Münchener Rück Aktie

Good morning to everyone. Welcome to Munich Re's Q2 2026 Earnings Call to all analysts and investors joining us today. And we indeed appreciate you attending our presentation as we are aware that some other insurance companies released results today. I have the pleasure to be joined by our CEO, Christoph Jurecka; and our CFO, Andrew Buchanan today. Both gentlemen will kick it off with some upfront remarks. Afterwards, there will be plenty of time for Q&A. So Christoph, the floor is yours.

Thank you very much, Christian. A big pleasure to see you all today virtually and to present excellent results today. Let's start immediately on my Page 4. And as you can see, we deliver on our promises. Munich Re is firmly on track to achieve its full year targets as it has consistently done in recent years.

And with a net result of EUR 3.9 billion in the first half of the year, we have already achieved more than 60% of our full year net income guidance. To be fair, we benefited from low major losses and the strong equity market performance. However, these results are at the same time, reflecting the continued strength of the underlying performance across our business segments, which I will discuss in more detail later.

This performance translates into a return on equity of 23%, comfortably above our Ambition 2030 target of more than 18%. After only 6 months into the new financial ambition, I'm fully confident that we will deliver on our medium-term targets despite the current headwinds in P&C reinsurance. My confidence is underpinned by the strength of our businesses, which are largely insulated from the P&C reinsurance side.

Slide 5 of our deck illustrates that the growth in GSI, in Life Re, and in ERGO more than offsets the revenue decline in P&C Re on a currency-adjusted basis. We will continue to expand their earnings contribution, enhancing the diversification of our earnings profile and further strengthening the resilience of our financial performance over time.

GSI is actively shaping its portfolio to capture opportunities in attractive specialty insurance markets, while Life Re and ERGO are delivering consistent earnings growth for quite some time now.

While P&C reinsurance contributed around 50% of our half year earnings, the strong performance of these other businesses gives us greater flexibility to manage the reinsurance cycle more strictly. We can afford to walk away from business where pricing does not meet our profitability requirements. Disciplined underwriting remains essential to maintaining the quality of our portfolio and navigating a temporarily more challenging market environment. Across the group, management incentives are not driven by top line targets. In many cases, foregoing business is preferable to writing business at inadequate terms, while we, of course, value long-term client relationships. Accordingly, our insurance revenue guidance should be understood as a directional ambition rather than a hard target.

And this brings me to the July renewals on Slide 6. Our discipline was again evident in the July renewals, where we managed the portfolio consistently to optimize risk-adjusted returns. We withdrew from business with inadequate profitability, particularly in the XL segment, partly offset by new business opportunities in proportional and non-proportional business.

Overall, volume declined by around 9%, however, largely driven by the overall price decrease of 5.5% and a further material reduction in U.S. casualty. The reported price change includes a negative business mix effect of around 1 percentage point due to an increased share of proportional business.

In essence, in July, we saw no acceleration in rate softening compared to the April renewals. Pricing in XL business moderated by the same amount, while slightly higher declines in proportional business reflected the higher starting profitability in those markets renewing in July.

In casualty business, specifically, we have not accepted a meaningful increase in ceding commissions, but are still concerned about loss cost trends being greater than rate increases in the primary insurance market. Importantly, market discipline was largely maintained with structures and wordings holding firm.

Overall, the market environment remains still quite attractive and continues to offer healthy margins for the risks we assume. And maintaining this discipline requires the flexibility to redeploy capacity swiftly across geographies and perils. Munich Re has a clear competitive advantage in this respect, underpinned by strong capitalization, the global footprint and deep client relationships.

The bubble chart on Slide 7 illustrates how consistently we manage the portfolio. We are prepared to reduce or exit business where pricing does not adequately reflect the underlying risks, but also maintain business that comes from a very good level and is still attractive. At the same time, we continue to identify attractive opportunities to deploy capacity and growth, including in Latin America and the U.S.

Less exposed to the cycle is our global specialty insurance business, which is shown on Slide 8. We established GSI to bring Munich Re's growing specialty primary insurance businesses under a single integrated management structure, while leveraging the group's risk expertise, capital strength and brand.

The business grew by around EUR 800 million annually through 2024 and adjusted for currency effects would have continued to grow in 2025. By combining a broad range of specialty insurance businesses, geographies, distribution channels, and underwriting cycles, GSI can flexibly allocate capital to the most attractive profit pools. Recent product extensions are U.S. real estate, professional liability, as well as surety in Europe.

In terms of profitability, GSI has consistently delivered very strong combined ratios, fluctuating moderately around 90%. Looking forward, the segment is well on track to generate robust and gradually increasing earnings over time and to achieve both this year's targets and the medium-term objectives of Ambition 2030.

Moving to Life reinsurance on Page 9, which has performed strongly in recent years, and this positive momentum continues. We remain highly successful in generating new business that will translate into earnings over time. In the first half of the year, we concluded a longevity transaction covering EUR 4 billion of pension liabilities.

More recently, we completed 2 large structured transactions in the United States, which will only be reflected in our numbers later this year. Our substantial CSM stock provides a strong foundation for reliable earnings delivery. Supported by a well-diversified portfolio, we continue to capture attractive opportunities in transactional business and longevity. At the same time, we remain disciplined.

Our clearly defined risk appetite helps mitigate the risk of adverse surprises, as evidenced by aggregate experience that is tracking slightly better than expected. The very strong performance of our FIN RE business once more made a significant contribution to earnings. Together, these factors drove a total technical result of more than EUR 1 billion in the first half of the year, somewhat ahead of the pro rata full year guidance and underpinning the targets of Ambition 2030.

Turning now to ERGO on Page 10, which continues to deliver reliably against its ambitions and is well on track to achieve its targets once again. ERGO's digital-first approach and the systematic deployment of AI across the group are key drivers of further efficiency gains and scalability. At the same time, ERGO is deepening customer engagement through its customer portal, a 4-time German Brand Award Winner, and the ERGO app, which ranks first among insurance apps and customer surveys.

In addition, ERGO continues to invest in its global brand to strengthen international visibility. In Germany, the focus remains on profitable growth, balancing top line expansion with underwriting discipline. We see attractive growth opportunities in P&C, including fire, property, and motor, as well as in supplementary health and new life business. This is supported by top-rated products and a high-performing sales organization.

Together with disciplined underwriting and effective claims management, this underpins a strong technical profitability. While Germany remains an important market for ERGO, the strategic focus is gradually shifting towards a higher international earnings contribution, where ERGO continues to deliver dynamic growth.

Strong market positions in Polish motor and Greek property, as well as Belgian corporate health business, are driving profitable top line expansion. The integration of ERGO NEXT is on track, and we are convinced that its AI capabilities platform, combined with ERGO's underwriting excellence will be a key catalyst for profitable business development.

Let's turn to our investment portfolio on Page 11, which continues to benefit from supportive capital market conditions. We are reinvesting new money at 4.3%, providing further upside to the running yield. However, we are not relying on higher interest alone. We have identified additional levers to enhance returns, including the gradual expansion of alternative investments and the active pursuit of opportunities across markets and currencies. This quarter, we also benefited from a strong performance of our private equity investments.

This brings me towards the end of my presentation with the outlook 2026 on Page 12. Based on strong half year results, we are heading with tailwind into the hurricane season, being well on track to deliver another record result this year. I'm even more so pleased that all businesses are contributing to this success.

At our Q1 call in May, we announced that the revenue forecast is more challenging than what we thought when we originally said it. With the information of the latest renewals, we decided to lower our revenue guidance in reinsurance by EUR 2 billion to now EUR 38 billion. I said in the beginning, for us, this is a directional goal rather than a hard target.

Related to that, let me conclude with a few remarks on our Ambition 2030 on Page 13. No doubt, we are seeing the effects of the reinsurance cycle on growth and margins in our P&C reinsurance business. This is, to some extent, amplified by the benign major loss experienced, a double-edged sword that supports current earnings but doesn't help in price negotiations. But such cyclical pressure is not new to us, and we have navigated similar phases successfully before. And this is precisely why we have already considered a certain slowdown of the technical performance in P&C reinsurance in the earlier years of our financial planning period until 2030. However, this time around, we are even better placed than in previous cycles.

Our strong balance sheet, higher investment income, and the steadily growing earnings contribution from businesses that are largely insulated from the P&C cycle enable us to navigate the softer market environment from a position of strength. This gives us the flexibility to walk away from business where pricing does not meet our profitability requirements while valuing long-term client relationships. Anyway, over the medium term, we see a compelling case for P&C reinsurance supply and demand becoming more evenly balanced again.

Finally, our strong solvency position of more than 300% provides substantial flexibility in managing capital. We remain committed to returning excess capital to shareholders through growing dividends and share buybacks. Together, these strengths underpin our ambition to deliver a return on equity of more than 18% and average annual earnings per share growth of more than 8%.

In summary, the targets of our Ambition 2030, of course, remain fully intact.

With that, I hand it over to Andrew now, who will guide you through the Q2 figures in more detail.

Thanks very much, Christoph, and good morning to all of you from me as well. A quick logistical comment upfront. For my remarks, I will not refer to any further specific slides in the pack, which you all have, of course. I'm just going to verbally expand on the financial performance of the quarter and the half year.

So I start by repeating something that Christoph said earlier, our diversified business model underpins sustainable earnings over time. And in the short term, P&C reinsurance once again benefited from a benign major loss environment, putting us on a strong course towards our earnings target for this year. But in an environment where the reinsurance cycle is showing signs of softening, and underlying earnings in P&C Re are beginning to reflect the terms achieved in recent renewals, the profitability of this segment remains at an adequate level. And the benefits of diversification are becoming increasingly evident as strong contributions from our other segments enhance the resilience of the group's operating performance.

In addition, as you know, a strong investment result in this quarter complemented the sustained strength of our technical results. And all-in-all, this resulted in a strong second quarter net profit of EUR 2.2 billion, which you will have seen a couple of weeks ago in our pre-announcement. And together with the very pleasing Q1 result, Munich Re remains firmly on track to achieve its full year target.

Now against that backdrop, let's take a closer look at the key Q2 earnings drivers, starting with the investment result. The return on investments of 5.5% benefited from favorable capital market conditions with strong contributions from both public and private equity investments. The running yield of 4% was supported by higher interest rates, but I should also mention dividend seasonality and also the catch-up effect from our inflation-linked bonds, which I also talked about in this call back in Q1.

The reinvestment yield remained or, in fact, increased to a very good level of 4.3%, which will provide continued support for the running yield through the rest of the year. So with a return on investment of 4.2% for the first 6 months of the year, we are comfortably within our full year guidance of greater than 3.5% ROI.

Now I turn to the business fields, starting with reinsurance. And the Life and Health reinsurance total technical result was EUR 528 million in the quarter, so above the pro rata ambition that we would need to hit our annual target. The release of the CSM and the risk adjustment was in line with expectations, while mortality experience was slightly positive.

The result from insurance-related financial instruments developed very favorably, supported by the large transactions that our colleagues completed in the second half of last year. And it's very pleasing also that the stock of Life CSM continues to grow, having now reached EUR 16 billion, driven by solid new business generation and with some help from positive currency effects, providing a strong foundation for sustainably high technical results in the coming quarters and even years. So being ahead of the pro rata total technical result guidance after the first half year means we are well on track to achieve our Life and Health targets as well.

In P&C reinsurance, we posted a strong Q2 results as well. You will have seen the combined ratio of 68.9%, once again benefiting from very low major losses. Reserve releases amounted to the usual and expected 6 percentage points in the combined ratio.

Now in our Q1 earnings call, we had already mentioned the upwards pressure on the normalized combined ratio. And you can see that in Q2, the ratio increased to around 82%. This firstly reflects the gradual earn-in of recent renewals, which also led to business mix effects from a higher share of casualty proportional business and a lower share of property non-proportional business.

However, what we did not know at Q1 was that the increase would be accelerated also by the writing of a large structured transaction, which has led the basic loss ratio to shift upwards somewhat structurally as well. You will have heard me say in the past that if we find business that has a good balance of risk and return, we will not hesitate to write it even if it drives the combined ratio higher.

I should also mention that the normalized combined ratio in Q2 has been adjusted for some one-off effects that are either temporary or relating to past periods and which I do not believe represents the underlying business performance. And that, in total, accounted for approximately 1 percentage point in Q2.

Looking ahead, we would expect the 82% to continue trending upwards over the remainder of the year, albeit at a more gradual pace as the renewal impact now also for July continues to earn in and also as the large transaction I referred to a moment ago grows in volume.

At this point, I would also like to comment on top line. Christoph already mentioned in his remarks that we now expect insurance revenue in the reinsurance business field to be EUR 2 billion lower than the original guidance of EUR 40 billion. I mentioned it at this point in my remarks because this reduction is largely attributable to P&C reinsurance, where in the first half of the year, revenue declined by EUR 1.4 billion versus the prior year period. Roughly 1/3 of the decrease was driven by currency movements and NDIC-related accounting effects. Above all, however, it is the result of disciplined underwriting decisions, which were taken to protect the profitability and quality of the portfolio.

The new revenue forecast does still imply a stronger second half year compared to the first half, including the continued earn-in of the new structured transaction in P&C Re that I mentioned a few minutes ago. But importantly, this adjustment to the top line guidance does not affect our earnings outlook for the year. So all-in-all, with a combined ratio for P&C Re of 67.9% after 6 months, we are heading with tailwind into the hurricane season.

I now conclude the reinsurance part of my remarks with Global Specialty Insurance, which delivered a pleasing result in Q2. On a reported basis, GSI revenue declined by around 3% compared with the first half of 2025. However, adjusted for currency and NDIC effects, organic growth was positive and was closer to the lower end of the range of 5% to 9% that we had talked about for the Ambition 2030 program.

The combined ratio of 88.9% was largely in line with expectations. And with the first half year combined ratio of 86.3%, we are well on track to meet our full year guidance in this segment as well.

Coming now to the primary insurance business field of the group, ERGO delivered a strong net result of EUR 321 million in the quarter, so far above the pro rata run rate and with a significant contribution this time from the strong investment result. ERGO Germany contributed EUR 235 million out of the EUR 321 million that I just mentioned.

In German P&C, we achieved good technical profitability and took a more prudent approach to reserving in order to continue building balance sheet strength. And I would say also that it was the P&C segment, in particular, that benefited from the strong performance of private equity investment.

Life and Health in Germany developed in line with expectations as did the CSM release rate of about 2% and the result from PAA business. The CSM stock remained at the year-end 2025 level, reflecting positive operating changes and growth in the Life new book.

The ERGO International business achieved a strong net result of EUR 86 million. International Life and Health was in line with expectations, showing a stable high CSM release and new contracts added driven by Spain and by Belgium Health.

In the International P&C business, the technical profitability and combined ratio were overall within the range of expectations with especially pleasing performance in major markets like Poland and Spain. Also, ERGO NEXT is progressing well in business development and integration.

Finally, a remark on the group's economic solvency position. It remains very strong. The ratio under Solvency II increased to 304% in Q2, driven by the very pleasing operating performance I have just described, and our economic earnings were even significantly higher than the IFRS earnings in the quarter.

With this, I'm at the end of my opening remarks. Christoph and I look forward to answering your questions. But first, I hand back to Christian.

Yes. Thank you very much, gentlemen. We are now very much looking forward to your participation, the analysts, in this discussion. However, I would like to ask you not to ask more than two questions per person. If you have additional questions, then just please join the queue again. And with that, we can go ahead. Thank you.

[Operator Instructions] We have the first question coming from Shanti Kang from Bank of America.

So it was really on the reinsurance revenue guide. I've heard your comments now that this is more of a directional ambition. So for that EUR 38 billion for the full year, that sort of implies an acceleration in the second half for revenue. I'm just curious to understand what would drive that sequential improvement in the second half of the year. Would that be from the Life and Health transactions you mentioned, perhaps GSI or structured one-off? I guess I'm trying to work backwards from you actually setting the new guide at the EUR 62 billion or EUR 38 billion. You clearly set that with some purpose, and I'm curious what the execution risk is to that, I guess.

Shanti, it's Andrew here. I'll take your first question today. So I think you've gone quite some way towards answering your own question already. When looking at this guidance, we did carefully look at what was in the pipeline, as we always said we would do. And indeed, on the Life and Health side, I'm cautiously optimistic. Christoph mentioned that we'd written a couple of things already that are going to -- we are pretty sure will come into the books in the second half of the year, whether it's Q3 or Q4 might depend on regulatory approvals and things like that. But also the pipeline is relatively well stocked. And I'd say we have a few things with pretty decent probability of closure. So I think there is some upside potential there.

And then on the P&C side, and I said clearly, this is where most of the, let's say, the sliding, the deterioration has come from in terms of revenue outlook. Things have been balanced out somewhat by the large structured deal that I mentioned that came in, in Q2 that wasn't known to us upfront and which has balanced things out.

So we've looked at the upsides and the downsides. And I think my personal opinion is EUR 39 billion would have been aggressive. I think EUR 38 billion now looks like a very sensible, reasonable and achievable number where I would maybe even go so far as to say we have a good chance of meeting. So I feel -- trying to help you calibrate, you're trying to get a sense of confidence level, I would say I feel good about the EUR 38 billion. I think that's quite a solid number now.

The next question comes from Andrew Baker from Goldman Sachs.

First one, just on the P&C Re core. I guess on the normalized combined ratio deterioration in 2Q, are you able to provide a split between the impacts from the large structured transaction and the renewal impacts?

And then I appreciate the guidance for the rest of the year, upward pressure around the 82. But as we think about the combined ratio into next year, are you able to give us a sense of how you're sort of expecting renewals to earn through there? And then is there anything we need to take into account in terms of a reduction in large loss budget given property XL volume reductions or any offsetting factors?

And then secondly, in ERGO, there was no change to the EUR 24 billion insurance revenue guide for the year. This implies pretty sizable growth, I think sort of 15% plus growth in the second half year-on-year. What gives you confidence in achieving this one? Is there some sort of next reinsurance recapture? Or is there something else that gives you the confidence there?

Thanks, Andrew. I wasn't exactly counting. I think you may have snuck 3.5 questions in there, but they do fit together as a package. So I will tackle them first. I think on some of the more commercial aspects on renewals, it might be that Christoph will have more to say about those perhaps later. But let me just try and address the finance aspects of what you just asked.

So on the normalized combined ratio, I'm going to have to disappoint you a bit here. I think I don't have an exact breakdown between the renewal earn-in and the new structured deal, how much each of those contributed. Put it this way, they're both significant enough that they were both worth mentioning. I wouldn't mention things if it was just moving by 0.1. So they're both meaningful, but I don't have an exact breakdown for you.

The combined ratio into next year. And here, I perhaps can best give you only a partial answer. Because clearly, we need to go through our full planning process, which is -- has started, but it will only conclude much later towards Christmas. And then we'll see what business we have on the books and the mix. And we'll obviously have to position ourselves a little bit also with respect to how we see the market shaping up for next year as well. And we might have more insight after Monte Carlo and after renewal negotiations have started ahead of 1/1. So we'll know much more towards the end of next year.

And I wouldn't really be able to commit to anything until then. What I would say is that the large structured transaction that I mentioned will continue to earn through most of next year, even in its current shape. So I would, therefore, suggest the structural uplift that started to flow into our Q2 numbers, I think, is going to accompany us through next year. And so whatever combined ratio we come with, I think, will probably, therefore, be -- well, by definition, will be a bit higher than what we would have done in the absence of that deal.

Coming to your specific question about the large loss budget, I think you very astutely have identified that there is a certain business mix shift that has taken place. And what I would say to you is that the 18% large loss ratio that we're currently using in our normalization calculations is probably now with the benefit of hindsight, a bit on the strict side, because our mix is certainly more towards proportional and more towards less cat-heavy business than I think we envisaged.

Now we try not to mess around with that during the course of the year. So we're not going to change the rules of the game on how we do the normalization intra-year. But I think we will need to look at that again, and I'm not sure yet where it lands. But as I said, I would say probably there's more downward pressure on our cat ratio as a proportion of premium or our outlier ratio as a proportion of premium. So the 18% sitting here today is probably a bit high and a bit harsh in ourselves.

And then lastly, you're absolutely correct. At ERGO, the run rate is currently behind where it would need to be because you would need to do EUR 6 billion a quarter to get to the EUR 24 billion guidance for ERGO. And the first factor that you mentioned is absolutely correct.

So ERGO NEXT, firstly, continues to grow. And secondly, is in the process of internalizing much of the reinsurance that was previously placed externally. So that's absolutely true. I would have a couple of other examples for you. The one is that our Chinese Life business within the ERGO Group is going to be brought into our consolidated results for the first time. And so there is premium there that would not really have been separately visible to you in the past that you will start to see in the second half of the year.

And then the last example that I would have top of mind is our acquisition in the Baltics where we took over the Gjensidige business, where you will also start to see some premium coming through in the second half of the year. So I think we have a few reasons there to be optimistic that the EUR 24 billion is still a realistic number.

The next question comes from Kamran Hossain from JPMorgan.

Two questions from me. The first one is on -- I mean, last quarter, we got into really kind of deep discussion around what the earnings in Munich Re look like and what letter that implies. I don't really want to get into the conversation today. But just really interested in, given the very clear weakness in P&C Re versus where you thought you were going to be at the beginning of the year. And I appreciate that your net income target is a combination of volumes, which have been weaker, but also a combination of margin assumptions as well.

But what do you think at this stage you can do to keep the earnings up? Do you think the share buyback that you've been ticking up each year needs to be bigger sooner on the 8% earnings growth? Or just maybe that's something we'll come back to. But do you think that's something you probably need to kind of pull the trigger on quite soon, kind of this year-end, et cetera, making it bigger to kind of keep the -- some earnings momentum in the business?

The second question is on, I guess, where you are year-to-date. You've hit 60% of your earnings target. And I think as you both alluded to and as I think everyone can tell, there's been some good luck in the results. So kind of very light nat cat in Q1 and Q2 and some other kind of benefits coming your way. I would assume that EUR 6.3 billion, once you get there, you will probably try and put bits and pieces away in the balance sheet to use it at a later date. What will be the plan if you just hit a normal run rate of kind of losses, earnings in kind of Q3, Q4? Will this be put away for a later date? Or what will you do with that?

Kamran, thank you for your questions. I'll take these. Yes. I mean, you said that you didn't want to go into all these linear versus U-shaped kind of earnings development pattern discussions. And I think it's the right thing not to go into these discussions, if I'm honest, because for the midterm target 2030, we very deliberately have relative targets with return on equity and with earnings per share growth, as you, of course, know, which gives us an additional lever. And the additional lever is indeed capital management, as you also already outlined in your question.

So we are more than conscious of that fact. I mean, we -- as a matter of fact, we set these targets knowing that we had that additional lever. And I said in my introductory remarks already, we knew that we were going into a softer phase of the market when we came out with our strategy already in December. So that's all not a surprise.

So therefore, coming back to your questions, yes, of course, we have that lever, and we are 100% willing to use that lever. And we'll discuss that in the remainder of the year depending on the result development. I mean, the hurricane season just started, who knows where we're going to end.

And also looking at the business development, looking at volumes, looking at potential growth of our risk capital towards the year-end and where do we stand with solvency, but also with other restrictions we have. So all this has to be considered.

But having said that, of course, yes, we are aware of the additional lever, and we might use it 100%, which brings me back to the very nice question, what we would do with all the money we make if we would make it at year-end, which is a great question. Let's await the hurricane season first. And there is this German saying, I'm not sure if that exists in English as well, that you only distribute the bear which you -- after you hunted it. So we are still in a hunting phase here. I'm not sure if that same saying exists in English.

I think at least it's a new one for me. I will Google it straight after the call.

But more seriously, I mean -- I mean, of course, looking at the revenue development, we would -- I mean, as always, set the assumptions in our balance sheet in a conservative way. We always did that. You know the reserve review is coming up towards year-end. So we will look into all the levers we have and then take a diligent and as always cautious decision in that respect. And we might use potential, which we then might have or not depending on the season. So you know us well. But yes, it's too early to talk in more detail about stuff like that.

The next question comes from Ivan Bokhmat from Barclays.

My first question would come on the Life and Health Re results. I mean, clearly comes ahead of the run rate, and we see strong growth in transactions. I was just wondering if I could ask you about those new transactions. How do you think about this new business in terms of margins? And also, I've noticed that you've been quite into LTC transactions, the ones that have been announced. How does that fit with your well-defined risk appetite, that you were talking about? Because I think this one, in particular, is a stand-alone LTC.

And my second question is just on the investment income. I think, Andrew, you've mentioned that the reinvestment yield is nicely up to 4.3%. So that's 90 basis points above running yield. How do you think about the shape of this being reflected in the running yield in coming years?

Ivan, I'll take the first one. Large transactions and specifically LTC. We wouldn't write large transactions if we were not satisfied with the economy behind these large transactions, which is always a risk return perspective, we are taking in light of the book as we have it overall in our book also including densification and similar things.

Maybe more specifically then to LTC and you're referring to one transaction which has become very public also. In the normal course of business, and many of you are aware of that, we have very little appetite for LTC as a stand-alone business, and that's unchanged. But then, however, we evaluate current and future client partnerships holistically, of course. And we are also willing to work always with our clients to explore and customize solutions on our business relationships while achieving, as I said, appropriate returns on the business and the inherent risk. I mean, this is a general strategy.

Now more specifically -- let's be open, on Manulife, the one transaction which is public. When I look at that transaction, we considered the relationship over the course of the last 50 years with Manulife and our expanded partnership going forward. That's part of our view on the business. And we also looked, of course, at Manulife's track record in how they manage that business organically. And so this transaction is just another example of how we can partner with clients and then a number of multiple ways to address clients' needs and also meet our objectives.

And so therefore, it's -- I mean, this is a very specific business with Life Re. It's not one size fits all. Each single transaction is different. But we do have the expertise, we have the teams. We have also the transaction certainty, which you need to have to make these things work. And so I think we can be very proud on what has been achieved and we say, very satisfied also with that.

Can I make a small follow-up on LTC, if possible? Maybe you could talk about the experience variances over the past, let's say, year. Mortality has been positive. Has there been any offset from other elements that are noteworthy? Sorry.

We don't break that out, but you can see overall the variances are positive this year.

And Ivan, it's Andrew speaking. I will come back to your other question, which is about investment income. So indeed, as you pointed out, the reinvestment yield in Q2 was very good, 4.3%. I probably would want to manage expectations a little bit, but I'm not sure we'll be able to show 4.3% every quarter. That is one of the more volatile numbers we have. Some quarters, we have lots of cash to reinvest. Other quarters, we have rather little.

So 1 or 2 positions taken can sometimes swing the number a bit up or down more than you would expect. It probably also depends quite a bit on the particular mix of currencies that we need to reinvest in a particular quarter. I think at the moment, if we're doing a lot of U.S. dollar reinvestment, that probably helps because of where yield curves are.

So I would want to perhaps just sensitize you a little bit to the fact that the reinvestment yield itself can certainly fluctuate a bit from quarter-to-quarter. But we have benefited from higher interest rates. And I think that does give me some optimism that we can continue to show at least a good reinvestment yield in the coming quarters, because as Christoph commented earlier, our colleagues have been finding, I think, decent opportunities offering reasonable yield.

So then coming to the question of running yield and how that now translates. The running yield that we showed in Q2, which was the 4.0%, I think I won't say it's artificially high, but it clearly was helped by a couple of specific factors. The one was the catch-up effect on the inflation-linked bonds, which I talked about already in Q1 in sort of mitigating why the result wasn't very high in Q1. And I'm delighted to see that, that catch-up effect has come through exactly as planned.

And then secondly, our dividend portfolio -- sorry, our equity portfolio does include a pretty reasonable portion of European equities paying dividends in Q2. So we do have the seasonality of the dividends coming through. So that's why I would want to say 4.0% on the running yield is probably higher than, let's say, a through the year underlying rate at the moment. But I also feel we should hopefully be generally achieving something a bit higher than the 3.5% that we had back in Q1.

So the -- let's say, the completely normalized through the cycle underlying running yield is probably somewhere between those two numbers, if you want to pick 3.7% or something like that, that might be a more reasonable guess. And I think then given that differential between reinvestment yields and running yields, I'm cautiously optimistic that we will continue to show over time the uptick, perhaps 10 to 20 basis points, that kind of range as the reinvestment yield helps to pull the running yield upwards.

The next question comes from Will Hardcastle from UBS.

Is it possible to get any more color on this large structured transaction, whether it be sort of annual revenue impact, the type of risk level of capital intensity and whether it can go beyond 2027? I mean, my very quick calc would, it sounds like you're saying it's sort of at least 0.5 point maybe on that combined ratio impact, which maybe implies as much as 5% of your annual P&C revenue, but it could be way out. Any help, you don't need the exact numbers, would be useful.

And then just thinking about how you manage those client relationships, bigger picture strategy-wise with this level of volume declines. You've clearly walked away from plenty of business correctly when it's not meeting return hurdles. But is there a limit to how much tactical business you're able to walk away from? And so anything sort of balance of how much of the book is structural versus tactical would be really helpful.

Okay. Well, I think on the first question, it's Andrew here. I'm sorry to disappoint you. We really can't give you much more on that. It is a special situation. We can't really go into individual transactions with clients that I think might be separately identifiable if they haven't already been released to the market.

The only thing I can offer you is in terms of earning period, even as the transaction stands today, realistically, I am expecting earning through 2027. I don't think there's much of a tail into 2028. There might be possibilities to extend that also by mutual agreement. But I think we would make that decision when the time comes.

Yes. Will, I'll take the more general question, tactical versus client relationship, I would summarize it. And well, it really is case-by-case. Each individual client is different. And so we have client strategies. And with clients where we have long-term partnerships, of course, we stick with those clients. And it's a trusted collaboration also in softening market environments as it is also in hardening market environments.

And we jointly with the clients work on the program, on the structures, on the terms and conditions, on the pricing, all in a very friendly long-term oriented way, I would say. And that wouldn't change also not in an environment like where we currently are, because this is really meant to be long term.

And by the way, this is one of the really big competitive advantages we have with our strong capitalization, what we can offer our client is that even after the biggest possible cut events, we are still there and offering higher capacity if needed. We could double capacity in those situations where the need is highest for clients. I'm not sure if many other players in our market are able to do that. We can most certainly. So this is really one of our biggest strengths.

Having said that, of course, there is also markets, clients who are looking at reinsurance in a much more tactical way, much more short-term oriented, much more opportunistic. And with these kind of relationships, of course, I mean, already to protect ourselves, we need to act similarly opportunistic or tactical sometimes. And we do. And we are fine with that as well, and we are serving these clients as well.

But there, obviously, also our perspective cannot be as long-term oriented as it is with our long-standing partners. And so as I said, it's really client-by-client. It always depends very much on also what the client wants from us, how the client sees the relationship. And we are really able to mirror whatever the client wants to see in us to offer that. And yes, very happy to serve all clients really with a very long-term perspective.

Can I give you numbers? Can I give you a split? I think that was the last part of your question. I'm sorry, I can't. And I'm sorry, I cannot go in, and I would not even have those aggregated numbers. But of course, I mean, a lot of our business is really based on these long-term relationships.

The next question comes from Iain Pearce from BNP Paribas.

The first one's just coming back to the LTC deal with Manulife. If you could just give us a bit more color on the sort of exact risks you're assuming? Are you just taking full ownership of all the reserves, assuming all the risk associated with the long-term care book? Or are you just taking portions of the risk on that LTC transaction?

And just on GSI and the sort of slightly low run rate versus the midterm target on the top line growth FX adjusted, could you just give us a bit of a breakdown on the sort of subsegments within GSI and sort of which ones are running above or below plan? Because we're hearing quite mixed messages on some of the pricing data that we're getting on specialty lines at the moment. So just trying to get a feel for where might be above or behind expectations.

Iain, on the LTC deal, I can make it very brief, if you want. I mean, there is a press release out there on that deal where you find all the details which we can talk about publicly. And there's not really anything else we would like to comment publicly. If I summarize at very high level, it's a proportional treaty. And in that respect, the structure is not very, very unique. But yes, you can Google it, you'll see it. And I think all the details are in that structure.

GSI, Andrew, are you?

Yes, I can take the question about GSI. So the subsegments. So Iain, you will obviously be able to see the revenue breakdown for the 4 revenue-producing units within GSI in our slides. So you can see the status as of today.

In terms of then growth rates going forward, I would say to you, areas that are more likely to produce growth at the moment are Hartford Steam Boiler, which continues to do very well in the equipment breakdown market. I would also mention in Global Specialty global markets, so the international business, we are establishing a footprint more in Continental Europe in some lines of business like surety, where we have been underrepresented in the past. And we are even expanding into Australia and other areas like that, where we're underrepresented.

So we have some examples like that. In the North American excess and surplus lines market, we obviously have to be more discerning now as that market becomes more challenging. But for example, just to take one recent example, the colleagues have released a new real estate professional liability product. So there is still white space in some areas of the market where I know that our brand name is very welcome and our capacity is very welcome and which we probably have been punching under our weight up until now. So those are certainly some areas where I would see growth possibilities.

The next question comes from Vinit Malhotra from Mediobanca.

I have one question on the structured transaction you talked about and one on specifically on the July renewals. So just trying to understand where the structured transaction sits in the Q2, because I mean, even in the July -- so is it that it's been fully taken up in the July renewals that will be earning through and a very small effect in Q2? If that is the case, then has it affected the normalized in Q2 or not really that much. So it's just trying to understand where this very large structured transaction sits.

And the reason I also ask is because Slide 6 does have this one-off transaction mentioned in the last paragraph, but I'm not sure whether this is the one you mentioned -- you're referring to.

And then just on the Slide 7, the property proportional, I mean, we saw your peer yesterday grow a little stronger there, whereas you've been a bit more -- even now a bit more cautious here, it looks like from the double chart. And I'm just curious whether -- is there any major differences in proportional property risk that you're seeing compared to other players in the market?

So Vinit, let me start. It's Andrew speaking, because I think let me try to help clarify the impacts of the structured deal. So first thing to say is that it's not in the July renewal report. So it's a rather special one-off deal that began intra-quarter. It was by no means -- Sorry, we have an echo, apologies. I think it's sorted now.

So it started intra-quarter. It wasn't part of the renewals campaign or renewals negotiations or anything like that. And I think if we had included it in the July renewal reporting, it would have completely distorted things. So you can say it's not in there, okay? So you can basically say that the July renewals are kind of clean in that regard. They represent what was happening in the market and in our book sort of excluding the large deal.

However, we did start to earn revenue from this large deal in Q2. Therefore, that deal has started to affect the combined ratio. Given the nature of the deal, it's pulling the combined ratio upwards. And we have not done anything to normalize that deal out, which means that it has pushed the headline combined ratio up, and it has also pushed the normalized combined ratio up by the same amount. So we have not done any normalizing with regard to that large deal.

I'll take the property proportional question. Obviously, I can't comment on the market on peers. What I can say on our book is that we had only very small movements across various regions in property proportional, which then added up to this slightly negative volume development you can see on the slide. So all-in-all, I would even say rather stable when it comes to volume and a bit of a price change, as you can see on the slide as well, but not really spectacular.

The next question comes from James Shuck from Citi.

My first question on the P&C Re normalized combined ratio, so we're around at the 82% level at the moment. You mentioned that you expect that to kind of trend up slightly for the remainder of the year. So if we kind of land at about 83%, 84% and then you still got the deal to come in. Next year, we're looking at probably the earn-through of the rate reductions year-to-date and then whatever the renewals bring in next year. We're looking at a kind of normalized level that's kind of well above the 79% to 83% that you're guiding for. And I appreciate that's 2030 target, and you've been clear that you will operate outside of that in the near term if you have to.

My question is really, what's to kind of stop the reported normalized combined ratio trending up to around 86%, 87% next year? Will you look to manage that through whatever levers you've got available? I'm thinking about kind of loss picks and the rest. That's my first question.

Then secondly, and if you're unable to answer this one, then perhaps I get a chance with the third question. But I just wanted to ask about ERGO International to NEXT. So you did EUR 337 million of gross revenues at 1H. Please can you tell me what the -- what Munich's underwritten share of the MGA revenues was at 1H, and how that will trend through the rest of this year and into next year? And if you're able to tell me what a look-through combined ratio for next year is too, please?

So James, it's Andrew speaking, and I will attempt the first one. So you are rightly saying that the normalized combined ratio will trend upwards for the rest of the year. Indeed, I said that. And that upwards trending includes, obviously, both the earn-in of the renewal results and it includes some further volume expansion of the structured deal that I just mentioned. And I don't know yet where the normalized combined ratio will land relative to an 83%.

I think you correctly pointed out that, that corridor of 79% to 83% relates specifically to the 2030 year. And we did not say precisely what the trajectory would look like between now and 2030. I have previously said and you may have heard me say that I had no concrete knowledge or expectation that we would go above 83% on the journey or at least my base case wasn't that we get there.

I would have to concede at this point, it has become somewhat more likely because even if you set aside the renewal results, this large structured transaction has changed the game a little bit. I mean, it has brought about a bit of an upward structural shift. And I think we will need to look at that very carefully in our planning process and thinking about the guidance for next year. And I really don't want to preempt that guidance for next year.

But what I can at least say is, we do not plan any change in our reserving philosophy or regime in order to mitigate the effects of the cycle. So we would not, let's say, compromise on the current level of conservatism that we have in our loss picks, which we think is about right to sort of engineer the outcome. That's not in our plans.

The ERGO NEXT question, to start with, of course, we expect ERGO NEXT top line to increase significantly, and there are 2 drivers to that, as you know. One is the strong organic growth by, for example, enhanced product categories, enhanced sales activity, sales success, but then also the additional internalization of business onto the own balance sheet.

I can't give you the exact split. And what you see in the revenue number as we publish it is, of course, only the revenue which we have internalized already. I can't give you the exact split. What I can tell you is that this internalization has started is ongoing, but it will take another year or 2 years until the entire business is finally all booked in our own P&L.

The next question comes from Emanuele Musio from Intesa Sanpaolo.

I just have a quick one. So it is on the reinsurance pricing that appears to be further into the softening cycle than primary pricing. Do you see a risk that primary pricing catches up over the next few quarters? And if primary margins start to compress, could that drive higher session rates or greater demand for insurance protection, ultimately putting a floor under insurance pricing? So you -- do you have any data point pointing in this direction?

Well, I'm not sure if we are the best one to be asked. I mean, our clients have two options basically. If the price with us goes down, they can internalize the margin or they can pass it on to their clients and use it to reduce price. And I think both is already visible in the market depending on where the market is and who the client is. I wouldn't really see that as a source for additional softening in the reinsurance market, if this is the question. But we'll see how the development goes and how primary reinsurance will react, but you should probably ask them rather than us.

The next question comes from Henry Heathfield from Morningstar.

Just one for me actually. Looking back at first quarter 2025, obviously, there was a rather a large nat cat impact from the L.A. wildfires. It looks to me like the European wildfires, well, the LA wildfires burned around 10% of what the European wildfires have burned is around early August. But potentially European wildfires are around 10% of the economic damage. I was wondering if you could kind of illuminate a little bit if that's what you're seeing so far, whether that's a good way to think about it or you're seeing something else?

So Henry, it's Andrew Buchanan speaking, and I will attempt this one. There's obviously a broader societal issue that we are seeing hotter weather and wildfire risk going up, and it's very important that the insurance industry plays its role in mitigating that, both primary and reinsurance, and we absolutely stand ready to do so.

But I think coming quite quickly on to the financial impact. The events, particularly in Spain, and France that we've seen recently are still ongoing. I think losses are not clear yet, not stable. And I think we will need a bit more time to really get a feel for that. But at least so far, I would say to you the potential for economic losses and thereby insured losses does appear to be, let's say, of a lower order of magnitude what we're seeing in France and Spain because quite a lot of the fires appear to have been burning in clearly non-urban areas, I guess, more forested and rural areas, although tragically, I think some hamlets and villages have been affected.

But certainly, the damages that flow through to the insurance industry, I think, first and foremost, are heavily linked to the value of property that is affected. And so it was an entirely different scenario in Q1 of last year where you have incredibly high-value homes in places like Pacific Palisades, and there was the Eaton fire as well, which I think was quite wealthy parts of Los Angeles, where the value of the insured property that was affected was really remarkable.

So far, that doesn't appear to be the case in the fires that are burning in Europe. And it would appear to us at least that our exposure to other kinds of losses like agricultural type losses or, for example, if there had to be evacuation and relocation costs if an urban area had to be evacuated that we don't have such major exposures in that area. So at least at this stage, there's no indication that those events are going to be sort of quarter impacting events that will have a big impact on results.

Beyond that, I would really stop short of really attempting any kind of quantification. We would need a bit more time to assess that. But I think it certainly goes -- it also goes back to the general point about insurance penetration and how important it is that we strive for higher insurance penetration to be able to stand behind people when they suffer losses from events like this.

The next question comes from Jochen Schmitt from Metzler.

Just one question on the investment result in Life and Health Re as well as in Global Corporate Specialty. You reported slightly negative fair value changes for these 2 segments. So my question is, is equity exposure here close to 0 and/or which asset classes caused this slightly negative fair value change in Q2?

So Jochen, the first thing I would say to you is that the investment results that we show for each of our segments individually isn't really so much a function of the business strategy of each of those divisions. It is rather a function of which assets we happen to be holding in which legal entities. And those then get allocated to the segments that use the balance sheets of those legal entities.

So if you do see a small negative fair value change, for example, in a particular segment, it isn't really because that segment did something wrong or did something on the business side. It may be just simply an idiosyncratic choice that our investment managers made about which assets to hold where.

So I think you mentioned Life and Health reinsurance in particular, and the minus EUR 6 million fair value change that I just found on the slides that you referred to. I would say in the grand scheme of things, that's an extremely small number in our overall portfolio. It might just simply be a mark-to-market on one individual position somewhere, which I wouldn't know off the top of my head, I'm afraid. But I would encourage you probably to look much more at the overall investment result, at least of the 2 major business fields.

Okay. Just a follow-up, if I may. I appreciate that this is a very -- or yes, a very low negative number, no doubt about that. Nevertheless, is it right to conclude that the vast majority of your equity exposure within the reinsurance segment is allocated to Non-Life Re. Would that be the right conclusion to take?

Yes, that would be correct. So going back to what I was saying about legal entities, it is the case that we hold relatively more, in fact, probably the majority of the riskier assets that are going to fluctuate more in entities that are heavily backing the P&C reinsurance segment. And all else being equal, I would expect the investment result for GSI and for Life and Health Re to be less volatile and therefore, probably on average, a touch lower as well. Directionally, that would be correct, what you said.

The next question comes from Ben Cohen from RBC Capital Markets.

I just wanted to ask, firstly, given where we are in the year and how much of your P&C Re book presumably has already been written? How much confidence does that give you in the new revenue guidance that you've given? I appreciate you don't split out P&C and you were saying there might be a bit of an offset on the Life and Health side. But what would you see as the kind of major variability there?

And my second question was on GSI. I guess, the expense ratio was a bit higher in the quarter. But given what's going on in those various markets, would you say that there is underlying upward pressure on the combined ratio that you're going to report in kind of coming quarters and into 2027?

Right, Ben. It's Andrew here. So firstly, confidence in the revenue guidance, the EUR 38 billion now. I would say my confidence is good or it's strong. So we looked carefully at the upsides and the downsides that we have. And we think that the EUR 38 billion gives us a very solid chance of meeting that updated guidance. As you rightly pointed out, we've now finished all of the material renewal dates, which means we have significantly more certainty already than we had in Q1.

You asked where would the variability come from? So there's perhaps one point I would bring to your attention, and we've maybe discussed this a little bit in the past as well, which is that on all of the proportional treaty reinsurance business, it's all very well to go through the renewal dates and to essentially agree the price with the client. But the clients themselves don't know yet exactly how much business that they will write. And even though we know the proportional percentage that will be ceded to us, we, therefore, of course, also do not know exactly what the absolute volumes are that will end up with us.

So there is always going to be that kind of uncertainty where we are a little bit coupled together with what's happening in the primary market. And then there are some parts of our reinsurance business even in P&C that sit outside of the treaty renewal seasonality. So in particular, our facultative business and large corporate business, which is much more looking at individual large single risks that would be presented to us sort of whenever they need to be insured, which doesn't necessarily come with a renewal date.

So those are some reasons also why there is still some variability left for the rest of the year. I said earlier on Life and Health Re, the pipeline does actually offer some potential for upside there, too. But we consider those upsides and downsides to be quite nicely balanced at this stage. And certainly, I think the code of uncertainty has narrowed compared to where we were in Q1.

On the GSI expense ratio, what I would say to you is that the overall expense ratio for GSI is weighed quite heavily by acquisition costs. So basically commissions that we would then be paying to the distribution network, the wholesale brokers and other participants in the chain. And those have been relatively high recently. So it doesn't necessarily represent us becoming less efficient in terms of our own administration costs.

Having said that, I think your perhaps second and more important question about GSI was whether we saw necessarily an upwards pressure, an upwards trend on the ratio and that we don't currently see. So I think our colleagues also in GSI are doing a good job in navigating the market and defending profitability. And we've been managing to deliver combined ratios just a little bit below the 90% guidance that we have. And my personal feeling at the moment is that's quite a fair and reasonable reflection of what the business is delivering. And we don't have the sort of relentless mechanical upwards pressure of earn-in that we have in P&C Re coming from the renewal dates.

The last question comes from Ivan Bokhmat from Barclays.

Sorry for dragging the call so longer, but I have twp small follow-ups. The first one on ERGO International. I noticed that on Slide 24, you're showing the U.S.A. combined ratio of 88.6%. Is that next? I mean, this is a level that's actually lower than I would have thought for a start-up. And is that the combined ratio that you anticipate the business will run at?

And the second question is related to Middle Eastern losses. I think the industry loss estimate has now increased after the recent spout in facilities, maybe to EUR 3 billion, EUR 4 billion. And I think what you've disclosed last time was under EUR 100 million, which is a lot lower than what your share of the typical large man-made would be. Is there a way to think about this differently?

Right, Ivan, it's Andrew. I'll take those. So on ERGO International, the short answer to your question is yes, the 88% is Ergo NEXT. I'm conscious that we've delivered or they have delivered that combined ratio 2 quarters in a row. I also agree with you. I think that's really a good number at this point in their development. So it's pleasing. But I would actually take this opportunity to manage your expectations a little bit now that you've asked the question.

I think we've had two good quarters there, but we don't yet consider the 88% to be the new normal that you should expect in all quarters. I think we are at a point where we're probably going to make underwriting profits more often than not, so below 100% combined. But yes, please don't hold us to the 88% as the new normal. I absolutely think we could see higher combined ratios in the coming quarters.

And I would also say in this regard that the overall breakeven point of NEXT has not moved forward. So we are still saying that, that would be by the end of next year. And when I say overall breakeven, I mean, the sort of bottom line net result not being negative because we are still -- and NEXT is still investing quite significantly in its capabilities. And so there are, in particular, expenses as well as income, by the way, MGA income, that is outside of the technical results and outside of the combined ratio that are not captured in the 88%. So we still have some way to go. We are not declaring victory yet. But of course, the 88% is encouraging, and I'm quietly pleased with it.

On industry loss estimates, and you were breaking up a little bit in the first part of the question, but I think you were talking about the Middle East and the Strait of Hormuz, is what I think you were asking about. You're right, industry loss estimates might be creeping up. For us, we really keep a watching brief on this. And we don't think with our book and with our exposures, there would be any reason to do anything more after the EUR 90 million that we booked in Q1. So for us, at the moment, it's rather stable.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christian Becker-Hussong for any closing remarks.

Yes. Thank you very much to all of you for your questions. If you have further questions, please don't hesitate to get in touch. Otherwise, hope to see all of you soon. Have a nice remaining summer and all the best, and have a nice weekend. Bye-bye.

Ladies and gentlemen, a very warm welcome to the media conference of Munich Re for the financial figures in Q2 and for the half year 2026. Munich Re's CEO, Christoph Jurecka; and CFO, Andrew Buchanan will present and explain the results to you. And afterwards, we are happy to get your questions. The conference call will be streamed live on our web page, munichre.com, and the recording of the presentation can be found there later today. Conference language today is English. With this, I hand over to Mr. Jurecka.

Well, thank you very much, Stefan, and yes, good morning. It's a pleasure to present such excellent results today. Let's start immediately at Page 4. And as you can see on that slide, we deliver on our promises. Munich Re is firmly on track to achieve its full year targets as it has consistently done in recent years. With a net result of EUR 3.9 billion in the first half of the year, we have already achieved more than 60% of the full year net income guidance.

To be fair, we benefited from low major losses and a strong equity market performance. However, these results at the same time, reflect the continued strength of the underlying performance across our business segments, which I will discuss in more detail later. This performance translates into a return on equity of 23%, comfortably above our Ambition 2030 target of more than 18%. After only 6 months into the new financial ambition, I'm fully confident that we will deliver on our medium-term targets despite the current headwinds in P&C reinsurance. My confidence is underpinned by the strength of our businesses, which are largely insulated from the P&C reinsurance cycle.

Slide 5 illustrates that the growth in GSI, in Life Re and ERGO more than offset the revenue decline in P&C reinsurance on a currency-adjusted basis. We will continue to expand their earnings contribution, enhancing the diversification of our earnings profile and further strengthening the resilience of our financial performance over time. GSI is actively shaping its portfolio to capture opportunities in attractive specialty markets, while Life Re and ERGO are delivering consistent earnings growth for quite some time now.

And while P&C reinsurance contributed around 50% of our half year earnings, the strong performance of these businesses gives us greater flexibility to manage the reinsurance cycle more strictly. We can afford to walk away from business where pricing does not meet our profitability requirements. Disciplined underwriting remains essential to maintaining the quality of our portfolio and navigating a temporarily more challenging market environment.

Across the group, management incentives are not driven by top line targets. In many cases, foregoing business is preferable to writing business at inadequate terms, while we, of course, value long-term client relationships. Accordingly, our insurance revenue guidance should be understood as a directional ambition rather than a hard target.

And this brings me already to the July renewals on Slide 6. Our discipline was evident again in the July renewals, where we manage the portfolio consistently to optimize the risk-adjusted returns. We withdrew from business with inadequate profitability, particularly in the XL segment, partly offset by new business opportunities in proportional and nonproportional business. Overall, volume declined by around 9%, however, largely driven by the overall price decrease of 5.5% and a further material reduction in U.S. casualty.

The reported price change includes a negative business mix effect of around 1 percentage point due to an increased share of proportional business. In essence, we saw no acceleration in rate softening compared to the April renewals. Pricing in XL business moderated by the same amount by slightly higher declines in proportional business reflected the higher starting profitability in those markets renewing in July.

In the casualty business, specifically, we have not accepted a meaningful increase in ceding commissions, but we are still concerned about loss cost trends being greater than rate increases in the primary insurance markets. Importantly, market discipline was largely maintained with structures and earnings holding firm. Overall, the market environment remains still quite attractive and continues to offer healthy margins for the risks we assume.

Maintaining the discipline requires the flexibility to redeploy capacity swiftly across geographies and peril. Munich Re has a clear competitive advantage in this respect, underpinned by strong capitalization, the global footprint and deep client relationships. The bubble chart you can see on Slide 7 illustrates how consistently we manage the portfolio. We are prepared to reduce or exit business where the pricing does not adequately reflect the underlying risks, but we also maintain business that comes from a very good level and is still attractive.

At the same time, we continue to identify attractive opportunities to deploy capacity and selectively grow, including in Latin America and the United States. Less exposed to the cycle is our Global Specialty Insurance business, which is shown on Slide 8. We established GSI to bring Munich Re's growing specialty primary insurance business under a single integrated management structure while leveraging the group's risk expertise, capital strength and brand. The business grew by around EUR 800 million annually through 2024 and adjusted for currency effects would have continued to grow in 2025.

By combining a broad range of specialty insurance businesses, geographies, distribution channels and underwriting cycles, GSI can flexibly allocate capital to the most attractive profit pools. Recent product extensions are U.S. real estate, professional liability as well as surety in Europe. In terms of profitability, GSI has consistently delivered a very strong combined ratios, fluctuating moderately around 90%. And looking forward, the segment is well on track to generate robust and gradually increasing earnings over time and to achieve both this year's targets and the medium-term objectives of Ambition 2030.

Moving to Life reinsurance on Page 9, which has performed strongly in recent years, and this positive momentum continues. We remain highly successful in generating new business that will translate into earnings over time. In the first half of the year, we concluded a longevity transaction covering EUR 4 billion of pension liabilities. And more recently, we completed 2 large structured transactions in the United States, which will only be reflected in our numbers later this year.

Our substantial CSM stock provides a strong foundation for reliable earnings delivery. Supported by a well-diversified portfolio, we continue to capture attractive opportunities in transactional business and in longevity. At the same time, we remain disciplined. Our clearly defined risk appetite helps mitigate the risk of adverse surprises as evidenced by aggregate experience that is tracking slightly better than expected.

The very strong performance of our FinMoRe business once more made a significant contribution to earnings. Together, these factors drove a total technical result of more than EUR 1 billion in the first half of the year, somewhat ahead of the pro rata full year guidance and underpinning the targets of Ambition 2030.

Turning now to ERGO on Page 10, which continues to deliver reliably against its ambitions and is well on track to achieve its targets once again. ERGO's digital-first approach and the systematic deployment of AI across the group are key drivers of further efficiency gains and scalability. At the same time, ERGO is deepening customer engagement through its customer portal, a 4-time German brand award winner and the ERGO app, which ranks first among the insurance apps in customer surveys.

In addition, ERGO continues to invest in its global brand to strengthen international visibility. In Germany, the focus remains on profitable growth, balancing top line expansion with underwriting discipline. We see attractive growth opportunities in P&C, including in fire property and motor as well as in supplementary health and in new life business. This is supported by top-rated products and a high-performing sales organization.

Together with disciplined underwriting and effective claims management, this underpins a strong technical profitability. And while Germany remains an important market for ERGO, of course, the strategic focus is gradually shifting towards a higher international earnings contribution, where ERGO continues to deliver dynamic growth. Strong market positions in Polish motor and Greek property as well as in Belgium corporate health business are driving profitable top line expansion. The integration of ERGO NEXT is on track, and we are convinced that its AI capabilities platform, combined with ERGO's underwriting excellence will be a key catalyst for profitable business development.

Let us turn to our investment portfolio on Page 11, which continues to benefit from supportive capital market conditions. We are reinvesting new money at 4.3%, providing further upside to the running yield. However, we are not relying on higher interest rates alone. We have identified additional levers to enhance returns, including the gradual expansion of alternative investments and the active pursuit of opportunities across markets and currencies. This quarter, we also benefited from a strong performance of our private equity portfolio.

This brings me towards the end of my presentation with the outlook for 2026 on Page 12. Based on strong half year results, we are heading with tailwind into the hurricane season, being well on track to deliver another record result this year. I'm even more so pleased that all businesses are contributing to this success. At our Q1 call in May, we announced that the revenue forecast is more challenging than we thought when we originally set it. With the information of the latest renewals, we decided to lower our revenue guidance in reinsurance by EUR 2 billion to EUR 38 billion.

As said in the beginning for us, this is a directional goal rather than a hard target. Related to that, let me conclude with a few remarks on our Ambition 2030 on Page 13. No doubt, we are seeing the effects of the reinsurance cycle on growth and margins in our P&C reinsurance business. And this is, to some extent, amplified by the benign major loss experience, a double-edged sword that supports current earnings, but doesn't help in price negotiations. But such cyclical pressure is not new to us, and we have navigated similar phases successfully before.

And this is precisely why we have already considered a certain slowdown of the technical performance in P&C reinsurance in the earlier years of our financial planning until 2030. However, this time around, we are even better placed than in previous cycles. Our strong balance sheet, higher investment income and the steadily growing earnings contribution from businesses that are largely insulated from the P&C reinsurance cycle enable us to navigate the softer market environment from a position of strength.

This gives us the flexibility to walk away from business where prices do not meet our profitability requirements while valuing long-term client relationships. Anyway, over the medium term, we see a compelling case for P&C reinsurance supply and demand becoming more evenly balanced again.

Finally, our strong solvency position of more than 300% provides substantial flexibility in managing capital. We remain committed to returning excess capital to shareholders through growing dividends and share buybacks. Together, these strengths underpin our ambition to deliver a return on equity of more than 18% and average annual earnings per share growth of more than 8%. In summary, the targets of our Ambition 2030 remain fully intact.

With that, I hand it over to Andrew, who will guide you through our Q2 figures in more detail.

Thank you very much, Christoph. And ladies and gentlemen, good morning from me as well. A quick logistical comment upfront. For my remarks, I will not refer to any further specific slides in the pack, which is available to all of you on our website. I will just verbally expand on the financial performance of the quarter and the half year.

And I start by echoing what Christoph said earlier, our diversified business model underpins sustainable earnings over time. In the short term, P&C reinsurance once again benefited from a benign major loss environment, putting us on a strong course towards our earnings target for this year. But in an environment where the reinsurance cycle is showing signs of softening and underlying earnings in P&C reinsurance are beginning to reflect the terms achieved in recent renewals, the profitability of this segment remains healthy.

And the benefits of diversification are becoming increasingly evident as strong earnings contributions from our other business segments enhance the resilience of the group's operating performance. In addition, a strong investment result complemented the sustained strength of our technical results.

In summary, this resulted in a strong second quarter net profit of EUR 2.2 billion as preannounced 2 weeks ago. And together with a very pleasing Q1 result, Munich Re remains firmly on track to achieve its full year 2026 target of EUR 6.3 billion. Against this backdrop, let's now take a closer look at the Q2 earnings drivers, starting with the investment result. The return on investment of 5.5% benefited from favorable capital market conditions with strong contributions from public and private equity investments.

The running yield of 4% was supported by higher interest rates, dividend seasonality and a catch-up effect from inflation-linked bonds that I talked about already with our Q1 results. The reinvestment yield remained high at 4.3%, providing continued support for the running yield. And with an overall return on investment of 4.2% in the first half year, we are comfortably within our full year guidance of greater than 3.5%.

Now I turn to the business fields, starting with reinsurance. The Life and Health reinsurance total technical result of EUR 528 million in Q2 came in above the pro rata annual ambition. The release of the CSM and risk adjustment was in line with expectations, while mortality experience was slightly positive. The result from insurance-related financial instruments developed very favorably, supported by large transactions completed in the second half of last year.

It is very pleasing that the stock of Life CSM continues to grow, having now reached EUR 16 billion, driven by solid new business generation and with some help from positive currency effects, providing a strong foundation for sustainably high technical results in the coming periods. Being ahead of the pro rata total technical result guidance after the first half year, we are well on track to achieve our full year targets in Life and Health reinsurance.

Now in P&C Reinsurance, we posted a strong Q2 result with a combined ratio of 68.9%, once again benefiting from very low major losses. Reserve releases amounted to the expected 6 percentage points in the combined ratio. Now in our Q1 earnings call, we had already mentioned upward pressure on the normalized combined ratio. And in Q2, the ratio increased to around 82%, reflecting the gradual earn-in of recent renewals as well as the writing of a large new structured transaction.

Looking ahead, we would expect the 82% to continue trending upwards over the remainder of the year. At this point, I would also like to comment on top line, so revenue. As Christoph already highlighted, we now expect insurance revenue in the reinsurance business field overall to be EUR 2 billion lower than the original guidance of EUR 40 billion. I mentioned it now because this reduction is largely attributable to P&C Reinsurance, where in the first half of the year, revenue declined by EUR 1.4 billion versus the prior period -- the prior year period.

And roughly 1/3 of the decrease was driven by currency movements, but it is mainly the result of disciplined underwriting decisions to protect quality and profitability of the portfolio. Importantly, this adjustment to our top line guidance does not affect our earnings outlook for the full year. So all in all, with a combined ratio for P&C Re of just below 68% after 6 months, we are heading with tailwind into the hurricane season.

I now conclude the reinsurance part of my remarks with Global Specialty Insurance, which delivered a pleasing result again. On a reported basis, revenue declined by around 3% compared with the first half of 2025. However, adjusted for currency, especially U.S. dollar and accounting-related effects, organic growth was positive and closer to the lower end of the Ambition 2030 annual growth range of 5% to 9%. The combined ratio of 88.9% was largely in line with expectations.

And with a first half year combined ratio of 86.3%, we are again well on track to meet our full year guidance in this segment, too. Now coming to the primary insurance arm of the group. ERGO delivered a strong net result of EUR 321 million with a significant contribution from the high investment result. ERGO Germany recorded a very strong segment net result of EUR 235 million. In P&C, ERGO achieved good technical profitability and took a prudent approach to reserving in order to continue building balance sheet strength.

In addition, the P&C business benefited from a strong performance of its private equity investments. Life and Health in Germany had a solid quarter and developed in line with expectations, including growth in the Life new book. The ERGO International business achieved a strong net result of EUR 86 million. The International Life and Health business was in line with expectations, showing a stable high CSM release and new contracts added, driven in particular by Spain and by Belgium health business.

In the international P&C business of ERGO, the technical profitability and combined ratio were overall within the range of expectations with especially pleasing performance in major markets like Poland and Spain. Also, not to forget, ERGO NEXT in the U.S.A. is progressing well in business development and integration.

Finally, a remark on the group's economic solvency position, which remains very strong. The Solvency II ratio increased to 304% in Q2, driven by the very pleasing operating performance I have just described. With this, I am at the end of my opening remarks. Christoph and I look forward to answering your questions. But first, I hand back to Stefan.

Thank you for the presentation, Christoph and Andrew. The next financial results will be presented on 12 November 2026 when we will present Munich Re's Q3 figures. In the meantime, we are happy to stay in contact with you, of course. Having said this, I close this media call. I wish you all the best. Take care, and bye-bye.

Ladies and gentlemen, welcome to the Münich RE quarterly statement as at 31st March 2026 conference call and live webcast. I am Sergen, the Chorus Call operator. [Operator Instructions]. The conference is being recorded. The conference has not recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Christian Becker-Hussong, Head of Investor and Rating Agency Relations. Please go ahead, sir.

Thank you very much, and hello, everyone. A warm welcome to Munich Re's Q1 earnings call. Thanks for joining this morning. I'm here with Andrew Buchanan, our CFO, and Andrew will kick it off with a short introduction, as always. Afterwards, we will go right into Q&A. Andrew, please go ahead.

Thank you very much, Christian, and good morning, everybody. Munich RE made a strong start to the year, delivering a pleasing net result of EUR 1.7 billion in the first quarter. This performance underscores the group's resilience amid elevated geopolitical and macroeconomic uncertainty. The direct impact of the conflict in the Middle East on our underwriting results remained very manageable. By contrast, heightened volatility in capital markets weighed on the performance of our investment portfolio.

In short, the narrative for the quarter is straightforward. Strong underlying operating performance across all business segments, supported by benign major loss experience was largely offset by weaker investments and currency results. So let me start with the investment result. We achieved a return on investments of 2.9%, which was below our full year guidance.

Rising oil and gas prices triggered renewed inflation concerns, prompting volatility across bond and equity markets. As a result, we recorded negative fair value changes in both our fixed income and equity portfolios. These effects were largely offset by positive revaluations in alternative investments and commodities, once again demonstrating the value of diversification also within our investment portfolio.

At the same time, we used the increase in bond yields to our advantage by reinvesting at more attractive levels. Consequently, the reinvestment yield improved to 4.2%, which provides further support for the running yield. With respect to the running yields, this came in slightly below expectations in the first quarter and was broadly flat compared with Q1 2025, while remaining below the elevated level seen in Q4 2025.

Two main effects explain this development. First, we experienced typical quarterly volatility in private equity distributions, which were lower than usual in Q1. Second, regular income was temporarily affected by the accounting treatment of inflation-linked bonds, which has not yet reflected the recent increase in consumer price inflation. Looking ahead, we expect a catch-up effect in Q2 driven by current CPI developments.

In addition, higher reinvestment yields and the dividend season should provide further support. Beyond that, we also see potential upside from disposal gains and positive fair value movements in a more normalized capital market environment.

Turning to the business fields, starting with reinsurance. Life & Health Reinsurance delivered a total technical result of EUR 500 million, slightly above the pro rata annual ambition. Overall, the quarter can be characterized as relatively quiet. The release of the CSM and risk adjustment was in line with expectations, while mortality experience was slightly positive.

The result from insurance-related financial instruments developed favorably, supported by large transactions completed in the second half of last year. The stock of CSM increased further, driven by solid business growth and positive currency effects, providing a strong foundation for sustainably high technical results.

In P&C reinsurance, we posted a strong Q1 result with a combined ratio of 66.8%, benefiting from very low major losses. Profit participation clauses led to a higher expense ratio, which offset lower basic losses. Reserve releases amounted to the expected 6 percentage points in the combined ratio. The discounting effect of approximately 9.5%, primarily driven by higher interest rates exceeded our guidance of around 9%. The normalized combined ratio of 80.3% is aligned with our full year guidance of around 80% and provides a solid basis for maintaining strong portfolio profitability in 2026.

At the same time, we acknowledge some upward pressure on this ratio, reflecting the outcomes of the January and April renewals as well as a higher expected level of major losses, which we have increased by 1 point to 18% -- we see this updated outlier expectation as being comprised very approximately of 14.5% for natural catastrophe losses and 3.5% for man-made losses. This leads me to the April renewals, which produced a good outcome despite a highly competitive environment.

We continue to manage our portfolio with strict discipline to ensure an optimal risk return profile. In line with our underwriting philosophy, we were prepared to reduce or discontinue our participation in business that did not meet our return requirements. This was, in particular, the case in casualty proportional business with limited impact on bottom line and also in property excess of loss.

Overall, we actively reduced renewed treaty volume by 18.5% to maintain portfolio quality while largely preserving terms and conditions. Please be conscious that this decline refers to a rather small book that has been renewed in April. Pricing remains the main battleground, most notably in natural catastrophe business, which accounted for more than 30% of our renewal volume in April. This drove a risk-adjusted decline of 3.1% in our portfolio.

As always, this price change is fully risk-adjusted, which means conservative inflation and other loss trend assumptions and model changes are taken into account. However, based on the very good starting levels, we deem the margins on the business we retained to still be healthy overall.

I conclude the reinsurance part with Global Specialty Insurance, which delivered a pleasing result. The combined ratio of 83.7% was better than our full year guidance, supported by a benign loss experience and also lower expenses. In primary insurance, ERGO delivered a pleasing net result of EUR 235 million, making a promising start towards achieving the 2026 net profit target of EUR 0.9 billion. ERGO Germany reported a strong segment result of EUR 157 million.

Technical performance in Life & Health improved significantly, mainly driven by a strong result increase in short-term health and travel business, supported by profitable growth and favorable claims and cost development. The CSM increased compared with year-end 2025 as positive operating effects in long-term health and life exceeded the releases into earnings. In P&C in Germany, ERGO achieved a good total technical result with an excellent combined ratio of 86.7%, better than our full year guidance, thanks to sound operating performance and low major losses.

The international business of ERGO delivered a solid net result of EUR 78 million, driven by good operating development, which was partly offset by a lower contribution from joint ventures compared to the exceptionally strong prior year quarter. Technical profitability in the Life and Health part of ERGO International was below expectations, but this was primarily due to a one-off effect from a portfolio sale in the Belgian Life business.

In P&C, a combined ratio of 89.5% came in broadly in line with full year guidance despite weather-related claims in Poland and the Baltics following severe winter conditions. I'm also pleased to report that the development of ERGO NEXT Insurance, our recent acquisition in the United States, continues very much according to plan.

Turning briefly to capital management. The group's economic position remains very strong. the Solvency II ratio decreased to 292% as the full deduction of the new share buyback program was partly offset by good operating performance and hence, economic earnings.

Let me conclude with a brief comment on the outlook. Our 2026 outlook remains unchanged, and we continue to expect a net result of EUR 6.3 billion. We do acknowledge that achieving our reinsurance revenue guidance of EUR 40 billion certainly has become more challenging than initially anticipated when we set the outlook 5 months ago.

Nevertheless, this guidance does remain within reach. Some reasons why that is the case. Firstly, Q1 unfortunately included some negative premium adjustments that we do not expect to happen again over the remainder of the year. Secondly, we also see attractive business opportunities ahead. Q1 was a relatively quiet quarter in terms of large deal activity, which we expect to accelerate over the remainder of the year based on a healthy deal pipeline. This is especially the case for Life & Health, but there is also potential in P&C. With this, I'm at the end of my opening remarks and look forward to hearing your questions.

But first, I hand back to Christian.

Thanks, Andrew. And yes, let's go right into Q&A. And I'd just like to remind you that you limit to 2 per person. So please go ahead.

[Operator Instructions] And we have the first question from Shanti Kang from Bank of America.

My first question is just on P&C and mainly on the normalized combined ratio, which was at 80.3%. That seems in line with your full year expectation. But I was just wondering if you could walk us through the moving pieces beneath that, particularly the interaction between the loss component buildup, lower earned pricing and that strong basic loss ratio.

And then perhaps within that, on that loss component buildup, that's, I think, 1.1 point increase, which is above the kind of flat expectation, I guess. Should we interpret that as purely prudent recognition on new business and lower pricing? Or is there anything else to suggest that, that would be a kind of structurally lower future profit on the new underwriting years?

Yes. Good morning, Shanti. So let me try to break down the moving parts in the normalized combined ratio. So the first part I'll tackle is the loss component because you particularly mentioned that one. Now usually, we expect our loss component over the course of the year to more or less cancel out. So we expect the buildup of the loss component to be a bit higher in Q4 as we anticipate the large volume of business that we write at the 1/1 renewals. And we would expect, let's say, modest releases in the first 3 quarters of the year.

At a high level, in theory, that's what we would normally expect. Now what happened this year is that you will have seen, of course, the renewal results last year, but also in 1/1 this year, we had negative price change. And so when our actuaries look at that, they always book in a prudent way. So going back to one part of your question. And so all else being equal, if they see a deeper price change in 1/1 than they perhaps had been anticipating back in December when they set the reserves, even with exactly the same level of prudence, that will result in a higher loss component.

So the answer to your question is this extra loss component buildup in Q1, I would describe it as one-off in character. I would describe it as a byproduct of our prudent reserving approach. But I think you can consider it to be a mechanical consequence of the negative price change that we had in the January renewals, which probably leads us to think that over the course of this year, there won't be quite the same balancing out effect in the loss component that we would expect in a typical year on average. And that would be one of the reasons why we do see some upward pressure on the normalized combined ratio.

Apart from that, what else would I say to answer your question generally? I would say, in terms of breaking down the normalized combined ratio, we obviously have our outlier allowance, and you know that we've increased that from 17% to 18%. I would say to you that some of that -- in fact, a significant part of that was already baked into the outlook for the 80% because, of course, we did have some advanced sight of the level that we expected outliers to be.

And the 18% is really, if you like, a kind of retrospective manifestation in our external reporting of what our pricing people already know. But that probably would account for some upward pressure. But then I would remind you that we also have the interest rate effect where the discounting came in at 9.5% in Q1. And we have reason to believe, given the way interest rates have moved that, that discounting may indeed continue to be above 9% through the rest of the year. And those 2 things probably cancel each other out, at least to the first order. So you have a bit more outlier expectation from the 18% instead of the 17%, but you also have a bit more discounting benefit. And those 2 things would probably bring you back around to something like 80%-ish.

And then what we need to see for the rest of the year is how our most recent renewal results earn in. And I think it's reasonable at this stage to say the distribution of outcomes has become quite asymmetric. In fact, I think I may have said already last time, it's probably unlikely we land under 80%. I think it's far more likely that we land above 80%, and there is some upward pressure. And we need to see how that develops through the rest of the year.

The next question comes from Andrew Baker from Goldman Sachs.

First one, just could you give a bit more detail on the mechanics behind the increase in the large loss budget? And I guess, specifically, just curious whether this is in any way tied to any compression in terms and conditions that you're seeing?

And then secondly, just looking ahead to July renewals, it looks like there's a higher proportion of cat business and also a higher proportion of North America. So if you, I guess, continue with the discipline you've shown so far in January and April, is it fair to assume a pretty sizable premium volume reduction in July as well based on what you can see at this point?

Okay. Andrew, let's talk about the large loss budget first because I think that's, in some ways, connected also to Shanti's previous question. Part of this is a mechanical reaction to the reduction in prices that we've seen in the last couple of renewal dates. So I think it's not a secret that profit margins on nat cat exposed business have come down, I think, proportionately more than any other line of business. And so if you're expecting -- even if you're expecting the same amount of nat cat losses per unit of exposure, if you were earning less premium for that unit of exposure, and then if you express your large loss budget in percentage of premium, it follows naturally your -- the denominator of the ratio has gone down and the ratio itself will go up.

And so part of what we're seeing actually is a reaction to that. There may also be some second order business mix things going on in the portfolio. If you look at the absolute amounts of business that we've given up, quite a large majority of that has been proportional. But I wouldn't want to overplay the business mix point. I think really the first argument that I gave is the important one. And it's probably also fair to say that the world is becoming riskier as climate change has an impact.

And so as you would expect in all of our nat cat modeling, there are underlying trends going on there. that over time, gradually and slowly risk increases. And so it's all of those things together as a package.

You did also ask about Ts and Cs as part of that. And my answer there would be not really. So I think probably the best achievement that the colleagues have achieved in these renewals is while battling on price and trying to secure the best volume price trade-off, they have kept the terms and conditions largely unchanged.

And so what we have is still a pretty high-quality book in the sense that the potential for unexpected surprises where we end up covering things that we didn't expect to cover as a result of loose wording or generous conditions, that isn't really there at the moment. So it's a long answer for a short question, it's not really down to the Ts and Cs.

And then moving on to July renewals. So I think you were asking to what extent is April a read across candidate for July, given, as you rightly pointed out, that those 2 renewal dates have similarly high nat cat shares. I would say to you, those are the similarities, but there are also some important differences. I think okay, the geographical differences is an obvious thing to point out. But I think it does make a difference.

So in April, quite a significant part of the renewal volume, less than half, but still quite significant was Japan, a market with its own particular dynamics and where they've enjoyed since 2019, a really good run of loss-free years. If I think about our April renewals, there was also Indian proportional business in there where we saw, I think, what we consider to be very aggressive price behavior by other players in the market. And European casualty business, for example, quite a lot of motor business. And so it's different kind of business that we -- or at least a different mix, you could certainly say that we will have in July. And so the read across is not that clear.

Obviously, capital is mobile. And so we have to assume that there is some indication from April about what July will hold. But also, if I look at -- if you go down into the individual contracts that drove the April renewal result, because we were only talking about EUR 2.5 billion of lifetime premium that was being renewed, when you're talking about volume of that low-ish size, 3 or 4 contracts or 3 or 4 client relationships going one way or the other can really swing the result quite a long way.

So it's not necessarily indicative of what the global reinsurance market currently looks like. So yes, I'm acknowledging there is some read across, but I think there are also plenty of differences. I'm not too despondent on the volume topic, for example, for July.

The next question comes from Will Hardcastle from UBS.

I guess it's a bit of a follow-on from that revenue number, I guess. And just thinking about that P&C revenue delivery Q1 and the April renewals on the whole. I guess, how is that in the context of what you envisaged in your 5-year EPS CAGR plans? Clearly, they've come in below expectations from an investor perspective.

But within your plan, have you assumed this type of cycle? Or is there a bit of a V-shaped cycle in the scenario? I'm thinking about the 5-year plan, not this year.

The second question is just thinking about Q1 result, obviously, strong technical result. I'm wondering if there's any additional reserve prudency evident at all. It suggests by some perhaps of your peers that the Middle East reserves contain some contingency. But is the EUR 90 million you're putting up a specific notification? And what about the potential second order inflationary impact? Is there any proactivity on that?

Apologies, Will. I think I may have in my enthusiasm to answer your question, I may have actually put myself on mute, sorry.

No problem. I like your enthusiasm.

Yes. So let me try again. So you were asking -- you did not ask about the 1-year guidance. You asked about the 5-year plan and where this leaves us. So you probably remember, we published a range for P&C reinsurance of 0% to 3%, which we saw as being the compound annual growth rate on average over the 5-year period.

And -- you mentioned V-shape. I personally had in mind a bit more of a gentle U rather than a V. But for sure, we, in our planning, anticipated short-term reductions in both volumes and prices. So directionally, not a surprise at all. And I feel that there are some factors that work in our favor towards the back end of our 5-year period. I mean I think there is still economic growth.

I think that insured values will continue to go up, especially if inflation is higher. I think that those insured values need to be insured. And so I think the primary insurance industry will continue to grow. And I also continue to believe that reinsurance will be relevant and that we will participate in that growth. So I think there are just some powerful perhaps slow-moving economic forces of sort of negative gravity pushing everything upwards when you choose a time period as long as 5 years.

I also think that there are really still enormous amounts of uninsured risk out there that need to be insured and should be insured. So if you -- if I take the least demanding interpretation of your question and I say, do I think that we can come back up to a level by 2030 that is above where we were last year and therefore, be inside of our range of 0% to 3%, then I absolutely do.

If I can then move on to your question about the Middle East conflict and reserving for that. So firstly, let me address the EUR 90 million specifically. For anyone who missed this, we are splitting that EUR 30 million for reinsurance, EUR 60 million for Global Specialty. You mentioned notifications. We have little to no notifications, and so the $90 million represents IBNR. We also consider the $90 million to be somewhat cautious, but somewhat cautious as an estimate of direct losses that might arise as a result of insureds or cedents being able to claim directly on the primary insurance or the reinsurance that we have with them.

So we are positioning the EUR 90 million in a more narrow sense. It's it's literally claims that we might end up paying if, for example, there are claims coming through the marine war market or the political violence and terrorism market, that kind of thing. So we're saying the EUR 90 million is conservative. We're saying it's not based on notifications, but it's a more narrowly defined number. We are not saying that the EUR 90 million is also contained some kind of blanket allowance for inflation.

We don't consider that to be necessary at this stage, not because we're denying that inflation could be higher than expected. But I actually think we've we lived through an experience in 2022 that I think will probably turn out to be more severe than what we're seeing this year and where our processes and our financial management approach, I think, came through very well and proved to be effective.

And I always talk about what are the lines of defense. The first line of defense is that the vast majority of our business can be repriced within 1 year. And as you'd expect, our pricing people and our economists are looking carefully at what that needs to be.

The second line of defense is asset liability management, where a meaningful part of our asset portfolio is responsive to inflation in some way. And I mentioned in my prepared comments, we do expect a bit of a catch-up effect on our inflation-linked bonds in Q2 as the most recent CPI numbers kick in there.

And then the third line of defense is reserves, which I guess is where your question originated. But there, I would have to say we -- in part of our annual reserve review, we have a reserve risk heat map where we think carefully about all of the white swans and black swans and other swans that could go wrong.

And there's a whole, let's say, bucket that is broadly allocated to economic deviations or volatility and part of that is inflation. And so at the moment, I'm pretty comfortable that whatever inflation brings on the claims side, we can certainly digest. And so we didn't feel the need in Q1 to do some kind of opportunistic special booking.

The next question comes from Kamran Hossain from JPMorgan.

Two questions. The first one for me is on the reinsurance revenue guidance of EUR 40 billion. I just want just intrigued kind of given the softness in Q1, given it sounds like there are probably some end effects in kind of revenue coming down. How comfortable are you with that guidance of EUR 40 billion? Is there something coming up in the remaining 3 quarters of the year that might give that a bit more support?

The second question is coming back to kind of the 5-year plan and the view. I believe back in December, it was mentioned that the 8% EPS CAGR by 2030 would be -- we should assume something fairly linear in terms of kind of how that comes through.

Given that it sounds like the environment is a bit worse, your comments on the normalized combined ratio, renewals also getting a little bit worse. Are you still comfortable with kind of the approach that it should be a linear kind of 8% EPS or maybe kind of a little bit more -- I don't know what to give it, but a little bit more kind of reshaped or reshaped on the EPS front.

Okay. So on the EUR 40 billion revenue for reinsurance, you asked me about that level of confidence. And I want to try and pick my words here carefully because I think we -- I already acknowledged that, that EUR 40 billion number is certainly more of a challenge than we intended when we set the guidance back in December. And so is it more of a stretch? Yes, it is. Is it possible that we don't get there? It is possible. I think at this stage, it continues to be within reach.

And I think there are some positives that could allow our revenue to accelerate a bit in the open quarters of the year. The -- just for the record, the accounting adjustments in Q1, you mentioned [ MDC. ] They are not necessarily all MEC. Some of this is very mundane in the sense that when you write proportional business, neither you nor your clients knows ahead of time exactly what the volumes will be. So the clients perhaps only discover after the year-end is finished what their own volumes were.

And then there is unfortunately a bit of a time lag once we have all of the statements of accounts received from clients and process those that we then know how that has fed through to our own volumes. This is overwhelmingly an issue with proportional business where it's usually a fixed percentage of the business that's just being ceded through to us. And unfortunately, we're rather far back in the information chain. So we obviously do our best to process everything as soon as we get it. That's detail, but I just wanted to mention it so that you don't think that Q1 was again an MDC end issue.

But I think coming back to the perhaps more important question of confidence level around the revenue, the accounting adjustments that I just mentioned do mean that Q1 was artificially a bit lower than it should have been. It means that it wouldn't be correct just to multiply by 4, even if we were not expecting any large deals to close through the rest of the year. But the reality is we are expecting large deals to close.

And in particular, those transactions where the client is trying to achieve some kind of financial objective to support their own balance sheet, it's sort of more natural that those happen towards the later part of the year. in Q1, I described it as relatively quiet in Life & Health. I think that's a fair description of what actually closed because we didn't have many things actually closing in Q1. But that is not a reflection of the pipeline. The pipeline is healthy.

And so I do see things that can close through the rest of the year that take us towards the EUR 40 billion. Then on the 5-year plan and the 8% CAGR on the earnings per share, am I still comfortable, yes. I think in order to be consistent, having just said that the EUR 40 billion of revenue for 2026 is more of a challenge than originally thought.

All else being equal, it means that we would need more of a recovery or more of a catch-up effect through the rest of this year or in subsequent years in order to get to the 8% earnings per share. But I would also say I have some optimism based on the levels of growth that I'm seeing in some of the other parts of our group. We haven't talked about ERGO at all so far in the conversation.

And NEXT Insurance is absolutely on plan, growing very strongly. And what's good there also is that we don't only rely on organic growth, but we are increasingly internalizing the business that they already have. once external reinsurance comes to an end, once the external fronting relationships come to an end, more of that business actually comes on to our own balance sheet. And so I'm also cautiously optimistic that in some parts of the group, quite possibly, our growth rates will exceed what we originally expected.

The next question comes from Chris Hartwell from Autonomous.

First one, sorry to come back on the revenue point. I think you sort of half answered with Cam's question just now. But I was just wondering if you can sort of help me sort of bridge the revenue attrition year-on-year. And you just mentioned the prior period premium adjustments. I was wondering if you can sort of put some context or proportionality to that.

And also, some of your U.S. peers also had the year-on-year sort of year-on-year comparative impacted by sizable reinstatements last year, obviously related to fires. I don't know whether you saw some of that which also may be weighing. And if I can have sort of a part B on that question. We haven't really talked much about GSI, but the organic revenue there also looks pretty muted. So I wondered if you could give a little bit more color on the sort of subunits within GSI, where you're seeing growth, where it's becoming a bit more challenging.

And second question to be a little bit cheeky. Just on capital, Solvency is still very high. I'm just sort of wondering what the renewals mean for capital deployment strategy and sort of where you're currently running versus your expected SCR build or SCR deployment that you were expecting?

Right, Chris. Let's go through those. So the revenue, I think you're picking on a a year-on-year comparison Q1 2025 to Q1 2026, which I think in many ways, has -- it's a story that needs to be unpacked because there is foreign exchange in there. The U.S. dollar, in particular, depreciated heavily in Q2 of last year, I think was the one quarter that really stands out in my mind as having the biggest dollar devaluation of all the quarters. So that's included in the year-on-year comparison.

And I think if we look at P&C reinsurance stand-alone, where the volumes are down about 19% in that year-on-year comparison, you can basically say 1/3 of that was down to FX.

The second thing that's -- and I suppose the volume reduction is real in the sense that we're a euro reporter, but at least one can say that, that should be one-off in character in the sense that we, on a forward-looking basis, don't expect the same level of FX fluctuations.

The second thing that's in there is all of the NDC adjustments that we brought through last year, and we reported on those quarter-by-quarter, and I think we had some in Q2 and in Q3. And I apologize, but I simply don't have those off the top of my head, the amounts that we brought through. When we show the chart in our slides, those accounting adjustments are bundled together with the organic change. And the organic change is you can basically take from our renewal reporting last year and into this year. Now -- so I think we have probably all of the critical points all bundled together into this year-on-year comparison. I would say forward-looking, I think the accounting adjustments are behind us.

We also have no reason to believe that FX will fluctuate again in the same way that it did last year. So really, the cone of uncertainty, I think, is a bit narrower now because it's all down to what will the renewals do and what does organic growth look like. You asked specifically about reinstatements. And I must admit, we don't -- we obviously don't know what the competitors or peers meant. I must say it's not a comment we particularly recognize. So I'm sorry, we we can't shed any light on that one this time. You asked about GSI and the growth there.

Now if you look at our equivalent slide on GSI, and you can see the organic part of the growth once you avoid or ignore the FX part, is pretty modest. I think it's about 1.5% if you do the division. Unfortunately, there, again, one needs to allow for the fact that revenues last year, at least in the early part of last year, should probably have been lower if the EDC adjustments had been done sooner. And so if you strip that out, and you get to more of a kind of underlying organic growth rate, then you're probably above 3%. That's not a number we actually have on the slide. So that may be new information for you. It would be above 3%.

Now the range of growth that we said we were looking for was more a range of 5% to 9%. So acknowledging that, that's below, I give my colleagues credit that on the GSI side, same as we have in reinsurance, nobody has a top line target that they will be compensated on. And we -- I think we've created an underwriting culture where it is okay to not write business that we're not comfortable with. And I think in the short term, at least, this is the better approach because I think in underwriting, maybe also sometimes a bit like investing, you can create as much value by avoiding mistakes as you can by chasing exciting opportunities.

So I think our underwriting culture is also alive and well in GSI. There are some aspects of that market where probably we're still a bit underpenetrated, some product lines that we still would like to push into and maybe we need to expand our distribution reach a little bit. I wouldn't say that there's any one thing I would particularly want to mention today. But GSI is still a relatively young organization, and I think they still have some room to grow in that market where we're currently underrepresented, but actually where the Munich rename carries a lot of weight.

And then coming to your last question about capital and deployment. In general, philosophically, we stick to what we said as part of the strategy, which is that if we find fewer attractive growth opportunities and we deploy less of our capital, all else being equal, we will tempt to return more. And we will try not to hang on to capital unnecessarily that is not needed to back profitable risk taking.

Having said that, in the short term, I certainly am not about to announce any new change in our capital return approach today. I think the 87% capital return from last year is a very solid start to the 5-year ambition, and we do stick to our 80% plus that we committed to back in December.

Next question comes from Darius Satkauskas from KBW.

The first one is just on the point you made on capital. Why are you sticking to what you announced in December if the conditions are clearly a bit more challenging? You pruned a lot of the very capital-intensive business in April. And if that's the case in June and July, obviously, you're going to have a bit of excess capital earning nothing. And the reason you've gone out of it is because of sort of below expectation returns on capital. So why wouldn't you return that capital if that was the case? That's the first question.

And the second question is, the SMO business contributed EUR 117 million in the quarter. Is this kind of a good proxy for quarterly run rate? I understand that revenue was not there in the quarter. But in terms of the contribution to the technical result, are we sort of ballpark what you would have expected in the first quarter or not?

Darius, on the capital question, I'm not sure actually that the business that we reduced considering also the mix is particularly capital intensive. So I said that a large majority of the business by volume that we gave up in April, but also in January was proportional business often with structured elements where actually our profit margin tends to be quite stable and where the business itself is actually less volatile than, for example, nat cat business. And so actually, the capital consumption of that business is probably on the low end of the spectrum for us as well. So I wouldn't say looking at the business that we gave up that that it has been especially capital-intensive or not intensive.

And our capital return policy is designed to stand the test of time. So we are looking for a slowly increasing dividend over time, and we're only going to decide on our share buyback once a year. So certainly, we wouldn't make a snap decision about capital return just on the basis of one renewal. I think all of this will be considered in totality at the end of this year and early next year once we see how much profit we have in the pot, especially in distributable earnings under German GAAP. And bear in mind that the profit that we have to distribute will not only rely on price levels in P&C reinsurance, but it will rely on other things such as the investment return we generate and the tax rate that we pay.

So there are quite some other moving parts. And I wouldn't want a knee-jerk reaction to say, let's say, just because we've had 1 or 2 renewals with negative price changes that this immediately triggers more capital return. I think I want to wait and see a bit longer how that develops. Darius, apologies.

Sorry, colleague just reminded me, I think Darius had a second question, which was about the level of FIMO Re. Sorry about that.

Broadly, the answer to your question is yes. That's what we had in Q1 is about the level that we would expect in a typical quarter. It's been supported a bit by the transactions that closed in the second half of last year. And those will continue to earn in, and I would expect a certain stability there. And there were no, let's say, exceptional items in Q1 either way. Sorry, I am now finished my answer.

The next question comes from Ivan Bokhmat from Barclays.

My first question would be on GSI. I was wondering if you could give a little bit more color on the underlying combined ratio there because we have a bit less in terms of the cat budget, et cetera. So clearly, we're on the reported basis, we're below the target. Maybe some trends there would be helpful. My second question is a bit broader and focused on the triangles. I mean it's slightly different disclosures now. So there's no group tab where you can look at the initial loss pick.

But if I try to aggregate it by lines of business, I can only see a very modest reduction in the initial loss picks for the business. I mean, over the past 3 years, basically, they stayed pretty stable, whereas a lot of your peers have significantly dropped those initial loss picks for the new business.

I was just wondering if you may give us a bit of a context of what level of prudence you've been assuming in those past 3 years of, let's say, harder market conditions compared to in the past? Was it would it be fair to say that compared to the previous market softening, you're a bit more prudent than you have been in the past? Or it's just there's some other effects there?

Okay, Ivan, your first question was about GSI. So regarding the combined ratio, perhaps it would be helpful for you to know that the very good combined ratio was driven by benign loss experience, but it's a little bit different from what we had on the P&C reinsurance side because actually, the outliers were not especially low in Q1 in our GSI business. they were actually pretty close to expectation, let's say, roughly the same as expectation.

And so actually, on the GSI side, you could say that the good combined ratio is more attributable to really good performance on the basic or attritional loss side, which perhaps you take a slightly encouraging because it's probably a bit more sustainable than outliers, which can go up or down. But the second thing I would say and give credit to our colleagues in GSI is they are really also making some good progress on the expense ratio.

So that certainly helps us there. I think it may have been a couple of points actually that the expense ratio is starting to look better, which is nice to see. So we haven't talked at all about our expense savings program so far. But that's up and running, and I think we are seeing some improvement there.

Moving on to the triangles. What I would say to you there is our loss picks are always conservative. I'm not at liberty to tell you, for example, how -- what our loss picks on the reserving side look like versus pricing. I think that would be too commercially sensitive, and we wouldn't go into that.

However, what I suspect is the case and probably our colleagues would say the same, is that we sometimes tend to underestimate the impact of a hard market in the sense that when a market is hardening, we perhaps don't realize how hard it really is. And so perhaps unintentionally or unwittingly, you actually end up with a bit more prudence in your loss picks than you perhaps thought, not necessarily by design, but I think that's perhaps just a dynamic that we've seen in past hard market cycles, and it may be the case again this time. And perhaps that's also, let's say, vindicated or justified by the fact that certainly, last year, if we look at our reserve performance on the property side, it was really excellent, suggesting that maybe we had buffers in there that maybe even exceeded our own expectations a bit.

So there might be some of that, let's say, unwitting effect, but it's not a systematic strategy on our side, let me put it that way. I would also say probably if we started with loss ratios that are sufficiently conservative, then perhaps there's less urgency to move them when we see the first signs of softening. So perhaps we have the luxury of moving a bit more slowly on that.

The next question comes from Ben Cohen from RBC Capital Markets.

I had 2 questions, please. Firstly, just coming back to the outlook for the midyear renewals. Were you indicating that you see that there will be less competition and therefore, as well as maybe a better kind of volume effect, you would also expect a better price effect. Could you maybe just talk in a bit more detail on that?

And the second question I had was on your investment portfolio. I think you pointed to some sort of additional re-risking that you took in the first quarter. And I presume that, that was sort of taking advantage of dislocations in the market. But are there other things going on? And do you think that you can kind of continue to get higher yields in the current investment environment versus maybe taking on more risk in this sort of environment?

Okay. Ben, the outlook for July renewals. to pick up the very first thing you said, am I -- did I mean to claim that there will be less competition in July? No, I didn't mean to claim that. So if it came across that way, that was unintended. I do think that there is strong supply in the reinsurance market, and I think that there is capital available to write risk. And so to some extent, I think that will play out in July similar to April.

But what I was trying to say is that there is definitely a geographical character to this. So the July renewal is going to be with different clients in different places writing different lines of business. So I think any read across from April to July, while a reasonable idea is a best approximate. And the other point I was trying to make is when you're looking at a book of business of only EUR 2.5 billion, which was the case for us in April, that's not a very large book, and it means that the outcome on 3 or 4 or 5 of the larger accounts really swing the results either way. And so I think in our April renewal, the minus 18.5% volume change is the eye-catching number.

And my point is that is, to some extent, an idiosyncratic outcome based on, let's say, a limited number of client negotiations. It doesn't follow automatically that you should expect the same number in July. Beyond that, I really also would need to wait and see. And as you can imagine, the clients are -- and our own colleagues are hard at work negotiating that set of renewals.

And then changing tack, you asked about Q1 and rerisking. Now I think the concrete statements that we did make, and I think we have them in one of our investment slides, is that we had a small increase in the equity share, including derivatives that went up to 3.3%. I think it was previously 3.1%. So I mean, this is an incredibly modest -- while it is factually true, it's an incredibly modest increase in risk.

And then we did also note that we further expanded alternative investments and emerging market government bonds, also meaningful but still small in the context of our overall portfolio. So I think it would be stretching the point too far if I said that we've seen dislocations in the market in Q1 as a sort of big buying opportunity or that we've really tactically jumped into a bunch of positions. I think that isn't really so much how our investment process works.

And certainly, when we think about the kinds of alternative investments that we invest in, whether that's an infrastructure equity investment or a real estate fund or something like that, these are things that are developed over months and months with lots of due diligence and interviews with managers and a lot of preparation that goes into them. So I wouldn't want you to get the impression that there's been sort of some kind of short-term trading effect. I wouldn't say that.

I do think that there is a broader point, though, about our investment yield, which is to say that I would like it to increase the regular income, particularly increase above the 3.5% that we showed in Q1. And I think the catch-up effect on our inflation-linked bonds will help. I think coming into dividend season on the equity will help. And I also think enjoying slightly higher yields will help too, noting that the reinvestment yield jumped up to 4.2% in Q1. So I think there are some reasons to believe that the investment result can be improved through the rest of the year.

The next question comes from Vinit Malhotra from Mediobanca.

I hope you can hear me. So most of my topics have been addressed. Just one thing remaining. We talked about the -- you talked about how the top line for this year should see some more larger deals. There are some other reasons like adjustments which should not happen just here. But also, I'm thinking that does this mean that the responsibility shifts a little bit more on the Life side for meeting the overall reinsurance target because Life has been phenomenal growth.

Again, I can quickly work out a 15% ex FX growth in 1Q in the insurance revenue side, also strong CSM continues to be the way. Could you just talk a little bit about is this likely the outcome -- unintended outcome that Life colleagues face a bit more pressure to create the revenue? Then what are the risks in that business? What is -- where are these large deals coming from? And also if you're commenting -- if you meant by large deals also PLGV, did you mean more quota share expectations or structured book type of deals? So what your thinking on that as well, please?

So then, it's kind of funny. The first question you asked, I was sort of feeling very much in agreement with what you were saying kind of the first 3 quarters of your question, as you were saying, do we start to rely a bit more on the Life and Health business to help us reach our revenue target for the reinsurance business field in total. And I think that's a fair conclusion to draw because it's, in particular, the P&C reinsurance part where we are saying the ambition is now more stretched. And I'm saying that my optimism for the rest of the year arises more out of large transactions.

So I think that's a reasonable conclusion to draw. And I think when we thought about the EUR 40 billion for the reinsurance business field towards the end of last year, we, of course, didn't know exactly how it is going to play out. And by having this one guidance for the entire business field means that we can also potentially have some cross-subsidization as we go along. So I guess I was I was sort of nodding along as you were talking. But then you did say one thing at the end that I would want to address. So you said, would there now be extra pressure applied to the Life and Health colleagues.

And there, I would say no because we really -- in our underwriting and this underwriting can also be of deals and of treaties. We will keep our focus on profitability and bottom line. And nobody should be told that they must write some piece of questionable business just because it generates top line. So there could be some, let's say, behavioral side effects that I would not want to trigger internally. So that was the only part really of your question where I had a bit of a hesitation -- and you then moved on to perhaps asking for a bit more flavor on the kinds of deals that we could be talking about. For Life & Health, no change really there.

On the one hand, we have our longevity business, historically the U.K. business, but also open for business in North America, where one of our strategic pillars is to continue expanding that. And then the second thing, and you've probably heard me talk about this a bit before, is the fact that there is this, let's say, structural shift happening in the global life insurance market, especially in the United States, where large books of in-force liabilities are being transferred, including assets transferred to asset motivated organizations or to vehicles that are backed by investment houses and where we have a role to play in derisking those by taking out biometric and lapse risk.

And there's no change there, so that continues to be our strategy. On the P&C side, what you said is right. So we would, in particular, be thinking of quota shares, particularly with structured elements that might bring extra revenue with them. So I think you are on the right track there with your question as well.

Next question comes from Jochen Schmidt from Metzler.

Just a very brief question. The one-off in ERGO International due to the sale in Belgium, could you give a number here?

Jochen, I'm afraid we can't. As you can imagine, there are also other parties involved in the transaction, and that would be commercially sensitive. I'm not able to give you the number, and I'm sorry about that.

Next question comes from James Shuck from Citi.

So a couple of things from me, please. Just listening to your explanation about the moving pieces on the normalized P&C Re combined ratio. And you point out the numerator and the denominator effects from large losses. Just interested why that doesn't apply to the reserve releases as well because the reserve releases are coming from the back book across multiple years. and the numerator is declining. So why not increase the PYD expectation from 6%? That's the first question.

And then secondly, just broad brush really, I just wanted to get some insight into the outlook for wind storm season in the U.S. and what kind of season depending on how that turns out, whether it's an active one or a quiet one or in line, how do you think that will play out on that cat pricing? Because at this point, to us, it just looks as if nat cat pricing is on an interninable slide down. So just keen to get your thoughts about what arrest that development.

Okay. James, on the first question, you're actually completely right in your basic logic that if the denominator gets smaller, then reserve releases could get larger. So mathematically, that all makes sense. And the only difference really I would point out at this stage is the 18% outlier expectation is a more forward-looking number that we -- I would say, I don't know if I use the word agile, but we update it on at least a yearly basis, and it's the output of our pricing processes. And so the 18% reflects, I suppose, what we already think internally in terms of what we are pricing into our business.

There's more of a forward-looking number. The 6% reserve releases is a backward-looking number it's more of a slow-moving number based on our experience of what we have been able to release over the years after going through our detailed bottom-up process. And so at this point, I, of course, understand your point mathematically that all else being equal, if we're able to release the same amount of reserves from previous underwriting years at the end of this year, that could come out at a ratio higher than 6% just because the denominator is lower. That's all totally fine.

And my only hesitation in committing to that already upfront is I really don't want to preempt the outcome of our annual reserve review. So I want to give our actuaries an opportunity to look into the portfolio deeply -- and I don't want to, let's say, impair their independence by telling them already at Q1 what the answer needs to be. I think we need a really intellectually rigorous and independent examination of our portfolio, and that's what I would like to see.

I think when it comes to steering because, of course, you know we have the ability to position ourselves a bit higher or a bit lower in the best estimate range. I would say the precedent was already set last year in Q4, actually in the other direction because you'll remember that we showed 5% reserve releases for full year 2025, but it probably could have been 6% -- and so the precedent is set there that if the situation allows, we can be flexible with that number.

But I just hope you understand I don't think it would be right to especially tie the hands of our reserving actuaries who need the opportunity to really look deeply into the portfolio and have a proper look. And then we see how it comes out at the end of the year. You asked about the windstorm season. So I think our scientists and experts are also on the record as saying at least statistically, scientifically in terms of what is modeled the expectation for this season is a bit below average. So they're expecting El Nino conditions.

I think that leads to more vertical wind share, which I think disrupts the formation of tropical storms and hurricanes. You can see I've certainly got a lot more interested in the weather actually since becoming a CFO in an insurance company. I should just say that in the other direction, ocean surface temperatures, maybe not as incredibly high as they were last year, but still pretty high. So I think you still have these 2 offsetting effects. And net-net, the expectation is for a season that's a bit less severe than the expectation was last year.

But actually, it's a good reminder, though, that we might on the basis of the modeling, expect, let's say, 15 tropical storms instead of 16 tropical storms or 7 major hurricanes instead of 8 or something like that. But in the end, it's going to come down a lot to do these weather events make landfall. And if they do, do we end up with a direct hit on an urban area that is densely populated or does it go through a wheat field somewhere.

And in fact, these are things that you perhaps only have an idea about within a few days of the event actually hitting. And so I think -- and perhaps last year, we had a good example of that where there was plenty of storm activity, some very big hurricanes formed, but the only one that really did damage was Melissa. And so we might -- I hesitate to take too much encouragement from this stage from the fact that the scientists are saying the season will be slightly milder because, of course, in the end, we know how much randomness there is when it then comes to insured losses.

The next question comes from Iain Pearce from BNP Paribas.

One on ERGO, firstly, on insurance revenue as well, unfortunately. The organic change in both Germany and International was negative in ERGO year-on-year. I'm guessing pricing was positive in both of those units. So just trying to understand what's led to the reduction in volumes in both the ERGO divisions on an organic basis?

And then the second one was just on the running yield on the recurring yield. If you could just give us some indications of sort of the headwinds that you saw from not receiving any PE distributions in Q1 and how you expect that to look over the course of the year? And what sort of tailwind do you expect from inflation-linked bonds if CPI stays roughly where it is at the moment for 2026, that would be very useful.

Right. To deal with the first one. And if we take ERGO Germany first, there are probably 2 things that I should mention in the context of ERGO Germany. The first is that the life back book, the classical traditional life business is in a runoff phase. And so even though there is new business that is on sale, the business that is sold, whether it's new life products or health or travel, perhaps doesn't always bring in the same level of premium that is running off from the back book. So you a little bit are having to run to stand still in ERGO Germany on the Life and Health side. And I think that effects perhaps we need to live with into the future.

When it comes to the P&C side, I'm pleased to say that there, there was, to some extent, a deliberate conscious effort to focus on profitability in the P&C business, including particularly in the motor business. And so the colleagues really focused on making sure that they got the technical pricing right, even if it meant that fewer policies renewed when they came up to their annual renewal dates.

And I think we're probably starting to see some of the fruits of that also in the good combined ratio that we had in ERGO Germany P&C. So a little bit of a trade-off there, favoring sound profitability at the expense of growth. Now when it comes to ERGO International, I mean, ERGO International, I think, clearly, we should, on average, expect higher rates of growth in ERGO International. And the negative organic change in Q1, this I would treat as more of a onetime effect. This arises from the Spain health business. There is one particular contract or one particular program that was discontinued already last year, I believe, but we were seeing ongoing effects coming into this year.

And once that's off the books, then that should fall out of the growth rates. And really, apart from that, we can look forward to quite solid growth in ERGO International. I think I mentioned ERGO, next a bit earlier, where you have the combination of really strong organic growth in the businesses being written together with increased internalization of the business that they already have. And we are also going to -- this is a bit more of an accounting point, but you know that ERGO has also recently acquired businesses in the Baltics, and we will consolidate that into our accounts for the first time.

And so I'm quite optimistic that the organic change, particularly on the ERGO International side is more one-off in character. And then your other question was quite a different one. So you were then switching attention over to the investment side. I'm afraid I don't have an immediate quantification for you of the impact of the inflation-linked bonds, exactly what that will bring into Q2. I would say, generally, we have been looking to grow the running yield by 10 to 20 basis points each year. And in general, I would be looking to get the number more towards the 3.7% that we had in Q4. But I'm afraid I don't have any more disaggregation of that available for you.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christian Becker for any closing remarks.

Yes. Thank you very much to all of you for joining us today. If you have further questions, please let us know. We are happy to help. Otherwise, we hope to see all of you soon. Have a nice remaining day, and bye-bye.

Ladies and gentlemen, the conference is now over, and you may now disconnect your lines. Goodbye.

Ladies and gentlemen, a very warm welcome at the telephone media conference of Munich Re for the financial figures in Q1 2026. Munich Re's Chief Financial Officer, Andrew Buchanan, will present and explain the results to you. Afterwards, we are happy to get your questions. [Operator Instructions] With this, I'd like to hand over to Mr. Buchanan. Please, Andrew.

Thank you very much, Stefan, and good morning from me as well to all of you. I'm very pleased to present our figures for Q1 of 2026. Munich Re made a strong start to the year, delivering a pleasing net result of EUR 1.7 billion. This performance underscores the group's resilience amid elevated geopolitical and macroeconomic uncertainty. The direct impact of the conflict in the Middle East on our underwriting results remained very manageable. By contrast, heightened volatility in capital markets weighed on the performance of our investment portfolio.

In short, the narrative for the quarter is straightforward. Strong underlying operating performance across all business segments, supported by benign major loss experience was largely offset by weaker investments and currency results. Importantly, for the full year, we are on track to achieve our expected result of EUR 6.3 billion.

Now in my slide deck, Slide 4 contains the most important figures, and I will guide you through them and point out some important aspects. In the top left, you can see the group result of EUR 1.7 billion for the first quarter that I mentioned a minute ago. This result is significantly above the first quarter of the previous year, which was heavily affected by the Los Angeles wildfires. Since this result after 3 months is above our proportional earnings expectation, you can see that we are well on the way to achieving the target of EUR 6.3 billion.

Accordingly, the return on equity after 3 months is also very high. You can see this in the bottom left, a 19.7% return on equity for the quarter. The 3 charts in the top right of the slide show the total technical results, the net financial result and the operating result. So all components of the net result in the top left corner. And in all of these categories, we are currently higher than in the same quarter last year. And some of the drivers for this are mentioned in the text below the graph on the slide.

I will mention briefly that in P&C Reinsurance, a major loss ratio of only 3.5% for the quarter supported the delivery of an outstanding combined ratio of 66.8%, which is well below the full year guidance of 80%. Global Specialty Insurance, GSI, also delivered an excellent combined ratio of 83.7%, where the guidance for the full year is 90% Life & Health Reinsurance delivered a very solid total technical result of EUR 500 million and is well positioned to achieve the guidance of EUR 1.9 billion for the full year.

Turning to ERGO, a result of EUR 235 million in the quarter, a very promising start towards achieving the 2026 net profit target of EUR 0.9 billion. Of that, ERGO Germany contributed EUR 157 million. ERGO International contributed EUR 78 million. Both in reinsurance and in ERGO, we were able to absorb burdens from investments and currency results, underlying the resilience of the business overall. So a very satisfying start to the year and I will go into more detail on those segments in a few minutes' time.

But turning to Slide 5 and the capital position. This is key to our ability to cover peak risks in particular. On the left, you can see that our IFRS equity increased by more than EUR 1 billion in Q1, finishing at EUR 34.6 billion, where the positive effect of the net earnings more than compensated for the outflows from the final tranche of the previous share buyback program, the 2025/'26 program, which was completed before our Annual General Meeting. In the graph on the right, you can see that the leverage ratio has reduced slightly, driven by the increase in IFRS equity as well as the additional CSM contractual service margin, which we also include in the denominator of the ratio when we calculate the leverage.

Turning to the Solvency II ratio, bottom right, you can see that it has declined to 292% from the starting point of 298% at the year-end. This reflects the fact that we have now subtracted the entire EUR 2.25 billion of the new share buyback program, the 2026/'27 program, even though the shares are likely to be repurchased in stages through until the Annual General Meeting of next year. And this effect, this downward effect was dampened by a solid quarter of economic earnings, which helped to bring the ratio back up by a few percentage points.

Now I come to our investment portfolio and our investment strategy, starting with Slide 6. You can see top left, a total of EUR 238 billion in investments for the Munich Re Group overall as well as the allocation between major asset classes. You are, I'm sure, already familiar with this, and the allocation does not change much from quarter-to-quarter as we are long-term oriented investors. Nevertheless, I can report that we slightly increased the equity quota net of derivatives to 3.3% in the quarter. We have also slightly expanded our investments in alternative assets.

Moreover, quite satisfying, if you look at the chart on the bottom left, we benefit from a higher reinvestment yield of now 4.2% in Q1. This increase shows that volatility in the capital markets does not only present risks, but also creates opportunities. And I expect this pleasing reinvestment yield to support our investment income in the coming quarters.

Then to the investment result itself on Slide 7. And here, I may start at the bottom of the graph. You can see that the investment results for the first quarter amounted to just under EUR 1.7 billion. Hopefully, everyone can see the number of EUR 1,682 million that we have for Q1. This corresponds to a return on investment of 2.9% which was a significant improvement compared to Q1 of 2025. But it is a little below our guidance for 2026, where we said that we aim to achieve at least 3.5% return on investment.

Rising oil and gas prices triggered renewed inflation concerns, prompting volatility across bond and equity markets. As a result, we recorded negative fair value changes in both our fixed income and listed equity portfolios. These effects were largely offset by positive revaluations in alternative investments and commodities, demonstrating the value of diversification also within our investment portfolio.

Moving back up to the top of the graph on this slide to the running yield. This came in slightly below expectations in the first quarter and was broadly flat compared with Q1 2025. You can see the regular income number of 3.5% there in the top. So that remained below the elevated level of 3.7% that we saw in Q4 of 2025. The main effects that explain this development in Q1 are: firstly, that we experienced typical quarterly volatility in private equity distributions, which were higher in Q4 of last year and which were lower than usual in Q1 of this year.

And second, regular income was temporarily affected by the accounting treatment of inflation-linked bonds, which have not yet reflected the recent increase in consumer price inflation, which was predominantly in the second part of Q1. Fortunately, in this regard, we expect a catch-up effect in Q2 once the latest CPI developments are reflected and also not to forget that we are coming into dividend season for our equity holdings. Moving into Chapter 2 of this presentation, I comment on each of the market-facing business segments, starting with ERGO. And on Page 9, we set out the results for ERGO Germany.

In the shaded box at the top left, you can see, starting with the third bullet actually, that the contribution to earnings was a net result of EUR 157 million. And looking at the chart on the top right, you can see that the total technical result was even higher at EUR 425 million, clearly above last year's figure, which was already very good. And what is the reason for this? It is mainly due to an increase in earnings in the short-term business, such as travel insurance and short-term health insurance. These contributed nicely to the improvement. The long-term life business has remained fairly stable, but also within expectations with a CSM release into our P&L of EUR 210 million.

In P&C, there was once again a very good combined ratio of 86.7%, driven by a very low major loss burden. And regarding insurance revenues at the bottom left, these have slightly declined compared to the previous year. This was mainly due to the Life business. And bear in mind also that our classic Life business in Germany is in runoff, while the P&C business continued to grow, especially in fire and property lines. The CSM, which we have on the bottom right, increased compared with year-end 2025 as positive operating effects in long-term health and life exceeded releases into earnings.

Now moving to Slide 10 and ERGO International. The International business delivered a solid net result of EUR 78 million, driven by good operating performance, which was partly offset by a lower contribution from our joint ventures compared with what we had in the prior year quarter, which was exceptionally strong. If you first look again at the top right and the total technical result, you can see that this is below last year. And this is because technical profitability in Life & Health was below expectations, but that is primarily due to a one-off effect from a portfolio sale in the Belgian Life business.

In P&C, a combined ratio of 89.5% came in broadly in line with the full year guidance of 89% despite quite some weather-related claims in Poland and the Baltics following severe winter conditions. If you then look at the insurance revenue at the bottom left, you can see an increase, which is also quite significantly assisted by our recent acquisition of ERGO NEXT. It is currently shown here in the line of the chart -- the line of the graph, labeled divestments/investments.

Overall, I am pleased to report that the development of ERGO NEXT Insurance continues very much according to plan. If you then look at the bottom right, you will see an increase in the CSM. The new business CSM stands at EUR 118 million, slightly below the level of last year. The increase in Q1 is mainly also due to operating changes, especially resulting from tariff updates to reflect economic assumptions in the Belgian health business.

Now moving into the reinsurance chapter of the presentation, and Page 12, where we have Life & Health Reinsurance. Overall, the quarter can be characterized as relatively quiet, but also very solid. Let's start again with the total technical result on the top right. The Life & Health business delivered a result of EUR 500 million, slightly above the pro rata annual target. Compared with the prior year, the figure may initially appear a bit low, but the prior year quarter, the number of EUR 608 million that you can see there, was inflated by very positive experience in the U.S., reflecting better claims development than expected and not at the level that we would consider the normal underlying level.

If you then jump down to the bottom right, you will see that the stock of the contractual service margin increased further by around EUR 0.5 billion, driven by solid business growth and positive currency effects. As you know, the CSM essentially stores the profits of the future, providing a strong foundation for sustainably high technical results.

Now I come to the Reinsurance Property and Casualty business on Slide 13 and start with the insurance revenue. This declined by 19.8% compared to the first quarter of the previous year, down to the level of EUR 3.9 billion. So looking bottom left, you can see the final number of EUR 3,923 million there as the revenue for Q1. Partly, this is still affected by foreign currency effects, as most major currencies depreciated against the euro in 2025, especially the U.S. dollar. The reduction also includes organic changes that we have deliberately initiated because we try not to renew business that does not meet our return requirements.

The combined ratio, as I mentioned earlier, was significantly below expectations at 66.8% due to low major losses. When normalized for the low major loss experience, the combined ratio stands at 80.3%, which is within expectations and provides a solid basis for maintaining strong profitability in 2026. At the same time, we acknowledge some upward pressure on that ratio, reflecting the outcomes of the January and April renewals as well as a higher expected level of major losses, which we have increased by 1 percentage point to 18%.

Now I come to the April renewals in P&C Reinsurance specifically on Slide 14. As you know, our reinsurance business is mostly renewed on 3 dates each year, first of the month in January, April and July. The April renewal mainly focuses on the Asian markets, but also includes some global business covering Europe, America and Latin America. And the April renewals produced a good outcome despite a more competitive environment. Overall, we actively reduced renewed treaty volume by 18.5% to maintain portfolio quality while largely preserving terms and conditions.

Please be aware that this decline refers to a rather small book that has been renewed in April, representing about 11% of the total P&C portfolio. And that is important to understand and to bear in mind that the 18.5% reduction refers to a portion of the portfolio, which itself is 11% of the total in P&C Reinsurance. Pricing remained the main battleground in the April renewals, most notably in natural catastrophe business, which accounted for more than 30% of our renewal volume in April. This drove a risk-adjusted price decline of 3.1% in our portfolio. As always, this price change is fully risk-adjusted, which means conservative inflation and other loss trend assumptions and model changes are taken into account. However, based on very good starting levels, we consider the margins on the business we retained to still be healthy overall.

Now I come to the GSI segment. As a reminder, this is a primary insurance business that thrives on underwriting complex or specialized risks globally with a current geographical focus on the U.S. and also the U.K. Since a large portion of the business is in the U.S., currency effects naturally play an important role here. You can see this at the bottom left with the premium volume, which declined by 7.5% compared to the same quarter last year, almost exclusively due to negative foreign currency effects. Similar to the P&C Reinsurance segment, the combined ratio in GSI was also comfortably below the full year guidance. The combined ratio of 83.7% was better than expected, supported by benign loss experience and also a lower expense ratio.

And with that, I come to the outlook, which you can see on Page 17 of the presentation. Our 2026 outlook remains unchanged, and we continue to expect a net result of EUR 6.3 billion for the group. We acknowledge that achieving our reinsurance revenue guidance of EUR 40 billion certainly has become more challenging than initially anticipated when we set the outlook 5 months ago. Nevertheless, our guidance remains within reach. And reasons why I say that are, firstly, that Q1 revenue included some negative premium adjustments based on reporting from clients that we receive with a time lag and where we do not expect these to recur over the remainder of the year.

And secondly, we also see attractive business opportunities ahead. Q1 was a relatively quiet quarter in terms of large deal activity, which we expect to accelerate over the remainder of the year based on a healthy deal pipeline. This is especially the case for Life & Health, but there is also potential in P&C. Overall, we can look back on a successful Q1 and our confidence in the outlook for the rest of the year.

That concludes my presentation on the first quarter figures.

Good morning. Good morning, ladies and gentlemen. I warmly welcome you here at the ICM, the International Congress Center Messe München right here in Munich. And of course, also good morning to everyone online. My name is Nikolaus von Bomhard. And as Chairman of the Supervisory Board, I hereby call to order the Annual General Meeting of Munich Reinsurance Company and in accordance with the Articles of Association, assume the chairmanship of the meeting. I note that all members of the Board of Management and the Supervisory Board are present. The minutes of today's Annual General Meeting will be taken by our notary public, Mr. Jens Kirchner, who, of course, you all know very well at this point. He's sitting right here to my right. You may contact him via the speaker's registration desk.

The Annual General Meeting was duly convened in accordance with the notice published in the Federal Gazette on March 19, 2026. We set up a document area right here on the upper level of the foyer. In this document area, you can view all documents relevant to today's AGM, including the notice of the meeting, the annual report and the remuneration report for the year 2025. The documents are also available on our website, www.munichre.com/agm. You will be able to find them there in the Documents section. Please familiarize yourself with the organizational notes leaflet, which is also available right here in the entrance area. This leaflet contains important regulations regarding the Annual General Meeting and particularly regarding participation, the exercise of speaking and voting rights end of the seating area. These regulations are binding for the meeting unless I expressly amend them here today. The entire meeting, including the general debate, will be streamed on the investor portal. Shareholders and their proxies can follow it there using their individual login credentials.

Now the opening of the Annual General Meeting, my speech as well as the speech by the Chairman of the Board of Management will also be publicly streamed and broadcast via our website. This public broadcast will end before the general debate begins. During the general debate, you may speak on the items on the agenda. If you wish to do so, please submit your request to speak as early as possible at the speaker's registration desk right here in the room. It is over there. I just pointed to it. Please present your admission tickets to our staff at the speakers' registration desk and indicate which agenda item or items you would like to address.

Ladies and gentlemen, with this, I would now like to call order to order agenda item #1. This is the presentation of the adopted annual financial statements, the approved consolidated financial statements and the combined management report for Munich Reinsurance Company, acting in Munich and the group as well as other reports for the 2025 financial year as announced in the notice of the meeting. Now with reference to the Supervisory Board's reports as its Chairman, I would like to highlight a few topics that we addressed, of course, with particular vigor in 2025. Generally, I can say that even in the past fiscal year, the Supervisory Board supported the Board of Management when it comes to working with the company. The work of the Supervisory Board in the last financial year was particularly coined by our future corporate strategy, but of course, also the geopolitical challenges as well as the digitalization initiatives.

The Supervisory Board, of course, pay particular attention to our growth strategy, which was Ambition 2030. And of course, also its main economic drivers. Mr. Jurecka is going to speak about this in more detail in his comments. Also in the past financial year, the company of course, faced enormous geopolitical challenges. Outside of the risk analysis, the geopolitical challenges were also a tremendous factor on our global business as well as, of course, the capital invest of Munich Re. We also analyzed the acquisition of Next Insurance in the United States. This acquisition, which takes the long view in strategic terms and has its roots in an anchor investment made several years ago, yet again underscores the company's commitment to digitalization and technology-driven business models. Now again, this is another aspect that Mr. Jurecka is going to address in his comment.

The Personnel Committee initiated some very important changes to the Board of Management, while the Nomination Committee made preparations for someone to succeed a Supervisory Board member due to leave. I will provide details on these personnel matters separately at the end of my remarks. The various activities pursued by the Supervisory Board and its committees are described in great detail in the report of the Supervisory Board, starting on Page 189 and following of the latest annual report. For that reason, I'll keep today's comments brief. Now already at previous Annual General Meetings, I have stressed how important good corporate governance is to the company and how careful Munich Re is to set a good example in this respect. This makes me all the more delighted to report that the German Association for Financial Analysis and Asset Management or DVFA for short, once again ranked us among the leading DAX 40 companies this year, once again confirming Munich Re's excellent corporate governance.

Now speaking of which, I would like to address a topic that is close to my heart and one that I cannot always understand the public debate upon. Now as you know, we, as a company, sometimes also go against the trend. Now I'm specifically talking about the role of former Board of Management members of listed stock corporations serving on the Supervisory Board of those very same companies. In 2009, the German Stock Corporation Act was amended in a move to strengthen the impartiality of Supervisory Board. Now since then, former Board of Management members have had to wait 2 years before joining the company's Supervisory Board. Now I believe that this is the right approach, and it is also the one we followed when I personally stepped down as CEO. This is so-called cooling off period has proven effective in practice.

Recently, however, I've noticed more and more investors and some proxy advisers that are fundamentally opposed to former Board of Management members joining Supervisory Boards if the intention is for them to serve as a Chairperson. I am skeptical of such a categorical stance on this issue, which goes far beyond the requirements of stock corporation law. In my opinion, the statutory separation between a Board of Management and its Supervisory Board ensures adequate impartiality, at least here in Germany.

As you know, there is no such separation in, for instance, the 1-tier Anglo American system. There, you have to, of course, discuss this question and matter completely differently. However, in this discussion, we can see 2 main issues emerging from the debate, the demand for an impartial Chair of the Supervisory Board on the one hand and the need for outstanding expertise within the Supervisory Board on the other or Supervisory committees in general. But the question is whether this concern about sufficient impartiality is really justified. Now personally, I believe, and you may already know this, I believe that these objections are unfounded.

The 2-year cooling-off period under stock corporation law ensures the impartiality of a former Board of Management members serving at the helm of the Supervisory Board. They are really gone for 2 years. And I can say from my own experience that this period is long enough to allow individuals to distance themselves sufficiently from the company's operational affairs. The German Corporate Governance Code also supports this assessment by providing for a corresponding cooling off period as best practice. Now even the German Federal Financial Supervisory Authority -- so basically, our supervisor recently confirmed in a circular that a 2-year cooling off period for members moving from senior management to a supervisory body ensures the necessary impartiality. No distinction is made between ordinary members and the Chair. Assertions that a previous position on the Board of Management prevents someone from living up to a completely different responsibility on the Supervisory Board are thus not really persuasive, I must say. I also must say this is my personal opinion as well.

Now in my view, this notion disregards the fact that the Supervisory Board is subject to significant checks and balances in the first place. First and foremost, there are the employee representatives who often appoint the Deputy Chair in co-determined Supervisory Boards. Another corrective mechanism is the impartial Chair of the Audit Committee, who, according to the German Corporate Governance Code ought not to be the Chair of the Supervisory Board either. In fact, demanding that former Board of Management members, especially the CEOs should fundamentally be barred from chairing a supervisory body leads to discontinuity and waste indispensable expertise. Now this cannot be in the interest of the shareholders who have only limited insight into the day-to-day running of the company, and I'm saying this with all due respect.

I firmly believe that large stock corporations can only perpetuate in the long run, the success stories they have written over the decade and maintain the resilience that comes with that if they can cultivate their institutional memory. Alongside innovation and the willingness to embrace technology, both stability and continuity play key and decisive roles in a company's success. In the financial services market, in particular, and especially in the somewhat opaque field of reinsurance, industry expertise and the ability to make sound judgments regarding development cycles and business trends over long periods of time are truly crucial. The Chair plays a key role in this process. Their experience with the company allows them to ensure that an appropriate balance is struck between the interest of staff members and shareholders.

Ladies and gentlemen, good corporate governance requires a thorough supervision. Now this can only be achieved if members of supervisory bodies know exactly what to look out for. Former Board of Management members are ideally placed to do this. As such, intentionally accepting a Supervisory Board Chair who lacks such expertise would, in fact, be negligent. Again, this is my personal opinion. And with this in mind, I advocate, again, not a huge surprise, trusting the judgment of legislators that supervisory authorities and the German Corporate Governance Commission and not opposing scenarios in which a former Board of Management member becomes a Supervisory Board Chair provided this serves, of course, the interest of the company concerned. I believe it is fair to expect that the individuals concerned can and indeed will grasp the considerable change in role associated with their move from management to the Supervisory Board.

And if you ask Mr. Wenning, who is, of course, here with us what he's doing right now, he probably would tell you he is currently cooling off. And depending on the -- depending on the developments of what I've just told you and depending on our discussions, the 2 of us, but also, of course, the Supervisory Board will make a decision until the end of the year as to how we're going to proceed forward. Now, thank you very much. This is very encouraging. Thank you very much. Now that completes my relatively long foray into corporate governance and this very special and specific topics. Allow me to now return to today's agenda.

As already announced last year, the Supervisory Board is proposing based on a recommendation put forward by the Audit Committee that the AGM appoint KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin or KPMG for short, as the external auditor for 2026 financial year. We all know them, of course, from -- back in the days -- he's been with us for long enough. The decision to change auditors is the result of intensive discussions between the Audit Committee, the entire Supervisory Board and the Board of Management, followed by a tender process that Munich Re conducted in the 2024 financial year, which was quite extensive, if I may say so. I mean, also by way of it being in 2024, you can see how long it took. The qualifications of the auditing firm and of the audit team were key criteria that the Audit Committee and the Supervisory Board took into account as part of the selection process. This was all exactly what we were looking at throughout this entire tender process.

And incidentally, E&Y was also shortlisted alongside KPMG as part of this process. Now after an in-depth evaluation and discussion of the tender offers, the Audit Committee recommended that the Supervisory Board propose KPMG to the Annual General Meeting as the new external auditor. And the Supervisory Board has therefore endorsed this recommendation. In addition, KPMG is to be appointed as the auditor of our sustainability reporting for the 2026 financial year as well. However, as was the case last year, this resolution is, of course, subject to the proviso that the national legislator requires the AGM to appoint an auditor for this purpose in the first place. However, the relevant legislation transposing the EU Corporate Sustainability Directive has not yet been adopted in Germany to this very day. And so this is still just a proviso.

Coming to the remuneration report, agenda Item 6. As in the previous years, this was prepared in accordance with the statutory requirements. And of course, beyond that, it also contains a number of voluntary disclosures, again, like in the previous years, meaning that I believe in its 38 pages, it provides comprehensive and transparent information on the remuneration paid to members of the Board of Management and the Supervisory Board. However, as the report is available to all of you, shareholders, I will refrain from going into more detail at this point.

And now I'm moving once again to more staff changes. In the middle of the last year, we announced major changes at the helm of the company. Following Mr. Wenning's retirement for personal reasons, on the 31st of December 2025, the Supervisory Board appointed Christoph Jurecka as his successor with effect from January 1, 2026. On behalf of the Supervisory Board, I would like to extend my most sincere thanks to Mr. Wenning. During his decades of service to the group, including, of course, 8 years as CEO -- almost 9 years as CEO, actually, his accomplishments were truly remarkable as reflected yet again in the impressive financial statements for 2025 that we will be discussing with you today.

Mr. Jurecka, of course, is a true expert of the insurance and reinsurance group. And he took over the reins as this proven expert at the beginning of the year at the Board of Management. And of course, such a change triggers other changes. And in this case, of course, we are talking about the CFO. So Mr. Buchanan then stepped into the role of CFO. You're going to be experiencing him firsthand today because certainly, he's going to answer some questions. So he became the Chief Financial Officer to succeed Mr. Jurecka.

Born in South Africa, Mr. Buchanan joined Munich Re in 2011 and served as Chief Financial Officer of the Reinsurance Group from 2017 to 2025. He will be addressing you in German today. Now Mr. Johnson was appointed to the Board of Management as Chief Technology Officer on August 1 of last year. So this was a new division, which we've never had in the group as far as I know. So this was just for technology. Born in the U.K., he has been working for the group since 2017. In 2023, he was appointed to the Board of Management of ERGO Group AG as Chief Technology Officer in addition to his role as Head of the IT organization of the Reinsurance Group. And now you understand why we have this division because for the very first time, it is now actually across the entire business activities. It is now bundled in one person in one position.

Now these changes to the Board of Management, we believe, have set the course for Munich Re's continued success. Furthermore, of course, we are also voting on a new shareholder representatives to the Supervisory Board today because as of today, we are bidding farewell to Mr. Booth, who has resigned from his position with effect from the end of today's AGM. We would like to thank you, Mr. Booth, for nearly 30 years of dedication to the company across all kinds of different functions, including as a Board of Management member and a long-standing member of the Supervisory Board for 10 years. And of course, we wish you all the very best for the future.

So this is, of course, a serious benchmark, but we are pleased to propose a new Supervisory Board member to you for election, and we are very, very happy to propose Frédéric de Courtois, a proven expert in the international insurance industry, who is going to hopefully become a new member of the Supervisory Board. And he understands German. He speaks German, but of course, in a business context, he prefers English, so he is going to address you in English, please.

Thank you very much, Mr. President. Good morning. I am very sorry that I only speak a little bit of German. And therefore, I'm going to speak in English. So good morning. I am Frédéric de Courtois. I'm 58. I'm French. I live in Paris. I'm European. I'm married. And my wife is a university professor teaching historical garden restoration. So quite far from insurance. We have 3 children. I'm a football fan. And here -- let's discuss. I think we can agree on 2 facts. It was a very good match. And the next one will be even more interesting. I'm a tennis fan. I'm a tennis fan, and I'm a tennis player. And I'm reading a lot. I'm interested in too many topics.

Business-wise, I'm a telecom engineer. I am an actuary. I have worked in 4 countries. I have to confess that my first job was in Germany, close to Cologne and Dusseldorf. I worked there 1.5 years. It was long ago. But my German will recover. I've also worked 4 years in Japan, 14 years in Italy and 15 years in France. Basically, I'm the man of 2 big insurance companies. I've worked 28 years at AXA and I have worked 5 years at Generali. My last jobs over the past 19 years have been CEO of AXA Italy. I was CEO of Generali International business. I was General Manager of Generali. And then I was Deputy CEO at AXA. And I was in charge of finance. Risk management, management, strategy, technology and insurance topics, underwriting, claims and pricing.

I'm also chairing Insurance Europe, which is the European Insurance Association. I have left AXA end of March. So I'm a free man. And my main purpose now more than ever is to contribute to our society and help build a better world. Munich Re is a great company. And I'm very grateful and honored to be proposed for a Supervisory Board seat. And if you vote for me, I'll do my best to support and challenge the management team and contribute to Munich Re next successes. Thank you very much.

Thank you so very much, Mr. Courtois. You can already tell, I don't know who should be more happy if he should be more happy or we should be more happy. He's truly quite something. And I can also tell you, and I don't believe that this is a secret, Mr. Zimmerer, who has been chairing the Audit Committee in a very committed manner for a few years now. And I've mentioned this previously as to who can be the successor of whom. He was also somebody who came from outside. He was also a heavyweight. And Mr. de Courtois is sort of warming up already for this exact task, the chairmanship of the Audit Committee. And I believe this is, of course, a very important position. And that's why your vote today is very meaningful as well. So thank you very much, Mr. de Courtois. Now -- having said that, let's talk business. Mr. Jurecka, over to you for the very first time today. He is now going to report to us on the 2025 financial year and provide an outlook on the current fiscal year. All the best.

Dear shareholders, welcome to the Munich Re Annual General Meeting also from me. Now I'm very pleased to welcome you today for the first time as the Chair of the Board of Management. Now standing here is a great privilege. And in the almost 150-year history of our company, I am only the 10th CEO. Now this shows just a deeply rooted continuity, long-term thinking and responsible leadership are at Munich Re. In 2025, we added yet another milestone to our history because on an annual basis, we were financially stronger than ever before. And at the same time, we achieved all the targets of our multiyear Ambition 2025 strategy program. And now with the presentation of our new strategy, Ambition 2030, the path to sustain our success story well into the future has been laid. But let me start by looking at Munich Re's position at the end of 2025.

Now Munich Re is in an excellent financial condition. Our net result in 2025 was EUR 6.1 billion. That is a level of earnings that would have been unthinkable just a few years ago. Now as part of our strategy, Ambition 2025, we surpassed our annual target 5 times in a row and we still had sufficient latitude to even strengthen our reserves. Thus, we didn't just clock up record results, but we also further secured our earning prowess. The net result is certainly the most meaningful indicator of our financial strength, but by no means the only one. With Ambition 2025, we have set ourselves midterm targets up to the end of 2025. And each single one of these targets has been achieved or even outperformed. For return on equity, we had set ourselves an increase anywhere between 14% to 16%. In fact, it went up by 18.3%. For our earnings per share and dividend per share, we have penciled in an average growth of at least 5%. In fact, these values rose by an average of almost 20% per year.

Looking at the solvency ratio, we define ourselves a target corridor of anywhere between 175% to 220%. At the end of 2025, it was actually far higher by 298%. And also, our non-financial commitments were fully honored. One aim was to increase the proportion of women in management positions across the group to over 40%. Now today, this figure stands at 40.5%. And we made significantly faster progress than originally planned with the decarbonization of our investment and insurance portfolios, which is all relevant from a business perspective. So our success benefits all our stakeholders, clients, staff and even society as a whole. And of course, it also benefits you, you as shareholders.

For 2025 alone, we are returning via share buybacks and dividends, EUR 3.5 billion (sic) [ EUR 5.3 billion ] to you. That amounts to nearly 90% of our net result. So subject to your approval, of course, we will then increase the dividend to EUR 24 per share. That's an increase of 20% over the previous year. And compared to the dividend level at the start of Ambition 2025, it actually comes up to 120% increase. But of course, also the share price reflects our excellent business performance.

As part of our Ambition 2025, that is from the start of January 2021 through to December 2025, your value has more than doubled. The shares more than doubled. And thus, they significantly outperformed both the German stock market index and the European insurance sector as a whole. All in all, our total shareholder return, that is the combination of dividends and share price increases to 180%.

So dear shareholders, so far for the facts and figures, which are remarkable in their own right. Now if you consider the circumstances under which we achieved these results, they become even more impressive because implementation of our Ambition 2025 was not done under conditions of a laboratory, no, but they were really done in a period that was characterized by a number of major crises. In 2021, we were still feeling the effects of the coronavirus pandemic. In 2022, Russia's attack on the Ukraine sent shockwaves through the capital markets which, in turn, led to high impairment losses in our investment business and inflation also rose sharply. Claim payments became significantly more expensive for insurers in some cases. And we had the Hurricane Ian that caused some of the highest claim expenditures in history. And in 2023, geopolitical tensions reached a tragic climax with Hamas' attack on Israel on the 7th of October and the subsequent escalation of the Middle East conflict.

In 2024, we saw the third most expensive year ever in terms of insured losses from natural disasters. Our property-casualty reinsurance business proved to be very robust here. And then in 2025, the United States protectionist foreign trade policy caused turmoil on the global financial markets. We experienced considerable currency losses due to the sharp depreciation of the U.S. dollar. Now of course, there were also some positive bright developments. The attractive market environment, the so-called hard market in the property casualty reinsurance gave us tailwind, and we took full advantage of that tailwind.

And we also benefited over the years from the rise in interest rates. But nevertheless, the fact that we were able to generate a steady increase in results in such an unpredictable economic and political environment was anything but self-evident. Rather, it was a result of our strategic foresight and our operational excellence. In the context of Ambition 2025, we made the decision to more intensively diversify our business. We've achieved this by expanding life reinsurance, primary insurance and specialty insurance alike. The increasing contribution to earnings from these less volatile lines of business makes our net result less susceptible to fluctuations overall. That in turn enables us to better offset extraordinary burdens, as I just outlined, in individual lines of business. This principle, however, only works if all business areas are operationally healthy and efficient. That was and is the case. So let me illustrate this with the development of our business fields and segments in 2025.

And I will start with primary insurance. ERGO has consistently achieved profitable growth in recent years and in 2025, generated a profit of around EUR 920 million. Now this represents a significant increase of around EUR 100 million. As a result, ERGO clearly met its annual target. Now developments in the international business and the German domestic market was very gratifying. ERGO once again significantly increased insurance revenue in its international markets in 2025. Its combined ratio was at a very good 90%. Particularly high was the growth in the property-casualty insurance business of [indiscernible] in Poland as well as in the Belgian health business. Also contributing was the full acquisition of the Norway-based health insurance provider, ERGO Forsikring in 2024 and the U.S.-based Next Insurance in 2025. Both these companies were fully recognized in the 2025 figures for the first time.

And with the acquisition of Next, ERGO entered the world's largest insurance market and thereby laid the foundation for further profitable growth in the coming years. In Germany, our business with life and health insurance products developed well. For example, revenue from supplementary insurance such as supplementary dental plans increased significantly. In life insurance, demand increased for our modern pension products and biometric covers, winners of multiple awards. In the Property Casualty business, our focus was on ensuring profitability of that business. And as a result, premium growth was more restrained. The combined ratio was at an outstanding 88.9%, which brings me to our reinsurance business.

Now the contribution to earnings from reinsurance increased by EUR 300 million to EUR 5.2 billion. Insurance revenue fell from around EUR 40 billion to about EUR 38.7 billion. Now one of the main reasons for this was less favorable exchange rates. But as you know, we write a great deal of reinsurance business in U.S. dollars. And in fact, the United States are our largest single market. And accordingly, the effects of a weak exchange rate are plain to see, although we cannot influence currency trends. We can take rational business decisions. So the market environment in the property casualty reinsurance is becoming more competitive. And against this backdrop, we are prioritizing profitability over volume. And so in 2025, we deliberately discontinued business that no longer met our return requirements.

The excellent combined ratio of 73.5% in the Property-casualty segment underscores the quality of our underwriting. And it was another 4 percentage points below the already very good figure from the previous year. None of our direct competitors achieved this level of profitability. So the segment's results ultimately totaled EUR 3.3 billion. Now of course, we also benefited from a favorable major loss outcome because not a single major hurricane hit the U.S. mainland in 2025. The absolute peak risk for reinsurers did, therefore, not materialize. Nonetheless, 2025 was not a year of low losses because no one could forget the record-breaking fires in the Los Angeles area at the beginning of the year. So overall, annual insured losses from natural disasters in the global market once again exceeded USD 100 billion.

And we also benefited from below average major loss expenditure in specialty insurance. The combined ratio for Global Specialty Insurance or GSI for short, was an outstanding 85.9%. Its contribution to the net result was EUR 562 million. GSI for the first time, is reported as a separate segment within the reinsurance field of business. The segment's size and its importance for our group really justified this step. Now unlike traditional property-casualty reinsurance, growth plays a major role at GSI. The specialty insurance market is broadly diversified and offers considerable growth opportunities. We offer insurance solutions, for example, for renewable energy for satellites, for works of art or for vintage cars. And that is just a small selection from our product portfolio. In recent years, GSI's insurance revenue has grown by around 10% annually. And so in 2025, it was slightly lower than in the previous years at EUR 8.6 billion. However, this was due to the already mentioned negative currency effects that I had, as I mentioned before.

Now we also saw very pleasing profitable growth in the third segment of the reinsurance business, namely in Life and Health. And at this point, it is worth taking another look back here because when we started our Ambition 2025 strategy, we started with a normalized total technical result of EUR 550 million. But that was in 2020, under the IFRS 4 reporting standards. At the time, our target was to achieve EUR 850 million by 2025. In the end, and under the reporting standard, IFRS we achieved 17, we achieved EUR 1.7 billion, which is more than 3x as much as in 2020 and exactly twice as much as we had projected for 2025.

A remarkable development was, of course, due to major transactions involving life portfolios here. In recent years, we have observed a structural change in the life insurance market particularly in North America. And here, you find that entire portfolios of life and pension insurance policies are transferred for primary -- from primary insurers, for example, to optimize capital and often by involving specialist asset managers. Now Munich Re identified this trend early on and reinsures the risks of portfolios transferred in such major transactions. So we have there generated more than EUR 3 billion in new business value from major transactions since 2022. Another profit driver are reinsurance solutions to optimize our clients' balance sheets. Here, in 2025, we enjoyed sustained high demand. The claims experience in the traditional business that is namely when we assume biometric risks was slightly higher than expected in 2025, but it was still within the scope of expected random fluctuations and absolutely no cause for concern. In other words, our life business is healthy in every respect.

Now so much on our insurance business. But let us now turn to investment, which is of low less importance in our business model. In 2025, the capital markets developed positively, but we do not rely solely on favorable market conditions, but we aim to realize additional earnings potential through active investment management. And that is something we once again succeeded in the previous financial year. In the short term, we again consciously accepted losses on the disposal of fixed interest investments in order to shift investments to higher-yielding securities. Moreover, we benefited from the positive equity markets. Over the long term, we will continue to expand our alternative investments as we did in private equity and infrastructure in 2025, for example. Thus, we managed to increase the group's return on investment by more than 30 basis points last year, improving it to 3.2% in 2025.

So dear shareholders, our group's success has many faces. To be precise, it is 43,982 faces. because that's how many staff members we employ worldwide. I cannot honor every individual achievement here and now today. But I would like to take this opportunity on behalf of the Board of Management and with all of you here today to thank our entire workforce. So all of you, esteemed colleagues, you are the backbone of our success. And I am very proud to be part of this team. My heartfelt gratitude, therefore, to all of you. And that brings me to the end of my review of last year.

Now I'd like to take a look at what's ahead of us. Before us is our Ambition 2030, and we want to continue our chosen path and actually set our sights even higher. Now I had already emphasized the significance of diversification for our business model. In the coming years, we will place an even greater focus on becoming a diversified insurance group that offers reinsurance, primary insurance and specialty insurance at scale. Doing so, we will enable us -- will enable us to enhance both the absolute size and the relative stability of our net result. And that is the essence of our strategy.

As part of Ambition 2030, we will significantly increase the individual contributions to earnings from life and health insurance, reinsurance from ERGO and from the Global Specialty Insurance. At present, these fields of business currently account for around half of our net result. Our goal is that by 2030, they shall rise to around 60% because this will make us less dependent on the results generated by property casualty reinsurance, which will, of course, remain a major backbone or pillar for our group, but not the only one. And that will be a decisive advantage, especially against the backdrop of the currently more competitive market in property-casualty and reinsurance.

The peak of the hard market of attractive market conditions seems to have come and gone. Prices fell slightly in the most recent rounds of renewals. However, we are coming from a very attractive position. And therefore, prices remain at a good -- at a solid level. But given the global price trend, we hardly expect any growth impetus in the midterm. Instead, we are quite deliberately discontinuing business that no longer meets our return requirements. Now thanks to our broad positioning, it is much easier for us than for others. And what's more, it allows us to manage the cycle in property casualty reinsurance more flexibly. And depending on the appeal and attractiveness of the market, the contributions to our net result from property casualty reinsurance will increase or decrease, and that is the true strength of our business model.

For Life and health reinsurance, for ERGO and for global specialty insurance, we expect strong revenue growth and even higher profitability in some areas. Thus, we will expand promising business initiatives and tap into new markets. Alongside it, we also want to increase our investment income. Thus, we will continue to expand alternative investments in such areas as infrastructure, renewables, real estate or private equity, while doing all this and exercising a sound judgment. Another key component of our strategy is cost efficiency. With Ambition 2030, we have set a specific group-wide cost target for the very first time. We want to achieve total savings of EUR 600 million by 2030. AI, Artificial intelligence will play a key role in this because AI not only helps us to operate more efficiently, it actually enables innovation. And especially for us, as a data-driven group, it is essential to deploy AI strategically.

Now there's no one who can say exactly today what the technology will be capable of in 5 years' time. But it's one thing that if you do not get to grips with it today, you will lose your competitive edge tomorrow. Increases in revenue and profitability and efficiency as part of Ambition 2030 ultimately translate into key 3 targets. Thus, we aim for a return on equity of over 18% by 2030. Then we want to increase our earnings per share by 8% per year. Our solvency ratio shall remain consistently above 200%. Now for you as shareholders of particular interest in all this, for the first time, we are making an explicit pledge to return capital. We plan to increase our total payout ratio from an average of 75% over the past 5 years to over 80% per year. And that means that we will return an even greater proportion of our net result to you in the form of dividends and share buybacks. For the current fiscal year, we have earmarked a net result target of EUR 6.3 billion.

Dear shareholders, I would like to end my speech by returning to a more fundamental topic. Obviously, we are pleased with rising profits. And of course, you are happy about rising dividends. But I do not think this is the only reason you've invested in our company. Just as I did not become CEO of this company solely because I wanted to increase its value. Munich Re and insurance in general stand for much more than that. Especially in today's world, it is important to recognize the social significance of our industry. We live in an unstable world. Established certainties are beginning to crumble and falter. Risks are intensifying. People have the feeling that there's nothing that they can rely on anymore. The war in Iran and its humanitarian, economic and security-related implications are just the latest instant in that shift.

So insurance, of course, cannot resolve geopolitical conflicts or economic crisis, but our services help companies and people around the world to protect themselves against risks and make due provisions for the future. We offer the certainty and a sense of security. So -- allow me to use an image to illustrate our role in the world. Insurance is society's immune system. Insurance protects mitigates and enables progress. Just as the immune system protects the body from life-threatening diseases, insurance protects people and companies from potentially existential losses and keeps the entire system working. But just the immune system remembers pathogens. It has encounter making the body resilient, insurers learn from past incidents. We can encourage sensible decision-making, enable prevention and thus boost society's resilience.

And just like the immune system allows the body to function smoothly and to move freely, insurance makes it possible to take the requisite risks to achieve growth and progress. Insurance grants a sense of security. And only a strong immune system is effective and only an effective immune system can protect an organism. In the same way, our financial strength and prowess and our excellence are essential for us to fulfill our role in society. As CEO, I will do everything in my power to preserve our financial strength and performance. And together with the hearts and minds of the 44,000 colleagues who make up our group and we claim to provide our clients with the best possible support in an ever-changing world and strengthened and buoyed by the trust you, our shareholders have placed in us. With that, thank you very much for your attention.

Thank you very much, Mr. Jurecka for your concise and very fitting, very calm and muted overview of the 2025 financial year and the outlook. You also just said thank you. I would like to cosign this also on behalf of the Supervisory Board. I would also like to take the opportunity to specifically and separately thank the members of the Management Board as well as all employees around the globe for their great personal commitment because, of course, as Mr. Jurecka said, it's all greater than the sum of its parts and everybody did their best. And once again, we had an excellent business result as we could, of course, see from the reports of 2025. So again, from us right here and from everyone behind me as well, thank you very much. Now Mr. Jurecka is sitting next to me. We have one very small thing. Please do say something on the development of the share capital and on the acquisition and the use of treasury shares. Over to you.

Thank you, Mr. Bomhard. Because based on the authorization granted by the AGM, the Management Board has decided with the approval of Supervisory Board to acquire treasury shares by and until the next AGM in April '26 to acquire treasury shares on the stock exchange during that period for maximum of EUR 2 billion over the stock exchanges. Now between the 15th of May 2025 and the 10th of April 2026, a total of 3,674,952 shares of the company were duly acquired, representing a proportionate amount of the share capital of EUR 6,532,293 -- sorry, [ EUR 6,532,932.2 ] which corresponds to 2.81% of the share capital and a total purchase price of [ EUR 1,999,985,555.05. ] The repurchased shares will be duly retired.

Now since the share price is so high, we have to take it back and back, right? Anyway, thank you very much, Mr. Jurecka. I would like to now inform viewers following our Annual General Meeting online that the public broadcast ends here, as I mentioned in my initial remarks. I would like to thank you very much for your interest. Shareholders and proxies who are logged into the investor portal may continue to follow the proceedings of the Annual General Meeting online. In the investor portal.

Ladies and gentlemen, welcome to the investor conference call and live webcast on annual results and January renewals. I'm Morris, the chorus call operator. [Operator Instructions] and the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Christian Becker-Hussong, Head of Investor and Rating Agency Relations. Please go ahead, sir.

Thank you, Morris, and good morning, everyone, and welcome to Munich Re's analyst and investor call on our full year 2025 earnings. As announced, today's speakers are Christoph Jurecka, our CEO; and Andrew Buchanan, CFO of Munich Re Group. Both gentlemen will start with their main messages before we go into Q&A.

And it's now my pleasure to hand it over to Christoph.

Thank you, Christian. And yes, good morning also from my side. Let me briefly recap our Ambition 2025, which concluded last year. It has been a great success marked by strong focus year-after-year. Over the 5-year period, we more than doubled our net earnings. We also significantly increased our return on equity to 18.3%. An exceptional result compared with industry peers and clearly above our cost of capital. This success was primarily driven by disciplined underwriting and active investment management, based on our strong client orientation and the excellent capabilities of our employees and business partners worldwide. We created substantial value for our shareholders who participated in this success to a significant extent.

Dividend per share growth was even higher than the increase in earnings per share. Ultimately, both metrics grew at nearly 4x the pledged 5% per year. And what more, we remain very comfortably capitalized despite materially increased capital returns. And this gives us considerable strategic flexibility as we embark on our new multiyear strategy and Vision 2030. In short, Ambition 2025 successfully accomplished. We over delivered on all targets by closing with another record year for Munich Re. And thanks to strong operating performance across all segments and the leasing investment return, we've exceeded our profit target for the fifth consecutive year.

Net earnings increased by almost 8% to EUR 6.1 billion. And our results would have been even higher had we not deliberately strengthened our balance sheet and future earnings power. We could implement these measures without compromising financial targets, enhancing our resilience in an environment shaped by geopolitical tensions, by capital market volatility and by continuously increasing insurance risks.

At the same time, we want our shareholders to once more participate in our strong financial performance. We have decided to increase the dividend per share substantially again by another 20% to EUR 24. Additionally, we continue with share buybacks also on a larger scale, of EUR 2.25 billion until the AGM next year. Altogether, we will return almost 90% of our earnings, very much in line with our commitment for our Ambition 2030.

This strong capital return is well supported by earnings contributions from beyond the more cyclical P&C reinsurance segment. While this segment remains our largest earnings driver [indiscernible] the combined contribution from GSI, from Life Re, and from ERGO was nearly as significant. And as was the dividend to a large extent. So our highly diversified business model is paying off.

Our combination of a global reinsurer and primary insurer scale gives us a competitive edge in maintaining the high profitability throughout the cycle. Before I delve into the specifics allow me to provide a high-level overview of our segments.

Global Specialty Insurance has been growing for quite a while. We focus on structuring the portfolio in such a way that it generates robust and increasing returns in attractive specialty insurance markets in the United States and increasingly worldwide. [ Life reinsurance ] has delivered a strong earnings trajectory over the past years, a well-performing in-force book [indiscernible] legacy issues and strong new business growth have been the key drivers. ERGO continues to deliver like clockwork with a wide earning share from international operations, the business is becoming more diversified. Taken together, these segments make us less dependent on the P&C reinsurance cycle.

At the same time, P&C reinsurance continues to be the strong backbone of Munich Re Group. The rising contribution from our non-P&C reinsurance segments, however, allows us to manage the cycle with discipline and achieve still attractive profitability levels. And this brings me to the January renewals, which had a good outcome given price competition.

Despite abundant capacity in the market, the discipline regarding terms and conditions was that fast. The high quality of our portfolio was maintained with largely unchanged terms and conditions, as well as structures. The main battleground in this renewal was on pricing, reflected in a price decline in our portfolio of 2.5%, still within the range of our expectations. As always, this price change is fully risk adjusted, which means conservative inflation and other loss [indiscernible] assumptions, as well as model changes are taken into account. Either way, coming off at very high levels, the margins remain healthy.

Consistent with our underwriting DNA, we were prepared to walk away from business which failed to meet our risk-return requirements. Selective growth in certain casualty markets and in credit business offset this only partially. Overall, we actively reduced our renewed PD volume by nearly 8%, with around 3/4 of the decline driven by proportional business, which has limited impact on the bottom line.

Now looking at the individual lines of business. The bubble chart on Slide 8 clearly illustrates our consistent approach, protecting technical pricing adequacy by giving up business where necessary. Rigorous underwriting and strict portfolio management remain essential to safeguarding attractive profitability. After several years of steady rate increases, [ Russia ] was greatest in [ property XL ] and primarily in nat cat. Prices declined by 6%, yet margins remain attractive, similar to what we seen 3 or 4 years ago. Still to maintain high returns, we gave up a meaningful amount of business. Our portion of the business showed a more mixed picture. We reduced positions that [indiscernible] our criteria while selectively expanding in areas such as casualty in Europe and Latin America.

Let's now turn to Global Specialty Insurance. Bringing our specialty insurance operations under one roof is paying off, increasingly recognized by clients and brokers alike. GSI benefits from a large diversified portfolio across specialty lines [indiscernible] still U.S.-focused further international expansion will enhance diversification. As regards to bottom line, GSI achieved an excellent performance in 2025. To some extent, this was supported by below average major losses. But even more so, it was the result of very strong underlying performance of all business units by strictly adhering to our prudent reserving practices.

Building on this success, we continue to emphasize on underwriting and claims excellence. This is the basis to effectively manage the different cycles in specialty markets and manage P&L volatility in the portfolio. At the same time, maintaining cost rigor remains an important lever to deliver on the combined ratio targets. GSI has grown top line by roughly 10% annually in recent years. In 2025, both continued but was dampened by a weak U.S. dollar. Looking ahead, I expect compound annual growth of 5% to 9%, while always prioritizing profitability and underwriting discipline.

Turning to Life and Health Re, which has reached a significantly higher earnings level compared to the start of Ambition 2025. Strong new business momentum continues to support the season, which now stands at about EUR 15 billion despite adverse currency effects. An impressive increase of roughly 40% since its introduction at the end of 2022. Around 7% released to earnings annually. This creates a predictable income stream for many years to come.

More recently, significant tailwind came from large transactions. The Global Life and Health reinsurance market is rapidly transforming, expanding from traditional biometric reinsurance into transactional business. Since 2022 large transactions have new business CSM and operating changes by more than EUR 3 billion, and we are anticipating a healthy pipeline also going forward.

In addition, a significant share of the positive business development came from [indiscernible] business. And additionally we see good opportunities to expand our longevity business in the course of Ambition 2030. This year, we expect the total technical result to increase by more than 10% to EUR 1.9 billion.

I would like to conclude my remarks on the segments with ERGO, which once again met its guidance with strong net earnings. The German business continues to deliver profitable growth. Adjusted for the one-off impact of the German corporate income tax reform, also the earnings improved. In P&C, the top line momentum paused as ERGO prioritized technical performance improvements. Among other measures, one focus was on improving the profitability of the motor business. These efforts are reflected in the strong combined ratio of 89%. Life and Health also performed well. Technical profitability improved when the one-off of the life back book and migration to the new platform continue as planned.

ERGO International business is grown faster than its German operations with dynamic improvements in both our revenue and earnings organically and through acquisitions. The segment now accounts for 30% of revenue and this share continues to rise. With the acquisition of NEXT Insurance, ERGO expanded its international footprint to the world's largest insurance market to the United States, entering the U.S. small and medium enterprises market provides a very attractive growth opportunities. While at the same time, giving us access to purely digital business models and uniting processes. The unit is developing exactly as expected, both financially and operationally. Despite a strong expansion, we maintained an attractive combined ratio. Altogether, ERGO domestic and international developments give me great confidence in its contribution towards our Ambition 2030, always based on technical excellence, and on rigorous cost control.

Beyond the insurance business, capital markets continue to provide tailwinds. Investment income is gradually rising as we reinvest at attractive yields. We aim to unlock additional earnings potential through active investment management, and we closely monitor financial markets to capture short-term opportunities. In 2025, we deliberately accepted EUR 0.8 billion in disposal losses in the reinsurance fixed income portfolio to shift capital into higher-yielding assets. And we also captured opportunities in commodities and in global equities.

Over the longer term, we continue to build exposure to alternative investments to earn illiquidity and complexity premium. Our ambition is to meaningfully increase the conclusion from active management to our return on investment. In 2025, this approach once again paid off, adding more than 30 basis points to the group ROI. Importantly, we do not intend to materially increase our risk appetite going forward.

When presenting Ambition 2030, we emphasized capital repatriation as a key lever in managing capital efficiently to support our return on equity targets. In this respect, dividend growth is particularly close to our hearts. Over the past 5 years, our dividend per share has more than doubled. Munich Re has not cut its dividend in over 50 years, even during crisis. Following a more than 30% dividend increase for 2024, we now propose a further 20% increase for 2025.

Last, the dividend increase again surpasses earnings growth, underscoring our confidence in the sustainability of our earnings and future dividend potential. This confidence is strengthened by the high share of earnings coming from less volatile, less cyclical segments. We will also continue to use share buybacks as a flexible capital management tool. Following last year's increase, we are again raising the amount to EUR 2.25 billion.

We have also exceeded our Ambition 2025 nonfinancial targets. We have set clear targets and the road map for reducing our greenhouse gas emissions, and we outperformed in all 3 core areas. Investments, insurance and own operations. The same applies to our social targets. We committed to achieving 40% of women in leadership positions across the Munich Re Group by 2025, and we reached 40.5%. Building on this success with Ambition 2030, Munich Re remains committed to further reducing greenhouse gas emissions and strive for balanced teams across all aspects of difference globally.

To conclude, we confirm the financial targets for 2026 presented at our Capital Markets Day last December. And with the projected net income of EUR 6.3 billion, we are again on track for another workout result. In line with our strategy, the expected an increase will be driven by the less cyclical segments, Life and Health reinsurance, Global Specialty Insurance, and ERGO, while we expect a muted development in P&C reinsurance given the more competitive market environment.

And 2026 is also shaping up to be a strong start to Ambition 2030. Our Solvency II ratio remains well above 200%. We clearly delivered a payout ratio of 80%, and net income growth, coupled with increased share buybacks should support an earning a share CAGR of more than 8%. And we entered the new Ambition period with an expected ROE above 18%.

With that, I hand over to Andrew, who will lead you through the financials in more detail.

Thank you very much, Christoph, and good morning to you all also from me. Indeed, 2025 was another very successful year for Munich Re. Strong financial performance across all lines of business led to net earnings of EUR 6.1 billion, slightly above our EUR 6 billion target, as you all know and have heard already. In short, a low major loss burden was roughly offset by significant currency losses, while pressure from a lower-than-planned top line was compensated for by higher investment income. Overall, the result was firmly supported by strong underlying performance across all business segments.

I am also particularly pleased with the quality of the results. As we already indicated with our Q3 earnings release, we used the stronger-than-expected financial performance opportunistically to strengthen the balance sheet in Q4, thus supporting a steadily rising and more stable earnings trajectory. In line with this long-term steering approach, we deliberately realized disposal losses in our fixed income portfolio to support the running yields and further enhance our claims reserve prudence, placing us on an even more cautious level.

From an economic sector, our Solvency II ratio increased further to almost 300%, driven by the strong operating performance, also reflecting new business growth in Life reinsurance, and lower capital requirements. At this strong level, we could comfortably afford to increase the dividend substantially. And as you know, we also chose to implement a new higher share buyback program in 2026/27.

Before moving to the full year view, let's briefly look at the isolated Q4 results. In light of those balance sheet strengthening measures, which, by the way, also contributed to somewhat lower algo earnings, we expected Q4 to fall short of the exceptionally high earnings of the previous 2 quarters. This was already implied by the Q3 guidance for the full year being maintained at EUR 6 billion for the group. And against this backdrop, net earnings of around EUR 0.9 billion for the quarter again benefited from strong operational performance.

In P&C reinsurance, specifically, underlying profitability remained strong despite a higher headline combined ratio of 85.3% in the quarter. And the underlying movements merit some closer examination. As part of our customary annual reserve review, which you all know about, we reassessed the reserves bottom-up. And while our actual versus expected analysis once more confirmed a very favorable overall reserving trend, we used the strong financial performance, and also benefit of lower large losses, to further reinforce prudence. And this affected 3 key components of the combined ratio that I would like to run through with you for a few minutes.

Number one was additional prudence in new business. So we booked new business in contract year 2025 at the very upper end of the best estimate range, which overall added roughly 1 percentage point above the usual level of prudence. And this fully explains the elevated normalized combined ratio, which was 83.6% in Q4 stand-alone, but more importantly, the full year figure of 80.1%. So about 1% above the 79% guidance.

The second category is lower reserve leases. So regarding reserves for basic losses from prior accident years, our cautious response had a similar magnitude of impact as the new business effect that I described a moment ago, resulting in lower-than-planned reserve releases, only 1.8% in Q4 and 5.0% for the full year instead of the approximately 6% that we usually expect.

And then category 3 is higher man-made losses. So larger man-made losses clearly exceeded expectations in Q4 as we proactively addressed, reserve uncertainties that we saw in several long-tail casualty lines. And so we built up outlier reserves for these lines. And this, by the way, is what caused the increase in the discount rate to 13% [indiscernible] stand-alone, quite a high [indiscernible], which is about 4% above the typical [indiscernible] of 9% in the quarter stand-alone or for the full year, about 1% above the normal level.

Now turning to GSI. GSI likewise benefited from a quiet major loss Q4, producing a better-than-expected combined ratio of 86.4%. And the full year combined ratio outperformed expectations as well. The 85.9% being a very good number, about 1 point better than the revised outlook of 87% that we issued at Q3.

Life and Health Reinsurance delivered a positive Q4 performance, meeting the full year guidance for the total technical results. Biometric experience was favorable and both the CSM release and the result from the insurance-related financial instruments developed as expected.

Turning briefly to ERGO. As mentioned, we also used the favorable claims development at ERGO Germany to strengthen reserve prudency. Overall, the combined ratio in Q4 and the full year met guidance. In the international business of ERGO, the combined ratio was slightly elevated had a pleasing development in major European markets was counteracted by higher claims in the legal protection business and Thailand, as well as the higher combined ratio of NEXT Insurance, which is now included in the figures for ERGO International. In addition, temporarily higher project costs in several entities, and costs for M&A activity impacted the net result.

Coming back to group level now and the investment return. Overall, we delivered a solid return on investment of 2.8% in the last quarter. While we once more incurred disposal losses, approximately EUR 0.8 billion across the 3 reinsurance segments to support future regular income, we also benefited from almost the same amount in fair value gains, which were mostly booked under P&C reinsurance. The same pattern is reflected at full year level. So positive fair value changes from supported capital markets, offset by deliberate disposal losses. And the full year investment return than the 3.2% was pleasing relative to our guidance of at least 3%. And you will have seen at year-end 2025, the reinvestment yields declined to 3.8%, partly due to reinvestment into shorter maturities at lower yields.

Now before turning to the 2025 full year financial development of the two business fields in more detail, allow me a few remarks on the top line. You will have seen we missed our insurance revenue guidance for the group of initially EUR 64 billion by EUR 3 billion. And to a large extent, this was driven by technical factors like currency effects, especially the U.S. dollar, and premium adjustments, including changes in the so-called NDIC calculation, which I remind you does not affect the bottom line and which we discussed already back at Q3.

But it was also the result of active portfolio management decisions. deliberately giving up business no longer meeting our return requirements. These effects were almost exclusively limited to P&C reinsurance. Thanks to our strong underlying profitability in all segments, we were able to fully mitigate the top line pressure and overdeliver on our net income target.

Now as said, let's take a closer look at the full year financials, this time, starting with ERGO, where both segments contributed to the strong bottom line performance and successfully achieved all of their goals. In Germany, the increase in insurance revenue was largely driven by the Life and Health business, where technical profitability improved, thanks to strong contributions from short-term health and travel business. In P&C, the combined ratio remained at last year's very good level, as a benign major loss development together with an improved cost development, was used to increase reserve prudence.

In contrast, the net profit decreased due to a significant negative one-off in ERGO Germany related to the future reduction of the corporate income tax rate in Germany. On an adjusted basis, if you take out that special effect, the net result increased year-on-year. At ERGO International, we experienced substantial growth, driven by organic expansion, particularly in Poland, Belgium and Thailand, complemented by the first-time consolidation of NEXT Insurance and the Norway [indiscernible] business. Profitable growth, coupled with a higher CSM release, along with favorable claims experience, resulted in a strong technical performance in major markets. Consequently, the combined ratio for ERGO International improved by almost 2 percentage points. In addition, the net result benefited from a significant one-off positive effect related to the consolidation of NEXT Insurance.

Moving on to the reinsurance business field now. Life and Health Reinsurance met its guidance with a total technical result of EUR 1.7 billion. Performance was strong overall, with releases on CSM and risk adjustments in line with expectations, and very healthy in business generation. FinMoRe business also developed positively. Experience variances were volatile throughout the year, slightly negative overall, but within the range of expectations.

At Global Specialty Insurance, underlying growth was held back by the weakening of the U.S. dollar, but the segment benefited from low major losses and solid reserve releases, resulting in an excellent combined ratio of 85.9%. And with around EUR 560 million in net income, GSI contributed very meaningfully to the group results. In P&C reinsurance, the headline combined ratio improved to an all-time low of 73.5%, supported by very benign major losses. Adjusted for additional prudence the normalized combined ratio was fully in line with expectation, as I mentioned earlier. And this brings me to the topic of reserving.

Our reserving position remains very comfortable. High reserve releases were possible despite a cautious reaction to loss trends, in particular in the U.S. liability business, where social inflation remains elevated. Overall, the outcome of the reserve review was again positive. The actual versus expected analysis has now shown consistently favorable indications for 14 consecutive years. Unsurprisingly, property was the largest source of the leases, where the favorable market environment was felt most strongly in the most recent contract years.

For casualty overall, we acted cautiously despite favorable indications. Our strong reserving position would, of course, we believe, have allowed a higher release, which would have been being at the 6% level in P&C reinsurance, in line with our guidance. However, as I mentioned, we decided to use the overall strong performance to reinforce our prudency resulting in the 5% release.

Turning now to the economic disclosure. Capital generation was strong and our Solvency II ratio remains at a very comfortable level, 298%, driven by strong operating performance and lower required capital. This ratio already fully reflects the proposed dividend, while the announced share buyback program will be deducted in Q1 of this year. Our resilience remains very high, even after significant stress events, we would remain far above our capitalization floor.

The well-balanced risk profile and the strong Solvency II position give us significant strategic flexibility to continue developing the group while continuing the disciplined repatriation of earnings. And to conclude with our third important capital metric, [ HGB ], or German GAAP, the improved results of EUR 5.5 billion reflects the strong business performance described earlier. It does also reflect some positive one-off effects from the release of equalization provision and currency, but more important than the results in any 1 year is the stock of distributable earnings, which more than EUR 10 billion provides a robust starting point for continued attractive capital returns.

With these final remarks, Christoph and I look forward to taking your questions, but first, I will hand back to Christian.

Thank you very much, gentlemen. We are now going right into Q&A. As always, my remark, please limit the number of your questions to a maximum of 2 per person. And otherwise, please rejoin the queue, and we can now go ahead, please.

[Operator Instructions] And first question comes from Shanti Kang from Bank of America, Merrill Lynch.

The first one was just on the January renewal volume, which contracted this time. Could you just elaborate on the lines where you walked away, for example, is that U.S. property, et cetera?

And then the second question is just on the GSI revenue growth up 5% to 9% CAGR does look quite ambitious against that 2% that we had this year. And we have some pricing headwinds to encounter through '26. So should we expect some of that 5% to 9% accretion to stem from M&A? And if so, one of your Swiss peers has added in the credit and [ surety ] space. I was just wondering which space might be most attractive to you guys as a proposition?

Yes, Shanti. Christoph here. Yes, January volume. If you look at the minus 7.8% decrease, 3/4 of that are proportional business. And as you know, proportional business is often restructured, or sometimes heavily structured. So therefore, for a lot of that business, the margins have been very low such that this is a volume decrease, not that much affecting the earnings and then talking about lines would be all over the place. Could be property, casualty. So it's proportional business and various treaties.

The second big component is [ Property XL ], so nat cat business. And there, I also would not want to maybe point at a single market, but rather say that across the board, of course, we were looking at price as well as the terms of conditions which remain stable, more or less. And where the price still met our expectations. We're very happy to write the business independently of the fact if that's in the U.S. and Asia and Europe globally. It's really rather about the price. And we saw an average decline of 6%. But obviously, those treaties which -- those contracts which we didn't renew, would have been below that, sometimes significantly below that. And therefore, I think, we actively decided to no longer continue that business and just to really safeguard the profitability of the book overall, very much in line with what we emphasize anyway all the time that we're an underwriting company, and that the key KPI for us is really the profitability of our book. And therefore, nobody in our organization in reinsurance P&C really care so much about volume.

GSI, [indiscernible] different. [indiscernible] volume matters. And therefore, we have explicit growth targets also our ambition, this 5% to 9% CAGR until 2030. Now this is a multiyear target, as you can see. So therefore, I would look at it maybe a bit more from a high-level perspective and a little -- not so much focusing on single cycles and which we might have currently. And by the way, all -- I mean there are many micro cycles in the specialty space. And our specialty is all a very differentiated book of business with some really kind of retail-ish lines in there and others are really the large risks. So it's a very diverse and diversified book.

I think a multiyear target, I think concentrating on single cycle really isn't that meaningful in that context. So therefore, the 5% to 9%, look at it as a multiyear ambition. And by the way, in the past, also, we had several years where we were growing to a similar extent. This was dampened a bit in 2025, in particular, due to FX, I have to say.

Your question is that if M&A is included? No, it's not included. So these 5% to 9%, those are organic growth targets.

Then the next question comes from Kamran Hossain from JPMorgan.

Two questions from me. The first one is coming back to the renewals. I just wanted to think -- clearly -- I don't think -- I'd assume a 7.8% reduction in your renewals. But I think clearly, you set your guidance in December. So you had a fairly good line of sight on kind of what was going to happen. To what extent do you assume that would happen when you set the 2026 guidance? And then I think in the slides you talk about how actually lots of this is proportional business, so it makes no difference to the bottom line [indiscernible] or if you can maybe just run through kind of the mechanics of that?

And then the second question is just on [indiscernible] like one full pace a bit, having [ EUR 10 billion ] there. It seems like you added like EUR 0.5 billion on top after you net out the share buyback and the dividend compared to last year. How should we think about how much you want to keep in the [ HCB ], as the earnings hopefully grow over the next few years?

I'll take the renewal question, and Andrew will then explain HGB. Honestly, I'm very happy I'm no longer the CFO. I don't have to answer HGB questions.

Renewals. Well, as I said in my introduction already. Of course, when we came out with our Ambition, we knew in what direction the market would go. And therefore, I think what I said earlier is that we are still in the range of what we assumed when we published the plan. The small word still implies that it's a bit worse than what we thought back then, but it's still within a reasonable range of what we would have expected then. That's just to give you some color. But I mean, we feel confident to support the outlook, and this is also what I think I emphasized very much in my introduction.

Andrew?

Thank you, Christoph, for generously allowing me to take the question about [ HGV ]. So Kamran, what I would say to you is, we do have an internal system by which we make sure that we have sufficient [ HGB ] distributable earnings on hand in order to give ourselves a reasonable degree of certainty forward-looking that we are able to stick to our past practice of not cutting the dividend and ideally, modestly increasing it. I'm not going to go into the mechanics of that system publicly, but just to say that we shepherd, or we steward that stock of distributable earnings to make sure that we have enough in the pots to give ourselves a degree of forward-looking visibility.

I would also say to you that in this year, financial year 2025, we have the wonderful situation with the [ HGB ] result of EUR 5.5 billion more than covers the sum total of the distribution that we've just announced, which is EUR 5.3 billion. And so we have the opportunity to build this stock further. But that doesn't have to be the case in every year. So the stock of distributable earnings can go up or down. And really, what we're looking for is more of a long-term sustainability rather than going up or down in any 1 year.

And the next question comes from Andrew Baker from Goldman Sachs.

First one, just on the reinsurance revenue. So I hear what you're saying on the P&C Re sort of bottom line focus, about GSI sort of through the planned growth target. Life health Re, already mentioned. But I guess you've got the EUR 40 billion target for 2026. And there's quite a lot going on in the '25 number, as you said, with FX, NDIC portfolio management actions.

So just can you have this target, are you able just to give us a breakdown of how we should be thinking about the components within it? Is there anything you can say on P&C Re, GSI and Life and Health Re, within that would be extremely helpful. And then second one, just on your retro program. It looks like any detail on sort of the decision to reduce your external retrocession and what went into that?

Andrew, it's Andrew speaking. And -- let me take the first one and possibly Christoph will take the second one.

So you're right. We issue our revenue guidance at the level of the reinsurance business fields and the ERGO business fields. And that does give us a certain amount of flexibility then to weather the ups and downs that you do inevitably get in the individual segments. However, what I would point you to is the growth ambitions that we have in our Ambition 2030. GSI, we clearly still have the ambition to grow. And it was mentioned a few minutes ago in 1 of the earlier questions that there we would be targeting growth of 5% to 9%. And based on what we just saw in the last year, if you adjust for FX, and you adjust for accounting effects, then we would have more or less been at the bottom end of that range.

Life and Health Reinsurance is also a growth area for us. And there, you will see we actually have the ambition to grow compound by 8% to 12%. In P&C reinsurance, I would say we have the ambition more or less to be flat from here on in. And if I was to sort of tackle the question in a different way and perhaps split it into parts. You might be looking at a proportional split something like P&C, a bit less than half, maybe 45%, something like that. And Life and Health about 1/3, and GSI about 1/4. That's the kind of split that we think would, in the end, get us to the EUR 40 billion.

And I think the P&C retro question, Christoph is going to take.

Yes, very happy to take that. Thank you, Andrew. Andrew, I mean, the basis for the way how we look at retro is, of course, our strong capital base. So we have a very strong balance sheet. And obviously, our business model is a business model [ of across ] underwriter. So therefore, I mean, if it all using retro, we do it for the purpose of managing volatility, IFRS volatility. And in light of our superior capital strength, in light also of our other options which we have to dampen volatility, we just decided that it would be better to deploy our own capital and keep the margin in-house.

And the next question comes from Ivan Bokhmat from Barclays.

My questions would be on the investment side. I mean the first one, perhaps tying this, to these questions on the top line. I was just wondering what's expectations do you have for your investment balances for 2026 and maybe 2027? Should we expect them to grow in line with revenues? Or is there anything that you can -- any more capital you would want to deploy in a controlled manner?

And secondly, also on the running and reinvestment yields. So if I -- if we look at the P&C Re, the running yield is already at [indiscernible] but the reinvestment across the entire business is lower here. So I'm just wondering if any further recycling of unrealized gains are actually that accretive? And how much do you expect that running yield to improve further from here?

And maybe one more question, if I'm allowed to. Any comments about the alternatives in your portfolio since we've had a lot of capital markets volatility, maybe you have any updated thoughts here?

Ivan, it's Andrew here. I'll take those questions. On the question of investment balances, I think you -- your intuition is pretty much correct, I'd say, at least to first order. I mean we -- whether we want to be or not, we are an asset gathering business in the sense that we bring in premiums and we embed them before we pay claims. And I think you could say first order, our investment balances will grow with premium. That's fair.

On the running yield, the first thing to say is that the realization of disposal gains and the reinvestment that we took place, that we carried out, does not lead to any further updates to guidance or to any further increase in our intended return on investments. So those -- especially the disposals, but indeed, some of the reinvestments had already been carried out at the time of our Capital Markets Day in December, or at the very least we're known at that time. So there is no, let's say, incremental uplift.

Having said that, we do still see some further upside developments in the [ yield ] could be 10 basis points per annum, something of that order of magnitude. And I think with that -- apologies. You had a question on alternatives.

So we are -- we're building up the alternatives, I would say, in a sort of responsible and measured way. And the alternatives for us, I think, call reasonably nicely spread between things like real estate, rather traditional asset class that also -- infrastructure equity, infrastructure debt, and we do also have some private equity holdings. And in a portfolio of holdings, when you have potentially hundreds of individual positions that you've invested in, you always have a large majority that are performing exactly the way you want and other few stars. And then you have a few that are distressed, or are being monitored closely and where you might be taking remedial action. And I think it's no different for us. But I would say, overall, the performance of that portfolio is solid and satisfactory and nothing more to report at this point.

The next question comes from Chris Hartwell from Autonomous.

A couple of questions from me. Firstly, just if I can go to the subject of Solvency. I mean obviously, you grew capital through the year despite the bigger returns to shareholders. And I appreciate that about 300% is technically above [ 200 ] your target. But it's a big gap. And so I was just wondering if we can sort of discuss at the CMD. But I wonder if we can just sort of revisit your sort of capital management plan and how we get even a little bit closer towards that sort of above [ 200 ] to the guidance you have with the CMD?

And then the second question, I was looking at the runoff trial we have in the slide deck. I guess this sort of comes back down to the question of prudence. But I was just sort of looking at your -- sort of yielding movements on most of the upwards. And so I wonder if you can sort of help me just triangulate between, I guess, your comments on prudence. And I suppose the question of what it leads to, which is, why the sort of prudence coming through in year 2 as opposed to in the initial loss pick? If you [indiscernible] what I'm trying to get to on that.

Chris. It's Andrew here. And I'll start, and Christoph, please add on if you'd like to. So on the Solvency ratio, fair enough, fair point, 300% is clearly a lot higher than 200%. I think partly, I would say to you, the points that were made at the Capital Markets Day back in December are still valid. So we decided that an upper bound, or a ceiling on that ratio wasn't meaningful and that we were simply going to express our intention and our wish to bring that ratio gradually down over time, and that we felt more immediately compelling and more concrete was the new commitment on the distribution ratio saying that in every year we would intend to pay out more than 80% of our IFRS net earnings.

And I guess you could say one of the factors that influenced our thinking about the payout this year was indeed the fact that the Solvency ratio continued to go up. And so that's part of the reason -- one of the reasons why I'm quite pleased that we've come out with an offering that is 87% of earnings, which I would say to you is, there's clear blue water there that 87% is substantially above the 80%. And so anybody who thought that we were just going to stick stubbornly to 80% and never pay out anymore. I think we've at least demonstrated upfront a clear willingness and ability to do more when the situation allows it. So I feel good about that.

I would say to you the high solvency ratio there are quite a number of things that could make this come down over time. I think we will continue to grow and we will continue to take more risk. We might not grow much in P&C reinsurance in the short term. We are growing in all of our other segments, and we are going to be taking more and more risk over time, which I think naturally will soak up some of that ratio. I would also say to you, part of the reason why the ratio went up this time was actually because of the required capital. So the denominator ratio actually went down. And that was to a significant extent an FX effect. And this can vary quickly reverse a lot. And so, I think, this gives us the leeway to be able to cope with, for example, a swing back in the U.S. dollar and other currencies. And lastly, that high Solvency ratio gives us all the strategic optionality in the world to do other things with the capital, should we find opportunities that we find interesting.

I'll move on to your second question, which is about the runoff triangle. And I guess you're referring, in particular, to the 2024 accident year. 2024, where you're probably looking at a number of minus [ 495 ] on the slide. So this is sort of development year plus 1. So it's the financial year after the accident year in which the losses were first booked. And this is actually not so surprising for us because we have very asymmetric behavior in that first development year.

We generally release little to nothing if things are running in line with expectations or running well. But we are quite quickly -- we're quite quick to jump on any pockets in the portfolio that we see that are worse than expectations. And where we -- if there are any gaps to be plugged, we plug them quickly. And so you tend to get this effect where actually none of the good news is shown, but any pockets of bad news are immediately shown. So that doesn't particularly surprise me actually that kind of year 1 deterioration.

What you do see in that triangle is then the years 2020 to 2023. This is really where the bulk of the release has come from, from the second development year onwards. And you've really got this wave of wonderful property business performing so well where you're seeing the very healthy releases. And by the way, that asymmetric behavior, I would say we do that in every year, but probably it was even reinforced this time around where we said openly that we were quite opportunistic in strengthening where we saw any pockets of uncertainty.

And the next question comes from Iain Pearce from BNB Paribas.

Just coming back to this insurance revenue guidance. I mean, so if we assume flat for the remainder of the year, that's going to result in P&C Re likely being down in the sort of 3% to 4% range. I mean even then if I take top end of the guidance, for Life and Health, and top end of the guidance, 12% guidance for Life and Health, 9% guidance for GSI. I'm just getting to [ EUR 40 billion ], assuming no FX impact. So maybe you could just talk about a little bit about what you're assuming for FX in that EUR 40 billion? And if we -- if you're assuming that [indiscernible] at the top end of [indiscernible] being at the 1% and life and been at 9% on GSI is the right way to think about the remainder of the outcome for the year?

And then the second one is just on the renewals as well on appetite. I know you sort of flagged that you've been reducing some large proportional business. But when I look at the renewals disclosure, you've produced volumes in every line of business, except credit, and that's sort of volumes, not just price. So can you just talk about where you're seeing opportunities in this market and if you expect the opportunity to grow volumes in various lines of business throughout the remainder of the year?

Thanks. I'll take the first question about revenues. Look, I think there are quite some moving parts under the hood here. The FX rates that we're assuming are more or less the current ones. And so we are not assuming a large, let's say, positive swing in the FX rate. I would say in the different lines of business, we obviously have some advanced visibility of what's in the pipeline, what deals we think we may able to write. And so when you do a bottom-up calculation, we certainly conclude that the [ EUR 40 billion ] is still realistic and still within reach.

I think I would acknowledge probably after last year's volume numbers and after the renewals, it's probably more ambitious than we may have thought at the time that we first set the number. But I think it's still kind of in the range that I would consider to be achievable and realistic.

You want to talk about the renewals?

Yes, I'm happy to do that. Thank you, Andrew. The renewals, I mean, there's plenty of opportunities, obviously. I mean we were able to renew a lot of our business at attractive prices. And the market generally is in a good place still. So therefore, I mean, if you look at these reductions, which are indeed to -- in basically all lines of business, and we were able to place business in attractive price and also [indiscernible] P&C still. And I mean, also even in the proportional space where I mentioned that we reduced significantly. There were growth opportunities and we did grow in the proportional space in some casualty business, for example, in Europe, and that's in America, that's something I mentioned already, I think.

And also credit is still an area where we very optimistic that we are able to grow that business also going forward. But what I would still like to underline again is that the market generally is still in an attractive territory. So there are plenty of opportunities out there.

Then the next question comes from Vinit Malhotra from Mediobanca.

So my two questions. First one is just on the inflation assumptions that you use in your pricing for renewals, for example, I mean, your slide is saying that in Slide 24, is saying that you should warrant close monitoring of inflation. But I mean, in many places, inflation is supposed to be easing off. And I'm just curious that in that 2.5%, what was the inflation kind of, let's say, drying or -- or another way to ask is that if you had not been overcautious on inflation, would you have taken some more business and the minus 7.8% could have looked different? So I'm basically trying to gauge not just conservatism generally, but just the inflation assumption that you are baking into these renewals and the business? So that's the first question.

Second question is just on NEXT. So I think it was mentioned that 4Q NEXT combined ratio was a bit higher. But could you just remind us what's the profit outlook? I mean, I know it's meant to improve a lot over the next -- over this plan. But if you've already -- I mean if we started with 4Q being high -- I mean I just appreciate if you could just revise that for us and just say why it's not a problem or something [indiscernible]?

Yes. Thank you, Vinit. I'll take both of your questions. I mean, first of all, inflation assumptions. I mean, obviously, there are many sources of claims inflation, which often are very detached for midline inflation, CPI inflation and stuff like that. Starting with social inflation. But then sometimes, we already the insured values, sometimes go up significantly and all these kind of loss trends. They're all fully captured in our numbers.

Also model changes. I think in the past, we discussed climate change quite a few times already, all these kind of trends that they are all part of our number. And this is what makes it so difficult to quantify that because that's not something you can do on a portfolio level. You can only do that on a single treaty-by-treaty level, and this is how we approach the pricing. So the individual underwriters that they would for their individual portfolio have to do that assessment and bake it into the price change. And therefore, we wouldn't know for single treaties, but we don't aggregate these numbers and we don't have it in the system, so I really can't take that out.

What I can try to do is just to reemphasize that -- I mean, you know us and all these kinds of things, the way we do them, usually, they are very conservative. But I'm sorry for that. I really can't give you a number because I don't have a number there.

Coming to NEXT. Well, NEXT is totally developing as expected. So the combined ratio, we mentioned here of 110% by the way, for the second half of the year, is also totally line in with expectation. It's a scale up. So you would expect, in particular, the expense ratio still to be a bit higher than what you would expect it to be long term, given that you're investing into growth and that the volume will grow further.

Speaking about growth, the growth we saw last year is also in line with expectation. It's an order of magnitude, 30%, which we saw. So that's nice. That's exactly the growth we were expecting. And also operationally as well as financially everything is exactly going according to plan. So the integration work, the fact that we have now fully consolidated numbers for the first time in IFRS 17 quality, all these kind of things how the company really moves on working in their market and the same entrepreneurial spirit than before all these kind of things really develop as expected. Nothing else I can report.

And the next question comes from Jochen Schmitt from Metzler.

I have some question on the dividend proposal. As you mentioned over the past 2 years, the dividend has grown stronger than net income. Also bearing in mind that your policy is to keep the dividend stable even in years with adverse earnings development. My question is, going forward, can we expect annual dividend growth to be more in line with the profit development if earnings develop as planned?

Jochen, it's Andrew here. And the short answer to your question is yes, it would be more realistic in future years to see the dividend growing something like the rate of growth in earnings per share. I mean the two things don't have to be the same. The targets that we've set for ourselves are growth rates over the 5-year period. So of course, we can have ups and downs. And so the earnings per share growth in a single year doesn't provide a, sort of, absolute anchor.

But what I think we can at least say is that after the big step that we took last year in the dividend and now a 20% step this year, that wouldn't be a sustainable path to increasing the dividend by those kinds of magnitudes year after year into the future. So I think that's certainly where I would want to manage your expectations. And I think where we landed this year where the dividend payout is not too far away from about half of the IFRS earnings, feels like a very responsible and sustainable level where we essentially have the dividend covered twice over.

And we do have one follow-up question from Will Hardcastle from UBS.

It's two. Just thinking about that strong solvency level. Are there any further positives to come, whether it be Solvency reform? And I know you talked about increasing leverage a little bit? And then what are you sort of assuming that, that sort of lands that when you're thinking about the 8% EPS CAGR for the next 5 years, how much absorption of that is baked into that?

Secondly, just thinking about listening to some of the others renewals calls earlier. It certainly seems that they're expecting in the 2026 numbers with where their combined ratios are set, that there's going to be further resiliency build in 2026, all else equal. Do your targets assume that as well? Or are they just assuming sort of a normal reserve rather than exceptional?

Well, it's Andrew here again. Yes. On the Solvency ratio, the Solvency II review, there are a few moving parts to that. And I would -- not only is there the Solvency II review, but we on an ongoing basis, make adjustments and improvements to our own internal model in alignment with our regulator. And so probably when you put everything into the pot together and we consider the positives and negatives that we know are coming down the road, I don't think it's anything dramatic. So you shouldn't really be expecting any big change overall, some big step change in the next couple of years in the ratio, driven by, let's call it, the sort of technical modeling methodology effects. So I think the Solvency II ratio is more likely to evolve as a result of real business effects going forward.

To be honest, the second part of that first question, we haven't really, let's say, targeted, or calibrated a particular trajectory of the Solvency II ratio on the assumption of dividend growth in line with earnings per share growth. So I wouldn't, let's say, have some new number to offer you. And indeed, we haven't said exactly what endpoints of the Solvency II ratio we would like to end up with. So I can only repeat of what we said before, which was that we would see a gradual decline over time being the most likely path.

And regarding your second question, the resilience build. No, on a prospective basis for us, we don't really, I would say, premeditate resilience building beyond, let's just say, the normal prudent level of reserving that we would generally always do. So for us, resilience building has been more than opportunistic activity when the situation allows.

That's really helpful. I guess just coming back, if I can, on that first point, just to be clear, within the 8% EPS CAGR, is it at least a fair assumption to assume it doesn't include any further inorganic deployment? Or is there some within the 8% CAGR already?

Apologies, Well, I think I may have muted myself there for a moment. Schoolboy error. I'm back now. Just to confirm on that. So there is no, let's say, known or planned M&A already baked into the financial goals that we set out in December and that we continue to talk about. And I would say that any M&A that we find that meets all of our quite demanding requirements [indiscernible] then execute of this potential upside.

And the next question comes from Ivan Bokhmat from Barclays.

I've got two small follow-ups, please. The first one, you made some reference to adding to manmade reserves as a third bucket. I mean you've quantified the first and second one. Maybe you could kindly make a comment on the third? I mean is it specifically U.S. casualty? Is the -- anything -- any update or color you can give?

And the second one, also technical. For GSI, could you maybe talk about the reserve runoff there [indiscernible] and what discount benefit have been have you been booking in Q4 and for the year?

Okay, Ivan. The first question, which is about the so-called third bucket, which is the building up of reserves actually for outliers on the casualty side. So just to give you a kind of flavor of what kind of things we're talking about there. So we opportunistically took the opportunity to really put ourselves in a strong position where we see scenarios out there in the world that are discussed in the public domain. So things like, what they call PFAS, which often go by their nickname for other chemicals, that's sort of interesting emerging area. Unfortunately, also in various locations in the U.S., sexual abuse and molestation suits. And then actually just the old classic of asbestos, which is still with us, and which we shouldn't forget about. And we do still see a trickle or a sort of ongoing flow of claims coming in. And we like to make sure that our so-called survival ratio is at a strong level by industry comparison.

So making sure that we have plenty of money in the reserves to be able to pay claims for many years into the future. And I mean, in terms of quantifying that, you could probably say it's a few hundred million. I wouldn't have a single, very precise number available, it's probably a few hundred million.

And then in terms of runoff, also the discount rates that are embedded in the reserves. And I think if I understood the question correctly, it related to Global Specialty. I don't know if I actually heard that correctly. But if so, then we're talking about 4.5% Q4 stand-alone, and about 4% for the full year. And those percentages when we talk about them are expressed in combined ratio points.

Ladies and gentlemen, there are no more questions at this time. So I would like to turn the conference back over to Christian Becker-Hussong for any closing remarks.

Yes. Thanks, everyone, for joining us this morning. If you have further questions, yes, I guess you know where to find us. So very happy to follow up on further questions with the Investor Relations team. Otherwise, I hope to see you soon, and have a nice remaining [indiscernible]

Good morning, ladies and gentlemen, and good afternoon even to those of you who have joined us from Asia today. Welcome to Munich Re's Media conference in which we will focus on the results of the 2025 financial year. Thank you for joining us and for spending the next 90 minutes or so with us.

This event is being broadcast live on munichre.com, and a recording will be available there later today. You can find both the media release and the presentation on our website. I'm joined here today by our Chief Executive Officer, Christoph Jurecka; and by the group's Chief Financial Officer, Andrew Buchanan.

This morning, we announced another record year, exceeding our annual target for a fifth time in a row. So Mr. Jurecka will describe the major building blocks, which explain how we got there. He will also give an insight into the property and casualty reinsurance renewals from the 1st of January, and he will explain how the foundation we have built will support our plans for the current financial year. Andrew Buchanan will then continue to explain our financial results and our financial position in more detail.

[Operator Instructions] And with that, I would like to hand it over to Christoph. Christoph, please.

Thank you very much, Roman, and good morning also from my side. Let me briefly recap our Ambition 2025, which we concluded last year. It has been a great success, marked by strong progress year after year. We have surpassed every single financial and nonfinancial target and thereby created substantial value for all of our stakeholders. Over the 5-year period, we more than doubled our net earnings. We also significantly increased our return on equity to 18.3%, which is an exceptional result compared with industry peers and clearly above our cost of capital. This success was primarily driven by disciplined underwriting and active investment management based on our strong client orientation and the excellent capabilities of our employees and our business partner worldwide. Our shareholders participated in this success to a significant extent.

Dividend per share growth was even higher than the increase in earnings per share. Ultimately, both metrics grew at nearly 4x the pledged 5% per year. And what's more, we remain very comfortably capitalized despite materially increased capital returns. And this gives us considerable strategic flexibility as we embark on our new multiyear ambition, Ambition 2030.

In short, Ambition 2025 successfully accomplished, and we overdelivered on all our targets, also by concluding another record year for Munich Re. Thanks to a strong operating performance across all segments and a pleasing investment return, we exceeded our profit target for the fifth consecutive year. Net earnings increased by almost 8% to EUR 6.1 billion. And our result would have been even higher had we not deliberately strengthened our balance sheet and future earnings power. We could implement these measures without compromising our financial targets, enhancing our resilience in an environment shaped by geopolitical tensions, by capital market volatility and by continuously increasing insurance risks.

At the same time, we want our shareholders to once more participate in our strong financial performance. We have decided to increase the dividend per share substantially again by another 20% to EUR 24. Additionally, we continue with share buybacks also on a larger scale of EUR 2.25 billion until the AGM next year. Altogether, we will return almost 90% of our earnings, very much in line with our commitment for our Ambition 2030.

And this strong capital return is well supported by earnings contributions from beyond the more cyclical P&C reinsurance segment. While this P&C reinsurance segment remains our largest earnings contributor, the combined contribution from Global Specialty Insurance, from Life Reinsurance and from ERGO is nearly as significant and covers the dividend to a large extent. So our highly diversified business model is paying off.

On Slide 6, a bit more on our earnings profile. Our combination of a global reinsurer and the primary insurer at scale gives us a competitive edge in maintaining a high profitability throughout the cycle in P&C reinsurance. Before I delve into the specifics of the individual segments, allow me to provide you with a high-level overview of these segments.

Global Specialty Insurance has been growing for quite a while. We focus on structuring the portfolio in such a way that it generates robust and increasing returns in attractive specialty markets in the United States and increasingly also worldwide.

Life Reinsurance has delivered a strong earnings trajectory over the past years. A well-performing in-force book, free of legacy issues and strong new business growth have been the key drivers.

ERGO continues to deliver like a clockwork. With a rising earnings share from international operations, the business is becoming more diversified. And taking these segments together makes us less dependent on the P&C reinsurance cycle.

And P&C reinsurance, on the other hand, continues to be the strong backbone of Munich Re Group. But the rising contribution from our non-P&C reinsurance segments allows us to manage the cycle with discipline and achieve still attractive profitability levels.

And this brings me to the January renewals, which had a good outcome given price competition. And despite abundant capacity in the market, the discipline regarding terms and conditions was steadfast. The high quality of our portfolio was maintained with largely unchanged terms and conditions. as well as also the structures. The main battleground in this renewal was on pricing, reflected in a price decline in our portfolio of 2.5%, still within the range of our expectations. As always, this price change is fully risk-adjusted, which means that conservative inflation and other loss trend assumptions as well as model changes are fully taken into account. Either way, coming off very high levels, the margins remain healthy.

Consistent with our underwriting DNA, we were prepared to walk away from business, which failed to meet our risk return requirements. Selective growth in certain casualty markets and in credit business offset this only partially. Overall, we actively reduced our renewed treaty volume by nearly 8%, with around 3/4 of the decline driven by proportional business, which has limited impact on the bottom line.

Now looking at the individual lines of business. The bubble chart on this page illustrates our consistent approach, protecting the technical profitability and the pricing adequacy by giving up business where necessary. Rigorous underwriting and strict portfolio management remain essential to safeguarding attractive profitability in our portfolio.

After several years of steady rate increases, the pressure was greatest in Property XL, primarily in NatCat. Prices declined by 6% in that business, yet the margins remain attractive, similar to levels seen 3 or 4 years ago. Still to maintain high returns, we gave up a meaningful amount of business. Proportional business showed a more mixed picture. We reduced positions that no longer met our criteria, while we selectively expanded in areas such as casualty in Europe and Latin America.

Now let's turn to the individual segments, and let's start with Global Specialty Insurance on this slide. Bringing our specialty insurance operations under one roof is paying off, increasingly recognized also by clients and by brokers. GSI benefits from a large diversified portfolio across specialty lines. And while it is still U.S. focused, further international expansion will enhance the diversification. As regards to bottom line, GSI achieved an excellent performance in 2025. To some extent, this was supported by below average major losses. But even more so, it was the result of a very strong underlying performance of all business units while strictly adhering to our prudent reserving practices.

Building on this success, we continue to emphasize on underwriting and claims excellence, which is the basis to effectively manage the different cycles in specialty markets and also manage the P&L volatility in the portfolio. At the same time, maintaining cost rigor remains an important lever to deliver the combined ratio targets.

GSI has grown by roughly 10% annually in recent years. In 2025, growth continued, but was dampened by a weak U.S. dollar. Looking ahead, I expect a compound annual growth rate of 5% to 9% while always prioritizing profitability and underwriting discipline.

Now turning to Life Re on Slide 10. And Life & Health Re has reached significantly higher earnings compared to the start of Ambition 2025. And the strong new business momentum also continues to support the CSM. So the contractual service margin, which is a measure for the value of the in-force book we have. So this CSM now stands at above EUR 15 billion despite adverse currency effects, which is an impressive increase of roughly 40% since its introduction in the year 2022. With around 7% released to earnings annually, this creates a predictable income stream for many years to come.

More recently, a significant tailwind came from large transactions. The global life and health reinsurance market is rapidly transforming, expanding from traditional biometric reinsurance into transactional business. Since 2022, large transactions have pushed new business CSM and operating changes by more than EUR 3 billion and we are anticipating a healthy pipeline going forward.

In addition, a significant share of the positive development came from FinMoRe business or financially motivated reinsurance business. And additionally, we also see very good opportunities to expand our longevity business in the course of Ambition 2030. This year, we expect the total technical result to increase by more than 10% to EUR 1.9 billion.

I would like to conclude my remarks on the segments with ERGO, and ERGO overall once again met its guidance with strong net earnings. On this slide, Slide 11, I start with the German business and the German business continues to deliver profitable growth. Adjusted for the one-off impact of the German corporate income tax reform, also the earnings improved.

In P&C, the top line momentum paused as ERGO prioritized technical performance improvements. Among other measures, one focus was on improving the profitability of the [indiscernible] business. And these efforts are reflected in a strong combined ratio of 89%.

Life & Health also performed well, supported by top-rated products. Technical profitability improved, while the runoff of the Life book and the migration to the new platform continue as planned. ERGO's international business is growing faster than its German operations with dynamic improvements in both revenue as well as earnings organically and through acquisitions. The segment now accounts for 30% of revenue, and this share continues to rise.

With the acquisition of NEXT Insurance, ERGO expanded its international footprint to the world's largest insurance market, the United States. Entering the U.S. small and medium enterprises market provides very attractive growth opportunities, while at the same time, giving us access to purely digital business models and underwriting processes. And the unit is developing exactly as expected, both financially as well as operationally. And despite the strong expansion, we maintained an attractive combined ratio in ERGO International. Altogether, ERGO's domestic and international developments give me a great confidence in its contributions towards Ambition 2030, always based on technical excellence and on rigorous cost control.

Slide 13 covers the investment result. As beyond insurance business, also the capital markets continue to provide tailwinds to our results. The investment income is gradually rising as we reinvest at attractive yields. Additionally, we aim to unlock earnings potential through active investment management. We closely monitor financial markets to capture short-term opportunities.

In 2025, we deliberately accepted EUR 0.8 billion in disposal losses in the reinsurance fixed income portfolio to shift capital into higher-yielding assets. We also captured opportunities in commodities and in global equities. Over the longer term, we continue to build exposure to alternative investments to earn illiquidity and complexity premium. Our ambition is to meaningfully increase the contribution from active management to our return on investment. And in 2025, this approach once again paid off, adding more than 30 basis points to the group ROI. Importantly, we do not intend to materially increase our risk appetite going forward.

On Slide 14, I'll talk a bit about capital repatriation. And when we presented Ambition 2030, we emphasized that capital repatriation is a key lever in managing capital efficiently and to support our return on equity targets. In this respect, dividend growth is particularly close to our hearts. Over the past 5 years, our dividend per share has more than doubled. And Munich Re has not cut its dividend in over 50 years, even during crisis. And following a more than 30% dividend increase for 2024, we now propose a further 20% increase for 2025. Thus, the dividend increase again surpasses earnings growth, underscoring our confidence in the sustainability of our earnings and future dividend potential. And this confidence is strengthened by the high share of earnings coming from less volatile and less cyclical segments. And we also continue to use share buybacks as a flexible capital management tool. Following last year's increase, we are again raising the amount to EUR 2.25 billion.

On Slide 15, a few words on the nonfinancial targets. We have also exceeded our Ambition 2025 in the nonfinancial target space. We have set clear targets, as you know, in all these dimensions and have a road map for reducing our greenhouse gases and outperformed in all 3 core areas, which are investments, insurance and [indiscernible] operations. Our climate strategy is effectively yielding results.

And the same applies to our social targets. We are committed to achieving 40% of women in leadership positions across the Munich Re Group by 2025, and we reached 40.5%. Building on this success with Ambition 2030, Munich Re remains committed to even further reducing greenhouse gas emissions in line with our long-term aim of achieving a Net Zero by 2050. And we will also remain fully committed to striving for balanced teams across all aspects of difference globally, reflecting the diversity of the clients and communities we are working with and for.

To conclude, we confirm the financial targets for 2026 presented at our Capital Market Day last December. With projected net income of EUR 6.3 billion, we are again on track for another record result. In line with our strategy, the expected earnings increase will be driven by the less cyclical segments, Life and Health Reinsurance, Global Specialty Insurance and ERGO and the investments, while we expect a more muted development in P&C reinsurance given the competitive market environment.

My last slide reminds all of us on our financial targets for Ambition 2030 and 2026 is shaping up to be a strong start into that Ambition 2030. Our Solvency II ratio remains well above 200%. We clearly delivered a payout ratio of above 80%. Net income growth, coupled with increased share buybacks should support an earnings per share CAGR of more than 8%, and we enter the new ambition period with an expected return on equity of above 18%.

With that, I hand over to Andrew who will lead you through the financials in more detail.

Thank you very much, Christoph, and good morning to you all also from me. Indeed, 2025 was another very successful year for Munich Re, as you will see on the first slide that I have to present in my section.

Starting at the top left, strong financial performance across all lines of business led to net earnings of EUR 6.1 billion, slightly above our EUR 6 billion target, as has already been mentioned. In short, a low major loss burden was roughly offset by significant currency losses, while pressure from a lower-than-planned top line was compensated for by higher investment income. Overall, the result was firmly supported by strong underlying performance across all business segments.

I'm also particularly pleased by the quality of the result. As already indicated back at our Q3 earnings release last year, we used the stronger-than-expected financial performance opportunistically to strengthen the balance sheet in Q4, supporting a steadily rising and more stable earnings trajectory. In line with this long-term steering approach, we deliberately realized disposal losses in our fixed income portfolio to support the running yield and further enhanced our claims reserve prudence, placing us on an even more cautious level.

From an economic perspective, our Solvency II ratio increased further to almost 300%, driven by strong operating performance, reflecting new business growth in Life Reinsurance and also lower capital requirements. At this strong level, we could comfortably afford to increase the dividend sustainably or substantially in the way that Christoph described a few minutes ago. And we also chose to implement a new higher buyback program for 2026 and '27.

Now before moving to the full year view, let's briefly look at the Q4 isolated result on my next slide. In light of the balance sheet strengthening measures, which also contributed to slightly lower ERGO earnings, by the way, we expected Q4 to fall short of the exceptionally high earnings of the previous 2 quarters. This was already implied by the Q3 guidance update for the full year being maintained at the EUR 6 billion level for the group. Against this backdrop, net earnings of around EUR 0.9 billion again benefited from strong operational performance across the group.

In P&C Reinsurance, underlying profitability remained strong despite a higher headline combined ratio of 85.3%. The underlying movements merit closer examination. As part of our customary annual reserve review, we reassessed all of our reserves bottom up. While our actual versus expected analysis once more confirmed a very favorable overall reserving trend, we used the strong financial performance and the benefit of lower large losses to further reinforce reserve prudence.

And this affected 3 key components of the combined ratio. Number one was additional prudence in new business. So we booked the new business in contract year 2025 at the very upper end of the best estimate range, which overall added roughly 1 percentage point above the usual level of prudence. And this fully explains the elevated normalized combined ratio of 83.6% in Q4 and the full year figure of 80.1%, which is a bit above the guidance of 79% that may have been expected.

Number two was lower reserve releases. And here, I'm referring to releases for prior accident years. And our cautious response had a similar magnitude of impact as for new business, resulting in lower-than-planned reserve releases of 1.8% in Q4 and 5.0% for the full year instead of the approximately 6% that we usually expect.

And the third component I would like to mention is higher man-made losses in the outlier category. And these clearly exceeded expectations in Q4 as we proactively addressed reserve uncertainties in several long-tail casualty lines. This caused also an increase in the discount rate to 13% in the quarter, which is above the typical level of 4% -- above the typical level by 4%, apologies, in the quarter stand-alone and about 1% above the typical level for the full year. And those percentages, as always, are expressed in terms of combined ratio points.

Now Global Specialty Insurance, likewise, benefited from a quiet major loss Q4, producing a better-than-expected combined ratio of 86.4%. The full year combined ratio, the 85.9% outperformed expectations as well, about 1% better than the revised outlook of 87% that we issued at Q3.

Life and Health Reinsurance delivered a positive Q4 performance, meeting the full year guidance for the total technical result, which is the most important KPI we tend to look at for Life and Health Reinsurance. Biometric experience was favorable and both CSM release and the result from insurance-related financial instruments developed as expected.

Turning briefly to ERGO. As mentioned, we used the favorable claims development at ERGO Germany to strengthen reserve prudency. Overall, the combined ratio in Q4 and the full year met guidance. In the International business, the combined ratio was slightly elevated as the pleasing development in major European markets was counteracted by higher claims in Legal Protection business and in Thailand as well as the combined ratio of NEXT Insurance reflected in our numbers for the first time. In addition, temporarily higher project costs in several entities and costs for M&A activities impacted the net result.

Coming back to the group level now and the investment result. Overall, we delivered a solid return on investment of 2.8% in the last quarter. While we once more incurred disposal losses, approximately EUR 0.8 billion across the 3 reinsurance segments to support future regular income, we benefited from almost the same amount in fair value gains, which were mostly booked in the P&C Reinsurance segment.

The same pattern is reflected at full year level. Positive fair value changes from supportive capital markets were offset by deliberate disposal losses. The full year investment return of 3.2% was pleasing relative to our guidance of at least 3%. At year-end 2025, the reinvestment yield declined to 3.8% due to reinvestment into shorter maturities at lower yields.

And before turning to the 2025 full year financial development of the 2 business fields in more detail, first, allow me a few more remarks on the top line. We missed our insurance revenue guidance for the group of initially EUR 64 billion by EUR 3 billion. To a large extent, this was driven by technical factors like currency effects, especially the weakening of the U.S. dollar and premium adjustments, including changes in the so-called NDIC or N-D-I-C calculation, which I remind you does not affect the bottom line. But it was also the result of active portfolio management decisions, deliberately giving up business no longer meeting our return requirements. These effects were almost exclusively limited to P&C reinsurance. Thanks to our strong underlying profitability in all segments, we were able to fully mitigate the top line pressure and overdeliver on our net income target.

Now let's take a closer look at the full year financials, starting with ERGO, where both segments contributed to the strong bottom line performance and successfully achieved all of their financial goals. In Germany, the increase in insurance revenue was largely driven by the Life and Health business, where technical profitability improved, thanks to strong contributions from the short-term health and travel business.

In P&C, the combined ratio remained at last year's very good level as a benign major loss development, together with an improved cost development was used to increase reserve prudence. In contrast, net profit decreased due to a significant one-off item related to the future reduction of the corporate income tax rate in Germany. On an adjusted basis, removing that special effect, the net result increased year-on-year.

At ERGO International, we experienced substantial growth driven by organic expansion, particularly in Poland, Belgium and Thailand, complemented by the first-time consolidation of NEXT Insurance and Norway Health. Profitable growth, coupled with a higher CSM release, along with favorable claims experience resulted in a strong technical performance in major markets. Consequently, the combined ratio improved by almost 2 percentage points. In addition, the net result in ERGO International benefited from a significant positive one-off effect related to the first-time consolidation of NEXT Insurance.

Now let's move on to reinsurance. Life & Health Reinsurance met its guidance with a total technical result of EUR 1.7 billion. Performance was strong overall with releases of the CSM and the risk adjustment in line with expectations and very healthy new business generation.

FinMoRe business also developed very positively. Experience variances were volatile throughout the year, slightly negative overall, but within the range of normal expectations. At GSI, underlying growth was unfortunately held back by the weakening U.S. dollar, but the segment benefited from low major losses and solid reserve releases, resulting in an excellent combined ratio of 85.9%. With around EUR 560 million in net income, GSI contributed meaningfully to the group result.

In P&C Reinsurance, the headline combined ratio improved to an all-time low of 73.5%, supported by very benign major losses. Adjusted for additional prudence, the normalized combined ratio was fully in line with the original expectation of 79%, as mentioned.

And this brings me to the topic of reserving. Our reserving position remains very comfortable. High reserve releases were possible despite a cautious reaction to loss trends, in particular, U.S. liability business, where social inflation remains elevated. Overall, the outcome of the reserve review was again positive. The actual versus expected analysis has now shown consistently favorable indications for 14 consecutive years.

Property was the largest source of releases, where the favorable market environment was felt most strongly in the recent contract years. For casualty overall, we acted cautiously despite favorable indications. Our strong reserving position would, of course, have allowed us a higher release for prior years, perhaps the 6% in P&C insurance that we would often see. However, as mentioned, we decided to use the overall strong financial performance in 2025 to reinforce our prudency, resulting in a slightly lower release of 5%.

Turning now to the economic disclosure. Capital generation on the Solvency II basis was strong, and our solvency ratio remained at a very comfortable level of 298%, driven by strong operating performance and lower required capital. This ratio already fully reflects the proposed dividend for financial year 2025, while the deduction of the proposed share buyback program will follow in Q1.

Our resilience remains very high, as you can see with the sensitivities on the right-hand side of the slide, even after significant stress events, we would remain far above our target capitalization level. The well-balanced risk profile and the strong Solvency II position gives us significant strategic flexibility to continue developing the group while continuing the disciplined repatriation of earnings.

And so concluding with our third capital metric, HGB, or German GAAP, the improved EUR 5.5 billion result reflects the strong business performance described earlier. It does also reflect some positive one-off effects from the release of equalization provision and currency movements. More important than the result in any one year is the stock of distributable earnings, which at more than EUR 10 billion provides a very robust starting point for continued attractive capital returns.

With these final remarks, Christoph and I look forward to your questions. But first, I will hand back to Roman.

Thank you very much, both Andrew and Christoph, for your very detailed explanations. It seems like good news all around. We now have a good 45 minutes left for your questions. Your questions may be asked in either German or English, and they will be translated into the other language as will be the answers. [Operator Instructions]

So let's begin with the first question, and I can already see one by [ Mr. Hubner ]. Mr. Hubner, please?

Sorry, I have no camera available at the moment because of the [ wobbly ] connection. One question for understanding on the outlook of 2026. I don't see any concrete outlook for the Global Specialty Insurance business as the reinsurance business and ERGO already sum up to the EUR 6.3 billion that you're expecting. Can you elaborate a bit on this? Hello? Do you hear me?

We can hear you.

Hello?

Mr. Hubner, we can hear you very well.

Okay. Yes. This, in fact, was my question already.

Yes, Hubner, good to hear you. I think I can very easily answer that question. If we -- the definition of our business fields -- in the definition of our business fields, GSI is part of the reinsurance business field. So if you look at the outlook number, which has reinsurance in the top line, the net result guidance of EUR 5.4 billion, that number would include also Global Specialty Insurance.

Is this a reversal of that split that you did to form Global Specialty Insurance as a separate business?

No, not at all. We have 2 levels. If you look at how we split our earnings overall, we first split it into what we call the reinsurance business field and the ERGO business field. And then on the second level, we split reinsurance out into life and health reinsurance into property and casualty reinsurance and into Global Specialty Insurance. And we split ERGO into ERGO Germany and ERGO International. So it's 5 segments, 2 business fields and then one group result. And what you can see on the slide is that, for example, for the combined ratio, we decided to have an individual target for GSI. So there you see a 90% target for GSI. While on the net result level, we didn't want to have our targets too detailed. And therefore, on the net result level, there is one target for the reinsurance and specialty business together.

The next question will be from the German stream [indiscernible].

[Interpreted] I'm going to ask my question in German. Reinsurance 2026 result, EUR 5.4 billion is shown. So where does this come from? Prices, volumes also in property and casualty insurance. Here, the results are going down, and we can hope that the activities will reach a normal level like in the past.

[Interpreted] Well, Mrs. [indiscernible], I try to answer this question. Now it's a bit more technical then I'd like to ask Andrew to give more of the technical details. But let me start with the strategy. The target, EUR 5.4 billion. This is what we just mentioned. This is the target of the business field reinsurance. And in addition to property casualty, this also includes life and health, and it also includes Global Specialty Insurance. So we start, and I believe we showed you this in all of these segments, in all of these business fields, we start from a position of strength. This means we come from a very good level.

Now with the renewals, and this is what we've shown, the margins in Property/Casualty are going down slightly. Therefore, the contribution of Property/Casualty will be a bit more muted than in the past. But this is the good thing about our business model. We've got 4 pillars: ERGO, Property, Casualty, Life Health. And we've got these 4 pillars. And therefore, we've got this privileged situation that the declines which we have in the classical Property/Casualty Insurance, we can overcompensate them, say, in Life and Health at ERGO and Global Specialty Insurance. So this means all in all, the result is growth. But -- and here, you are right. This is not based on Property and Casualty Reinsurance alone. No, it covers the entire spectrum of our business model.

[Interpreted] Yes. Just one more question, completely different issue, ERGO migration of contracts to the new platform, how much progress have you made so far?

[Interpreted] Well, I mentioned it in the beginning. All this is going according to plan. I touched on it in my brief presentation. So I should say that we are really making progress, but it is a very complex and long-term project. So having said that, I can say things are really moving forward. But what I can say is that the technical platform and the architecture and infrastructure have been set up completely and any components related to collective bargaining are being worked. And of course, the migration to the new platform is just going on at present. 1 million contracts have been migrated successfully already, and they are being administered on the new platform already. But as I said, it's a long-term process. It lasts for quite some time, and we talk about large portfolios in this respect.

We now change back to the English channel to Ben Dyson from S&P Global. Ben, please?

I just had a question on P&C Re and the reserving prudency that you're building in there. I just wondered if you could give an idea of the actual quantum of that and what it's for. I know some of that's for U.S. casualty business. But the reason I'm asking is that it seems like it's coming from 2 places or showing up in 2 places. One of that is a lower reserve release and the other is higher man-made catastrophes -- and higher man-made losses, sorry.

And then the second sort of point related to that is just would you -- given that you're reporting higher man-made loss ratio, how much of that is down to prudency? And is there also any indication that there are an elevated level of man-made losses? And if you could say what those are, please, that would be really helpful.

So maybe I take that one. Ben, it's Andrew Buchanan here. So you asked about reserve prudency. And I would actually invite you to split it into 3 buckets, I think, rather than 2. So the first thing I would say to you is look at the reserve releases of basic losses for prior accident years. And that's where we released the 5%, where usually we would expect and we would guide towards a number of around 6%. And so you know in the calculation of the normalized combined ratio, we usually use the 6% because that's what we would typically expect. So if you're trying to quantify the impact, that's the first part. It's just the 5% versus the 6%. So it's a 1% difference. That's the first thing.

The second bucket, I would say, is we did also look at the newly booked losses for the current accident year. I mean when I say the current accident year, it's 2025, we're talking about here. And there, we also were, I would say, even more than usually prudent. So we were really going to the top of the plausible best estimate range. And that is the thing that drove the normalized combined ratio being at about 80% rather than 79%. So that's about another 1% right there that I think that you can take into account.

The third bucket is, let's say, a little bit less precisely defined, but this is in the outlier category, where you're right, we had an interesting mix of outlier losses last year. There was more focus on man-made events and less focus on NatCat, where it was a pretty benign year, as we all know.

And what I would be able to offer you by way of quantification is that we said by having to -- or by choosing to strengthen reserves, in particular for man-made outlier events that drove the discounting benefits in the combined ratio higher because a lot of these events being man-made take more years to settle to run off than a typical property loss. And so you have cash flows further out into the future and discounting is a bigger topic there.

And that's why we said the discounting benefit embedded in the combined ratio expressed in combined ratio points was 13% in Q4 stand-alone. So pretty high. I mean, 4% above, let's call it, the baseline level of 9%. And then if you spread that across the entire year, it's 1% in the combined ratio over the entire year. That was just the discounting effect. So I haven't exactly answered your question. But that's the best I can do for you there on quantification.

But qualitatively, and I think this is now more the second part of your question is what kind of things are we talking about? We are aware of and we are monitoring risk scenarios out there in the world. If I offer you some examples that are quite widely discussed in the public domain, the so-called PFAS, PFAS, which are also sometimes known by their nickname of forever chemicals. So that's a loss complex we're monitoring. And there are also other events out there in the world like sexual abuse and molestation. And then even the old classics like asbestos, we still need to keep an eye on because claims do also there continue to come in. So that hopefully gives you a flavor of the kind of things we're talking about.

We now turn to a question that came in, in writing, and it comes from Thomas List of the German [indiscernible]. Thomas asks to please explain the lower Life and Health Reinsurance net result, 2025 net result compared to 2024. Andrew?

Yes, happy to do that. Thank you for the question. So the first thing to say is, and perhaps what's driving your question is that at the level of the total technical result, which is a KPI that we really care about for Life and Health Reinsurance, we exceeded guidance modestly. So the result was EUR 1,715 million, so modestly exceeded the guidance of EUR 1.7 billion. And so you would, therefore, say that actually in the underlying insurance and reinsurance business of Life Health, we delivered very solidly.

So then coming to your question of why is the net result lower? Well, the main reason is that the financial result, in particular, the investment result is lower than we would ordinarily expect. And I mentioned earlier in my comments that we engaged in significant trading of the portfolio. And so we realized significant losses across all 3 of the segments within the reinsurance field of business in order to prepare ourselves to earn higher yields in the future. And actually, in Life and Health, that was even reinforced by some special large transactions we did, which led to some losses being crystallized on the asset side. And so it's purely an asset side story, nothing to do with the technical performance of the business.

And Andrew, the mid- and long-term outlook is very much about growth, right?

Absolutely. We see a strong and reasonably full pipeline, particularly in the field of large transactions, which are -- is one of the main things driving growth of Life and Health Reinsurance. The other one I will mention for completeness is expansion of our longevity business, which has been very successful over the last decade. But those trends and that momentum is undiminished. So the fact that the net result in 2025 was lower really has no bearing on that.

Thank you very much. We have another question in writing. This comes from Rachel Dalton of the Insurance Insider. Rachel says, I note that in the fourth quarter for the P&C Reinsurance unit, major losses this year were almost double what they were in the same period last year at EUR 588 million. Can you tell us more about what constituted these losses?

I'll do it very briefly, and then please let us know if you would like to hear more details. The biggest event was Hurricane Melissa, which contributed largely to that number to a large extent to that number. And then also the reserve strengthening Andrew was just talking about in the man-made space is also reflected in the number here. And then as always, the number also includes some positive runoff. So it's a net number, including losses, but also the runoff. And I think that's what we can say on that question.

Thank you, Christoph. We move back to the German channel. We have a question by Maximilian Foltz of [indiscernible]. We see a beautiful background, but we don't see you.

Your 2026 profit target -- sorry, I forgot to open my camera, sorry. Your 2026 profit target is only slightly higher than last year's result, which would have been better without the balance sheet strengthening. Where does this caution come from? Are you taking a caution approach to your target in your first year as CEO?

[Interpreted] Yes, Mr. Foltz, I'm going to answer in German. It is very good that you call this target a prudent or cautious one, and I do not contradict you. I should say that this is a very ambitious target actually, depending on which perspective you take. What is the reason for that? We have got different perceptions, I admit. The reason is the highly competitive market in the Property/Casualty market. Now the point of departure is a very high figure. We exceeded it EUR 1.6 billion. But look at the earnings results 5 years ago of Munich Re. These are enormous increases, which we've seen over time. So we've reached a very high attractive level. Now from there and increase it even further from there. Here, you might say this is really bold. At least it is audacious, but at least it is very ambitious. And then, of course, the more competitive market in the Property/Casualty market has to be added. And you've seen in the renewals, prices have come down and then other things have also gone down. What will happen is that all the other segments will cushion this or balance this out. That is the decreases which we see in the loss Property and Casualty business. And we do so, we accept it very consciously. And as I said, it is an ambitious target.

We stay in the German channel. There is a question by [indiscernible].

[Interpreted] I've got one of those. What happens if we've got the NatCat, our core business now despite ERGO, despite Global Specialty, things are as they are. Now would you have been in a position to have a new record result if you hadn't had a disproportionately low development of the NatCat losses?

And the second question, which I have, 7.8% volume, which you took out or singled out, what were the focal points? What were the areas where you've retreated in which regions?

[Interpreted] Thank you very much for this question. It's a hypothetical question, which is not easy to answer because we do not look at individual driving forces or parameters. There are several and some of these parameters are not known at the time of planning. If you look at the figures, then we certainly benefited the NatCat losses came in less so than expected. And we had another burden because of the currency exchange fluctuations. And these things cannot be known in the beginning of the year. And if you look at the orders of magnitude, you can compare the 2. And I could go on the movements in one or the other direction. But I'm not going to do that because this will be very, very technical.

What I want to say, the beauty of our business is that we've got a wide diversification of our portfolio. And this means we can really cushion or balance out any fluctuations in one or the other direction. And that's our target. Despite these fluctuations, we still want to achieve our targets and give reliable payouts to our shareholders. And we've done so over the last 50 years and also share buybacks. And we want to have a steadily growing earnings trajectory. So this is our ability, our art, so to speak, to cushion all these fluctuations, but it goes in both directions. There are many moving parts, which result in some deviations from the things which we planned in the beginning.

Then renewals, where did we give up business? Well, I would classify it according to the type of business. 3/4 of the declines refers to proportional business and to some extent, structural proportional business. So these are businesses or business where customs gave us, say, a share in the yields of their portfolios. And in this case, in this business, the margin is very low. So we gave up volume and the effect -- the impact of the margin, well, it is easy to see.

And then the other decline driven by the NatCat business, -- and this is -- this has been discussed in the run-up to the 1:1 renewals. Some of the business is declining because of the lower number of NatCat losses. We can confirm that. And this meant that prices went down, and you see it on my bubble chart, about 6% price decline in this NatCat business.

In reinsurance, this is not an ongoing development or trend. So our price ideas well didn't come through in this respect. We gave it -- we gave them up in order to achieve the profitability across our entire portfolio. I would like to say that there is a smaller renewal around in April. And in summer, things will be a bit more interesting, particularly in the United States. But in January, you've seen a trend.

Do you think that this trend will continue? Well, of course, we are not crystal gazing or crystal ball glazing and we cannot do so. And I want to be, say, very cautious in what I say. But it is clear and everyone in this marketplace knows the market environment. And in addition, it depends on the market, depends on the loss experience, depends on the customers. And you cannot simply generalize things in this respect [indiscernible] in Japan. This is the renewal round and prices have gone down in Japan already. So the point of departure is a bit different over there. But nevertheless, I can say that the global development is very well known. And in Japan, we haven't seen any major losses over there. Thank you.

We move back to a question that came in, in writing by Glenn Tyrpa of the Intelligent Insurer. He says, please discuss your treaty shares on deals that you did like and were not inclined to prune at the renewals. [indiscernible] didn't plow savings back into recouping retentions or other lucid terms and conditions. But there is some indication in the market that they chose to build panels. How much of this have you seen? And how did that impact your shares?

Let me try this one. I mean this is a very specific one, and I'm not sure if this is something we are very happy to comment on as all these individual developments we have in several markets, some of them are very specific. And again, our book is broadly diversified. And so therefore, many individual developments, which have been commented on, sometimes they affect us, sometimes they don't. Sometimes they are a small part in our book, sometimes they are a bigger part in our book. But they are in only very rare cases, representative of what is going on in our book across the entire book. And therefore, I would rather not comment on individual facts from renewals in one or the other market.

Glenn, as this was a very detailed question, you might still try to contact our media colleagues after the conference.

We have another question in writing this time in German from Sebastian [indiscernible].

[Interpreted] Just a question to understand more about ERGO. How is it possible that a tax decrease in the future leads to less earnings in the present?

I'm going to answer this question in English to better express myself, and I hope you understand. Your question is very justified because it's not intuitive at first sight that a reduction in the tax rate, the so-called Korperschaftsteuer in Germany, which is supposed to start happening in 2028 in a succession of steps, how this could actually be negative for us. But the answer is hinted at already by my colleague, Roman, is that it relates to the fact that we have deferred tax assets in our accounts already, the [indiscernible] position. And of course, these are calculated on the basis of tax rates and so if you have, let's say, losses that you can carry forward, the value of those losses depends on the tax rate. And so when the tax rate is supposed to reduce, those deferred tax assets become less valuable. And that is immediately visible in our accounts, which is why we take the hit already in 2025.

Now of course, in the medium to long term, a reduction in the tax rate is a positive thing for us because it means that profits that we will earn in the future will be taxed at a lower rate. The issue is that you don't see that yet. That only comes later.

Thank you, Andrew. We move back to -- while we stay in Germany, but we move back to video. Ms. [indiscernible] has another question. [indiscernible]

[Interpreted] I just wanted to get back to the reduction in jobs at ERGO. Can you already gauge how that is going to impact your numbers in any way?

[Interpreted] Yes. Of course, we can very well gauge that, Ms. [indiscernible], because if you remember, in the framework of our Ambition 2030 planning, we, of course, also showed that on a group level, we are going to have a positive result impact due to cost savings. And this impact is contributed by all business fields and all companies around the globe, but of course, also ERGO. And for that reason, all of this is also fully included in our planning.

[Interpreted] And sorry, a follow-up question. How much is ERGO actually going to contribute to that?

[Interpreted] So out of this EUR 600 million, that's what we're speaking of. That's right. I'm speaking of the EUR 600 million. That's in fact, right. And of course, we specifically decided to only give you the number on a group level and not break it down any further because going forward, that is going to allow us for a little bit of flexibility. So please, I hope you understand that we don't take a deeper dive in that. That's a number that we will only give you on a group level.

Okay. We have another question that came in, in writing by Martin Assmann of InsuranceERM. The question is in German. Munich Re had -- [Interpreted] Just recently, Munich Re communicated a strategic realignment in which efficiency gains by way of artificial intelligence should play a big role. And also recently, in the ERGO Group, there were reports on connected HR reduction measures. How can you align these AI efficiency initiatives in the -- with the overall Munich Re strategy? And which clear time frame do you see for the implementation as well as for preliminary tangible impact, both operationally as well as financially within the Munich Re organization?

[Interpreted] Mr. Assmann, thank you very much. So AI, artificial intelligence, that is, of course, a truly revolutionary technology that is available. That is also, of course, going to continue developing very, very quickly. So we are going to be using that even more. We're already using it. We're going to be using it even more going forward. And so many things that we see from the Ambition 2030 is based on this particular technology and how we use it. It includes efficiency initiatives. It includes efficiency gains.

Now efficiency basically just means that things will be more efficient, of course, that basically the cost can be reduced without doing many things very differently. However, with efficiency, we also think that we can do things differently, that we get better with those things that we already do. And on both sides of that spectrum, we have the respective projects already ongoing in ERGO, this is more efficiency driven. In reinsurance, it's a little bit differently oriented, but both, of course, represent a central lever in the strategy.

The time frame -- well, this is all in the Ambition 2030 and the strategy there. But I'm sure you'll also understand that the short-term steps that we want to take are significantly more specific than everything that we're going to be doing closer to 2030. Of course, with technologies that develop so quickly, that just makes sense. And certainly, nobody will be able to tell today what this technology can do in 2, 3, 4 years down the line. And for that very reason, it's very important for us to stick as close to the technology as possible in order to really stay with what's current at the moment to be able to use the technology when it's available, as it's available, while at the same time, being creative, staying creative and, of course, always at an intellectually very high level to really tap into the maximum utilization in order to ensure that we can support our reinsurance and primary insurance business acumen.

Beyond that, I'm unable to specify any further because, as I said, with the technology that develops at this particular speed, I think it's impossible to specify it even more as to what we are going to do in 2, 3, 4 years down the line.

Okay. It would seem that we currently have no further questions. We still have a few minutes left. Are there any more questions?

[Interpreted] Well, since we still have a few minutes, maybe a more ethical question to the Board of Management. Job cuts at ERGO, ever-increasing profits, 90% payouts to the shareholders. How does that all go together?

[Interpreted] Well, Mr. [indiscernible], I think we have to, of course, see we are faced with competition. We're not alone in this world. And therefore, of course, we also have to do certain things that will allow us to continue to have a very solid competitive position. And if you look at today's record levels, as of today, that's, of course, fantastic. But it is anything but assured that we will simply be able to achieve this without really putting in the work. And for that reason, we have set out our Ambition 2030 and the corresponding strategy with the expectation that we are going to remain an attractive partner for all stakeholders. And so we did really put a lot of thought into how we position ourselves between these different stakeholders. However, competitiveness is central to this.

And I think it also belongs in that consideration in terms of the responsibility we have to the employees, we have to the shareholders, we have to the group. And I think that is everything that we have to align in the bigger picture. And that balance, that equilibrium also includes cost measures while at the same time, also involving investments, and we feel really good with this equilibrium that we struck. We could also add to that, that the [indiscernible] negotiating partner said that this agreement could be a potential blueprint for other insurance companies.

Now that being said, any other questions? At the moment, we don't see any. No.

Sorry, I asked whether there were translated anyway. So there don't seem to be any more questions at the moment, which would mean that we are coming to the end of this conference. If you have any follow-up questions, more detailed questions, our media team are, of course, available for you for the rest of today and of course, also tomorrow. You will find their contacts at the end of the media release and obviously also on our website.

Lastly, I would like to remind you of 2 important upcoming dates. The first one relates to our annual report, which will be published on the 18th of March and in which we will make available even more detailed information. And secondly, of course, our Annual General Meeting, which will take place on the 29th of April.

This brings us to the end of today's conference. Again, I would like to thank you very much for your interest and for spending time with us today. Goodbye, and speak soon. Bye-bye.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Ladies and gentlemen, a very good morning to everyone, and a warm welcome to Munich Re's Investor Day on our new Strategic and Financial Ambition 2030. My name is Christian Becker-Hussong, and I'm Head of Investor Relations and Rating Agency Relations.

And it is my pleasure to introduce to you today's speakers, which I will do according to the agenda for today's presentations. Joachim Wenning will kick it off with the CEO perspective, followed by our CFO, Christoph Jurecka, who will introduce to you the group's financials. Then we will turn to the business fields, starting with ERGO and its CEO, Markus Rieß, before Thomas Blunck, CEO of Reinsurance, will conclude with his presentation. Afterwards, we will go right into Q&A without any break. Please note that only those participants can ask questions who have registered prior to today's event. [Operator Instructions].

And in the interest of time, let's kick it off. Joachim, the floor is yours.

Thank you very much, Christian. Ladies and gentlemen, dear colleagues, good morning, everybody, also from my end here, and thanks for your interest in our strategic course going forward. Our future Ambition 2030 is again a 5-year program. And I think it's important to recapitulate where we come from.

For this, please look at this graphic. Coming back out of the pandemic low in 2020, we wanted to reach the summit by 2025. And in fact, we made such good progress each year that we set higher targets for the following year, higher and higher. And in fact, we will likely end this year with an annual result of EUR 6 billion. This is 2 to 3x as much as in previous years.

As you know, we will probably surpass our financial targets from Ambition 2025 by the end of this year by quite a bit. We will presumably achieve a return on equity of around 18%. Earnings and dividend per share have risen significantly, far more than the pledge 5% every year to date. And what's more, we are capital rich despite materially increased capital returns. In short, Ambition 2025 more than accomplished.

Let's take a closer look at the return on equity. The main drivers of this outstanding performance were excellent underwriting and active investment management. We have vigorously expanded our business with attractive margins and optimized our investment returns. We are particularly pleased that our success is based on all parts of our business, reinsurance, be it P&C, be it Life and Health, Global Specialty Insurance, ERGO, be it Germany, be it international, investment, everyone has delivered.

And let me give you a few examples here. I start with property casualty reinsurance. Remember 2022 and remember 2023, we grew boldly while the capital market displayed doubt, and our competitors were unwilling and/or unable to keep pace. We have ideally capitalized on the resulting hard market. Our earnings have practically doubled. The combined ratio currently stands at an outstanding 79% for Life and Health Reinsurance.

The expected total technical result of EUR 1.7 billion is now twice as high as projected at the beginning of Ambition 2025. Major transactions in the U.S., the financially motivated reinsurance business, longevity business, but also organic growth in the bread-and-butter businesses in the U.S., but also Asia and they are particularly in India and China contributed to this doubling.

Global specialty insurance. This has become really a key driver -- growth driver of our group as expected. With over 15 product launches in the last 5 years, we have significantly broadened the offering in the U.S. middle market and are well on our way to becoming a key provider in this segment. Or let's take ERGO Germany. It has grown in a largely saturated market, as you're aware, above all, again, due to excellent products and to its successful hybrid customer sale model. And the combined ratio in Property Casualty there is at the excellent level of 89%.

ERGO International has been growing both organically and inorganically. Its share of revenue has risen to 30% and the share of total earnings to as much as 40% and the combined ratio there being at a good level of around 90%. Investments. In the last 5 years, our running yield has improved by almost 150 basis points due to the general rise in interest rates, but active investment management has contributed at least another 20 basis points per year on average.

For shareholders, the excellent performance over the Ambition 2025 period has manifested itself in leading total shareholder return. But the question is what propelled us to this top position. And we think it's 3 things: performance, diversification and capital management. I start with performance. It takes courage to grow when others prefer not to, but also resolve to withdraw when circumstances start deteriorating. And all of this is based on excellent underwriting and understanding of risk without allowing ourselves to be or becoming disconcerted. And all of this is underpinned by reliably and consistently managed customer relationships. And all of this, of course, is also based on excellent claims management. In turn, our net result has more than doubled in just 5 years, outperforming our peers by 25 percentage points annually.

Second, diversification. We have grown profitably in Life and Health Reinsurance, in ERGO and in Global Specialty Insurance organically and inorganically. And it is important to understand and repeat that the more we grow in these business pillars, the better we will be in the P&C reinsurance business because we can take on more exposure in a hard market, yet withdraw more in a soft market.

Third, capital management. We recently returned an average of 75% of our profits in the form of dividends and share buybacks. We have not rationally put our excess capital at risk. Instead, we now earn 18% return on equity, and this includes our excess capital. And thanks to our focus on performance, the consistent diversification of our portfolio and disciplined capital management, we have created great benefits for our stakeholders.

Now this is impressively demonstrated by the following key figures on this slide. We have practically doubled the dividend per share and the share buyback as part of Ambition 2025. Last year's total amount distributed was EUR 4.6 billion. The Net Promoter Score for measuring customer satisfaction has risen continually both in reinsurance and at ERGO. Employee engagement at high levels across the group. Countries worldwide have benefited from our value creation by means of Munich Re's tax payments totaling around EUR 25 billion.

So to summarize, we will have honored all our financial commitments and all our nonfinancial commitments by the end of this year. We managed to do this despite the initial expenditure attributable to the COVID-19 pandemics, despite low interests, and then followed by a sharp rise in the interest rates and also resulting sharp rise in inflation rates and despite resulting high valuation losses on the asset side, despite a massive increase in claims inflation. We also grew our earnings in spite of the wars in Ukraine and Gaza and the associated uncertainties, and despite a rising share of natural catastrophe losses being insured, et cetera, et cetera. We are listing these headwinds to underline that we have been resilient over the years, not just lucky.

So what comes next is Ambition 2030. The motto will be Outpeak, Outpace, Outperform. Outpeak means going higher. We will boost our net result to new records beyond EUR 6 billion. The pillars of success will remain an excellent corporate culture, outstanding grasp of the market, unparalleled staff expertise, excellent underwriting, outstanding investment and stable earnings through diversification.

Outpace means becoming more efficient. We will optimize our organization to meet its peak potential by reducing complexity to get faster and become even more efficient and top performance at high speed inevitably leads to outperformance. We pledge the return on equity of even more than 18% by 2030.

This, of course, is ambitious, but nevertheless realistic. Reading the trends of increasing large losses, the favorable conditions for our industry remain largely unchanged. Reinvestment yields will continue to foster our investment income over the next 5 years. Growth is poised to stay positive as well and continue providing us with good business opportunities.

I now come to the heart of Ambition 2030, and it consists of 4 parts: a financial ambition, a capital management ambition, a nonfinancial ambition and what we call enablers. We have assigned key strategic levers to all of them in the white boxes of this slide. Levers that we will apply and the better we do this, the more everyone will ultimately benefit, shareholders, clients, employees and communities.

So let me start with the financial and capital management ambition. Christoph is going to tell you more about the capital management ambition later. To date, we had aimed for a return on equity of between 14% to 16%. We started Ambition 2025 at barely 12%. Going forward, we expect to achieve more than 18%. So in other words, we plan to consistently perpetuate the very high returns of today. This will be supported by growth, improved efficiency and higher investment income.

I would like to broadly and briefly, the later speakers will tell you more details, address the strategic levers for achieving the financial ambition. First, we expect even greater profitability in underwriting. That is the combination of business performance and business development. Life reinsurance will continue its robust growth trajectory. Global Specialty Insurance will continue to grow and in turn, increase its earnings. The same will be true at ERGO, bolstered by NEXT. And even if we are currently -- just currently a little bit more cautious in P&C reinsurance. The reinsurance segment as a whole and more so even the whole Munich Re Group will continue their upward trend.

Second is efficiency. ERGO is planning a new efficiency campaign, which will help it to gain ground on the competition. And new standards in reinsurance will assure that future growth will consistently also grant economies of scale. Third, our investments. They will generate higher returns, partly because of the continuous tailwind from higher reinvestment yields and also because we will further expand our portfolio of alternative investments.

Our Ambition 2030 also has a nonfinancial component. And one of this is the DEI ambition, which we will extend to embrace all aspects of diversity. Thus, each Munich relocation will define and pursue its own DEI targets of greatest strategic importance. And in terms of our planet climate, we remain committed to our long-term aim of achieving net 0 greenhouse gas emissions by 2050. This applies both to the insurance and the investment portfolio.

And here on this slide, I want to highlight that functional excellence is the backbone of our business success. On the one hand, quality can be further enhanced by more closely integrating AI and human expertise. On the other hand, efficiency increases by eliminating redundancies in processes and systems where they still exist. One IT will foster this mission. What's more the standardization of our various IT infrastructures will reduce costs, will improve our own cybersecurity and streamline the development of business applications.

We are already deploying AI in many cases in the group. However, technological progress has accelerated, and it has increased the number of potential value-creating applications. We want to become a pioneer in this area. And also in this regard, ERGO and maybe later also Munich Re can benefit from NEXT. Last but not least, human resources more than ever will be benefit from consistent harmonized strategies that definitely combined the conventional HR processes of recruitment, development, remuneration and so on.

So here comes a slide that outlines the past decade and the coming decade of our strategic journey. From left to right, we move from the past into the future. The dark sections of the pie chart represent the earnings contribution of P&C Reinsurance. The light sections correspond to the earnings contributions of Life and Health Reinsurance, ERGO and Global Specialty Insurance.

In the past, the group result was largely dependent on P&C Reinsurance and was correspondingly volatile. The picture has significantly changed as part of Ambition 2025. P&C Reinsurance has optimally capitalized on the hard market. Growth and earnings have risen materially. In this respect, the dark sections of the chart actually should have become even larger. In fact, Life and Health Reinsurance, ERGO and Global Specialty Insurance have also made strong gains in growth and in earnings. And as a result, today, the 2 categories are equally strong in terms of earnings. We are not only performing significantly better than 5 years ago. Our earnings are also much more stable.

And this trend will continue over the next 5 years. Life and Health Reinsurance, Global Specialty Insurance and ERGO will continue to grow more and earn more, while P&C Reinsurance will possibly move a little bit more sidewards. The entire group will earn more in absolute terms with even greater earnings stability.

And I add one more pie in this chart now. Depending on the attractiveness of the P&C Reinsurance business 10 years from now, so beyond 2030, the share of earnings could rise again in hard markets or fall in soft markets. It is clear which prefer -- which scenario I would prefer, but neither is a problem. After all, we will earn consistently high returns on equity in both scenarios. And this is precisely where the power of diversification comes into the play.

I wish to conclude by saying that our target picture is clear and so are the strategies for the coming years. Our financial plan is in place. We pledge to our shareholders that we will continue to outperform, generate a return on equity of more than 18% and pay out more than before. Many thanks.

And with this, I hand over to you, Christoph.

Thank you very much, Joachim. And yes, a very good morning also from my side. It's a big pleasure to present the financial and capital management cornerstones of our strategy now.

If we go on my first slide, what you see here is that our new financial targets are well designed to align our internal value-driven steering methodology with the way how capital markets look at the value of the company, so the total shareholder return.

Profitable organic business expansion remains the backbone of our strategy. Going forward, we expect attractive earnings per share growth of more than 8%. At the same time, our commitment to high capital returns is even more pronounced. We promised that more than 80% of our higher net income will be distributed to shareholders via increasing dividends and buybacks. These even higher repatriations are well funded by our strong capital position [Audio Gap] earnings per share growth, Munich Re delivers industry-leading financial targets.

On my next slide, I would like to provide you with some more color on the different drivers that improve our profitability over the next 5 years. This year, we expect, as you know, a EUR 6 billion result, which is also well substantiated on an underlying basis. And this EUR 6 billion result translates immediately in a return on equity number of around 18% and thereby clearly exceeds our Ambition 2025 targets.

Now coming off that already high basis, we will further expand our profitability by increasing underwriting and investment result by improving the efficiency and by continued stringent capital management.

If you look at the ROE walk, I think very nicely illustrates that the contribution of the first 3 RoE drivers is of a similar order of magnitude, which in a way also depicts how well diversified we are when it comes also to business models, not only to portfolios. And what you also see is that despite the fact that we, of course, will continue to be an underwriting company, also the investments can have a valuable -- can deliver a valuable contribution to our overall value proposition.

Now if you look at the group target of above 18%, I would like to emphasize that this does not only apply for the group overall, but also for ERGO individually and also for the reinsurance business field individually. But if you look at the various drivers, so underwriting efficiency and investments, there you'll see differences, which driver contributes how much to the overall RoE development. And you will see these details then later on in the presentations by Thomas and Markus.

Having said all of that, capital management will continue to be very relevant for us, and it will actually be the core of my presentation today. But before we go there, I will briefly cover the under -- the other bars. So underwriting efficiency, investment first.

Let's start with underwriting. As regards to underwriting, we will considerably increase volume at attractive margins over the next 5 years. What you see on this slide is a summary of growth and profitability targets for 2030, as they also will be presented in more detail by Markus and Thomas later on.

If you look at the ranges, they are all relatively wide, which I think is natural given market uncertainties, which are currently maybe particularly high, but also given the long planning horizon of 5 years. So therefore, relatively wide ranges.

But we also do have a lot of flexibility when it comes to capital management. And therefore, we are confident that we are able to achieve our RoE target of above 18%, irrespective of where within these various ranges, our numbers finally will be because we can react on the capital side. And therefore, the RoE target would be supported by all the numbers within the ranges as on the slide here.

Also, what I would like to emphasize is that as we cover the full insurance value chain from primary insurance, via specialty insurance to reinsurance, we have a lot of flexibility to actually deploy capital wherever attractively opportunities are found for us. And this could be in various lines of business, various regions, various geographies, cycles, various, I don't know, business fields. So we are not restricted by pay anything and have all the flexibility going forward. And this should then will support a steadily rising earnings trajectory and even more resilient earnings trajectory in the coming years.

On the next slide, just a few words on efficiency. Cost efficiency as the second lever for the increase of the RoE is a central aspect of our ambition. We aim to continuously improve efficiency across all business areas and make cost management a visible and natural driver of the return on equity. By making Munich Re leaner, less complex and more efficient, we are aiming for primary cost savings of around EUR 600 million in 2030, growing from EUR 200 million already next year, counteracting the inflation-driven cost increase. The benefit will be visible in various P&L items across all business fields.

Now increasing investment returns, which is the third core element to increase the return on equity. On the asset owner side, we will benefit from gradually deploying additional risk capital into alternative investments and further refining our investment processes. MEAG, our in-house asset manager, is committed to delivering sustained outperformance on its assigned investment mandates.

On this slide, what you can see here is that our investment returns are expected to further rise as we continue to enjoy a favorable market environment, with reinvestment yields above the running yield of our book. Beyond that, we continue to enhance active -- our yield by active investment management. So the already mentioned addition of alternative investments to our portfolio is one lever. But the other lever is, of course, also to carry on to make use of attractive market opportunities as we see them.

Now alternative investments and the expansion of alternative investments. On the slide here, you see some more details, some more color on what we plan to do. I would like to start with the fact that as a long-term investor, we have quite a few really long-term liabilities, which are a perfect match to illiquid and more complex asset classes like alternative investments. And we can earn illiquidity and complexity premiums by doing so. And we built up the alternatives quite significantly already, if you look at the slide.

Now alternative investments, as we use the terminology is for us a summary of various asset classes, as you can also see on this slide and would encompass topics like real estate, like infrastructure, like agricultural and forestry, like infrastructure debt, private credit, all these asset classes are part of alternative assets as we define them.

What we see as particularly interesting for us are attractive market opportunities alongside structural trends where we do have knowledge already on the insurance side, and then also on the investment side are engaging more and more, and thereby have nice synergies between insurance and investments and can benefit from our deep understanding of the risks of those investments also on the investment side, while the experience and the expertise on the insurance side is long-standing anyway already. So that's an additional synergy we would like to exploit it even more going forward.

Now finally, on this slide, I come to capital management. And this is, as I mentioned, the heart of my presentation. Munich Re's strong balance sheet across all metrics allows us to deploy capital in the most efficient way already today. But actually, there are further areas where we think we can improve the capital efficiency. And I will go through them one by one now on the next few slides. But to only mention them briefly, it's diversification. It's the optimization of our capital structure and active capital management.

I start with diversification on that slide here. Joachim, he explained that already. We expect to disproportionately grow more in businesses which are less cyclical and less volatile going forward. And over the years, this will then gradually lead to a higher portion of less volatile businesses than in our overall portfolio mix.

To make it more tangible, if you look at the slide on the right-hand side, you see that today, Life Re, GSI and ERGO together, they are contributing roughly 50% to our mix. While we expect their proportion to grow by 10% until 2030, up to 60% then.

So in other words, we will accelerate the transition from being a reinsurer to being a composite insurer over the next 5 years. And this should then also be beneficial to volatility of our earnings, to our cost of capital and then ultimately also to our stock valuation.

Now optimization of our capital structure. Munich Re has one of the lowest debt leverage ratios in the industry, as you certainly know. And this provides us with ample flexibility, which we really appreciate. But to further improve our capital efficiency, we are on a long-term track already for quite a number of years to gradually increase the leverage ratio up to a level of, let's say, towards 15%.

Currently, we are at 12%. Both numbers, 12% as well as 15%, as you can see on the chart, are at the lower end where the industry is and specifically at the lower end where also our peers are. So therefore, no drastic change, but I think a gradual continuation of what we have been doing in recent years. What we are also doing is we look at our legal entity structure, and we look for additional simplifications to increase the internal capital efficiency, avoid redundant or trapped capital and to ensure an even smoother upstreaming of earnings going forward.

Now on my next slide, Solvency II. A significant driver to our shareholder return is capital management, as you know. And we are conscious of our very high Solvency II ratio, and we are highly committed to manage our excess capital. At the same time, the Solvency II ratio, first and foremost, is a risk measure. We have to keep that in mind. And what we want to have is the highest flexibility in writing and managing risks, in particular, also with regards to peak risk exposures. We want to offer our clients reliable, consistent and high capacity, if needed, over the cycle and independently of loss events. Therefore, holding a sufficient capital buffer is simply a necessity for us.

Accordingly, we introduced a bit of a new Solvency II framework. So actually, what we do is we introduce a Solvency II target floor of above 200%, which replaces the old target of 175% to 220%. And by the way, this above 200% floor level is aligned with the target rating of AA. Just to be very clear, this change in methodology does not at all change our commitment to repatriate capital, as you will see in the next slides.

Active capital management on my next slide. So fundamentally, what can we do to bring down the Solvency II ratio? Basically, we have 2 options. We can increase the capital -- so the risk capital, the SCR or we can decrease the own funds. And to do that, there are various options, business growth, we can take more investment risk. We could go for more M&A or higher capital repatriation. Those are the theoretic options at least. And I will cover all of them in my next few slides because the big, I think, very strong position we are in it is that we can do all of those things, and thereby optimize really return versus risk and versus capital in the way how we manage our group going forward.

But let's be a bit more specific on the next slide. First of all, the SCR growth versus business growth volume is this what is shown on the slide here. And you all know we have been growing our book significantly over the last years. As you can see on the slide, the GWP growth is really very high, as you can see.

But due to our broad diversification, the SCRs or the risk capital growth was significantly smaller, over the last 5 years, 4x smaller than the volume growth. And this relation is still valid if we would adjust for interest rate changes or other not business-related impacts. So in other words, what this means is we can deploy capital in a very efficient way. We can grow our book in a way like not many of our peers are probably able to deploy capital and thereby have an attractive value proposition also for our clients.

I would bring one remark here on this slide, maybe also on the asymmetry between economic and IFRS accounting as it matters in the Solvency II context. The new business value we have in Life business, in particular in life reinsurance business. And we expect that business to grow dynamically going forward. This new business value is immediately recognized in the Solvency II capital number, in the Solvency II ratio.

While in IFRS, via the CSM, it only translates into earnings over time. So there is a time difference. There's a time lag, a gap between recognition in Solvency II and in IFRS earnings. And this time lag is something we have to be aware of. We have to manage that. And we have to keep that in mind when looking at the Solvency II ratio, but also when we look at the development of the IFRS earnings.

My next slide briefly covers the topic of investment risks. And on this slide, what you see here is the split between investment and insurance risks. And what you see is that over the years, this ratio always has been breathing. So there are years with higher proportion of insurance risk and there are years with lower proportion of insurance risk. Currently, the insurance risk is rather dominating, while increasing the investment risk over time until 2030 would bring us more back towards an equilibrium, also optimizing the diversification. So that's the idea. The diversification, in any case, will stay above 30% going forward and with 30% on a very strong level.

Next slide, M&A. Apart from organic growth, M&A has always been on the table for us. Now as always, you could argue, well, you didn't buy a lot. And indeed, we didn't. And the reason is that we apply a very rigid criteria for assessing targets, so assessing growth opportunities. And the reason is very clear. When you acquire a company, the integration risk, the execution risk, the operational risk is significantly higher compared to a situation where you organically grow your book. And therefore, we have to be rigid.

And the criteria you see on the slide, strategic fit and financial fit, we take them very seriously. Any target must fit to us, both from a strategic perspective as well as from a financial perspective. Or in other words, it must enhance our value proposition at a value-creating price.

Now finally, capital repatriation the most important lever to manage excess capital for us also going forward. Our shareholders have always benefited from Munich Re's earnings growth, increasingly actually so in the last couple of years. Dividends have been steadily increasing for many, many decades, while the share buybacks have been a flexible tool, which we used on top of the dividends.

In our last ambition, we provided a growth target for the dividend per share. Implicitly, we still do have that as we expect our dividend per share to grow in line with earnings per share going forward. But what we are now introducing for the first time in the history of Munich Re is a payout ratio. And we promised a total payout ratio of above 80% net income going forward. This means that for the expected EUR 6 billion net income target for this year, we would then at least pay back EUR 4.8 billion to our shareholders via dividends and share buybacks.

We consider this payout ratio target to be attractive in 2 dimensions even. Firstly, the 80% is higher than the average number we had in recent years, which was 75%. But on top of that, the 80% is an annual number. So we promised to give back more than 80% of IFRS earnings in every single year.

In that context, I would like to emphasize or ask you to please keep a look also at the definition of that payout ratio as outlined in the footnote on the slide. The 80% refer to the announced amounts as we usually do it in the first quarter of the year. Just to remind you of the process, and it will be the same next year. In the first quarter of the year, we always announce a dividend and a buyback. And the sum of those amounts is what we mean by annual payout. Just to be 1% or 2% certain about the -- that everybody has the same understanding of the methodology.

Now you could ask, can you really afford that above 80%? Well, and we can. It's backed by our very strong capitalization across all metrics. In addition, we mentioned that a few times already, our dividend is covered to a large extent already by our more stable segments, ERGO, GSI and Life Re, and those segments are less exposed to cycles and conceptually less volatile.

So to summarize what I'm trying to outline here on capital management is that we are committed to returning as much capital as reasonably possible within the applicable restrictions in order to maximize the total payout ratio to a level, in fact, above 80%.

This brings me to my last slide, which is the Outlook 2026. With a net income level of EUR 6.3 billion next year, we are once again on our way to deliver a record year. The increase from EUR 6 billion to EUR 6.3 billion is solely driven by reinsurance. Based on the strong underlying performance with healthy margins, we are further expanding our business. This will be supplemented by higher investment returns as the RoI should grow to above 3%, 4.5%, in particular in reinsurance, where we expect a higher result from the realization of gains and losses in addition to a higher running yield.

The insurance revenue for the group is projected to rise by EUR 3 billion compared to 2025, the 2/3 borne by ERGO, a substantial share of which will come from NEXT Insurance. Reinsurance is also expected to see top line growth of around EUR 1 billion, driven by Life Re and by GSI.

On margins, P&C Reinsurance is anticipated to maintain its strong profitability with only a slight uptick in the combined ratio to 80%. The guidance for GSI is unchanged at 90%. And also in Life and Health Reinsurance, we continue to show very attractive margins, even a further increase of the total technical result by EUR 200 million now to a new level of EUR 1.9 billion, which underscores also the robust and strong underlying earnings power we have in our Life Re business.

At ERGO, the combined ratio in Germany should stay at a very attractive level of 89%, while the international business is expected to even improve further to a level also of 89%, and then nicely aligning with Germany's ratio. The net income for ERGO is forecasted at EUR 0.9 billion, broadly in line with the year 2025. And here, you have to keep -- you have to know that investments into Ambition 2030 mask at ERGO that there is an operating or operational improvement, or an underlying improvement planned also for next year, but this is then compensated, as mentioned, by investments into new -- into the new strategy.

Now let me summarize. Munich Re is in very good shape strategically as well as financially for the next 5-year ambition, more than 18% RoE, more than 80% capital return and more than 8% earnings per share growth.

Thank you very much for your attention, and I hand over to Markus.

Good morning. I would like to take the opportunity to introduce you to the ERGO contribution to Ambition 2030. And this chart just basically explains to you our journey so far. I don't want to go into that at all. The only comment I would like to make is that we have improved over the last 10 years significantly our performance. I think it's fair to say we now have achieved very competitive KPIs, and we have achieved a good track record of delivering our contributions to the Munich Re overall result. And it goes without saying that this is an obligation for the future as well, i.e., we will do everything in our power to continue to deliver into the Munich Re results consistently and with low volatility.

This is the framework that Joachim Wenning showed you, and I just want to very briefly translate that into the ERGO strategy. On the Outpeak side, it is about profitably growing our book of business. And that basically means for us, improving the already competitive market positions in all regions, primarily successfully to integrate NEXT with a significant contribution by 2030, and I will come to that in a second, and to overall expand our excellence in underwriting.

Outpace makes us faster and more efficient. And that means -- and that for us is an absolute main emphasis of the next 5 years is to systematically, and I'll put an exclamation mark behind that, systematically adopt artificial intelligence solutions across the entire value chain. Secondly, we need to enhance our digital transformation with a global IT infrastructure. Again, that is something which we will do in the context with the entire Munich Re Group. And thirdly, we will try to accelerate our efficiency in these very uncertain inflationary environments.

That should lead for an outperformance to ERGO. If we dig now one level deeper, you again see Dr. Wenning's slide being put up and translated into the ERGO points. I will just only very briefly touch on a very few areas. First of all, on the financial ambition, applying cost rigor remains for us a top priority. We continue to systematically benchmark our businesses, our processes and try to catch up where we have differences. This has been a very successful recipe for the ERGO development in the past, and we commit to this being a further development also into the future.

On the enabler side, I would like again to focus on the leveraging new technology's part and the driving functional excellence because they are interconnected. New technologies enable us to do new things to become more global, to become quicker, and I believe this increases not only our competitive position, especially in the cost dimension, but it also makes us quicker and less bureaucratic.

This is the chart you have seen by Christoph and by Joachim, and I will just touch briefly on what it means to ERGO. And while this remains an illustrative chart, you can see that the individual boxes are a little bit higher or lower, and that is rooted in the reality of the ERGO strategy program.

So if you just look at the numbers, we will achieve around 15% RoE by 2025 and thus are in line with the Ambition 2025 of the Munich Re Group. We commit to around 18% or larger than 18% return on equity in the Ambition 2030. And this walk for us consists primarily of the first box, the underwriting box. And that is the case because of the fact that we will integrate with NEXT a scale-up into our book of business and into the ERGO International segment, which we really bought at the time that the scaling is really happening.

So while we believe that we will transform it into significant profitability over the last 5 years, this will be not only driven by disciplined underwriting and digital processes, but also by growth. And that's why I believe that this first box, the growth, the profitable growth will be driven by NEXT, but also by the continuation of our growth path, both in our international and German segments, primarily in Poland and India in the international segments.

Efficiency goes back to the question of cost rigor. I said it before, I say it again because it is so super important for us Cost discipline is our guiding principle everywhere. And new technologies enable us to be even more efficient and more effective in achieving cost efficiencies in the future. Investments for us is a comparatively lower contribution and capital management is a detractor here primarily because of the equity we are getting allocated because of the next transaction. Let's again dig one level deeper into the drivers of the financial ambition. And if we look at the profitable growth and portfolio steering, I would like to say that we have built over the past 10 years, quite a resilient and competitive portfolio of international companies, international being outside Germany. And even without NEXT, the growth trajectory of this portfolio is actually quite impressive and significantly higher than the German trajectory.

This will now be even focused and accelerated through the next acquisition. On the underwriting excellence, we used to have for the last 10 years already a very strong, what I call vertical in our matrix underwriting function, which we continue to strengthen. So the matrix organization with the vertical underwriting function will become even stronger, and we will significantly invest in underwriting technology and portfolio data management. And I can go into that into more detail in the Q&A session. But basically, this is about central pricing and claims strategies and hubs. And I already talked about the cost rigor. And let me just tell you, as an example, each and every company has a very clear cost targets, both on an absolute term, but also on a cost ratio dimension. And I have reason to believe that we will improve our competitive competition in all of our markets in the course of this Ambition 2030, bolstered by the fact that we already have a very strong claims ratio in most of these markets.

In total, we'll have [indiscernible] total of 200 measures, which we individually allocate to the subjects and regions and which we'll be centrally monitoring. The result of these measures is summarized on this chart. We believe that we can commit to an insurance revenue of EUR 26 billion to EUR 30 billion in this strategic program, and we believe that our profit contribution will increase significantly. And if you look closely for the first time, the ERGO International contribution will be larger than the ERGO Germany contribution, and that is not only because of NEXT, but also because of the increased growth trajectory of the international business. And there are various arguments for that. You see them listed on the right-hand side, and we'll discuss each of every one of that in the Q&A if you so choose to ask. There's one element which I would like to draw your attention to, in particular, and that is NEXT. And I've talked about it not only because it is a new acquisition into the ERGO segment, but it is also a super important growth driver for us going forward.

So let me just remind you on what NEXT stands for, and this is a chart I spend some minutes on. On the left-hand side is the U.S. small, medium business market. The market itself is a submarket of the U.S. commercial market, which is -- has a size of the order of magnitude of EUR 400 billion. The SMB market will be estimated to be around EUR 180 billion altogether and is being defined as consisting of companies between 0 and 100 FTEs. Now within that market being the target market for NEXT, the super specialization of NEXT is in the so-called small SMB markets, which are just smaller companies between 0 and 19 FTEs, and there are tens of millions of these kind of firms outside in the United States. And the interesting thing in this segment is that the market is not highly concentrated.

If you look at the U.S. market, the concentration level of the top 10 player in motor is 77%, in personal home is 67%. But in the SMB segment, it's only 36%. That means a new entrant such as NEXT has a good opportunity to really scale up, and that is actually what is happening. So we are entering a very attractive, less cyclical market in the United States. and we'll gain access to purely digital native business models and underwriting processes. And I can explain it more in more detail in the Q&A, if you want to, but the entire value proposition of NEXT is to digitize everything. Every process is digitized and most of them even on an end-to-end basis.

We have bought them at a time where they are still in the start-up phase on the verge to the scale-up phase. That's why we believe that we basically start from a sweet spot in which the minimum viable products are not only existing, they already have an insurance revenue of roughly EUR 400 million. So they are by no means a start-up anymore. And we believe that we can scale them up and achieve a net result in the mid-triple-digit millions by the end of this program and actually get them to a very competitive combined ratio based on that scale-up.

So I've talked a lot about the international segment. And I think one of the key questions that always arises is what does this segment comprise of other than being owned by ERGO. So I would like to spend one chart on the questions of what we would call the cross-border initiatives in order to give illustration to how we steer the portfolio. And it really has become now an international portfolio steering. So AI solutions, underwriting platforms in this very program, mostly in Health are key subjects which are rolling out on a multi-country basis, centrally managed and controlled.

In the entire program, we also gained additional flexibility by setting up global business services. We have established tech hubs in Poland and India during the last strategy program, which is now finishing. And in these near and offshore solutions, Poland and India, we now increasingly put non-IT services, which not only gives us flexibility, but gives us, so to speak, global synergies because all of our companies can access these hubs, not only for IT, which they are doing as one of our drivers for a more competitive IT cost solution, but also for the non-IT services.

The same is true for pricing hub. So we are starting to recruit actuaries within our niche operations in Poland, who will then support, control, manage pricing solutions throughout the entire ERGO Group. And all of this is, of course, being complemented by local initiatives such as streamlined SME strategy and top-tier solutions for claims and data management. The result of this, you see on this very page and the numbers are already reflected in what Christoph Jurecka told you. So I'm just repeating that there will be a continuation of our good record in 2030, both in the segment, ERGO Germany and ERGO International.

And for Germany, we use the KPI of the combined ratio P&C Germany because it really is comparable around our peers. And secondly, because of our continued cost rigor, we believe that the cost ratios, which you can see here since 2016 have significantly decreased over the last 10 years, will continue to decrease even further. But -- and Christoph said it, I would just like to reemphasize it in the near future because of the investments of our front-loaded program, they will possibly rise in the next year, but then will ultimately end up in a much more competitive stage. And I firmly believe that in this program, we can make decisive progress towards competitive cost ratios. Let me briefly touch on the enabler because they are also relevant. We need to implement a strategic HR agenda, basically refers this to all of the changes and recruiting for our people. And with all of the technology changes coming up, reskilling and reeducation will be one of the key drivers, and we will apply that especially in Germany with a significant emphasis.

The leverage of technologies I have already touched. This is primarily the systematic AI deployment and the One IT is basically built by the synergies with Munich Re, and I have already alluded to that verbally, and I have one chart, which I'll show you in the next 5 minutes. So let's just go very briefly into these enabler dimensions. Firstly, HR. What does it mean? Sometimes it's super abstract and it's not really tangible. The reality here is that we start by a very analytical drive. So we start by deploying workforce planning and workforce planning means on a super detailed level, location, the group, the department, but also the skill sets to really understand what are the dynamic changes in demand and supply of work. This allows us to manage the demographic change in a much more controlled way.

In order to avoid discrepancies in all of our ERGO companies, think about the ERGO International portfolio, we will come to a much closer harmonization of processes and infrastructure across the group. And of course, we need to have an enabling organization. So we need to help our employees to manage the technology changes that are being exposed to. I have talked a lot about AI. This chart is just telling you it's not a German thing. It's not a U.S. thing. All of our companies have dedicated AI processes, and I will be more than happy to talk about this in the Q&A. My last ERGO specific point is the question on digital first. We are a very customer-driven company. And the customers are expecting digital elements. And we will do a very significant focus on that, both internally and externally.

I'll give you an example. On the marketing data that we use to do marketing actions with Meta, Google and TikTok, we use Veo 3 and Sora 2. So very new developments on the digital marketing side. On the internal processes, we look at all of our processes that we have as a process mining tool in order to improve the processes. And of course, on our customer experience and sales process, we'll try AI-powered visual inspection solutions, customer portal, self-services, et cetera. This chart illustratively tells you about Munich Re Group technology. Both Joachim and Christoph touched on it. We take full advantage of the power of the group, which combines the technology functions of reinsurance IT, MEAG IT and ERGO IT. This helps us in standardization, in security, and of course in more competitive costs.

So let me draw to a close. Our target ambition for 2030 means a continuation of our successful path, both in Germany and in international with the numbers that you are seeing here. It is reflecting the fact that our international portfolio grows more strongly as it has been in the past, but in the next program will also make a huge step towards an even more competitive combined ratio. And thus, we will try to continue our track record in supporting the Munich Re Group result in a low volatility and very reliable environment.

And based on the 200 measures that we have compiled in order to facilitate this progress, I'm quite confident that we can achieve that also in the future, which then leads us, and this closes the circle to my first chart to a leading ROE in 2030 and even more diversified net income contribution from the various regions, primarily the achievement in the United States through next, even more competitive cost levels at ERGO Germany and International, as I alluded to, and we really strive to be a frontrunner in artificial intelligence by systematically applying it throughout our entire value chain. That summarizes briefly the strategic contribution of ERGO, and I hand over to Thomas Blunck for the same on the reinsurance side. Thank you very much.

Thank you very much, Markus, and good morning and good day also from my side. I jump directly into my slides. At the same time, will rely on one or the other part that has been explained by Joachim and Christoph, and that is very similar also with ERGO. You will see that. First, our track record has been really very nice. You can see this on this slide. This is the reinsurance part of the Munich Re Group. And you can see that we have developed a nice track record in each of the 3 pillars. And that is important. So the Life and Health reinsurance, the P&C reinsurance and GSI and GSI in 2025, we have reported separately. So a very good foundation to move forward into the next Ambition.

This slide is quite important for us internally. It does answer the question, why do we have those 3 pillars under one roof. And these are our common principles and our common success factors. And if you look at them, I think you clearly see those are, at the same time, decisive elements in our proposition in each market. And let me give you just a few examples. The topic of capacity, how we use capacity is, of course, a decisive element of any value proposition in all 3 pillars. And each pillar benefits massively from the magnitude and the flexibility how we, as a group, can provide the capacity. And by the way, without hinging on retrocession. Another example, the cyber business. The cyber business has been developed by a cross-functional team, by the way, also including ERGO and all the foundations, the data, the coverage, the pricing, the accumulation control, the overall risk management in one team and then can be provided to all the business units that can sell it.

We sell it on reinsurance. We sell it in GSI. We are liaising with ERGO. And even in the future, we can think of sharing it, of course, with NEXT. AI has been mentioned as well. And you should know, we have globally in the Munich Re Group, one AI platform. And that is important. The technology base and the platform is a very expensive thing, and we need to have economies of scale. And by just having one, that is another element, another synergy that we have across our different units. This framework, you already have seen. Just let me emphasize one point that we have realized. This does operationalize the levers that we are addressing in the new Ambition. And at the same time, it does align the organization and aligning the organization in such a big group is of very high importance. And let's now look into the results.

Again, this slide is, I think, quite known in the meantime from you. The reinsurance also commits to an Ambition to achieve more than 18% of return on equity. That is here the most important message. And of course, where is this coming from? You will see the numbers again, but Life and Health reinsurance growing very nicely, GSI growing nicely in underwriting of the P&C re business, we do recognize the more competitive environment. What you don't see here, you see it in the green color on the investment side, a little bit an indication is that the contribution of investments is higher than at ERGO as a larger part of the before mentioned increased return on investment is allocated to the reinsurance portfolio. This is an important thing you should be aware of.

And in my following presentations, I will now focus on underwriting and efficiency. But you can see coming off from already very high profitable levels we aim to deliver more than 18% in reinsurance. Let's now delve into the -- into each of these pillars, and we start with the P&C reinsurance. And you can -- I mean, the most important maybe sentence is our strategy is not changing. You know that we serve all markets, that we have full range of products, that our value proposition gives us a very strong market position.

And this is then depicted in the numbers of the left side, right? You see that we expect either a stable or a low growth of the P&C Re portfolio until 2030. And let me explain the sequence that we foresee. More or less during the next 2 years, we might see a rather declining revenue, subject to the development, of course, of the market cycle. But in contrast, and based on normalized net earnings of 2025, the net result will stay rather flattish or trend slightly down because the higher investment income that I mentioned earlier largely compensates for the slight reduction of the technical result in our P&C reinsurance business.

After that dip, we expect our business to again grow with the normal, for example, 3% that the market growth is providing. So gradually, revenue and net result will rise again. I think you also know from experience, pursuing a strict portfolio management enables us to maintain a high profitability throughout the whole period. And one thing that I think you are also aware of, we can shift resources and capacities highly flexible globally per line of business, per region and per peril. And that is an excellent foundation for us to maneuver through a more competitive environment. Let me add a few more arguments to this topic. On the left side, you see the main arguments why we regard and we have seen it recently that the reinsurance and especially the natural catastrophe segment is in the medium to long term, a growing and very attractive market. But as we all know, the prices fluctuate.

On the right side, you find the main arguments why we have such a strong market position. And the result will be, as we maneuver through a more competitive environment that each year, the global portfolio will have an attractive pricing level despite of the fluctuations in the market. And this is a proven track record that we already had achieved in the last cycle. And very broadly, smart cycle management means for us, we know where to grow. We know where to stabilize or reduce or even stay away from. On the lower part, you see arguments that are also important. For example, our management has no top line target, which mean we encourage them to either grow or reduce or shift resources or stabilize. And again, I repeat, we are, I believe, one of the business models with the highest flexibility of shifting resources and capacities depending on where we find opportunities.

And one reason is, again, we don't hinge on retrocession. We don't have to fill up the retrocession program and costs or if we grow, the retrocession program doesn't set us a limit. And that is, for example, the growth that you have seen in the last 3 years, also mentioned by Joachim already in our network catastrophe business. Another few arguments, how we see the market. On the left side, we want to illustrate a few trends and arguments why reinsurance is so well positioned. Let me summarize. You see that the natural catastrophe losses are increasing. And one important trend within that is the non-peak perils. And they drive quite different and dispersed trends globally. That means we don't have a uniform trend. Rather, we have things moving up or down in different ways across the globe. And that, of course, again, creates opportunities for our business model. On the right side, you see the dedicated reinsurance capital, and the so-called alternative capital.

Clearly, you can see that the traditional reinsurance capital is much bigger, but more importantly, it's, of course, highly diversified. And it doesn't -- it is really, therefore, much more efficient than the collateralized solution of the alternative capital. Also, the alternative capital is, in most cases, highly unflexible. It's a fixed structure in a multiyear, in most cases, only one shot, which compared to the traditional reinsurance that you can change each year, and you can add structural elements like reinstatement drop-down, whatever is possible. In summary, the increase of exposure and claims development globally is strong, and it does require the growth of the underlying risk capital. And we have seen that in the long term, we do have a sound relationship between the growth of the exposure and the allocated risk capital. traditional reinsurance clearly being the most efficient and effective solution.

This slide illustrates how we have done so far in the cycle management. On the left side, you find the full range of results from our recent renewals in the year of 2025. And you can see that the price movement has been only a negative number of 1.1%. On the right side, you find the shifts of the portfolio between the year 2020 and 2025. And of course, we have increased our share in those most profitable areas, and we have reduced them in the more critical segments. Joachim mentioned an interesting thing that happened during spring and summer 2022, and some of you may remember that. The NatCat business was not really seen as an attractive market segment by the capital market and some reinsurance completely stopped and some reduced their capacity to this market. We had here a conference with many -- some of you and many analysts and Stefan Golling and myself tried to share our conviction that the natural catastrophe market is highly attractive despite of the fluctuating prices. And you have seen the result in our growth as of 2022 in the NatCat business as a major contributor in the recent years in the old Ambition.

In summary, in P&C Re now, Munich Re is really well positioned to navigate through a market environment that is a little more competitive due to our strong market position, our global access, our full range of products, our deep risk knowledge and the very flexible business model. And with that, let me move to our next division, the Life & Health business. The numbers on the left, I think, very clearly indicate a really strong growth plan. And most of this is based on a proven track record. I will come to that. If you look at top and bottom line on the left side, I find that growth very impressive. And again, here, our strategy has not changed. Similarly to P&C Re, we operate in all markets. We have a full range of products, and we have a very strong value proposition. And you also heard recently in our presentation, the Net Promoter Score. P&C Re and Life & Health Re have a very strong Net Promoter Score. That is important for the growth, of course.

Also important, as there are some solutions out there in the market that we don't like, we stick to our biometric risk. That is our risk appetite, and we don't mess it up with other asset potentially assessors. Two major initiatives are driving the growth. We will look into that with the next slide a bit more. We are expanding our longevity business, which so far we have been focused on U.K. and a little bit in the Netherlands and now expanding it into North America and maybe looking also into Japan. And then what we call transactional business. This is one major growth driver here, and let me explain that with my next slide a bit in more detail. The Life reinsurance industry, you can say, has developed these different profit pools over time. And I would say, in most of the years, Munich Re, very strong in the lead.

Our traditional business, you know that very well, is, for example, a quota share where we share the biometric risk with a life insurer. We then have extended over the decades, the solutions into FinMoRe business, financially motivated business, and that optimizes financial KPIs of our clients, for example, a prefinancing with liquidity, and we get biometric margins that allow us then to earn our return. Longevity, I already explained. And now let's look at Transactional business. There are many structural changes in the Life and Health Insurance industry. And the drivers can be that the life insurers and a product or change their business model focusing more on distribution, for example, or there is a consolidation, so M&As or there are regulatory changes.

And very often, in these occasions, they want to carve out a very big biometric portfolio and then share that risk with a reinsurer. And these one-off very big and very complex transactions have been a driving force for us in the growth. We have a proven track record that you will see in the next slide. And we have already a pipeline for the next few years that is giving us the confidence to grow the business. This is to show you and give you some explanations back to this transactional business. Let me just pinpoint 2 arguments that are important. The new business of the recent years has already been higher than EUR 3 billion, driven by these transactions. And again, coming back to the importance of our clients and the relationships in the market, you need to have strong relationships with alternative asset managers and private equity companies because they drive this process very often, and they are the ones also looking for the partner on the biometric side.

With that, I'd like to move to another growth story, which is the GSI. It has been, of course, already mentioned by Christoph, by Joachim. So this is, again, another nice growth story. And you can see on the left side that we are promising and planning another strong growth into the next 5 years. The value proposition is strong because it does benefit from the synergies that I mentioned earlier of the reinsurance and the whole Munich Re Group. That is one of the core drivers why we can gain market share. Core initiatives for us are we are expanding regional-wise, for example, Continental Europe and very selective into Asian markets. And we are expanding the product lines, which Joachim already alluded to, where we have quite a track record of introducing new products into the market.

What is the core of the business? It is commercial and personal business. That is what we're aiming for. And that also means that the GSI portfolio, most parts of that have quite small limits and per risk, small exposures. Further growth drivers are, by the way, that these markets tend to grow faster or stronger than standard products of property or casualty. And over time, I would add that the different GSI units will also increase the cross-selling among them. As mentioned before, GSI Global Specialty Insurance shall be a contributor to diversification and to less volatile earnings. And therefore, we very tightly manage the limits that we apply per risk. We very tightly manage the portfolio accumulations, especially natural catastrophes. We do buy external reinsurance for GSI. And we complement depending on how expensive or cheap the external reinsurance might be, we complement it by internal reinsurance.

From our perspective, another nice synergy within our reinsurance group. Cost Ambition, cost rigor has been mentioned by all presentators already. I'll keep it a bit short. Of course, the reinsurance is also committing to economies of scale. And we have very clear defined target budget limits for each and every unit. And on this slide, you see the summary of the levers that we're pulling in order to achieve that. There's a very strong commitment by each unit to have a very cost competitive position with respect to their peers in their business model. And of course, we continue investing into the enablers that have been mentioned also before. The people strategy is a big topic for us and the analysis of demographics that also Markus alluded to, we do just the same and use that as a sound basis and foundation for our people strategy going forward.

And we apply AI on the efficiency side, but also especially on the reinsurance side and can help us in many places in order to better understand the risk of an underlying portfolio. We have very attractive cases, and therefore, we will continue in prioritizing investments into that. And anything that helps us on our risk expertise and underwriting excellence is, of course, that you can see on this slide, also an investment that we favor and will push going forward. Our target picture, let me summarize. I'm convinced that the reinsurance group is building on the success of the last Ambition.

We have a proven track record, and we will continue growing steadily top and bottom line over the next 5 years. With our leading position in the P&C Re business and the Life & Health reinsurance and that complemented by a strong footprint in the fast-growing specialty market, we are very well equipped for the new Ambition. And as mentioned before, the higher growth of Life & Health and GSI, which are both less cyclical and less volatile, will further improve portfolio diversification and earnings volatility for the reinsurance and for the Munich Re Group. Thank you very much. And with that, I hand over to Christian.

Thank you, Thomas and gentlemen, for your presentation. We are now starting our Q&A session. [Operator Instructions] We already have the first question from Shanti Kang from Bank of America.

I just had a couple mainly on capital. So clearly, you've lifted that payout ratio target to an 80% floor across the next 5 years. How should we think about those returns split between dividends versus buybacks? I think historically, that's tracked as a kind of 50-50 split. Is that something that you'll continue to look to do? And then on the ROE target, that sort of 18%, how much is that driven really by the capital return Ambition versus the earnings contribution, i.e., what should we think about as the core driver between the numerator or the denominator for that?

Yes. Well, thank you, Shanti. I will take your question, Christoph speaking. The first one, dividend versus buyback. Obviously, we always have a bit of flexibility in that. But what you can see also in the slide deck is that the basic assumption is that dividends will grow with -- dividend per share will grow with earnings per share. And then we have buybacks as a flexible tool. Now as I said, it's not carved in stone, but that's the current assumption.

On your second question, ROE. There, as always, the answer is, it depends because as you can see, we didn't commit really to any IFRS targets for 2030. So therefore, depending on where in the ranges and the ranges have also, to an extent, an illustrative character where we land in the ranges, obviously, capital management will have different contributions or different relevance depending on where actually the business development will go. And this is exactly the kind of flexibility which we need and also want to have because who is able to predict 5 years, nobody actually. So therefore, I think it's a bold move to come out with 5-year target. It shows how confident we are in our business prospects. But even Munich Re needs some flexibility in expressing targets over a 5-year time horizon and our flexibility sits in capital management.

The next question, please. The next one is from Ivan from Barclays.

Congratulations on the success of your current strategy and setting ambitious goals for the next 5 years. I'd say probably one of the first ambitious targets you've set is the Life & Health, that's the 8% to 12% revenue growth. And I think at the top end, the technical result Ambition that's EUR 1 billion higher than 2025. So I was just wondering with that improvement, how much is already captured by this extra EUR 3 billion of new CSM that you've generated? And how much would come from the genuine new business? Because you're talking about pipeline, you're talking about some new initiatives like partnerships, there's risk sharing. If we split between '26 and the outer years, how does you think that trajectory looks like?

Because if I assume that your CSM release on the EUR 3 billion is 8%. That's only 1/4 of this EUR 1 billion that you plan to do. So maybe extra color on that would be quite interesting. And then the second question I have is perhaps on the change in the capital allocation towards more market risk. I think especially in the context of continued growth, that Slide 35 looks pretty curious. Maybe you can talk about some changes to the target asset allocation and whether the stronger growth in Life and Health would actually result in much longer duration and therefore, substantial increase in less liquid assets, private assets. Anything on that would be interesting.

I'll take -- I'm happy to take both, Thomas, whatever you want...

Just start and I'll complement if necessary.

That's fine. I actually even start with the capital allocation. I mean the main change is what we mentioned as an increase in alternative assets. And this is also what is shown on this one specific slide on the alternative strategy. And by that, we mean a variety of different asset classes. Some of them have debt character, some of equity character, but this is the major change. Now I mean, you're using big works change in capital allocation. I would say it's gradual. It's not that significant because if I may -- I mean, you could read the slide in a way that the uptick in alternative asset, what is it? It's probably a mid-single-digit billion number.

If you look at the chart and take out your ruler, you would measure that. I don't give you any precise numbers. There are no precise numbers. But order of magnitude may be. If you then would apply a capital charge of, I don't know, maybe what is it, 20%, let's assume 20% because it's a mix between equity and debt and real estate. So let's assume 20%, apply 20% on a mid-single-digit billion number as additional capital charge for these higher investment risks, then we will see that this order of magnitude is quite gradual in the context of our overall risk taking. And this is what it meant to be. So no fundamental radical change at all. But as I said, the split between investment insurance always has been a bit breathing. We are going to bring it down a bit further towards the -- increase asset a bit, bring insurance in the relative split a bit down, but nothing really -- no fundamental change, let's put it that way.

We continue to be an underwriting company, and this is just the topping of the icing maybe. So that's how I would express it. So really no change to capital allocation. That would be 2 strong words. I would not use them. Life & Health, I mean, you answered the question yourself, probably already, when you did the calculation. So there is a significant new business needed to achieve our growth targets, and we see a healthy pipeline to get there. And Thomas spoke a lot about these transactional opportunities which we see. And they are part of that, but also the bread and butter underlying business is supposed to grow nicely and also our FinMoRe business and our markets business. So yes, we need to grow and there is quite an ambitious commercial growth program behind these numbers. That's how I would express that. But maybe, Thomas, you would like to add something?

I think you already said it. I mean the only thing I would add is the transactional business, that can be very big transactions, and there are 2 benefits to it. In most cases, we know the client and we know the portfolio because we already reinsure it. So we have quite a confidence and a track record. Therefore, we have an estimation for what can we achieve with the existing pipeline and how could the pipeline develop. But it is lumpy. It is lumpy, and therefore, we don't predict specific numbers.

Thank you, Ivan. I think we can move on to Kamran Hossain from JPMorgan.

Two questions from me. The first one is on the 8% EPS CAGR. I just wanted to kind of understand how we should think about this over the course of the plan. I hear your comments, Christoph, that you don't want to commit to IFRS targets, you're very confident in the prospects. But is this -- is the 8% in terms of distribution until 2030? Is this kind of -- should it increase linearly? Or should it increase as like a hockey stick? It sounds like there's some good contributions from things like NEXT going forward towards the end of the plan. So just interested in whether you've got an idea of direction of improvement of earnings over the period.

The second question is on GSI. I'm very curious when I compare P&C Re and the direction of travel and GSI. In P&C Re, you've said the combined ratio will be between 79% and 83%. So a worse point than it is from this year's initial guidance. Whereas GSI is actually, you expect it to be at a potentially lower level, 87% to 90% versus the 90% initial guidance for the year. So just trying to understand kind of what's going on there. From the outside, it looks like in lots of commercial lines were at peak pricing and things are getting a bit worse. So just wanted to kind of square those 2 things, whether this is more expense saving, whether there's portfolio optimization, kind of what's going on there for that number to potentially improve?

I'll start with the first one maybe and then I look to...

I'll take GSI.

You'll take GSI? Then I'll start with the first one and then Thomas takes over. Well, the earnings per share CAGR, I mean, also there, Kamran, you said there's a bit of flexibility in there, and I think we need that we had the discussion. If everything goes 100% according to our today's best estimate, which, by the way, is never ever going to happen. But let's assume for a moment, everything goes 100% according to our own current best estimate over 5 years now. Then I would think from a group overall diversified perspective, we could expect a rather linear development of the earnings going forward.

But again, the beauty of the way how we do express the targets is there's only an IFRS target for 1 year. Everything else has much more flexibility because we need that given the uncertainties we see going forward. And therefore, we have that ranges. And that ranges would open opportunities like -- of completely different patterns like linear. And that would also be fine for us because all these various paths would support our ROE target of above 18% in 2030. And therefore, we have a bit of flexibility manufactured into the plan, and I think we really need that. But if 100% our current best estimate, then pretty linear, I would say.

Okay, GSI. And the target combined ratios that you mentioned. Of course, if we look into the next 5 years, there is quite some uncertainty. But of course, what we present here are the ranges driven by the portfolio composition and the pricing level. So both things can, of course, have a major impact. And as we want to diversify away from other accumulations of the reinsurance group, one area that we will go into a bit more can be, for example, longer tail business that comes with certain higher combined ratios. At the same time, we have economies of scale, and you mentioned that on the cost side. That is for sure, and it's fixed and baked into the plan. And as these 2 things come together and adding the uncertainty for such a long period, this is how we see the range developing.

Okay. Thank you, Kamran. Next question, please, from Will Hardcastle from UBS.

The first one is just on P&C Re. Can you talk me through, if you can, what you're assuming on pricing from start to end point to get to that end range on that 79% to 83% so I guess the 83%. Would you be thinking there's any balance sheet or reserve consumption to get there? And just coming back on the share buyback, it's a nice -- it's very clear. The one clarification I just wanted to get is, are you essentially stepping away a bit from the sustainable level that you used to talk about? So one where we imagine last year's buyback acts as a floor for the following year. I'm just curious because you mentioned it as a flexible tool, and I just want to see how flexible that is?

I start with P&C Re. I mean in the 5-year period, to have a very granular description of the development of combined ratio, you know well, that is very difficult. But we have calibrated the whole period a little bit with the experience that we had in the cycle before. So the sensitivities on the pricing are quite similar, but we have a more, I would say, optimistic view because we believe the discipline and the diverse and not uniform movement across lines, perils and regions will give us more opportunities. But the first 2 years, it's a slight reduction of the pricing where I mentioned it is being compensated partly by the higher investment income.

And then the traction as of 2028, again, improving margins and growing with the market growth of more or less 3%. I think that's what I can give you as the guidance. But the way we shift and change maybe our appetite because the risk return is developing up or down in different segments depends on the cycle and how the cycle as a whole predicts or how different it is to the former cycle is still difficult to say.

Well, on share buybacks, I think the wording is completely unchanged. So we always emphasize it's a flexible tool. Now in reality, if you look back the last, I don't know, 15 years, in reality, we decreased the buyback or canceled it mainly or only in years where significant external events happened. But the wording has always been like that because we need a wording like that in case such kind of events happen. If we achieve our target a steadily increasing earnings trajectory also going forward, the likelihood of significantly reduced buybacks given the payout target of 80% is pretty remote, isn't it? And therefore, I just want to emphasize again, the wording is unchanged. But clearly, the commitment to repatriate more going forward is what should be the thing you remember out of the presentation today.

And we move on to our next question, which comes from Iain Pearce from BNP Exane.

The first one was just following on a little bit from pricing. Obviously, with the renewal date getting pretty close now. It sounds like from the sort of guidance today, you're sort of expecting a renewal relatively in line with last year. If you could just give us a bit more color on what you're seeing as we get closer to the renewal date, that would be useful. And then the second one was just a question around Next. If I'm just running forward the sort of the Next assumptions, I'm sort of struggling with the math of getting towards a mid-triple-digit number, if we assume $1 billion of premium with $100 million growth per annum, which is what the company has done over recent years, if we assume a 90% combined ratio, 4% investment return, it's quite difficult to get to see how you're getting to that mid-triple-digit number. So if you could just give us a little bit of color around the sort of mechanics of the mid-triple digit and actually as next driver of the improved combined ratio in the ERGO International segment, that would be really useful.

I'll start again. Iain, you know that the most important 2 weeks are still to come for us in the renewal. But I would -- what I can share is some anecdotal, I would say, stories or evidence. And I would say, compared to the last year, where I indicated on my slide that we had a price reduction of 1.1%, I would foresee a little more -- a little higher price reduction in this renewal. But I cannot fix it to a number. It's too early to tell. And it will take us until mid- of January to then have the real number. But the tendency is a little more.

On Next, I'll start and then hand over to Christoph for complementing it in the planning. So of course, we don't want to disclose the individual targets as they are being discussed with NEXT currently. But I think if I draw on your conclusions, the insurance revenues, I think we plan them more aggressively. NEXT basically sells about -- sells on 3 channels, direct, agent and partnerships. All the growth numbers we have been seeing prior to our acquisition, and this is totally unchanged in the way we can analyze the NEXT development so far, points towards a much more aggressive trajectory, both in terms of growth rate and then consequently volume in 2030.

Also, I believe, given the fact that they are concentrating on the small business -- small and medium business subjects and here, especially in the micro market, as I alluded to in the chart, the 90% loss ratio prospectively would be quite a disappointment to me. So these 2 elements translate into, let's say, a higher level of confidence towards a 3-digit million net profit contribution by the end of 2030. But Christoph, please co-comment wherever necessary.

No, nothing to co-comment. Maybe just to add one topic, which I think is also relevant from a balance sheet management perspective. An initial volume push will also come from the fact that we're going to internalize all the business to take on the own balance sheet, while initially NEXT was still writing a lot also on third-party balance sheet is either via reinsurance or other constructions. So this will also support particularly initially the growth trajectory.

Could I just clarify, Markus, was that 90% combined ratio? I think you said 90% loss ratio, but I think you meant was a 90% combined ratio.

That's what I meant. If I said 90% combined, I would be more disappointed. So my apologies, and thank you for giving me the opportunity to clarify that.

Next question from Darius from KBW.

Two questions, please. Should we assume that you are willing to support your combined ratio targets for P&C Re and GSI with reserve releases? Or should we think there's some pricing risk to those figures over the next 5 years? The second question is, could you just confirm the EPS CAGR of more than 8%, you are using the EUR 6 billion net income target for that as a base or something different based on the actual results. And the third question is, what kind of Solvency ratio do you commit to getting down to? Because I think the range of possibilities is extremely broad compared to where you're currently sitting and above 220 when you talk qualitatively about wanting to be open to all the big risk opportunities and whatnot.

Darius, can you repeat the second one? I'm not sure if I got the second one right, please.

Baseline, what are the baseline.

Okay. Very good. Darius, I'll take all 3 of them and all have a strong financial background. First one on reserve releases, as we always said, we would never use our reserves to buffer a soft market because it would lead to the wrong signals into the underwriting and into the market. For volatility, that's a different story where we could use them, but not to support long term, and we're talking here about a 5-year strategy. So the answer is crystal clear. We cannot support this 5-year trajectory by just releasing money we already earned in the past. That would not work, and that's not what we want. So there is cycle and pricing risk in these numbers. But yes, it's our best estimate, and we showed the ranges in order to show what we think are also possible outcomes, and then we have capital management to react.

The outcome for the CAGR is actually the outlook result of EUR 6 billion. And the Solvency II ratio, so we don't commit to any target -- any target Solvency II ratio. There is no target. But if you ask me today what I think where the Solvency II ratio will be in 2030, then I would tell you clearly below the level where it is today.

Okay. Thank you, Darius, for your questions. I'll continue with a question I have received via mail because he has technical issues from Hadley Cohen from Morgan Stanley. And it's a question for Christoph. How should we think about the organic evolution of the Solvency ratio from here? One of your peers expects solvency to decline on a 55% payout ratio. Appreciate Munich has more diversification and life value of new business. But what does an 80% plus payout ratio mean for annual net organic capital generation? Linked to this, how much capital do you expect to be consumed by planned asset rerisking? I think you have already alluded to this last one.

Yes. And I think also the first one actually because the expectation for me would be that Solvency II in 2030, the ratio is lower than where it is today, and there's nothing else I would like to comment today. So I think -- that's the answer, I think.

That should be okay. And we can continue with the next question. The next question, I think, is again from Kamran from JPMorgan.

In terms of M&A, I mean, I guess you've said you've got lots of flexibility. You've highlighted kind of things that would be attractive. Should we think about the 8% plus EPS as having no M&A included within that target? Or naturally, there should be probably some kind of bolt-ons, et cetera, in places like ERGO or maybe GSI? The second question is on ERGO. In terms of the investments that you've talked about in 2026, I think a look back or I think back to like 10 years ago and the investments you made there or that stage were hugely successful. I'm just interested in kind of how much you're spending in 2026, and kind of what the investments are aimed at? Is this just kind of positioning yourselves for greater AI adoption or kind of what that might involve?

I'll start with the first one and the second -- Markus will take the second one. The first one is very simple. There's no M&A assumption in our projections.

We do not want to disclose an individual year-by-year investment number. Overall, over the 5 years, we'll invest a significant 3-digit million sum into ERGO. So it's going to be a little less than in the first program, but it's still very, very significant. And in 2026, the investments are primarily technology investments because that is going to be the basis for the future. So it is mostly everything on AI and AI-related technology. So it includes some investments into the legacy systems to make them AI compatible. And there's also some restructuring in parts of our group, which have to be financed, but that would be the 2 most important drivers for 2026. As I told you, we have a front-loaded program. So there will be more investments in '26, '27 and then in '28, it balances out towards '29 and '30.

Then we have another question from Shanti from Bank of America.

So just on Life & Health, that 8% to 12% top line growth corridor is pretty punchy based on how you performed in the past. And I was just curious, where is that growth really come from? Is it going to be organic or inorganic? And that step-up, is that really driven by changing conditions? Has something changed now versus in the past? And then the second one was just on P&C on the Pendulum Slide 21, where you showed P&C swinging from being around 1/3 of the group back to 1/2. Just curious, is there a metric that you monitor to determine whether or not pricing has sort of bottomed out and turned again?

Take the first one.

I take the first one?

Yes.

Life & Health reinsurance, why is it growing so nicely? Or why do we promise the same thing? The market as such, the normal market biometric business, quota share business, financially motivated, rightly, you're indicating that, I think, in your question, grows at a lower pace. But we have those 2 additional initiatives. And the most important one is really what we call transactional business. And this is where I have shown the slide of the recent transactions during the last 3 years. And we are not changing conditions. It's rather the other way around.

We are in such a good position to take on those very big portfolios because in most cases, we already know the client. Very often, we already reinsure the underlying portfolio, or we have the same data from different cohorts, from different clients because we have such a broad view on the market as a reinsurer. So you can say if it wasn't for being big and part of a very complex transaction, it is plain vanilla business. But it's something that you don't find in the statistics of a market growth because those transactions are one-offs and take quite a long time to be executed, a year, sometimes 1.5 years.

Shanti, this is Joachim. We struggle for a second if we understood your second question right. So if I may ask back, are you referring to that pie chart slide that I was talking about. And can I ask you back what is the concrete clarification that you request?

Yes. I was just wondering at what point do you turn back into a kind of growth position for the P&C book. I think you showed that kind of shrinking over the ambition. So that capital in the system? Is it pricing? Is it -- just wondering what metrics do you monitor?

That's important that you ask it. Thank you very much because that's an important clarification. So if you look into those pies and how they have evolved over time, what you see is the total pie is becoming larger and it's expected to become even larger than today in the next 5 years. And if you ask how will it probably look in 10 years from now, it's even larger. So the whole group business will grow, first thing. And however, the composition will be within that portfolio between P&C reinsurance and non-P&C reinsurance, we expect to earn more than 18% ROE. So that's important. Do we have sort of a predefined optimal share of P&C reinsurance worth of the other lines of business? No. So whatever from a profitability perspective makes sense to us and adds value, and today, everything is adding value the way that we are doing, is welcome.

But the more the markets allow us to grow the stable lines of business to grow, the stronger we feel ourselves on the P&C reinsurance side for the reasons that I highlighted because the more they earn the others, the stronger we are to offer huge capacities like we did in 2022 and '23 on the P&C reinsurance side irrespective of whether large losses may affect us or not. That's a promise to the market, which is highly valuable. But should the market turn into unattractive, which it is not today, but if so, at some point, then we will be in a much stronger position in also reducing our exposures because we can afford it because we have the other 3 lines of business already earning so much and increasingly so and paying the dividend interestingly, already them alone. So that is the whole logic, what defines the size of the pie and the composition is just the profitability that we can see in each of them.

We will continue with Will Hardcastle with his second question.

Just on the Solvency, I guess, given you've made the effort to change that Solvency metric to the greater than 200%, can you just go into why you chose 200%? I mean one of the things I think about is the cost of equity at that sort of level would be incredibly high, I would have thought. But maybe some of the details that you thought to choose 200%. You also mentioned potential to look at legal entity structure. I'm just trying to understand where there are maybe some trapped capital? It's not something I remember us discussing in the past. So that would be helpful.

Yes. Well, thank you. First, Solvency II, the lower boundary, I mean, we did run a few scenario calculations and also look at the alignment with rating assumptions. And the 200% is where a AA rating would roughly sit. And also what we always want to make sure is that independently of what kind of large industry loss happens that we are, in any case, be able to then grow into that hardening market after the large event. And for that, your capital shouldn't be too low because if it's too low and then a significant event hits you, then it would be very hard to go into growth mode because maybe your capital would not be sufficient for that.

So therefore, we need a certain level of excess capital for 2 reasons, rating capital and also, let's say, general capital strength, but also to stay in business if a real big industry event would hit us because those would be the most profitable years, and you want to grow into those years. This is exactly what you need to do then. So you have to take a precaution ahead of that already and keep the balance sheet strong enough to be able to immediately go into growth mode if needed. So that's basically the reason for the lower boundary.

Just coming back on that just quickly. I imagine, do you think you would be able to grow significantly at just above 200%? Is that what you'd still be saying you could still grow significantly if that went down to 205% and post event? Is that...

No, the 200% is a minimum. So even if we are at 200% and then a large industry event would hit us so bring us significantly below 200%, even in that case, we would need to be able to grow again and to then make sure we can get these more attractive margins then. And therefore, the calibration of the 200% is basically, let's think about a really severe stress test and try and make sure that the 200% is high enough that we are able to grow even if a large industry event would hit the industry. And therefore, with 200%, we are, of course, happy to go in any case. But the 200% plus the stress, and then we should still be able to have a lot of capacity for the market. I mean from a commercial perspective, what is our key strength is really the consistency and that we are able to deploy capacity for all our clients independently of large industry losses and independently of the cycle. And this is something which we need to support by capital management.

The second question, the cost of equity for that level. I'm completely relaxed when it comes to that because the cost of equity is also dependent on the way how you finance the 200%. And our debt leverage ratio is very low, but I mentioned in the presentation that we're going to increase it gradually over time. And this would help us optimize the cost of capital. But even at the level where we currently are, we easily earn the cost of capital. So therefore, I don't think there's any urgency at all. It's just an element where we could further optimize our capital strength going forward and then the profitability on top of that.

Similarly, on the legal entity side, I mean, there's no trapped capital anywhere. But really to further streamline, optimize, you have to just reassess the structure regularly. If you don't do it for a couple of years, then you find out that you have maybe more legal -- a few more legal entities than what you love to have. If you look at our annual report, you find there is quite a lot of those. So what we do is we just go through all of them, review them and make sure we only keep those who are really value creating and simplify structure wherever needed because each of these legal entity in a way is binding some capital, sometimes very small amounts only. But if you add it all up, I mean, it accumulates. And therefore, it's helpful to do this. I would call it, it's a bit of a cleaning exercise. You have to do it regularly. And we also think a bit about the interface between ERGO and reinsurance. So a lot of housekeeping in a way, nothing significant.

We will continue with the questions from Andrew Baker from Goldman Sachs.

First one, I guess, on ERGO Germany and the insurance revenue growth outlook so the 3% to 5% CAGR, is there anything we need to take into consideration the different outlooks between P&C and Life & Health there? And then secondly, I think in your '25 AGM, the short-term incentive plan, there was sort of -- it was voted that you went from -- it used to be just based on the net result and now to at least 2 metrics. Are you able to give us any insight into what that other metric is?

Markus?

Shall I start? So we don't want to go into too much details. But if I may answer that question for Germany conceptually, then we have traditionally a very stable growth on the P&C side in Germany in the market that is around 5%-ish. Sometimes it's 4%, sometimes it's 6%, mostly depends on the motorcycle. I think that it is fair that we commit ourselves to grow with the market or maybe a little bit above market medium term in the P&C side. On Life, you have to realize that we have a very successful new book of life business, which is basically capital market-oriented hybrid and some biometric products. But there's also the runoff of our classical life, and that, of course, is dragging in the premium. So we would not expect from the overall life participation in the German market to grow with the market because we have this large back book.

And in health, we are, as you know, a market leader. We have roughly 10% market share on comprehensive health and 21% market share on supplementary health products. And there, I mean, you already have a little growth because of the price increases that you have, but we'll be able to manage growth also in the number of insured persons. So here, I would also assume depending on which criteria you look at into an at market or above market growth, that's maybe sort of like a general comment to your question. I hope that helps you for some orientation.

And your second question surprised me a bit now. So yes, there will be a second target, and we are very close to being able to announce it already. The only thing I don't know if I'm allowed to say it already today or if there are governance or compliance reasons, which would rather recommend not to mention it today. Therefore, I'd rather not give an answer, but it will be on our homepage in the next couple of weeks. And we can give you a hint as soon as it's available there. There will be no big surprise what the second target will be. But actually, as I'm not 100% certain that I'm allowed to say it, I'd rather be silent.

We will continue with a question or 2 questions or let's call it 2.5 because I'm friendly from Chris Hartwell from Autonomous. The first question for Christoph, I think, has more or less been answered. However, I think I will read it out. Coming back on capital, can you clarify whether 200% is an operating floor or a stress floor? Given comments earlier on maintaining flexibility to offer peak risk to clients, if we add the tail risks and investment shock sensitivities in effect, is this just reducing the excess capital by 25%? How should I think about that? And semi-related, do you envisage a scenario where your payout could be 100% or greater given the level of capital today?

Yes. The first one, operating floor or stress floor. When we say -- as I mentioned before, when we say we are above 200%, the reason for that is that we want to be able to grow our business even if a stress happens in that situation. So therefore, I would -- using your language, probably say it's an operating floor, even if I'm not 100% certain how the exact definition of the term is you're using. I wouldn't say it's a reduction of excess capital because our commitment to give back as much capital as possible given all applicable restrictions is unchanged. So therefore, I think it's rather underlying and explaining a bit better really what the drivers are for capital boundaries we have. And the 200%, as I mentioned before, seems to be a very good number for actually being the floor.

The payout ratio above 80%, well, we have to be a bit careful not to get ahead of ourselves. But already mathematically above 80% exclude above 100%, but it also doesn't exclude above 1,000 or above 10,000 or whatever is. I don't want to joke too much here. I mean, exceptional circumstances, why not? For example, in the past, if you think about years where we had very big losses and we maintained the dividend, very naturally, the payout ratio would be significantly above 100% in those years, while in more normal years, 100% feels more like a stretch, to be honest.

And the next question was on investment risk. Given how high capital has been running through the plan -- the last plan, why is now the right time to increase investment risk, particularly into alternatives, given some of the recent concerns entering the market? Is it notable also given the natural opportunity for the running yield to improve given the reinvestment rate gap?

Yes. So why is it the right time? I think what I mentioned in my presentation is the synergies we have between insurance and investment when it comes to the assessment of some of those alternative assets and asset classes. What we would, in any case, try to avoid is places which are overcrowded already today. So if there are in certain areas, some alternative risks where maybe the risk return profile is no longer as attractive as it used to be, obviously, those are areas which we would avoid. And I just would like to remind you that our definition of alternative assets is very broad, it starts with real estate, which is a very traditional investment for insurers for decades or centuries even, up to more modern asset classes, and we can allocate just the capital as we like it and where we find the most attractive areas.

And so therefore, I think it's the right point in time when you look at alternatives in that broad sense and in a very differentiated way. And then I'm sure we'll find the attractive areas where it makes sense to deploy the capital. The reasoning is very clear. It's our illiquid liabilities, which allow us to take a bit more of these illiquid risks. And from that, I think we and our shareholders can just benefit by the higher yields we are going to achieve accordingly.

Thank you, Christoph. And sorry, a third one for you. DPS in line with EPS is our message. The question is, is that a commitment? Or is there a flexibility there to decouple those growth rates to some extent?

So the commitment is above 80%. The DPS in line with EPS is the current assumption, but there's flexibility. I think I mentioned it before already.

Okay. Then we continue with the next question here from the Internet, Iain Pearce, please.

It's just on the ROE walk versus the Solvency guide. And I'm just trying to square the circle of the ROE walk, which seems to embed a sort of a quite significant equity build, at least in the chart you presented versus the guidance that the Solvency ratio is coming down. Now are those sort of 2 things assuming different assumptions? Is it that the Solvency ratio is coming down because of an SCR build? And I know you said there's flexibility around what you plan to do with the equity, but the sort of assumption would be for me is if the Solvency ratio is coming down, you wouldn't necessarily be building a lot of equity at the same time. And therefore, if the solvency ratio comes down, that ROE might be a bit above 18%. So I'm just trying to square that circle really. If you can give me some help with that, that would be really useful.

And just a follow-up on ERGO Germany as well. Markus, you mentioned that historically, ERGO Germany has been growing in line or slightly above the market, and that's the expectation. This year, the growth in ERGO Germany looks a bit light and particularly in light of what we've seen in German motor pricing. If you could just touch on why you would be confident that, that's going to reverse in '26 and beyond, that would be useful as well.

Yes. Let me start squaring the circle. So first of all, all these assumptions, they are consistent. So I think as a CFO, I would be very unhappy with an inconsistent plan. So I'm happy to confess, yes, it's consistent. The, I mean, what you have to keep in mind, yes, there is some equity build, but we're also growing our book and in some of the businesses quite significantly, and this will bind more capital. And then we take this additional investment risk, which also is part of the equation. And therefore, quite naturally, you have to assume an SCR buildup until 2030, already growth driven and this additional investment element. And then you have the profitability, you pay out, but you retain some capital as well. And if you then do the math, you'll find a reduction in the Solvency II ratio.

Thank you for the follow-up on the German sales. You're absolutely right. This year, the growth is lower compared to the market difference if we compare that to the past. And it's a very intentional decision. As you know, we clearly commit ourselves towards profitability. So the claims ratio for us is, I think, the most relevant KPI if we steer our P&C book. And you have talked about motor. We do not profit as much as others from the motor price increase because our motor book, as you remember, is compared to our main peers much lower. We have lower motor book than the others. So this gives us sort of a slight statistical disadvantage, but it's more than that.

We have been very reluctant in, let's say, '24 and '25 to take on new motor risks given the long-term inflationary outlook that we have that has been hurting us in new business, like I said, intentionally. But we've also pruned our commercial business more significantly, especially in the transport segment in order to reduce the volatility because we firmly believe into our role of ERGO within the Munich Re context is to provide steadily growing low volatility earnings contributions. So we always look into potential sources of unwanted volatility, and we have and will continue to prune the portfolio wherever necessary, and we prioritize profitability over growth, and that's what you're seeing this year in the market.

Thank you. I'll continue with another question I received via e-mail. It is from Emanuele Musio from Intesa Sanpaolo. Two questions. It appears your targets are conservatively struck as they factor for all the things that can go wrong, a market that softens further from here and macro uncertainty, et cetera. The targets do not seem to include any M&A. So there is strong upside potential to your baseline guidance. On the M&A front, as of today, where do you see strongest potential for deployment?

Maybe, Thomas, you take number one, and you take 2, Christoph.

Yes. Let's begin where we won't do M&A, and that's the whole reinsurance business. P&C Re and Life & Health Re, we don't pursue any kind of M&A. And that is because we have a very global, very strong market position. Any M&A wouldn't help us. But GSI, GSI is something where we are considering M&A. But again, I think it was Christoph in the presentation that mentioned we stick to our conservative view. So there must be a very strong strategic fit, and there must be a reasonable price. And all those 2 hurdles are difficult to achieve, but we actively pursue an M&A strategy that is for GSI true.

Well, the -- I probably leave it to you to assess how conservative our plan is or not. I would rather say it's an ambitious plan and an attractive plan over the next 5 years. And in particular, also when you look not only at the sheer numbers, but also that it's quite bold to come out with a 5-year strategy in light of all these uncertainties you're also mentioning. So therefore, I'd rather go with ambitious, but I think it's up to all of you to assess from your perspective, if it's ambitious or not.

Thank you. Then let's continue with another couple of questions, this case from Vinit Malhotra from Mediobanca. First one probably for Thomas. Life technical result growth CAGR of 7% to 10%. What are the risks that large transactions may not be profitable or that your sharing business with alternative asset companies leads to more profit sharing with them? And then we have a question on cost expense initiative, EUR 200 million, now growing to EUR 600 million. Is this a bit higher importance for Munich Re than in the past? What difference might it make for services that clients are used to from Munich Re, for example, on various research products like climate change, et cetera?

I take Life & Health. I already, I think, mentioned a little bit in the direction of your question, the transactions are big and complex, but the underlying biometric risks in almost every case, we know it quite well. And the reason can be either because we are already reinsuring that portfolio. It's one of our clients approaching us or because we have data from the same cohorts from a different part of the market, and therefore, the biometric risk is what we take and what we understand, of course, deeply. And therefore, I don't see any danger that we might have a surprise on the biometric development in the next 2 years because of this type of transactions.

Thomas, do you also want to comment on Vin's other question, the cost ambition and whether the reinsurance services might be affected?

Yes. I promise that we will have economies of scale in reinsurance. And especially those economies of scale will be in Life & Health and GSI and drive the whole reinsurance. And in those elements, especially on Life and Health, where we have some digital services around the globe, it will not reduce our offering. And in GSI, it's more a distribution power that we are increasing. There are no, I would say, major big services that hinge on the success of the GSI business.

I will continue with another question I received via mail. It is from Ben Cohen from Royal Bank of Canada. Is it fair to characterize the 8% plus EPS CAGR? So another question for you, I guess, Christoph, to characterize the 8% plus EPS CAGR as weighted to the second half of the 5-year plan, given top line and margin pressures in P&C Re and upfront investment in ERGO. Would you assume rising investment yields over the course of the plan? And to what extent would you smooth each year's EPS growth to 8% with change in the size of the buyback?

Okay. Ben, thank you for the question. I think I mentioned before already that according to our best estimate as it's underlying the plan here, a rather linear development would be expected. But taking up the points you were mentioning, I think the drivers behind the result development in the different years, they can vary quite a bit. And I mentioned in my presentation today that next year, we are, for example, expecting quite a step-up in the investment result. So this will help next year in a year where ERGO is, for example, still, to some extent, burdened by the investments they are making. So as you see, we have our means to steer and to manage that. But overall, it's going to be rather linear if everything goes according to plan, which over a 5-year time horizon, you anyway don't really know, and this is why we just came out with those ranges.

Similarly, with the investment yield. So there are -- we have assumptions underlying that. And based on that assumption, the investment yield should trend up further, and we have that also in the slide deck. But then again, of course, you're depending on the capital market, like you're dependent on the insurance markets or reinsurance market on the business side. Therefore, again, these wide ranges give us some flexibility. We can add capital management to the equation. And on that basis, are very confident to achieve the above 18% ROE target. But we need to ask you and we need to get that flexibility on the course on the path towards that above 18% because nobody can predict the future over 5 years.

Thank you. We have 2 more questions from Faizan from HSBC. First one, at what point does the shift from P&C Re to other lines become suboptimal from a diversification perspective? And the second question, it was mentioned that you have greater flexibility given the limited use of retrocession. Given that we may see a softening of retrocession prices in the next phase of the cycle, could this create a scenario where your return on deployment may be lower than your peers that are heavier users of retrocession?

Thomas, do you want to take the retro question?

Yes.

Shall I take the P&C reinsurance question? So from what point on would the size or the share of the P&C Reinsurance business be suboptimal? I want to emphasize again, we do not have any optimal size in front of us. So we do not target 20%, 40%, 60% or 80%. If profitability is high, we are very happy to have much more P&C reinsurance business. And if not, we are happy to have and live with less P&C reinsurance business. So I underline there is no critical point of suboptimality.

One core element of us, Munich Re, in the reinsurance P&C market is the capacities that we provide to our clients, we don't make it dependent on retrocession. Why is that so important? Because we want to be and we are the most reliable and consistent player in the market. And especially this feature of our strategy has given us in 2022, the huge opportunity to grow our natural catastrophe book. The question that you mentioned, could it be then in a very cheap retrocession cycle that we then have a drag compared to others using strong retrocession? I can't give you numbers, but we look at the whole cycle. So over a period, depending on how it develops, 7, 8 years. And then you always pay the full retrocession cost plus the margin for taking -- for the one taking the retrocession. So on average of a cycle, you don't have a benefit. You have to pay the normal risk adequate price for retrocession. And that's how we look at it. And combined with our strategy, we want to be able to give the capacity in each and every single year independent of retrocession. That's how we act in the market.

Thank you. Thomas, I think I have one more for you because we have received a second question from Emanuele from Intesa Sanpaolo. When we look at the returns required by ILS investors, today have gone down materially from peak in 2024. In the past, there was a strong relationship between rates and ILS required returns. It appears that the relationship no longer holds true as insurance rates are holding up stronger than in the past. Is it what you are seeing? And do you think this may suggest that rates will stay stronger for longer?

I had a slide where I also alluded to the alternative capital. And I think you are raising a very interesting point. I cannot finally make a judgment if that is the case. But what we have seen is that the ILS investors also within the different alternative solutions move from one to another. And the recent development has been especially moving away from sidecars and moving into cat bonds. And that has depressed the cat bond market even more than the insurance market. So I think, yes, the ILS market and the respective subsegments are more vulnerable to price reductions than the normal reinsurance or insurance relationships.

Thank you, Thomas. And I think we have a very last question now from Andrew Baker. Please, Andrew.

Just one, please. On the 80% P&C Re combined ratio target for 2026, can you just help me sort of think through that versus your original 79% for 2025? You mentioned obviously, pricing was down 1.1% last year. That's still partially earning through. It sounds like it's a little bit weaker this year. What's the offsetting factor? Is it discounting? Or is there something else going on either in '26 or in the base in 2025?

Andrew, as you know, there's always a few moving parts in IFRS 17 when you look at those combined ratios. The good news this time is discounting is stable. So there's no discount rate changes. But as always, of course, the business mix varies quite a bit from one year to the other and business mix changes can easily explain also movements of the order of magnitude you're mentioning. So therefore, completely unspectacular in a way, underlyingly, I think very well supported also going forward. And I think this is the entire story already.

So thank you very much. As far as I can see, there are no further questions, and let me just check my e-mail once more. I think we have addressed all of them. So I think -- yes, it's -- thank you. It was a very, very lively and very good discussion. Thank you for all your questions and participations. And yes, there's nothing left for me other than to say thank you for joining. We will now close today's session. Should you have further questions, as always, please don't hesitate to get in touch with the Investor Relations team. And I would like to wish all of you happy holidays and a good start to a healthy and successful new year. Speak soon, and goodbye.

Yes. Thank you, Mohit, and good morning, and welcome to everyone to Munich Re's Q3 earnings call. Today, I have the pleasure to introduce two speakers to you. As always, Christoph Jurecka, our CFO, for his last quarterly earnings call as the group CFO before taking over the group CEO role next year. And a warm welcome also to Andrew Buchanan, CFO of Reinsurance. Most of you know him anyway. He will be the group CFO as of next year. Andrew will support us during the Q&A session.

Now I hand it over to Christoph for his opening remarks.

Thank you, Christian. And yes, good morning also from my side. It's always a pleasure being here, and I'm pretty sure I'll miss all of you, but I will still be around.

As always, I start with my introductory remarks. So Munich Re posted another particularly pleasing net result this quarter. As you all have seen, EUR 2 billion in Q3, and the drivers are similar to those of the previous quarter. We have a good underlying performance across all lines of business and coupled with an exceptionally strong technical result contribution in P&C Reinsurance and GSI. We have very high net earnings at ERGO, including net positive one-offs as well as also a very high investment return.

Overall, with a net result of EUR 5.2 billion after 9 months, we are running clearly ahead of our pro rata full year guidance. In all segments, we are comfortably on track to meet or even exceed our full year targets.

Let's look at the Q3 earnings drivers in more detail, starting with the investment result. The return on investment of 4.1% continued to benefit from benign global equity markets and overall positive fair value changes in reinsurance, while the investment result of ERGO was boosted by the first-time consolidation of NEXT Insurance. The reinvestment yield of 4% remains above the group's running yield, providing further support for its upward trajectory going forward.

Turning to the business fields. Let's start with Reinsurance. The Life and Health Reinsurance total technical result of EUR 314 million came in below the pro rata annual ambition driven by negative biometric experience across major markets. This offsets the positive experience we posted in the first quarter and is not an indication of a negative trend in our portfolio or generally deteriorating mortality. This aside, the total technical result developed as expected in terms of the release of CSM and risk adjustment and benefited from strong new business and the impact from management actions.

The result from insurance-related financial instruments, which includes our FinMoRe business, grew nicely over the quarters and performs according to our expectations. Overall, after 9 months, the total technical result is within the range of the pro rata full year guidance. The stock of CSM increased despite strong currency headwind due to favorable new business development providing a sound basis for continued high total technical result going forward.

In P&C Reinsurance, we posted an outstanding Q3 result with a combined ratio of 62.7%, which benefited once more from very low major losses. The release of the loss component of almost 2 percentage points is in line with the neutral overall change we anticipate for the full year. Reserve releases amounted to the expected 6 percentage points in the combined ratio. And I'm particularly pleased that the underlying performance remains strong with a normalized combined ratio of just below 79%. After 9 months, the normalized combined ratio is very much in line with our guidance for the full year, while the actual combined ratio of less than 70% is even well ahead of plan.

Please allow for an additional remark on insurance revenue. The decline we have been observing during the course of the first 9 months is on the one hand, driven by currency effects, mainly due to the U.S. dollar. On the other hand, it is the consequence of deliberate business decisions we took in the latest renewals to safeguard high profitability of our portfolio. We remain prepared to reduce business which does not meet our requirements with respect to prices and even more so as regards to terms and conditions. Beyond that, the further downward revision of our full year top line guidance in Q3 is also related to premium adjustments, including changes in the NDIC calculation. The negative currency impact on the top line applies in particular to Global Specialty Insurance. Hence, rather technical headwinds obscure the fact that the business continues to grow nicely at a mid-single-digit rate on an underlying basis.

As regards to profitability, GSI posted a strong performance in Q3. The first 9 months combined ratio of around 86% is better than the full year guidance, thanks not least to a pleasingly low combined ratio of 82.8% in Q3, which benefited from a low level of major losses.

In primary insurance, ERGO came in with an extraordinary strong net result of EUR 304 million in Q3. This result includes a few positive and negative one-off effects, such as the first-time consolidation of NEXT Insurance and the impact of the German tax reform. All in all, leading to a net positive effect of around EUR 50 million. Adjusted for this effect, the net result is slightly ahead of the quarterly run rate. underscoring the strong underlying performance. Overall, ERGO is well on track to achieve its full year guidance.

ERGO Germany posted a net loss of EUR 21 million in the third quarter, driven by high tax expenses because of the corporate income tax reform. From 2028 onwards, we will benefit from gradually decreasing tax rates. The technical performance in Life & Health remains strong, mainly driven by lower claims in the PAA business. The CSM release was fully in line with expectation when the stock of CSM decreased mainly due to model and assumption changes in long-term health. The P&C business achieved a good technical result with a combined ratio of 88.7% at the level of our full year guidance.

ERGO International reported an extraordinary strong net result of EUR 324 million. The first-time consolidation of NEXT Insurance provided a gain in the investment result. Underlying, the segment continues to deliver a strong performance. The technical profitability in Life & Health was pleasing, and the P&C business delivered a strong total technical result and a combined ratio of 88.7%, better than the full year guidance.

Turning to capital management. The group's economic position remains very strong. The Solvency II ratio increased to 293% in Q3. Strong operating performance and the issuance of subordinated debt overcompensated the consolidation effect of NEXT Insurance accounting for around 10 percentage points as expected.

I would like to conclude with the outlook for the full year 2025. Based on the drivers I described before, we expect EUR 1 billion lower insurance revenue in Reinsurance compared to our last guidance we gave in August. Obviously, this reduction mainly affects P&C and GSI. In contrast, the profitability KPIs of both segments are much better than anticipated. Therefore, the outlook for the combined ratios improved to 74% for P&C and 87% for GSI. After standing clearly ahead of our pro rata full year guidance after 9 months, we are, of course, very optimistic to achieve EUR 6 billion net income in 2025.

In the last quarter of this year, we will reassess reserve uncertainties as part of the annual reserve review as usual. Our actual versus expected analysis shows a pleasing continuation of an overall very favorable reserving trend. However, we might opportunistically use the so far better-than-expected financial development and any benefit in case of lower large losses also in Q4 to even further strengthen our reserve prudency, potentially also at the cost of a higher normalized combined ratio. We anyway plan to realize disposal losses in our fixed income portfolio to support the running yield going forward. These measures are all fully in line with our long-term oriented financial steering approach, targeting a steadily increasing and smooth earnings trajectory. We will present our new midterm ambition on December 11.

With this, I am at the end of my opening remarks, and I'm looking forward to answering your questions. But first, I hand back to Christian.

Thank you, Christoph. We can go right into Q&A. [Operator Instructions] Thank you.

[Operator Instructions] And the first question comes from Shanti Kang from Bank of America Merrill Lynch.

So on the revenue guide, which is now EUR 61 billion, you mentioned that was attributed to three components, that was the premium adjustments, the renewals and FX impacts. And I was just curious, could you help us gauge how much of that guide reduction today was linked to each component that you've mentioned? I was mainly surprised just to see that FX is a contributing factor in this second round revision. So that's my first question.

And then the second one is just given the buoyancy of the 9M results today at EUR 5.2 billion versus that EUR 6 billion mark, what really held you back from raising guidance for the full year today? Should we take that as some cautious positioning into Q4, for example?

Shanti, thank you very much. Sorry for the slight delay. We are two here together today. So we always have to discuss who's taking which question. I kick it off here now. I'm Christoph speaking, still here. I'll start with the second question.

So the 9-month result, indeed, of EUR 5.2 billion is very close already to the EUR 6 billion. So as I said also in my introductory remarks, we are very optimistic not only to achieve the EUR 6 billion, but potentially also exceed it. But I think what I also mentioned is that we will opportunistically just use the opportunity to strengthen our balance sheet and also strengthen earnings for the future.

And I think that the two main levers, which seem to be quite attractive for us from today's perspective are realization of losses on fixed income instruments, which I think we already very concretely plan to do. And then depending on how the reserve review goes, but also depending on how many large losses are we going to see in the fourth quarter, also potentially act a bit on the reserve side to position ourselves even more on a cautious level than where we are already.

Now is this all needed? No, obviously not. I mean our reserve position is very sound, completely unchanged compared to prior years. So I'm just highlighting that just to make sure that there are no concerns. But of course, opportunistically, you can always do a bit more. And I mean anyway, there's always room to additionally buffer some or additionally increase the prudence in the reserves. So that's something we would consider doing. And basically, this is the reason why we didn't increase the guidance to higher than EUR 6 billion immediately.

Your first question on revenue and the split between the various sources. And you were talking about three potential sources. I would even cluster it into two groups of different origins for the premium decline. The first group is what I would call technical adjustments. Technical adjustment would, for example, include FX, would also include premium adjustments. And in the premium adjustment, I think in my presentation at the beginning of the meeting, I also mentioned the NDIC changes we saw. So that -- that's the first part.

And premium adjustment, for example, could also be that some treaties we have the premium volume is attached to external parameters. And if they change, the premium volume changes also. So that -- I would call them technical corrections, technical also because I mean, currency is a different item. But for the other things, the profitability is very much unaffected by those changes.

And then there is a second category, and this second category is very much related to business decisions. business decisions where we decided not to continue with businesses where prices or even more importantly, terms and conditions would not be in the right order, right order of magnitude, right size when it comes to price or terms and conditions would just not be good enough for us to continue to underwrite the business.

And now coming to -- you were asking for concrete numbers. I think you can see it in our presentation. If you look on Slide 18, you see already the split between currency and organic change for the 9 months. And so there you can see that the -- what is it, the foreign exchange is roughly EUR 300 million, while the organic change is around EUR 600 million, EUR 650-ish million. And in that organic change, there is also this premium adjustment topics. And my high-level estimate would be maybe EUR 250 million of premium adjustment in that number and the remainder being then related to these business decisions.

And the next question comes from Andrew Baker from Goldman Sachs.

First one, just in terms of the sort of prudent actions that you're talking about in Q4, how much of that is you're conscious that the full year '25 net income number would be the base for your next plan? Or should we -- when we think about your new targets in the base, should we expect that to be on the sort of normalized EUR 6 billion sort of target number?

And then secondly, just on the GSI insurance revenue growth. I think you said in your comments that the sort of underlying growth is mid-single digit. Can you just help me bridge sort of how I get to that number? Because again, if I just look at your slides and back out FX, it looks like it's a bit below there. So what am I missing in terms of that bridge to get back to the mid-single-digit underlying growth rate?

Okay. Andrew I'll take the first question and then Andrew, next to me, will take the second one. The starting point for the next strategy phase. And I have to apologize in advance, I will not comment a lot on that today because I mean, we have our Investor Day coming up soon now at the 11th of December, anyway, where we'll go into all levels of detail. But obviously, the starting point should be what we think is the underlying earnings power we have currently. And there we still think EUR 6 billion is maybe not a bad starting point to start with in any case. I mean there's always moving parts, and we shouldn't be overly scientific about all these ups and downs we are seeing here and there. But we think EUR 6 billion is probably the right starting point to think about what we are able to deliver also going forward.

And let me take the second question. You were asking about the growth rates in GSI. It's Andrew Buchanan speaking here. And I think the important thing to understand is it's right indeed to adjust for the FX. But then if you look at our slide and you look at how the insurance revenue has changed for the 9 months of this year, compared to the first 9 months of last year. You may be looking at our number of EUR 183 million. And indeed, if you calculate that as a percentage of the starting point, it's a relatively lower single-digit number, it's more around the 3% level.

The important thing to bear in mind is that the premium adjustment topic that Christoph was also talking about shows up in this number, too. He mentioned the so-called NDIC, the NDIC effect. That is not confined to P&C reinsurance. So that is also a phenomenon that we see in GSI. It's a pure accounting effect, so it doesn't affect the underlying performance of the business. But if that accounting effect or premium adjustments had not come through, then that EUR 183 million organic growth would have been significantly higher. In fact, possibly more than double the number you see there.

And the next question comes from Michael Huttner from Berenberg.

I've got one question, which my colleague and I debated, and he thought you wouldn't be able to answer, and I'm hoping you might. And then the second one is much simpler.

So the first question, you kind of said it pretty much throughout your presentation, you're incredibly profitable. If I take the 62.7% or whatever combined ratio in Q1 in Reinsurance, add back the discounting, so we're at 71%. I think some of your peers would be around 90%. And I know you can't comment around your peers, but if your peers represent the markets, and you must be thinking about the market as well when you do your numbers, you're almost 20 points better, and this is almost a question to -- it's nice to have both the CFO and the CEO in almost the same role at the moment. How do you think about that? It's -- where do you see this excess -- what I would term as excess, all this better than market profitability coming from? It's very nice.

The second question is really, really simple. Can you say anything about the credit losses in the U.S.?

The second is -- I can be very brief. Credit losses in the U.S. I don't think we are affected by that at all, if I understand correctly what you mean by that. But whatever I understand, under the term credit losses does not affect us.

The difference to peers, maybe I should give back the question to you because in a way, I was always hoping to get better comparable numbers with IFRS 17. But now some of our peers have GMM numbers, we do have PAA numbers. There are some methodological differences. But then also in the business, the business mix is different. So there are quite a few differences, but we are also in a bit sometimes asking ourselves where does this difference come from? And then frankly, I do not have a conclusive answer either.

So I'm not sure if it was you or your colleague who said I was not able to answer it. But one of the two of you was right. I'm also a bit puzzled by the difference. But let's rephrase it in a positive way. Let's just say we are all impressed by the level of profitability our underwriters are able to achieve.

And the next question comes from Kamran Hossain from JPMorgan.

Two questions from me. The first one is just coming back to the kind of EUR 6 billion guidance. It sounds to me that you're more likely than not to take action in Q4. Just really intrigued, kind of your EUR 1.5 billion for a normal quarter large -- you've got large loss budget within that. Is there anything going on large losses as well that we should consider? One of your peers commented particularly on Melissa yesterday. So could there be even greater than EUR 700 million post-tax kind of buffering via realized losses and prudence in reserves?

The second question is on GSI. Really great to see another excellent quarter in terms of like headline performance. I just wanted to get your insight into whether you think this is just nat cat good luck for 2 quarters. I think you were 78% in Q2, you are 82% and a bit for Q3 or whether there's anything else going on underlying that is coming in a little bit better than you had assumed?

So Kamran, it's Andrew speaking again. On the Q4 question, you asked if there's anything special out there and you mentioned Melissa, in particular. I have to add a pretty hefty caveat upfront. It's early days. The loss estimation process on Melissa is in full swing, as you would expect. It's a Caribbean event. I think probably the numbers will take a bit longer to stabilize. But at this stage, we are counting on a mid-triple-digit loss number. That's our current view. And I would say, just for the record, that fits comfortably inside our loss budget for Q4. So if that's the only thing we see, then we'll certainly have some room left over. But other than that, I don't think there's anything noteworthy that needs to be mentioned.

Then the question on GSI. So thank you for mentioning that the numbers we're now seeing in Q2 and Q3 are certainly looking better. Overall, I would say to me, this is a fairer reflection of the underlying earnings power of the business. So I'm really pleased to see GSI at this level, it feels about right. I can tell you that we are not supporting that result or dressing that result up by doing any kind of extraordinary reserve releases behind the scenes or anything else.

So that really is a true number. What you see is what you get. But of course, acknowledging the simple mathematical fact that Q3 was a benign outlier quarter for GSI as it was for P&C Reinsurance. So both segments have benefited from that, let's call it, a onetime tailwind. But other than that, I would say with GSI, this is a fairly fair reflection of how the business is running.

And the next question comes from Ivan Bokhmat from Barclays.

I've got two, please. The first one is on the P&C. Just wondering, looking back to the 9 months of the year, I think perhaps to draw some parallels to Michael's questions. One of the things your large peers were doing was adding to reserve buffers. Is there any indication that in your combined ratio, there's any increased level of prudence or it's all reserved for the Q4 actuarial review?

And then maybe my second question, shifting topics on Life and Health Re. There was a bit more negative experience this quarter. Perhaps you could give a little more color on the geographies and lines of business. One thing I'm particularly interested about is whether some of this experience may be related to the large transactions that you've been writing recently? And perhaps you can elaborate on how your experience with those large transactions have been unfolding.

Ivan, thank you for the question. I'll start with P&C and Andrew will then take your Life question. On the P&C side, so reserves, when -- I mean, our reserve review always goes into the fourth quarter, so it's still ongoing. But what we see so far is a very strong reserve performance across all our books more or less. So having said that, I think the way we book has been as conservative as ever, and we have a very positive reserve performance was on that basis.

Did we deliberately decide already to have additional reserve strengthening so far until the first 9 months, so in the first 3 quarters? No, that was not the case. But in the first 9 months, we more or less booked as we always would book in our regular business activity. While in the fourth quarter, and this is what I said in my introductory remarks, opportunistically, we might even add additional prudence to that if the result allows, and just to be even more on the safe side going forward.

Do we have any indication that, that would be needed? No, we don't. But then on the other hand, we really understand from many of our investors how much they appreciate a smooth earnings trajectory, smooth and slowly increasing earnings trajectory going forward. Obviously, in some very -- in very good times, you need to somehow also prepare -- to be prepared once there is potentially a quarter or maybe also a couple of quarters where volatility is striking. And therefore, as I said, opportunistically, we just might use the fourth quarter to build up even more prudence despite the positive developments we saw so far this year.

And Ivan, I'll take the Life Health question. It's Andrew again. So you asked about the experience and the geographical spread of that. So quite a few different markets. And I would say what we saw in Q3 was a number of relatively unspectacular items that each on their own were in the double-digit millions, which in this quarter happens to all have a negative sign attached to them, and so they tend to add up.

Typically, we benefit from a bit of diversification in our global portfolio between countries and lines of business. This quarter didn't work out so well. Although if you look at what we've seen so far this year, we actually had a good quarter in Q1, where a lot of the items just had positive signs attached to them.

So it can go both ways. I wouldn't say that there was any one big driver that we would say is a systematic warning light that gives us particular cause for concern. You do just see these ups and downs in this case, spread between quite a number of the Anglo-Saxon markets, a little bit in the U.S., Canada, Australia, but nothing particularly large in any one of them.

I did also ask the team also to satisfy my own curiosity to look back and see these kinds of fluctuations, how do they look in historical context. And actually, if you look back in most past years, we have at least one quarter where there's been an up or a down like this. So we'll keep it under close watch, but I wouldn't say that there's anything in here that is a particular cause for concern.

I think you did also ask about how the large deals are running. And I would just say for the record, the large deals so far, absolutely satisfactory. I think both financially and operationally running in a very orderly fashion.

And the next question comes from Chris Hartwell from Autonomous.

Just two, if I may. I just wanted to come back to the revenue trend, I think, it's really the answer to the first question. I'm trying to sort of think about the message that -- or what we've seen in the Q3 versus the experience from the July renewals. I mean, I think back in the Q2 results, you were talking about a more sort of conservative view on the cat book. So I was wondering how much of this that we're seeing in Q3 is relating to -- specifically to cat. And therefore, are we seeing a bigger Q3 impact on growth than ordinarily we would see in future quarters just on that point. Hopefully, you get what I'm trying to get out on that question.

And secondly, just on NEXT, the acquisition is a quarter in now. So I was wondering if you could maybe share your thoughts. I know it was a business you knew quite well, but now you've got 100% ownership of it. I was wondering if maybe you can update on your enthusiasm for the growth profile that you have there.

Sure. The first question, I think I outlined already that the underlying reasons for the revenue decline. The cat business is obviously also part of that. So what we said in the 1/7 renewal, somehow had a limited impact also in the numbers as we present them today. But you also have to think about that after the renewal, not so much time elapsed yet. So therefore, I mean, it's also other renewals which played a role there, but also business which is written outside of the renewals or premium adjustments, which are independent of the renewal dates, also played a role. So it's a bit of a mixed bag, I would say. It's not cat only or not even pronounced towards the cat direction.

On NEXT, indeed, so the closing was in the 1st of July. So we have now a bit more than 1 quarter where NEXT now belongs to us as a group. The integration work is going as expected. So a lot of the internal operational stuff has been set up. We were also able, as you can see, to include NEXT already fully in our IFRS numbers for the Q3 on a preliminary basis. We are working hard to get the first real, and more precise consolidation done and also for the year-end closing, and then we are well on track to do that. Also, a lot of the other let's say, nonfinancial operating integration work is going well.

And so far -- maybe so far is maybe even the wrong word. So we didn't -- we are not aware of any changes to the trajectory as we assumed it before the transaction, looking at the prospects of the company from today's angle. It's more or less the same, I would say. And anyway, it's only 1 quarter, so we have to take it from there.

And the next question comes from Vinit Malhotra from Mediobanca.

Yes. So my two questions. One is just on the -- again, sorry to bring it up. But when we look at the revenue progression, so not talking about the guidance as such, but the 9 months, and thanks for breaking it out at [ EUR 650 million ], I mean it's still -- even excluding the EUR 250 million you mentioned, it's still about 2.5%, maybe 3% organic weakness. And when I look at the renewals, I mean, a rough check is suggesting this year's YTD down about 1.5% and last year was about plus 1% or 2%.

So maybe just rounding numbers, but I'm just trying to understand if there is something more than the renewals and now we are excluding NDIC, excluding premium adjustments. Is there something more that you would like to flag? And maybe the answer is a simple, no, but I just wanted to be very sure of that.

Second thing is on the balance sheet strengthening in 4Q and you said it's opportunistic. But I'm just wondering, I mean, 2Q and 3Q were 60s combined nat cat reserve releases seen. So I mean, what's the -- I mean, what better opportunity would have been to actually add to reserves? And I mean, maybe the answer is the reserve review is needed for that decision. But I'm just curious about releasing reserves from nat cat for 2 quarters. And then in fourth quarter, we are adding back. So I'm just curious about that reserving action.

Vinit, it's Andrew here. Thanks so much for the question. I mean, let me take the follow-up on the revenue item first. Because you said, look, even if we strip out EUR 250 million for NDIC, you're asking what else can be going on there? And it's a fair question. So not all the business we write is dictated by our big renewal dates in the treaty reinsurance on 1st of January, April and July. I think Christoph's comments earlier about how we've been really strict and disciplined about reducing business that doesn't meet our requirements. That's for sure, the most important part of the story.

We do also have some other business that's perhaps a bit more flow in its nature, where we have to continually update the estimates as we go through the year as new information comes to light. So one example I could give you there, just to help you really concretely feel what we're talking about is I might have proportional treaty that I may have renewed all the way back on the 1st of January, but where neither we nor the client know exactly how many underlying policies are going to be sold. And so as you go through the year, the primary volumes get updated. And then those volumes get further updated when statements of account reach us.

So of course, there's a constant refining of estimates that happens during the year. And many times, you probably have ups and downs in those estimates would even out to a large extent. I would say this time, those estimation updates tended more towards the negative, but we've tended to see more reductions in volume.

Perhaps it's a bit anecdotal, but another example I would offer you so that you can feel what kinds of things are going on is agricultural business, agro business, where some of it, the insured amount, and therefore, the premium volume actually responds to agricultural prices. And so when commodity prices drop in a particular period, you actually have less risk and less premium. And that indeed is something else that has happened. But you wouldn't necessarily know that on the renewal date so you wouldn't pick that up in the renewal reporting.

So when we talk about premium updates or updates of estimates, there are also these other factors blending in not only the sort of big decisions on the renewal date to renew or not renew a program.

And Vinit, your other question on the reserve strengthening, and I understood it, why didn't we do anything already in Q2 and Q3 given the results were so good. Maybe there are two reasons for that. The first is a process-related one. Indeed, our reserve review is only towards the year-end. But I think there's a second reason.

And the second reason is also that we -- I mean, we want to be very transparent also how the business really is going. And if we, every single quarter, would somehow interfere with our reserve level, I think it would a little bit overshadow also the view on the underlying profitability. And then therefore, we just book the first 3 quarters as they come in, in a way. And then only in the course of the fourth quarter, we look deeper into the reserves and opportunistically or even if required, which didn't happen so often in the past years, we would then take action on the reserves only.

And then also be very explicit and tell you what we did, just to make sure you can differentiate between the underlying development and what we would potentially put as an additional prudence into the reserves. I think this transparency is very important. And therefore, again, in the first 3 quarters, we didn't do a lot in that respect on the reserving side.

And the next question comes from James Shuck from Citi.

I had a question to begin with about Munich Re Ventures. Just keen to understand why you decided to close that unit? Obviously, it's given birth to NEXT for you, which one would think would be a great success. And it just seems as if Christoph, that's like one of your first moves, moving into the new CEO role, has been to shut that unit. So just keen to see if there's any kind of messaging that we can read into that closure?

And secondly, I believe that Jo Wenning has stated at one of the conferences that we can expect the kind of flattish outlook for insurance revenues in P&C Re, excluding GSI. Could you just clarify what is meant by that? Over what time frame? Is that nominal? Is that real? Is it in constant FX? Would be very helpful to get an idea of the outlook for P&C Re revenues based on previous commentary.

James, thank you. Excellent questions. I'll start with Munich Re Ventures. So first of all, there's no CEO messaging at all in any of the items you might observe at Munich Re today or in the last quarters or even in the weeks to come. We do have the CEO right now, and there will be a new one next year, and currently, I'm the CFO. And that's all about it. We'll speak more about the future anyway on the 11th of December. So I refrain from commenting any more on future CEO kind of questions. I don't think it's the right point in time to do that.

On Munich Re Ventures, though, what I can say is that there has been a shift in our activities, not only related to Munich Re Ventures, but more broadly that we would wanted to concentrate more on our core activities, on our core insurance and reinsurance business. And in that course, we did take some action already also in other areas in recent years. And in line with that activity, we also decided that it would be a better way forward to have that activity now handled or to be managed by our asset manager, MEAG, instead of Munich Re Ventures. And this is all what I have -- I should say, or I have to say about that.

I think it's a normal shift of focus, which happens occasionally in companies, and we very much want to focus on our core business now. And I think it makes a lot of sense also looking at the profitability we are able to achieve and the margin we are able to achieve in the core business. So that's maybe about Munich Re Ventures.

On the P&C revenue outlook, I -- the very general statement I can make is -- and this is very much in line what you see in the Q3 numbers already that for us always profitability matters more than the sheer volume of what we are doing. I think this is something you know us for very well, and that's something we always have been highlighting very much. More details on how this very general view would translate into a revenue plan into the future, I have to apologize, this is something we are happy to comment on the 11th of December, but today, it's just about a month too early for that discussion.

And the next question comes from Jochen Schmitt from Metzler.

I have one question on insurance finance expenses in P&C Re, which even decreased in Q3 year-over-year. Obviously, FX effects have probably played some role and business volume has to be considered, but nevertheless, it seems that the negative contribution from the unwind of discount does currently not increase much further. Would that be a right conclusion for modeling purposes for 2026? That's my question.

Also, this is a question which is so forward-looking that I think it makes sense to rather discuss it in December. But I think that the general assumption is not wrong that for this year, there is a bit of a gap. And I think, also, you gave a good explanation for that. It's interest rate related. And therefore, also for the future, obviously, a lot will depend also on the interest rate assumptions. And some of our business is not as long term such that also short-term interest rate moves sometimes do matter in that regard. But again, the more long-term outlook and perspective is something we should take up maybe then in December.

The next question comes from Emanuele Musio from Intesa Sanpaolo.

I can see there is quite a bit of focus on revenue growth and cycle management. While I also note that you have quite a sizable amount of surplus capital based on your solvency target range and this continues to grow. It is about EUR 16 billion, if I'm not wrong. So I was wondering how much of that -- unencumbered and deployable to other uses other than organic growth?

And if you can also remind us what is your rationale for further M&A? And if there is any ROI [ or rate ] that perhaps you may want to share with us. And lastly, on GSI what are the lines of business that you see most attractive at the moment?

Okay. I start with the capital management question, Emanuele. Thank you for the question. So indeed, we are very strongly capitalized, and this is just a very good place to be in for various reasons. First of all, as you all know, capital repatriation is a significant part in our strategy, and it always has been and always will have. And again, for the future, we'll discuss it in December, but capital repatriation matters a lot to us. Having a strong capitalization is, of course, the ideal basis also for that going forward.

On top of our capital repatriation, obviously, deployment into growth, organic growth, but also inorganic growth is something which we are always looking at, look and trying to find the right areas to grow our business, having in mind our profitability targets, having in mind also our footprint, our concentration on the core business, as we discussed early on. So this is something we are constantly looking into.

And we identified various growth targets in recent times. As you know, for example -- I mean, NEXT was one example on the M&A side, but also organic growth, Life Re, I think, a brilliant example where we are nicely growing. ERGO has been growing significantly over recent years. So there has been quite a high amount of growth. And this growth comes along with capital deployment on our side. And it's good to have a lot of capital to be able to continue a growth trajectory also going forward. Again, details to be discussed in December.

Now M&A, M&A always has been on our list. So that's not new. We had this NEXT transaction this year. But also, I mean, in the future, why not looking into other targets, as we always said. And clearly, not in reinsurance because the synergies would just be massive. But on the ERGO or GSI side, completely unchanged view on that. M&A could be something we are looking into also in the future.

My last and very general statement is that on December 11, capital management will also be a very integral part of our strategy going forward. So therefore, reserve some time and some questions, please, also for December to discuss capital management a bit more then and not today.

And the next question comes from Roland Pfaender from ODDO BHF.

One question from my side on ERGO Germany. It seems like there has been some revenue softness in the last 2 quarters. So maybe you could shed a little bit light in what's going on in P&C in the light of, yes, recent price increases in the market, while revenues are actually falling on an organic level.

I'll take the ERGO question, and I think there was one question on -- Emanuele still on GSI, which I think Andrew will then also cover. On the ERGO Germany side, nothing very specific. As always, in the various lines of business, sometimes you focus a bit more on profitability, and this is what we did. And therefore, the growth is a bit more muted currently in P&C Germany than what it used to be maybe a year or 2 ago, but nothing really spectacular to comment on.

And it's Andrew here. Let me go back to the question posed by Emanuele about GSI. And the first thing I would want to say there is just when we talk about GSI, it's important to remember that this is really a family of businesses that increasingly are working together, but which are active in quite different markets.

So in particular, on the question of where do we see promise or which business do we feel positive about, I would say we continue to feel positive about the core equipment breakdown business that we write at HSB, which is one of the key business units within the GSI segment. I would say we continue to be positive about the business flow that we see in the Lloyd's market, where we have the Munich Re syndicate.

And then I would say, looking at other lines in the U.S., we continue to believe that there is potential for growth in the excess and surplus, the so-called E&S market in the U.S., which has been on a phenomenal run of growth in recent years. And my sense is that, that hasn't completely run its course. So we see some potential there. And then last but not least, we are modestly expanding our presence into Continental Europe also in our Munich Re Specialty - Global Markets business.

And in terms of the lines of business that we see, I would say property rates are generally still adequate in most markets where we find them, which is good. And I think we have also made clear our intention to be active in surety and in engineering lines. And last but not least, casualty is a very broad family of different products. We are indeed active in some of them with all due caution, making sure that we avoid any of the casualty issues that have caused trouble for U.S. carriers in recent years.

And the next question comes from Michael Huttner from Berenberg.

Two questions. One, the U.S. dollar rebalancing. I think you spoke about it probably Q1. I just wondered, can you give us an idea of how far you've gone in that direction?

And then the second is ERGO growth in Scandinavia. My colleague, the famous colleague who was right on the first question, did ask me to ask about this, and I thought that's fair enough. Scandinavia has always been -- I always thought it was kind of almost a closed market, very difficult to break into, but it'd be interesting to hear what you have to say.

Sure, Michael. Thank you. So let's start with ERGO Scandinavia. ERGO always had a joint venture there, 50-50, and took over the other 50%, and now it's 100%. So in a way, it's not a new market entry, but just increasing the stake in an existing business. So therefore, easier to break into that market and the health business we have then Norway has always been running quite beautifully from a performance perspective, traditionally for many years. So we're happy to have it now in the group to 100%. So that's everything which is going on there. Remind me of the other question?

Dollar, U.S. dollar rebalancing.

Sorry. Yes, the U.S. dollar position in the meantime is very close to neutral. So the significant long position we had in the first quarter, we gradually reduced it, and we are now more or less in a neutral position, slightly long, but very close to neutral.

And just on this, can you explain why initially you were long U.S. dollars? I think it has to do with capital allocation or something. But I struggle with this. Now you have so much capital, it's probably irrelevant.

No, no, Michael. For us, currency is like any other asset class where we would take positions in the technical asset allocation. And historically, currency, U.S. dollar long was always a natural hedge for other risky asset losing value. So therefore, in a way, it was a hedge position to offset the risk we would take, for example, in equities or commodities or other asset classes. All, as you know, to a limited extent anyway. We are an insurer, so we are not taking huge positions, but we do take positions here and there. And indeed, the tactical asset allocation in recent times, achieved quite a beautiful outperformance for us with a nice amount of base points adding to our overall investment result.

But as this year, the currency position has been suffering so much, this year, obviously, the TAA was burdened by that. But I think year-to-date, they were even able to overcompensate the currency loss on an economic basis, including all the TAA positions.

Having said that now, the hedge position, obviously, it didn't work this year. So this year, the correlation between currency and the risky asset classes was different than historically, for the obvious reasons, political reasons. And therefore, it was much harder this year to benefit from that hedge position. But -- so this year, we didn't benefit. But in the past, we would have benefited from that hedge very often.

And the next question comes from Ivan Bokhmat from Barclays.

Just two small follow-ups. When thinking about the P&C revenues, one of the drivers you mentioned in the slides, but not so much in the commentary now was the share reduction in the proportional business. I was just wondering if this is driven by your decision to write less of quota shares or just the competition, resulting in an increased allocation to those quota shares being smaller. So maybe you could comment on that, or maybe specific lines of business where that applies?

And second question, I noticed that in ERGO Germany, the CSM was seeing some sizable negative operating changes during the quarter. Was that related to tax or any other reason?

I briefly take the ERGO Germany questions. Indeed, this is tax -- so the tax rate change due to the corporate tax rate did also affect the model for the CSM. I don't go into all the technicalities here, but indeed, that's the driver behind that reduction. There will be an offsetting effect or a compensating effect in due course when the actual tax rate is lower starting 2028.

And Ivan, on your question about the proportional business, yes, you asked, are these reductions the result of our own, let's say, explicit decision? Or is it a case of having our shares reduced? Well, the answer honestly is that it's a bit of both. And in some cases, it's almost a bit difficult to separate the two things because generally, it starts with a discussion and finishes with a discussion and a mutual exploration of what we would be prepared to write on what terms. And sometimes, that leads to the client, actively reducing our share. Sometimes it's more initiated by us. But as you know, we don't comment on individual relationships or individual deals. So I ask you to accept the answer that it's a bit of both.

Maybe I could rephrase it a little bit. Do you see clients seeding less business in general? Or it's just the more commercial negotiations in this case?

I wouldn't say that there is a general trend for all clients to seed less business. I do think that in certain markets, after a few years of decent profitability, some balance sheets have been rebuilt and strengthened. And it is the case that sometimes in reinsurance, you're not only competing against the other reinsurance companies, but you're competing against the client's retention.

So there are definitely some clients out there that are -- now perhaps have the financial capability to accept more risks on their balance sheet than before. That is true. But also, with the view ahead to the 1/1 earnings campaign, I mean, anecdotally, in our risk committees, I think we are also seeing one or two requests for additional capacity that might be needed by certain clients. So I think there could be some increases as well as decreases, which is why I wouldn't want to be too pessimistic at this point.

The next question comes from Iain Pearce from BNB Paribas.

Just two very quick ones on ERGO. If we take the normalization and sort of the EUR 50 million of one-off net benefits you've had, do you see that EUR 250 million as a good run rate going forward for ERGO?

And then second one, given you've not changed the net income guidance for ERGO and they already set at sort of EUR 800 million for the 9 months, should we be viewing this as there's prudency to be added in ERGO as well as in the reinsurance businesses in Q4 or investment losses in ERGO in Q4 as well as in the reinsurance businesses?

So I think the very brief easy answer is ERGO is acting similar like we do as a group overall. So I think it's the same financial steering and DNA also in ERGO. So indeed, you could look at the run rate and interpret it as the target should be should be increased. But then also at the ERGO side, there are measures around how to maybe prepare a bit also for the future. And then ERGO will also be looking into those, obviously.

So therefore, the guidance of EUR 0.9 billion, I think is still the guidance despite the fact that we saw 3 quarters now where the run rate was rather around the EUR 250 million, which, by the way, is very good news because it shows that underlying ERGO is doing very well. And I think this is really reassuring and then showing how much success and how much progress has been made again by ERGO.

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Christian Becker-Hussong for any closing remarks.

Yes. Thanks very much to everyone for attending and for joining this call. Further questions, please don't hesitate to ask. Otherwise, we see each other again in December. Thank you. Bye-bye.