Ladies and gentlemen, welcome to the Baloise full year 2024 results conference call and audio webcast. I am Valentina Chorus C all 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 one on your telephone. For operator assistance, please press 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. Good morning, thank you for joining and welcome to Baloise's Q&A call about our annual results 2024. In our call today we have our CEO Michael Müller, our CFO Carsten Stolz and our CIO Matthias Henny. We start with a quick overview of our results. For this I hand over to Michael. Thank you, Markus. Dear analysts, dear investors, ladies and gentlemen, I am happy to welcome you together with Carsten Stolz, our Group CFO, and Matthias Henny, our Group CIO. Since launching our new strategy last September, we have successfully reached the first milestones, which I am very pleased to present today together with our full year result 2024. During the next few minutes, our Group CFO Carsten Stolz and I will provide you with a brief overview of our full year 2024 results. Let me start with the key messages. First, we have successfully started our refocusing strategy and are well on track to meet our new ambitious targets. Second, we have delivered strong underlying results with growth in our target segments in non-life and investment-type premiums and a higher profitability in all business units. Third, we have achieved a strong and growing cash remittance which enables us to increase payouts to our shareholders with a higher dividend and complemented by a planned share buyback. With this in mind, let's now take a closer look at our strategic goals and the progress we have made so far. In terms of capital productivity, we were able to significantly increase our return on equity from 7.2% to 13.9%. This puts us well in the middle of our 12%-15% target range. Note that the profit for the return on equity calculation is in line with our definition adjusted by the CHF 92 million impact of the sale of the FRIDAY portfolio and the discontinuation of ecosystem strategy in 2024 for 2025 and beyond. We expect no further significant effects on earnings from the portfolio transaction or the ecosystem stop. We were able to further increase our cash remittance to a strong level of CHF 565 million. This includes a non-recurring contribution of CHF 62 million from the optimization of the Belgium life back book. Even without this contribution, we achieved for the first time a remittance of more than CHF 500 million cash. This sets us in a very good position to achieve our target of remitting more than CHF 2 billion cash for the period 2024-2027. Considering the proposed increase of our dividend to CHF 8.10 per share and the intended share buyback of CHF 100 million, we increased our total cash payout ratio to 83% while exceeding our strategic target of at least 80% and underlying our capital discipline. While we have made strong progress towards our strategic targets, there are still areas where we are well on track. Some further work is needed. We improved our combined ratio by 1.7 percentage points to 92.9%. This compares to the 91%-94% guidance we have communicated for the full year 2024 on the backdrop of the major large storm event in Switzerland at the end of June. For the strategic period, we will ensure our strong technical profitability by striving for an excellent combined ratio of about 90%. The main lever is the expense ratio which we aim to reduce to a maximum of 26% by 2027. For full year 2024, the expense ratio amounts to 29.9% which represents a small improvement. Comparing to the previous year, the EBIT in the life business reached CHF 282 million. This compares well with the guidance of above CHF 200 million we have provided for the strategic period. With that first overview, I hand over to Carsten for the financial part. Thank you, Michael. Let me highlight a couple of points. In our full year 2024 results, we achieved growth in non-life and investment- type premiums. We enhanced profitability, we have a higher payout and we remain strongly capitalized. Full year 2024 shows strong results across the board. In non-life, we deliver growth of 2.2% in local currency. The growth of -5.2% in life reflects the continuing trend in Swiss group life towards semi-autonomous solutions. The investment- type premiums increased by 20.2%. When looking at profitability, we achieved a higher EBIT and enhanced profitability in all our operating segments. Our full year 2024 results include a negative impact of CHF 92 million stemming from the sale of the FRIDAY portfolio and the discontinuation of the ecosystem strategy. Despite this impact, we achieved a shareholder profit of CHF 385 million. This is 60.6% higher compared to previous year. In terms of cash, we deliver a higher payout to our shareholders. Our cash remittance was very strong and increased to CHF 565 million. On the back of the high cash remittance, we propose raising the dividend by CHF 0.40 to CHF 8.10 per share. In addition, we plan to complement the higher dividend with a share buyback of CHF 100 million. This sums up to a higher total cash payout ratio of 83%. Our capitalization remains strong. The CSM increased by 2.8%. Shareholders' equity grew by 11.57%. We expect a stable SST ratio of just over 200% as of January 1st, 2025. Our rating of A was confirmed in June by Standard & Poor's. Now looking at our four core markets Switzerland, Germany, Belgium and Luxembourg, we have successfully increased the EBIT in all regions. In Switzerland we grew non-life by 1.1%. Good growth in property and liability insurance was partially offset by negative volume effects in motor, accident, and marine insurance. In life, we experienced a continuous market trend to semi-autonomous solution. This is also reflected in the growth of our own semi-autonomous solution Perspectiva. In Belgium non-life, we kept our focus on profitability in motor. Further, we have decided a far-reaching exit of the marine business. This results in a slight decline in premiums. Adjusting for the exit of transport business, we achieved a growth of just over 3%. The Belgium life business grew by 17%, mainly driven by the launch of a new investment product. In Germany non-life, we saw strong new business in our target segments and successfully implemented tariff adjustments. We increased premiums by 8.7%. German life business grew by 4.9%. For Luxembourg, we saw strong growth both in non-life and in life. Let's switch perspective to our operating segments. In non-life we reached a strong increase in EBIT by 94.9% reaching CHF 261 million. The combined ratio improved to 92.9% driven by less large claims. The finance result increased to CHF 116 million due to an improved investment result. Other income and expenses were negatively affected by the one-off effects from the sale of the FRIDAY portfolio and the discontinuation of the ecosystem strategy. Switching to life, the EBIT of CHF 282 million is 39% higher than in previous year. CSM increased to CHF 5 billion. The higher CSM is mainly a result of a higher illiquidity premium in the IFRS discount rate. The CSM release ratio rises from 4.9%- 5.4% and the finance result increases to CHF 63 million. Other income and expenses is less negative than in full year 2023, driven by updated actuarial assumptions in the Freedom of Services business and totals CHF -76 million. Switching to asset management and banking. In asset management and banking we achieved a higher EBIT of CHF 89 million. Contribution from asset management increased to CHF 47 million. On the backdrop of a larger asset basis, the EBIT of the bank remained stable as higher fee and commission income and lower project costs offset the lower interest rate environment. In summary, operationally, 2024 was successful, a very successful year for Baloise. We achieved a higher cash remittance and improved the underlying business. We continue our reliable track record of dividend increases with our proposed dividend of CHF 8.1. This represents a 5.2% increase year- on- year over the last more than 20 years. We never lowered our dividend, but increased it 14 times. In addition, we intend to complement the ordinary dividend with a share buyback of CHF 100 million. This follows our new capital allocation framework that we have introduced on our Investor update in September. With that I hand back to Michael. Thank you, Carsten. Let's open directly the Q& A. As already mentioned, I said Carsten and myself, and also Matthias Henny, our Chief Investment Officer, are here for the questions. We will n ow begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questionnaires on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Anyone who has a question may press star and one at this time. The first question comes from Amelia Strudwick from Deutsche Bank. Please go ahead. Good morning, this is Amelia from Deutsche Bank. Thank you so much for taking my questions. I'll start. I have three if that's okay. First, sort of on life and the CSM release ratio. I think in the past and at the investor update in September last year, you've said sort of directionally it's heading north of 5% or greater than 5%. I was just wondering, I mean, we're now sort of at that point, I mean, how much more upside is there to that number going forward? On non-life, if I may, if you sort of X out discounting, inflation, and large claims on sort of an underlying undiscounted basis, the loss ratios sort of deteriorated slightly year on year. I was just wondering if there's sort of any thoughts around this. Just on non-life remittances for 2024, remind me, do they reflect sort of statutory earnings from the previous year or what are the drivers of sort of the decline year on year in that, if I may. Thank you very much. Thank you, Amelia. I think we start with the question of the life and the CSM release new framework coming from IFRS 17. Perhaps I hand over for that to Carsten. Thank you, Amelia, for your question. The 5.4% that we achieved in 2024 are higher than previous. You have noted that we adjusted in the convergence to the market the liquidity premium calculations resulting in higher CSM and translating in a higher run rate also stemming from the CSM release which is visible in the accounts. For the time being we consider this to be a sustainable level, contributing then sustainably from the release to the P& L in life. The third question was about the cash from non-life and why it is lower. I think. Carsten. Yeah, I assume you're making reference to Slide 11 in the analyst presentation where we have spelled out exactly. Okay, first of all, the cash remittance is the result of the entire business portfolio. We allow for shifts between the different lines of businesses from one year to another year. That is, as you see it, also the case in 2024. What's important for us is that all segments contribute to cash remittance. The non-life cash remittance is slightly lower than last year. To your question on which statutory accounting year it is based, it is based on the 2024 statutory accounting year. There is no, how do you say, a one year timing lag in between the cash remittance and the underlying statutory accounting year. Since we had a pretty strong cash remittance coming from Life, including the CHF 62 million one-off effect from the Belgian back book transaction, non-life remitted a little bit less than in 2023. Again, it is the portfolio view that matters most. The underlying profitability and earnings power is unchanged. Question about the non-life and the result we have there overall, just to say overall I think we have in all our business units quite good non-life results. Also no profitable base. If you're looking then a little bit more into it, there have been quite high losses last year. In 2023, yes, we also have some hail storms, then also windstorms in Switzerland with floods during June that was in last year. Overall we aim for this target of 90% in the combined ratio, which means for everything it's also including the cost ratio where we want to go below the 28%. We also have done a start, the first step, a small step in the cost ratio. Overall I think that is also an important part to reach our 90% target in combined ratio. Thank you. Thank you. The next question comes from Farquhar Murray from Autonomous. Please go ahead. Morning all. Just two questions if I may. Firstly, on the kind of guidance for 90%-93% on the combined ratio for 2025, I just wondered if you could give us a sense of what you're budgeting there for discounting and large claims at this stage in the year and then just more generally, how should I frame that 90%-93% for full year 2025 as compared to the kind of around 90% target? In particular, should I think of the 90% as an average over the target period or more like a kind of medium term aspiration? Secondly, just going back a little bit to remittances and the question earlier, could I just double check whether there are any constraints that affected that reduction on the Swiss business or I think the answer in a way is telling us, look, you had enough at the holding, therefore you didn't need to do a full upstream. How much more might you have been able to do? Thanks. Okay, first, I think we go first to the question of the, of the guidance and also the long term ambition for, for the combined ratio, which is clear, we are aiming for the 90% target which I already mentioned just before, and the guidance for this year. Carsten, I would hand over to you, I think the question is also about the budgeting or what's with the large claims because we had two years with quite high large claims the last two years. Yeah, good morning, Farquhar. Carsten here. Thank you for your questions. With regard to the 19%-93%, there's around about 4% quote unquote budgeting for large claims included. With regard to discounting effects that you also asked, discounting effects obviously depend on interest rate levels, but we would assume 2-3 percentage points in quote unquote run rate effects stemming from discounting in the non-life combined ratio. The start into 2025 was benign with regard to claims, but obviously it's still a long way to go until December 2025. This is hopefully the answer to your first question with regard to what's implied in the 19%-93% combined ratio, 90% combined ratio and guidance with regard to large claims load and discounting effects. On non-life cash, as said before, we look at it from a portfolio perspective, both from an operating perspective as well as from a business units perspective. The overriding perspective is our targets of CHF 2 billion over the strategic horizon. We allow for fluctuations in the segments and business unit perspective. We continue to work on it. The refocusing strategy is based on strengthening the underlying earnings power of Baloise Group in the different elements. That is the alpha and the omega, contributing then to sustainable cash remittance. Okay, thanks very much indeed. The next question comes from Nasib Ahmed from UBS. Please go ahead. Hi, thanks for taking my questions. Firstly, on I noticed Perspectiva, you gave a return on investment of 9.2%. That feels a little bit low, particularly relative to your return on equity target of 12%-15%. Just trying to understand why is that so low? Is there anything I'm missing there? Secondly, on the restructuring and optimization in Belgium, what benefit do you get from that? Why is that helpful? The third point is on the investments into your ecosystems. At the capital markets day or investor day, you said there's about CHF 30 million to come. Is that all done now? Kind of related to that, can we expect the payout ratio to now increase further from the 83% given you're not making any more investments? Thank you. Okay, about the investment in ecosystem, I start with that one. The last question you had, just to be clear there, we stopped our ecosystem strategy. We always said that we are not now fire sailing the investments. We look at each investment by details at the moment. We always said also that we will not have more than CHF 30 million investments in future. At the moment there's already a part which is clear and cleaned up. We also had some exits. We do not expect any further negative impact going forward. In future, and if I look today at this CHF 30 million overall, I think at the moment we expect that it will be lower what we need for future. Let's see how the future is going into the next phase. At the moment it seems to be much lower. That is from the ecosystem, so we do not expect any negative impacts going forward. The second one is about the return and I hand over there to Matthias. I am not sure whether we got it right, because the 9.2% you had, I think it was another part. It was not the return on equity, but. It is quite straightforward. 9.2% has been the investment performance on the invested assets of Perspectiva. It has nothing to do with return on equity or the fee income that we generate on that business. It has basically been number two in our peer group of 14 market participants. Quite a good result that basically. Increases all the coverage ratio of this foundation. Thank you, Matthias. For the second part, which was the restructuring of the organization part. Yeah, thank you, Nasib, for this question. When we use the word restructuring in this context, it's rather an optimization of the legal entity structure within the Baloise Group. It has nothing to do with operational restructuring and so on. What we did is Belgium, the Belgium insurance entity is now a direct participation of Baloise Holding. We did this from different operational and regulatory perspectives. Last but not least, to have the cash remittance from Belgium flowing directly from the operating entity into the mother company of Baloise Group. That's an accounting and group structuring measure that has nothing to do with the cash remittance and the underlying business. Therefore, the effect that we accounted for in the statutory accounts of Baloise Group is one-off and non-cash ethics driven. That's perfect. Thank you. Ethics driven. The effect is ethics driven because historical ethics rates due to the strengthening of the Swiss franc since many, many years just materialized as a result here. Again, it's not relevant for payouts from Baloise Holding. Yeah. What benefit do you get under the new structure? Is there any tax implications with the money flowing through different channels? I'm trying to understand what was the rationale for doing it. Is it just simplification or anything else? Yeah, it's simplification. That the dividend can flow directly into Bâloise Holding and doesn't have to go to other structures where sometimes you also lose a year. That goes back to the question that Amelia asked before. I think so that profit generation and dividend flow is aligned within the same financial year. Okay, thank you very much. Next question comes from Farooq Hanif from JP Morgan. Please go ahead. Hi everybody. Thank you. My first question is around the financial result. I mean the net finance result. When we look at non-life, it's improved considerably. You get an increase in the finance cost, but a much bigger increase in income. When we look at life, those two things are going in the opposite direction. Just firstly, in non-life, can you explain where you see this margin going? If we are to model it, should we see the spread between income and the finance costs being now quite stable or are there timing effects that we need to take into account? Secondly, on the life margin, is that different to do with the unit link book and just the way that flows through? Equally, how should we model the margin, the difference between the income and the finance cost in life going forward? That is question area one. Question two is obviously there have been stories in the press about your combination potentially with a large peer. What is your appetite for this? Thank you. Okay, thank you very much. Perhaps first about the market rumors. As always we are not commenting any market rumors. About the financial result, non-life, there are different points which are going into that. Perhaps Matthias, you can elaborate a little bit why it is higher than it was in the previous year. Yes, absolutely. I'm referring to page 34 with. The details of the non-life investment result. As you can see, we have a higher current investment income compared to last year, which is driven by the higher interest rate environment. We also have higher contribution from gains and losses through the income statement coming from different sources, such as in general more positive equity market. We had some appreciation in real estate values in Switzerland that led to a positive contribution are also some positive effects coming from portfolio restructuring or reshuffling in the fixed income area that led to this overall investment income of CHF 198 million reflecting 2.1%. These are the main changes compared to last year. Okay, that was about non-life. Is that okay with the answer? We go to life. Yeah, I think before we move, obviously when we're modeling this, we have to think about the finance cost as well. In my mind anyway, those two things should be stable, that spread between the two. I mean obviously there's volatility in markets. If we're looking at the delta in the finance cost as well, which has increased, how should we think about that going forward? Sorry, can you say where are you looking at and what figures about finance cost? I'm referring to the CHF 94 million. If we look at the non-life PNL finance result. Sorry, not the cost, apologies, the IFR. Okay, okay. About the IFEA part. Okay, this technical part I hand over to Carsten about this figure. Yeah, so this insurance finance income and expenses, that's I think the line item you are referring to. Is that the one. I'm referring to the finance result, the 116, it's broken into the 94 and the 211. I understand the 211, but I don't understand where the 94 goes and how that grows or stays the same and how that develops. Okay. This is interest rate dependent. Under the new accounting rules we would expect this for 2025 to be a little less smaller based on lower interest rates. There is some interest rate sensitivity in it. The unwind for 2025 is expected to be slightly lower than in 2024. This is the reason. Thank you. This is the result of what the interest rates did in particular towards the back end of last year. The end of the year. Okay. We come to the life and the life margin where we always have to go into the details of the CSM and the part which is outside of the CSM. Carsten, can I hand over to you for this? Yeah, sure. In life, obviously CSM is the most important part of the income statement. When we look at it from an EBIT perspective, we already talked before about what happened in 2024 there, that we expect a higher and more sustained, higher and sustainable contribution coming from the CSM release to the Life EBIT going forward. The life finance result moved from 47- 63. That comes particularly from the Belgium business, which is BBA modeled. With the building block approach, which by the nature of things has some inherent volatility, it therefore depends also on market environment developments going forward in life. Looking at it from a PL perspective, we also had an improvement of the other income and expenses and this is contained, and I think Michael alluded to it in his introductory remarks, non-recurring effect stemming from the modeling of the IFRS 9 business in the freedom of services amounting to around CHF 20 million. That is an effect that we would not expect to reoccur in subsequent accounting periods. Thank you very much. Thanks for your answers. The next question comes from Simon Fössmeier from Vontobel. Please go ahead. Hello everyone, it's Simon from Vontobel. Two questions. The first is I didn't really understand the footnote explaining the reason for the restatement of the life and the other segment and I was wondering if that would trigger a change on the EBIT guidance. The second question refers to the share buyback program. I'm assuming this will start shortly after the AGM and last until year end 2025. Is this correct? Yes. We go first with the question of the footnote, which is more an accounting technical point, so a more technical accounting issue, and I think also the share buyback after that, which is the question then when it starts or how it is planned. I think Carsten, you can take both of them. Yeah. Hello Simon. With regard to the segment attribution, there were some minor shifts between companies who are attributed to the life segment. By and large this does not alter our EBIT guidance. We stick to the guidance of at least CHF 200 million EBIT from the life segment. With regard to share buyback and timing, as you said, the sequence is deciding on the dividend in the AGM on April 25 and subsequently then looking at potential timing of the share buyback. Thank you. Thank you. The next question comes from Iain Pearce from BNP Paribas. Please go ahead. Hi. Morning. Thanks for taking my questions. The first one is just on the underlying CSM growth with the higher CSM release rate in the guidance that that's going to continue a sort of higher level going forwards. If I look at the underlying CSM development experiences that that shrunk this year, do you expect to have to grow that with the higher CSM release rate going forwards? On the non-life segment, just wondering if you could give us any guidance on any expected contribution to the combined ratio in 2025 from the inflation reserve and sort of where that's at currently. Thank you. Okay, first about the CSM growth and the CSM release. Yeah. CSM growth, I assume that Ian, you are looking at it both from what is released from the CSM that is sitting on the balance sheet in combination with the contribution of new business CSM and the release subsequently into P& L. The 5.4% release ratio C stemming from the CSM on the balance sheet we assume to be sustainable and therefore contributing also to CSM growth and translating into the CSM release. As said, obviously we also need to add new business CSM to the portfolio and that's the question of new business volume and new business CSM profitability. It has been minus 1% for full year 2024 and that was in particular due to the volume effects that we alluded to when commenting on the life business. Those are the drivers of the CSM growth moving forward. With regard to the non-life guidance on combined ratio, the guidance for this year is 90%-93%. For 2025, obviously assuming a normal claims environment, and with regard to your question on inflation reserving, which we spelled out to have contributed -0.8% to the combined ratio last year, there is not a material impact stemming from this to be expected. It is continuously adjusted in the portfolio and in individual claims, and therefore no material effect is to be expected moving forward. You can take the 90%-93% as an all-inclusive guidance for the current financial year. The next question comes from Bhavin Rashid from HSBC. Please go ahead. Hi, thank you for taking my question. Bhavin Rashid from HSBC. I have three on my side, two on life, one on P&C. The first one on life is you mentioned that relief ratio of 5.4 is going to be more sustainable going forward. Now does that make your EBIT guidance more than CHF 200 million more conservative than you had initially planned for? The second one would be on Slide 21 for the life habit. Within that slide, the other income and expenses improved quite significantly in 2024. Can you provide some color what's driving that improvement and how should we think about that line item going forward on a normalized basis? Third one on P&Cs. Appreciate if you can provide some more color on general tariff and claim inflation trend that you're seeing in your major market, Switzerland, Germany and Belgium. How are rates evolving with the claim inflation that you are currently seeing? Thank you. Thank you. Bhavin, just the first question about EBIT guidance. Can you say that again? Because it didn't go all. Sorry if I was not clear. Just trying to get through your EBIT guidance of more than CHF 200 million and assuming release ratio is going to stay at the sustainable level of 5.4% versus 4.9% last year. Now does that mean that your EBIT guidance of more than CHF 200 million looks more conservative given the higher release ratio you're expecting going forward? That was the question that I was trying to put. Okay, thank you. Carsten will take it. Thank you. Thank you for your question. The guidance is at least CHF 200 million and that is what we're aiming for. It is really a floor. I say this with a twinkle in my eye. If that's fine for the year for the time being, I allow myself to take the second question that was referenced by you to Slide 21 with the other development of other income and expenses that moved from -CHF 115 million to - CHF 76 million. In this line item is the one-off effect that we mentioned before, which is the actuarial assumption changes on the freedom of services business in Luxembourg amounting to a one-off effect of CHF 20 million, which you have to consider when you read this line. The question with regard to claims inflation trends in the business units, I think we have moved after the Super Spike year 2022, we have moved into an environment where inflation is more of a normal and therefore it is reflected in continuous price increases and in continuous assessments of claims and reserving. No particular trend as we speak to mention here. I think there it's clear we are aiming for this 90% combined ratio. There will also be in future a lot of actions also in the portfolios, but it's not an overall trend. I think it's really business line by business line and also different in the different markets where it is, let's say, more normal portfolio steering, but it doesn't mean that we don't have to do a lot of things there. I think it's normal portfolio steering. We have a follow up question from Nasib Ahmed from UBS. Please go ahead. Sorry, just one more. Are you able to give us a sense of the FRIDAY cash impact from the sale of FRIDAY? What kind of is it low single digit millions. What is the impact? Thanks. We are not closing anything about price and different points about the FRIDAY impact. I think what we disclosed is what we have done overall. The impact on the balance sheet, which is in the non-life segment and also at the end, but not different or any points more. It is a portfolio transfer. Ladies and gentlemen, that was the last question. Okay, ladies and gentlemen, thank you very much. Let me summarize our results once again. First, we have successfully started our refocusing strategy and are well on track to meet our new targets. Second, we have delivered strong underlying results with good growth in our target segments in non-life and investment type premiums and the higher profitability in all business units. Thirdly, we have achieved a strong and growing cash remittance which is enabling us attractive and increasing payouts to our shareholders with a higher dividend complemented by a planned share buyback. Ladies and gentlemen, thank you very much for your interest. We hereby close the call. Thank you for joining and have a great day.