Zurich Insurance Group Ltd

Good afternoon, everybody, and welcome to Zurich Insurance Group's nine-month 2024 results Q&A call. On the call today is our Group CEO, Maria Greco, and our Group CFO, Claudia Cordiovi. Before I hand over to Claudia for some introductory remarks, just a reminder for Q&A, if you could keep it to two questions, that would be much appreciated. Claudia.

Thank you, John. Hello, everyone. Thank you for joining us. Good afternoon. Before we answer your questions, I would like to provide you with a few opening remarks. As you will have seen from this morning's press release, we have continued to see strong volumes growth across all of our businesses, starting with P&C. Gross rate and premiums in P&C grew by 4% on a reported basis, supported by 5% rate increases. Growth in retail and SMEs was especially strong, with GWP ahead by 10% with 5% rate increases in the period. Retail P&C margins have improved year on year despite significant weather events, especially in EMEA. We expect to further increase retail motor rates in both Germany and Switzerland over the important 1st of January renewal period. Volumes in commercial have been impacted by the commodity price-driven decline in the top line of our crop business. Excluding crop, commercial insurance gross rate and premiums were ahead by 5%. And I was pleased to see North America report 4% gross return premium growth for the discrete third quarter. Commercial continues to see positive rate momentum. In North America, although property rates have moderated somewhat during the first nine months, we continue to see strong rate increases in auto and liability as rates continue to respond to lost cost trends. It is also good to see an increase in the retention rate for commercial insurance despite our continued focus on underwriting profitability. We have quantified the impact of net CAT on our combined ratio for the first nine months at 3.4%, which is modestly higher than the 3.1% for the prior year period. We believe that this is a testament to the good work by our underwriting teams to reduce and manage our net exposure to CAT volatility. Our initial estimate of the pre-tax cost of Hurricane Helene is $160 million. Hurricane Milton, which is a fourth quarter event, is expected to cost less than $200 million pre-tax. Our live business continues to deliver strong growth with new business premiums up by 6% on a like-for-like basis at stable margins. This was driven by robust sales of unit-linked through our bank partners, and higher sales of protection in the UK and Japan. Short-term protection sales, which is mainly driven by Latin America, grew by 12% on a like-for-like basis. We also saw 10% like-for-like growth in fee revenues from investment contracts, supported by higher average assets under management. The transformation at farmers continues at pace, with farmers' management fee revenues up by 6%, on the prior nine month period, supported by 5% growth in gross earned premium at exchanges. The underwriting performance at the exchanges was again excellent, with the nine months combined ratio at 93.5%. It is also pleasing to see the exchange surplus ratio at 37.7% towards the upper end of the 34 to 38% target range. This ratio does not reflect the issue of 300 million of surplus notes shortly after the end of the quarter, which will add around 1.6 points to the ratio on a pro forma basis. Finally, Zurich's SST position remains very strong. The nine-month SST ratio of 224% has declined modestly since June 30th, mainly reflecting lower interest rates, which were partially offset by strong capital generation, net of dividend accrual. Market movement since the quarter end will have reversed some of the interest rate impact. We're looking forward to sharing with you our ambitions for our new three-year cycle for 2025 to 2027 in London in a couple of weeks' time. With that, we'd be happy to take your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment may press star and one on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Kindly limit yourself to two questions only. Our first question comes from Michael Hutner in Berenberg. Please go ahead.