America. I know it's still smaller than Pierce, but is this something that was very opportunistic only for Florida or is it also the Gulf broadly? Is it something that you could further increase in next renewals next year. I'm just curious if there is a shift in how you view these risks, or is it just a very opportunistic, because, you know, we're heading into a quiet season kind of move. Thank you.

Thank you, Vineet. I take the first one, and Jean-Paul might complete, but definitely take the second one. But as you pointed out, referred to what I said before. So, yeah, I guess competition is up in the sense where the incumbents build capital through a strong profit. So that's the competition that is increasing. It's about ultimately competing, isn't it, in our market is capital availability and the capital is going up because we create a lot of capital these days as also a score of the So that's a reality, and more offer obviously creates more competition. So what is on the other side of the equation is that the demand is going up, and I said it. We are in a volatile environment. The geopolitics, climate change, digitization create an environment in which we see an occurrence of large losses, on a very regular basis. And I don't have to remind you that the first half year, 2025, was one of the worst in terms of insurable CAT losses. So that stands a bit against it, that there is also a strong upward trend in demand. And the last point that goes against the increased competition is that we generally still see strong discipline, generally, by the reinsurance participants in the market. So you really have to look at those tools, which gives you a bit more of a balanced view. And then what really then is very specific to score is our strategy to grow in a very specific way in lines where we see less cycle and more stable prices. Jean-Paul, anything you want to add to this first point?

Yeah, the only thing I would add is you have to remember also in the financials that you earn through the previous underwriting years and quarters. So as we have had very good underwriting years, 23, 24, 25, those will continue to earn through in 25 and probably early 26th. So that's why I say, you know, we expect the strong attritional to remain for the coming quarters because it's really the underwriting years, 24, 25, that we're earning through.

And then you also said, and François has mentioned it, but we have said it a few times, that maybe the market is not as peak anymore as it was in 24, but it's still very attractive overall. And definitely on a... IFRS 17 phases, we're actually very much in a peak phase.

On the PMEL question, again, we're staying within the framework of Forward to 2026. There, you know, we said we wanted to remain cautious on climate-effective perils. You know, we have a cap ratio that's fixed at 10%. So there's no intention to increase the cap profile compared to those assumptions. Here it was more an opportunity that we saw. We did grow a little bit on Florida, but last year we wrote two accounts. This year we write six accounts. So it's not a big growth, but it was more overall where we see the attractiveness of the business on the growth side and decided to also retain more net.

Okay.

Thank you very much.

Thank you, Vinit. This does conclude the Q&A session for today. So thanks for attending our Q2 2025 conference call. The IR team will remain available for any follow-up questions you may have, so please don't hesitate to give us a call. At the reminder, SCORE will release its Q3 2025 results on Friday, 31st of October with a call at 2 p.m. as usual. Thank you, and have a nice summer. Thank you.

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