Ladies and gentlemen, welcome to the Bâloise Group Half Year Results 2021 Analyst Conference Call and Live Webcast. I am Sandra, the conference call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Markus Holtz, Head of Investor Relations. Please go ahead, sir. Good morning and welcome to Bâloise Q&A call on our Half Year Results 2021. On our call today, we have our CEO, Gert De Winter, our CFO, Carsten Stolz, and our CIO, Matthias Henny. Now I would like to hand over to Gert. He will give you a quick overview of our results before we open the Q&A. Many thanks, Markus. Good morning, everybody. A warm welcome from Carsten's, Matthias, and my side. Welcome to our half year 2021 discussion. Let me summarize our feeling as follows. We are proud and we are very satisfied with our half year results 2021. Proud because, once again, we stand by our clients when they need us most. We have helped and are helping our clients to cope with the actual consequences of the extraordinary natural catastrophes that have happened in June and July. Besides being proud, we're also very satisfied because despite these exceptional circumstances, we have delivered a very strong half-year result. Our bottom line exceeds CHF 300 million, which is 70% higher than half year 2020. Our growth is strong in non-life over 8% and in the capital light investment type life business over 30%. The underlying quality of our non-life and life portfolio is very strong. The combined ratio in non-life is despite, as I said, the extreme and the extraordinary storms rise by 92.3%, which is clearly in the bandwidth of our target, 90%-95%. In life, we have achieved an EBIT of almost CHF 200 million. Our innovation strength and power remains unchanged and high. We are digitizing and digitalizing our core business stronger and faster. We have entered with FRIDAY in France. We have concluded additional partnerships in the ecosystem home and started many initiatives in the ecosystem mobility. Given our strong Half-year results 2021, we are, and I am convinced that we will reach all our strategic goals in the current strategic phase, Simply Safe: Season 1 until the end of this year. We're also very confident for the outlook of this year. We will start Simply Safe: Season 2 as of 2022 with tailwind. Again, summarizing, proud and very satisfied. Having said that, I would like to open for the Q&A together with Carsten and Matthias, the colleagues, and Markus. Please go ahead. It's too early to promise a beer for the first question, anyway, we're waiting for the first question. We will now begin the question and answer session. Anyone who wishes to ask a question may press star one on the touchtone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star two. Questioners on the phone are requested use only handset and then eventually turn off the volume of the webcast. Anyone who has a question may press star 1 at this time. The first question comes from Peter Eliot from Kepler Cheuvreux. Please go ahead. Thank you very much. The first question was on the nat cats that you've experienced. You've guided to CHF 40 million for June and high double digits for July, so I guess over CHF 100 million in total. Could you just remind us how your reinsurance cover works for these? What your exposure is per event, reinstatement premium, maximum exposure? That would be very helpful. The second question is, if I look at your EBIT matrix on slide 39, I guess the other result of CHF - 38 million is a bit higher than usual. Also, if I look within non-life, there's an other of CHF - 80 million, which is a bit higher than usual. Speaking to IR, it seems some of that was due to FX and maybe investment in FRIDAY. I'm just wondering, and I apologize I've asked this question before, but are you able to give us any guidance on what you consider a sort of underlying normal level? If you were in our position, how you would model those two numbers in particular going forward? Then, maybe finally, on costs, could you just remind us sort of to what extent any integration costs are affecting these results and if there's any left to come? Thank you very much. Thank you, Peter. Let me hand over the question on reinsurance to Carsten. I will try to pick up the other two questions, of course I would say amended by comments of Carsten and Matthias afterwards. First, a few, Carsten, on reinsurance and cat nat events. Good morning, Peter, and thank you for your questions. It's right, we have CHF 40 million in half one, and we expect a high double digits on top of that for second year as of today. The reinsurance program or the reinsurance coverage is based on excess of loss, nat cat coverage. It depends on the lines of business, what this will imply in the end. I think we need to wait a little bit until we see the structure of the events to be able to quantify this. As we speak, we are expecting a high double-digit number on top of the CHF 40 million that we already have accounted for in the first half. The second question was on EBIT. Yeah. Let me first handle the others, or the group business, if you want, or the others. I think that the large part of that number is indeed affected by FRIDAY results. That is clear. FRIDAY is still prioritizing growth over profitability, so it's still an investment. That's the bigger part of the other in EBIT. If you look at non-life EBIT, couple of things maybe, of course, there has been the exceptional storms in June, which account for net CHF 40 million approximately, which has an impact. It's also the fact that half year 2020 has, of course, known somewhat, not somewhat, deeper frequency in claims. That has, I would say, normalized in the half year 2021. That also plays a role, and what is certainly also the case is that, from a capital market side, from a financial income point of view, we have been a bit holding back on non-life, maybe a bit more on life then to compensate, but that certainly also has its effect. Then the third question on costs. Belgium is still integrating, of course, Fidea and the ex -Generali, so the Athora business. That will last until 2023. There are indeed some integration costs still going on until 2023. We are expecting actually CHF 40 million-CHF 50 million additional benefit P&L in Belgium, given the integration after 2023. In the costs, in Belgium especially, there's also a one-off we should take into account, which was actually the activation of the acquisition costs in Fidea last year. That's a one-off we need to account for. Of course, we have a lot of digitalization, digitization projects going on. Also, the IFRS 17 and IFRS 9 project, of course, which is absorbing a lot of capacity and needs investment. Those projects are influencing certainly the cost side. Matthias, Carsten, anything to add to the questions of Peter? No? Fine. Okay. Thank you very much. That is very helpful. Could I perhaps just quickly come back on the reinsurance and the nat cats and just maybe to help us understand, if we get further events, how should we think about any likely exposure? Are you able to help us there on how reinsurance may or may not kick in going forward? Well, that's at this stage hypothetical. If we get further events that qualify for reinsurance coverage, then reinsurance will take its fair share according to the contracts and the limits. Even with further events, we will stay within our 90%-95% net combined ratio bracket. It doesn't have an impact on the ambition going into Simply Safe: Season 2. Okay. Thank you. It always depends, Peter. It always depends on what's the nature of the event and which are the lines of business that are affected. That's why we would need to know how this event look like. Yeah. We had a fair share of events already this year. I say this with a twinkle in my eye. We had our share and are not unhappy if we don't have further, if we have further events, of course, we are going to cover the client's needs first and talk to the reinsurers as we do now. Yeah. Okay. Carsten, appreciate it. Thank you very much. You're welcome. The next question comes from Simon Fössmeier from Vontobel. Please go ahead, sir. Good morning, and thank you for taking my question. It's Simon from Vontobel, and I'll take the beer if nobody else claims it. My question is on life insurance. The EBIT is pretty strong. If I look at the half year results in 2019 and 2020, half year EBIT is less than half of the full year. If I just double the CHF 195 million, you would end up being substantially above your guidance of having at least CHF 200 million. Any special effects in the first half year that influenced the EBIT in life? Thank you. Thank you, Simon. A couple of points maybe on the Life results. The guidance we are giving is a minimum of CHF 200 million, it's a floor. That has always been the case. Even in difficult capital markets and interest rate environments, the CHF 200 million is the guidance as a floor. That's one. Secondly, the strategy in Life for years has been hard work. On the active side, we're trying, of course, to optimize the yield on one side. On the passive side in Life, we have been working with capital light new business and balancing our portfolio. We have been lowering guarantees. We have from time to time also deliberately reserved in order to bring the guaranteed interest rate down. It's hard work. That's one point. Of course, in the first half year of 2021, what you see with the interest rates rising have allowed us not to reserve, and that's certainly an advantage. Of course, capital market conditions in the first half year have been also favorable. That's where we see if interest rate environment and capital markets are, I would say, favorable, then we get tailwind in the Life business, and then indeed, we clearly exceed the CHF 200 million floor guidance that we have given. Looking forward to the end of the year, as I said, it's hard work, and we continue the hard work on the active and the passive side, but it also depends, of course, on the interest rate environment and the capital market. Okay. Understood. Thank you. The next question comes from Thomas Bateman from Berenberg. Please go ahead. Hi, good morning. Thank you for taking my question. Just first one on innovation investments. I know that Simply Safe: Season 2 doesn't begin until next year, it feels like you're already investing here in 2021. Can you give us any indication of how much is invested thus far and how much you made this year? Second question is just on the loss ratio in Switzerland. Understand that it was COVID in 2020, the hailstorms in 2021. There seems to be a slight uptick on some underlying trends in Switzerland. Is there anything that's driving this? The final question, just on the improvement in the new business margin in Life, up to 47.6%. How much better can this get as the business mix improves? Thank you. Thank you, Thomas. Let me try to start answering the question. Innovation is, of course, not new. I think since we started Simply Safe: Season 1 back in 2017, we have been focusing on innovation, and not only on innovation beyond insurance, but also very importantly, innovating within our core business to make it more efficient and more easy for our partners and clients to work with us. Innovation is certainly not a new event that will start as of next year with Season 2. We have invested indeed over the last couple of years in innovation, have also done so in 2021. If you take the innovation, I would say, budget in the core business, so really investing in IT and so forth, we are around CHF 100 million a year, more or less. If you look going forward, we have said from the cash that we will generate, we will actually invest 10%-30% in innovation in the core business and in initiatives beyond insurance. If you look at Switzerland and the loss ratio, I will hand over to Carsten. Thank you, Thomas, for this question. If we look at Switzerland the last few years, there was an alternation of normal years, but also years with, in the first half, very benign claims environments, or years with a high load of claims, like for example, last year. Bearing this in mind, the underlying book is technically very strong. There have been fluctuations, especially from large claims loads and nat cat events over the last few years. Having said that, we don't see particular trends as we speak. If we take the improvement question on the new business margin in Life, obviously it depends on the market environment and on what is the business mix that we are selling to the customers. It benefited in the first half of this year, again, from products with low or no guarantees on the one hand, and from the high pickup in investment-linked products. It depends what the market environment does with regard to customer behavior and where we put our efforts in with regard to new business mix from a product perspective. Certainly the level, nearly 50%, is very good, and it shows that the focus, that the hard work also on the product design side and distribution side is paying off. Maybe one more element or one more thought on the non-life underlying in Switzerland. We have said that with a combined ratio on the group level of 92.3%, there's a 2.1% impact of the storms and the floods in June, and of course, the large majority of that part was in Switzerland. Germany has also been hit partially, but the July floodings were actually, especially Germany and Belgium. June and half year is especially Switzerland, and that's why the underlying quality of the non-life book in Switzerland remains exceptionally strong. Okay. Thanks very much. That's my question. The next question comes from René Locher from Stifel. Please go ahead, sir. Yes. Good morning. Can you hear me? Yes, René. Good morning. Good morning, all. Again, just quickly on this follow-up on Peter's question on reinsurance. Let's put it that way. In the annual report on page 176, there you explain your life and non-life reinsurance strategies, and it says, "The group's maximum retention for cumulative claims is CHF 20 million, then the retention for individual claims are CHF 16 million for property claims," and so on. I guess what would be interesting for us analysts is just to explain to us later in the year or next year how your reinsurance cover has worked. With the June, July nat cats we have seen. Just as an idea. When I'm just looking at your strategy, it's for me hard to understand how you can end up with a high double-digit net claim. On Germany, please. Yes, Germany, I think very interesting, and you have a very strong combined ratio. I am on slide 37, and there you see the non-life, I guess these are the gross premiums. If I take a 90% retention, I have net premiums of some CHF 466 million. If I calculate an underwriting margin of 7.3%, I would end up with an underwriting profit of CHF 34 million in the non-life. When I look on slide 39, non-life EBIT is CHF 4.2 million. Is my thinking wrong or do I miss something here? I guess it has to do with the investments in non-life, IT, but perhaps you can shed a bit more light on Germany non-life. Question for Matthias Henny. I have seen you have cap increase for the Baloise Swiss Property Fund. I guess that was at the end of July. Interestingly, real estate is still a very hot topic. I was wondering how easy is it for an asset manager to find interesting real estate assets in the current market environment? If I may, on slide 21, you have touched already on the life result, but I think this profit by sources is very interesting. Is there this high saving result? It's partly offset by higher policyholder participation, I guess. Just as a clarification. It's just interesting in FRIDAY, strategy in France. Could you just shed a bit more light here about investments, products, what are you targeting here? Thank you. Thank you, René. It's a varied bunch of questions. Sorry for that. I will try to tackle a couple of them and then hand over to Carsten and Matthias. I'll pick Germany and FRIDAY strategy in France if you want, and then distribute the rest of the questions among Carsten and Matthias. Germany, as you have seen over the last couple of years, we have really transformed Germany. In life, we are clearly going for only biometric capital light solutions. In non-life, we have exited the industry portfolio and focusing and growing in retail lines and SME. That pays off because you see the combined ratio in Germany has come down and has been at a very good level, stable since a couple of years. That is one. Secondly, there is also, of course, investments going on, heavily investments in the non-life platform in Germany with the Guidewire platform, where we are really investing, and part of that investment is not in the combined ratio. That is about almost 1%, I would say, of combined ratio. There is a very technical explanation on reinsurance and shifting from one segment to the other, but I think that is too technical for me, so I will leave that to Carsten afterwards. On the FRIDAY strategy in France, we have launched FRIDAY in France as of 1st of July, actually the product we have launched there is what is called in French multirisque habitation. It's actually a combination, if you want, of household home insurance and liability insurance, which is a mandatory insurance product in France for homeowners, but also renters. It combines, as I said, home liability and, to some extent, legal assistance. This product is easier than car. That's why we have chosen this strategy. It's also more profitable than car in France. That's the reason why we have launched this multirisque habitation in France. It also, as FRIDAY is a multi-country, multi-channel, multi-product strategy, and has been designed as such, it allows us to prepare actually liability launch in Germany. That is the reason why we have chosen this path in France. If you look at FRIDAY overall, we have been growing year -on -year with 100% since the launch in 2017. We have done so also in 2020 with over 100,000 customers. Have also doubled again if you look at half year premium of FRIDAY in 2021. Overall, good on track. Thank you. For questions on reinsurance on Germany and on the real estate side, handing over to Carsten and Matthias. Thank you. Thank you, Gert. I pick up on your explanation with regard to Germany. One of the reasons, and you mentioned reinsurance, is the group internal reinsurance relationships between Germany and the group internal reinsurance carrier, which is accounted for in the segment group business. That, from a segmental view, explains part of the missing part in your equation. With regard to your clarifying question on page 21, it is absolutely true that the development with regard to the savings result has to be looked at hand in hand with the policyholder participation. There you see that the higher results stemming from the capital market development is mirrored in the policyholder participation. That's exactly the way you described it, and that's the way it is. With regard to reinsurance, we'll get back to this later on in the year once things have settled. With regard to the Swiss Property Fund, I will hand over to Matthias. Yes. Thank you for the question. Indeed, we're actually doing a capital increase in the Baloise Swiss Property Fund. The response has been very good, and it will be executed by the 1st of September. In this capital increase, there is a transfer of real estate from the balance sheet of Bâloise to the Baloise Swiss Property Fund. The reason for that is that those properties do no longer fit into the real estate portfolio from an insurance asset perspective. It's actually not that we have purchased those real estate on the market. It's been a transfer. In general, it's rather difficult to find real estate currently at reasonable prices. We are very selective in acquiring. We always ensure that the yield is fine so that we can ensure that each property can contribute to the long-term investment result. This is interesting. I'm always, not wondering, but I have to say, if I am a policy holder of Bâloise Insurance, I shouldn't be so happy to see that part of the real estate portfolio is then carved out and shifted to the asset management. You see my point? Because it's so hard to get yield on the bonds and so on. Interesting. You are not the only one, but it's very interesting to see how this works. To comment on that. It's primarily driven by asset allocation consideration. For example, if in individual life we have decreasing asset base due to maturing traditional life business with guarantee. This means over time, just to keep the ratio constant, we need to dispose of real estate. Of course, this disposition, when we transfer it to the fund, is done at market values. Yeah. Now fully understood. It's like a warehousing, right? It's like on the insurance balance sheet, and then you just carve it out and shift it over to the asset management. It's just okay. Thank you very much. The next question comes from Farquhar Murray from Autonomous. Please go ahead, sir. Morning, all. Two, possibly three questions from me. I'll try and keep it brief. They're all related to the nat cat numbers. Just starting with the first half number of CHF 40 million. Would you by chance have the gross amount of claims against that net figure, I presume? Sorry if I've missed that earlier. With regards to the higher double-digit amount in the second half, is most of that Belgium or Germany, just in terms of composition? As a subsidiary question, for Belgium, does that include an estimate for the request from the Walloon government for what we might call a kind of solidarity contribution? Thanks. Thanks for the questions. On nat cat. The first half were mainly the storms and largely in Switzerland. The second half will contain also the floodings and the other jurisdictions like Germany and Belgium. With regards to your first question, obviously it's a little higher, but it's not that much higher than the CHF 40 million that we have stated. The second half, where does it come from? It's certainly more stemming from other jurisdictions like Germany, Belgium, but also Luxembourg, which means that overall, looking at the nat cat year 2021, all our business units and geographies will be impacted by the events so far. With regards to the solidarity contribution or the discussions in Belgium. You leave it over to a Belgian citizen. I leave it over to a Belgian citizen. Good. Thank you, Carsten. Maybe also an additional remark on the second question. If you look at the July storms and natural catastrophes, and looking at the numbers, it is true that majority is coming out. Of course, all our markets are hit, including Switzerland and Luxembourg, but Germany and Belgium are indeed hit the most. If you look at the recent evolutions, Germany was talking about CHF 5.5 billion. I've seen this morning that it goes direction of CHF 7 billion. Indeed, the average claims are probably higher than initially expected. There's still an evolution there. Also Belgium is actually moving towards the CHF 2 billion of total claims for the overall market. What is important for us is to stand by our clients. That's the first priority. To help them out, 10,000 of them have been hit also in Belgium. There are discussions going on, and there has been solutions being brought to the table between the association of insurance companies in Belgium and the Walloon government. We stick to that. We are loyal to, of course, the agreement that has been found and are also discussing, and that is part of the discussion also with reinsurance, whether this part of the claims will also be covered by reinsurance or not. It's an ongoing discussion. First priority is helping out our clients. Just to follow on, are you assuming some coverage for that voluntary contribution from the reinsurers? I presume your base assumption is zero. I think it's an ongoing topic and it's too early to state. Okay. Thanks a lot. As a reminder, if you wish to register for a question, please press star and 1. The next question comes from Jimmy Fan from UBS. Please go ahead. Hi, it's Jimmy Fan here from UBS. Thank you for taking my questions. I have two, please. My first one is on the underlying performance of the non-life business. I guess if I look at the underlying loss ratio bits, if I took off the adjustments and also considering the COVID benefits, and the real underlying level looks to be back to the pre-COVID level. Also seeing on the expense side, as you mentioned, it was a bit elevated in [half one] due to the one-offs. Actually, could you give me a bit of color in terms of what you are planning to do or doing in terms of the pricing versus claims dynamic in different markets, and also on the expense side, given you are going into a new strategic phase with a lower core target? My second question is about Belgium and the top line looks really good there, even excluding the deal impact. Is there anything new in terms of business development there, and how should we think about the momentum going forward? Thank you. Thank you, Jimmy. Let me start with a couple of points in trying to answer your questions. If you look at the underlying performance quality non-life, what we do not see is claims inflation on one side. It is, of course, a competitive environment, so the pricing competition is there, especially in car business and in corporate business, I would say, corporate lines, yet pretty stable. Competition is normal, so there's nothing special going on there, I would say. From an ambition point of view, in Simply Safe: Season 2, starting as of next year, we are actually leaving behind the bandwidth of the combined ratio of 90%-95% and say we target an area of 90% combined ratio. We also expressed the ambition to lower our costs by CHF 200 million in Simply Safe: Season 2. We're working at all different aspects of pricing claims, underlying quality costs going forward. That also, of course, these results that we want to see and that we are working towards in non-life contribute substantially to the cash target of CHF 2 billion over four years, which is 25% + compared to Season 1. If you look at the Belgian top line, indeed, we are not only in Belgium satisfied with the top line. If you look at the overall top line of our Group, it's over 9%, combining non-life, life, and investment type of business. In Belgium, of course, there has been also a very strong growth. It's partially due also to the ex -Generali Athora integration, which was not fully integrated in the numbers in half year 2020, but also the organic growth in Belgium is very strong with almost 8%. It's due to a couple of factors, I would say. One is our very strong relationship and reputation with the broker community. Belgium in non-life especially is a very dominated broker market. We have a very strong reputation since years and a very strong relationship. Secondly, we are of course number four in Belgium, we cannot be ignored, all the brokers are working with us. We have only recently, over the last couple of years, entered into the Walloon area, the potential for growth is still very strong and valid in the southern part of Belgium. As we have focused primarily on retail markets over the last couple of years, we are getting a lot of traction in the SME market. Belgium is an SME market, that's where actually the growth factors and elements come from in Belgium, but not only in Belgium. Thank you. We have a follow-up question from Thomas Bateman from Berenberg. Please go ahead, sir. Oh, hi. Thanks for the opportunity to follow up. It's just on FRIDAY, I was hoping you could give us some more details on the capital raise, and maybe just an update on premiums and the loss ratio at half year. Thank you. Yeah. Thank you, Thomas. I am glad to do so. Since the launch of FRIDAY in 2017, we are actually pursuing a multi-country expansion and growth strategy. That's clear. That's also why we entered in France, building on the synergies and the capabilities, the assets, and the knowhow we have built in Germany. It is indeed our strategy to expand further. Therefore, we need, of course, additional capital. That's why we have said also a couple of weeks ago that we are open for additional strategic financial investors who would actually contribute to the strategy of FRIDAY and the growth strategy of FRIDAY throughout Europe. That's why we have said that. We are exploring all the different alternatives, I would say, or financial options that we have. We are pretty open there for additional investors. There are, of course, other alternatives. If you look at FRIDAY, as I said before, the year-on-year premium growth has been almost 100% every year. That's also the case half year 2021. We were at over EUR 30 million premium at the end of 2020. We have exceeded half year that same amount. If you look at the technical profitability of FRIDAY, it is improving year-on-year. You see the technical cohorts actually in terms of profitability, in terms of churn, in terms of loss ratio, improving year-on-year. That's a very good sign towards break even in the midterm. Okay, thank you. For any further question, please press star and one. Gentlemen, so far there are no more questions from the phone. Thank you very much for the interesting debate and allowing us to try to respond and answer the questions. As I said, the summary is we're proud and we're very satisfied, and we are very confident for the remainder of 2021. Thank you very much. Have a nice day. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect the lines. Goodbye.