Good morning, everybody, and welcome to Swiss Re's Annual Chief Economist Media Briefing. My name is Michael Gawthorne. I'm from Swiss Re's Media Relations team, and I'm joined here today by Jérôme Haegeli, our Swiss Re Group Chief Economist. Jérôme will run us through the global macroeconomic environment and its impact on the insurance industry for the coming years. We'll then follow that with a Q&A session for you all. Please mute your microphones if you can, and I think with that I'll hand over to Jérôme. Well, thanks a lot, Michael, and welcome everyone. It's great to have so many people online and so much interest in our global economic insurance outlook. Now, this is the last Sigma of the year and as traditional, this is the outlook session, and it's actually the 54th year we are running the Sigma series, the flagship report of Swiss Re. Next year will be 55 year we have been running Sigma. There's no question in our mind, yes, there's a lot of uncertainty around in terms of the global economic outlook and the path ahead. If you think about where we are today in Zurich, it's 11 degrees-14 degrees in terms of the weather. If you think about our outlook for the global economy, we expect that the temperature is gonna cool down pretty quickly. That winter will be arriving pretty quickly in terms of macro indicators cooling down. I will hint at it very briefly later on, looking at the indicators that we are watching. This being said, winter has not arrived yet in meteorological terms. Clearly there's also a lot of divergence going on when you think about where we are in Europe for the global economy. There we are probably already in a recession. Where you look at the U.S., with U.S. doing very strongly still, this is also part of the problem when I think about inflation. Now with this, let's go first to what is the key letter. In our view, the key letter to summarize our economic outlook and key letter summarizing our economic outlook, it is the letter D. You might remember last year we also said D is important. Yes, this is still true. D that we had last year about deglobalization, about digitalization and demographics. These are structural factors which still are in play today, so that's not changed. However, there are new Ds that are coming up that we have to keep in mind when you think about the 2023 and 2024 outlook, which this is about. It's the D about debt overhang. That's not new, but if you look at the debt figures, +70% global debt increase since the global financial crisis, making up the debt level today of 350%. That's the global debt to GDP level globally. That is not new, but we had an increase in debt, obviously because of the pandemic, and that is super problematic when you think about the interest rates, because interest rates in the meantime, they have adjusted. Meaning the debt overhang, the D, will also put a brake in the economic recovery path, which is gonna come once we're gonna see the cool down and inflation, recessions in advanced economies over the next 12-18 months, which we are predicting. That's one D, the debt overhang. The second D to keep in mind is the divergence in growth. If you think about the G3 economies, be it U.S., be it China, be it Europe. U.S. super strong still on steroids i]n terms of growth. We'll come to that later on. China, we expect actually to do differently next year. We expect China to grow stronger next year while other countries actually cool down and Europe, as mentioned already, U.K. has had a contraction in its GDP growth in the third quarter, likely to be in recession in Q4, and Europe probably entering a recession this quarter with Germany leading. D is also for divergence in growth to keep in mind over the next two years. However, the D is also about the divergence that shouldn't happen, the divergence in fiscal and monetary policies. We saw in the U.K. what happens if you have divergent fiscal and monetary policies. We had a change in government. I think that's a wake-up call, and hopefully, with today's announcement of the new budget, we see also with the pound, the cable having strengthened to 1.20. We see it also that market has gained confidence in the U.K. spending cuts and also tax increases. It's really critically important that we don't get this divergence in fiscal and monetary policies again. It's important that we also don't get it in the Euro area. In the U.K., you had at least the market reactions which meant that bad economic policies got disciplined and got corrected. I'm a little bit more pessimistic when I think about Euro area and when I think about Italy and the periphery in the Euro in particular. I mentioned D, debt overhang, divergence in growth and let's not have the divergence in fiscal and monetary policies. There is another D, which is super important because what's happening on inflation front will be important for societies, for economic growth, but also for insurance industry. Yes, we are expecting also a disinflation. We are expecting inflation to come down pretty rapidly next year in the U.S. and in Europe. However, we shouldn't be overly excited. Inflation will also prove to be very sticky and they remain extremely cautious on the inflation front. Now with this, let's go to the key figures, and we have also three key figures I wanted to highlight, summarize them. Our Sigma report. This is 5, 6, and 7. 5, the Fed will hike. It will have to hike above 5%, might even go to 6%. Second, 6. 6 it stands for the global commercial insurance market prices having increased by 6% in the third quarter of this year. This is the longest running series of quarterly price increases. 20 x of quarterly price increases. Very strong market. We see market conditions for insurance sector next year to be extremely strong. 7. 7 refers to several numbers. It refers to this year, the first time now really where the global insurance markets are gonna earn annually more than $7 trillion in terms of premiums. We thought that this would happen already last year. We were wrong. This year we are sure it's gonna happen. We had obviously a lot of global economic shocks. Again, insurance industry surpassing $7 trillion of premiums earned, that's a strong picture in terms of what the insurance industry can provide in terms of resilience. Seven also stands for the 1970s. It's 1970s, the stagflation period. In our view, it's a very important downside scenario which we highlighted now for several years. In our view, it is, however, still a remote scenario. Let's turn to the macro picture with our key forecast and key themes before we turn to the Insurance sector. Now to the economic outlook. Number one, the Great Moderation period that we had seen since at least the global financial crisis has ended, in our view, very clearly this year with the repricing of the risk. Repricing of the risk is also the theme of this Sigma outlook. We should be ready for greater macro volatility. In my view, it's really clear that the post-pandemic inflation and energy shock is really the final nail in the coffin, if I can say it like that, for the Great Moderation period. Now, what is the Great Moderation period? First of all, the Great Moderation period was a period where macro volatility was very low, where we had seen very low financial market volatility. It was very low for several structural factors. Globalization force was one definitely. The other factor was also the central bank reaction function to the global financial crisis, keeping rates, policy rates low for longer and even going into negative territory. Now we saw with the inflation shock that we have, that this also led to problems. The Great Moderation period definitely is over. Looking ahead, we expect countries accounting actually for more than 1/3 of global outlook to contract during part of this and next year. In our view, it's very, very clear central banks cannot afford to do any more the low interest rates policies that they have been doing in the past. Again, fiscal policies need to be consistent with monetary policies. The central bank put is out of the money and now central banks, they need all around the world to win the race to regain price stability. They are in that race. I'm also pretty much confident that we remain on that course of central banks continuing to tighten very strongly. That course of tightening central bank policies, as you see in our forecast, and if I alluded to the five, the Federal funds rate, that is definitely not over and that race of price stability still needs to be won. Great Moderation period has ended. Inflation is number one concern. We flagged that already last year. Remains number one concern for next year. Inflation, recession are definitely also exposing the structural vulnerabilities. The debt overhang, the low productivity growth I mentioned also previously. Inflationary recession also means inflation higher than central bank target and the contraction of growth over two quarters. Now let's zoom in a little bit in the cyclical and structural picture for the economic outlook and structural and on the cyclical picture, you see divergence in terms of future paths of major economies. You also see very clear on the left-hand side for the cyclical growth pictures. These are the composite purchasing manager indices for China, U.S., U.K., and Euro area as well as the global picture. You really clearly see that the sentiment in the Business sector, but also on the consumption side for households, they are in contraction territory. They are clearly in recession territory. Now, on the right-hand side, what you see is actually the growth path. You see the structural growth picture. You see the U.S. and also Europe, the deviation from trend growth index to 2019 levels. What you see? You see the pandemic actually led to a sharp contraction, very sharp recession and then a rebound. Now the war in Ukraine with all the economic and stagflationary shock that it brought with it also dampened the growth trajectory. What I think is really interesting is that if you compare our forecast for the U.S. and for the Euro area relative to pre-COVID trend, I find it really interesting that you don't remake lost grounds in terms of GDP loss. The GDP will be lost relative to where we have been before COVID trend, and this is also super important, I think when you think about where the recovery is gonna come. The recovery will need to come, in my view, with supply-side reforms, with stronger productivity growth. Actually, it's quite interesting, by the end of 2023, we forecast U.S. real output to be about $2.2 trillion below our pre-Ukraine invasion forecast, and that's about 5% smaller than by 2025 than otherwise would have been the case. Now, with this, let's look a little bit also at the inflation picture. Growth, mentioning before, sentiment index already in recessionary territories, and you clearly see it with the PMIs. You see it with consumer confidence figures in Europe. E.U. consumer confidence in October was actually below the low point that we saw during COVID. Now, what's happening on the inflation front also obviously super important, and as mentioned, it has been our number one concern now for quite some time. You see here that inflation pressure with the graph on the right-hand side for headline CPI has probably peaked. However, it is clearly still very much above historical averages in our expectation, in our forecast over the next two to three years. You see on the left-hand side the U.S. headline personal consumption expenditure price index broken down by its subcomponents and the subcomponents by how much the components are driving or increasing in terms of relative price increases. It's interesting to see that actually you have still a very high share of price increases within the U.S. CPI of 10% and more. It's about 1/3 of overall U.S. CPI price category sees price increase of 10% or more. That's super high, 1/3. However, it has come down of a share of about 40%. That's the good news and probably also the good news and why we can be more confident that we are seeing the peak in inflation is that the price category of 0%-2% in the share of items which have 0.2% price increases, that has been continuing to trend upward. That's also a good sign. Clearly, in our view, the race of price stability, it's not won, and we will need to continue to keep very tight central bank policy rates and continue to need to see central banks to be very tight. Now, on cross-country comparisons, we also have a divergence in terms of views. In Europe, we see the inflation risk being the highest, and this is to do with the energy crisis, with Europe being the most exposed, obviously. It also has to do with the government interventions. Now, the government interventions in Europe, they keep the price pressures moderate. However, that might be also just temporary. Obviously in Europe, it's also the lagged effect of the reopening of the economies after COVID-19 relative to the U.S. Now in the U.S., in our view, the major threat in inflation is not to come from the headline CPI. It actually could come from second-round effects such as rising wages. Wages, they continue to rise, and I'm gonna show you also some signs, some labor market indicators which are more worrying. Wages are continuing to rise, but they're also at a lower pace. Now, with this, let's move over from growth inflation to central bank policy rates, because central bank policy, they matter a lot in obviously how the global growth picture and the mix of GDP growth and inflation will play out over the next two years. Now, what you see here is that, with the graph on the left-hand side, the share of the world central banks hiking interest rates. This is the broadest central bank tightening cycle for decades that we have seen if you look at the graph on the left-hand side. However, if you look at financial conditions with the graph on the right-hand side, financial conditions for the U.S., Euro area, and U.K., you also see that financial conditions are still pretty loose, meaning central banks will need to do more. In order for inflation pressure to come down, financial conditions need to be tight. Yes, they are tight in Euro area. However, they're not really tight in the U.S. Actually, if you look deep dive in the U.S. with the stock market rally that we have seen over the last 2-3 weeks, financial conditions, we are back where we have been in September before the Fed hiked twice by 75 basis points. More needs to come, and this is a super brutal central bank hiking tightening space that we are seeing like never before. Let's look at the U.S. labor market conditions. Labor market conditions are super important. If you look at the labor market conditions in the U.S., you clearly see that the U.S. economy is still overheating. If you look at nowcast figures, so real-time, high frequency GDP activity data in the U.S., you see that growth, real economic growth in the U.S. is more in the order of +4%. Think about that, more than 4%. You will get inflation down, no question about that, but how meaningfully you can get inflation down to Fed's target of 2% while the U.S. economy is overheating by such an extent. That's why super important to look at labor market indicators. Please have a look at the graph on the left. Here you see the U.S. job openings, and you see that there are almost two open positions for each person searching for a job. While that's super encouraging, right? That's good news, and it also means the pressure on wages, the pressure on inflation, it's gonna remain intact. When inflation is gonna come down, it doesn't mean price levels are gonna come down. It just means that the increase of the price level increases will be less than before, and that's also super important. While looking at the employment conditions in the U.S., I mentioned the U.S. job openings. Yes, almost two open positions for each person searching for a job. At least encouragingly, you see that it has peaked and it's coming down. Now on the right-hand side, I show U.S., the excess savings of households and consumers. You see that the excess savings of households and consumers, commercial bank and deposits is almost $2 trillion. This is money that the government, the authorities in the U.S. have provided because of COVID-19. That's in the bank accounts and that's being used, being spent. You saw also this week U.S. retail sales extremely strong. As long as we have excess savings in the systems, excess consumer savings in the systems, pretty much clear that the employment conditions as well as consumptions will stay extremely strong and also pretty clear that the inflation pressure will continue to exist. Meaning excess savings have to come down, financial conditions have to remain tight, central banks will need to continue tightening. Now bottom line on the macro picture, where first of all, yes, sure, it is good news actually. I showed a picture of a mountain where actually it's pretty cold out there. The weather at the top of a mountain, it can change pretty quickly. If you look at hard data in the U.S., it's a robust economy. It's a overheating economy. The robust picture side, the strong employment conditions, these are definitely good news. The drawdown is wages and wage pressure is too high and the drawdown is also that the growth that we are having in the U.S., it remains unsustainable. That's why the central bank will continue to tighten and no, don't wait for the pivot from the Fed. It won't happen. It's like wait ing for Godot. Definitely the bad news is there's a lot of evidence that the economy will slow down by sentiment indices, but also bad news is that it needs to slow down in order for inflation to come down. Inflation pressure that we have all around the world, be it in Europe, be it in the U.S., it needs to come down. We need to have price stability. Again, that's super important for growth. That's super important for sustainability of growth. It's not a luxury, it's a necessity. We also expect in the U.S. inflation, a recession. Actually, 2022, we had a technical recession with two following quarters or consecutive quarters of negative growth. Likely, we are gonna have contraction and possibly even two consecutive contractions in the U.S. over the next 12-18 months again. I just look at the statistics, and if I look at the statistics, what they are telling us is that since 1955, and think about that, since 1955, there has never been a quarter with price inflation above 4%, unemployment rate below 5% without a recession within the next two years. I just asking myself, why shouldn't we have a recession, even if it's a mild one in the U.S.? Growth contraction is gonna be part of the solution also to get inflation down. However, I do not expect it to be severe. That is definitely also the good news. Now let's move on from the macro picture, which has been so fastly evolving, and it's very important obviously when thinking about the Insurance industry and Insurance sector. Let's go to the Insurance outlook. For sure, the Global Insurance industry is facing a number of challenges, the macro environment, the volatile financial market dynamics. However, we also see a lot of insurance market prices hardening. The market is hardening, no question about that. We also see that capital in the insurance industry is pretty scarce and is likely to remain like that. We also see interest rates that you can earn on government bonds, and insurance industry, they are very much long-term investors, and if interest rates go up, that's good news for the insurance industry. It's good news for any asset holders. It's good news for the societies overall as well. I'm really glad that we are leaving behind the era of negative interest rates environment. I think that was an aberration. Having interest rates repricing so quickly, sure, it's problematic. However, I rather have a high interest rates environment with risk-free rate actually serving its function in providing a signal to capital markets and capital market allocation. Now, a lot of what you see in this graph has been already said, but very brief summary. On the macro front, it's the inflation, recessions which are impacting the insurance industry. It's also the rising interest rates. It's overall longer-term super good news. We also have to monitor very close to financial stability risk. We have seen them in the U.K. over the last quarter. Now more stability is to be expected in the U.K. In terms of what's happening in the insurance industry, sure, if this year was marked also with both asset side as well as the underwriting side being shocked. A shock on the overall balance sheets, both sides of the balance sheets and also the interest rate increases means a hit to stakeholders, to shareholders' equity. These are all conditions if you have on top of that also scarce capital and both sides of the balance sheets are being hit. These are all conditions now in place actually to see the hardening in the market, in insurance market conditions to continue. On top of that, you have the catastrophe losses. Catastrophe losses, the capital, the lack of new entrants, and then inflation and all that mix that we have been talking about makes me extremely confident about the outlook for the insurance industry. Now, I will show you very briefly the insurance market premium forecast, which is driven by the GDP growth forecast that we have from our Sigma research. You see actually that bigger picture and for both life and non-life that we see and we expect slight contraction first for total global premium growth in 2022. That's no surprise, right? Given that there's so much macro pressure globally, and that global growth is gonna take a hit this and next year. Actually, we forecast global growth to be the fourth weakest next year since the post-war period. However, 2023, we expect global insurance market premiums to recover and to be still below trend growth in 2023, while being above trend growth in 2024. For the figures, you see the figures here, 0.2%, that's the contraction. It's slight contraction this year, and then 2.1% for global premiums on average over the next two years. If you look and compare life and non-life, on the non-lifes, we see that personal lines are being most impacted. If you look at the region and if you look at the regional differences, yes, there are differences amongst the regions. Advanced EMEA and advanced Asia Pacific, they will actually likely experience the largest declines. North America still to expand actually this year by around 1.5%, while emerging markets, when you exclude China, they will stay positive, about 0.9% in 2022 and also lead next year overall global insurance market growth. Emerging markets will be where we're gonna have growth for insurance industry. If you look at least on the insurance market premium front, there we expect +4.3%. Now with this, let's look at very briefly insurance market profitability. This is again for the primary insurance industry profitability. The rising yields will support profitability, but this will take time, and this is the key takeaway when you think about the profitability. On top of that, you have the market hardening. On top of that, you probably have also the lack of new entrants on the alternative capital space, which will keep the momentum ongoing for the insurance market pricing to continue hardening. Now for non-life Return on Equity, we expect a rebound for primary markets to a 10-year high in 2024 for the effects I just mentioned. For the life industry there, definitely we have seen in terms of profitability, much less impact this year, given that the inflation developments have less impact on given defined benefits. For Life Insurance segment, it is very fair to expect to see again a rise in profitability, both not just from rising interest rates, but also then from a normalization of the COVID-19 claims over the next two years period. Now, still have one more section to go. This is the good section, which is about the takeaways. Please get ready for the Q&A for your questions. I still have one more point I would like to share, which is about the scenarios. Certain scenarios and key takeaways. Definitely in this environment where you have uncertainty being so high, alternative scenarios are very key to monitor. This is not something new. We have been doing this now for a number of years, meaning doing this in terms of publishing and sharing it also in our Sigma research. Our Takeaway is, yes, risk are serious due to the downsides, but the 1970-style stagflation scenario is still remote. Here please see the summary of our alternative scenarios. We look at three alternative scenarios that you will find in Sigma report. This is the Golden Twenties, a very positive, optimistic scenario. We attach a low probability, but it still has probability of about 10%. It would be driven with geopolitical de-escalation and stability, and hopefully also accompanied with more sustainable and accelerated infrastructure spending. I also think here about decarbonization and greening our economies. On the right-hand side, in the middle scenario, 1970s-style stagflation and the severe global recession scenario. These are the downside scenarios. Combined, we attach a combined likelihood of about 30%. Now, I think the bottom line on the scenario is threefold. Number 1, as just mentioned, risk is due to this downside. Second, the optimistic scenario has less probability than the compound likelihood of the downside scenarios. Third, in our view, the severe global recession scenario is still the single most alternative scenario to watch with the highest likelihood, followed by the 1970 stagflation, which has about a similar likelihood than an optimistic scenario. Now happy to share you our key takeaways. 3 key takeaways. Number 1, yes, on the macro front, the near-term outlook, it is highly uncertain. The U.S. economy is still on steroids, and this is also however part of the problem. Inflation needs to go down. Yes, we expect inflation to come down pretty rapidly. That's why D also stands for disinflation. There should be no illusion. It will take time, and it will hurt for inflation to come down. That's why let's be ready for inflationary recessions probably here. We see it not just in the U.K., but in Europe overall and the Euro area, which is most exposed. Looking ahead, inflation and interest rates will also be structurally higher as they are peaking. At least higher interest rates, I think, is a positive. Second, yes, the Great Moderation period has ended, meaning more macro volatility ahead. Because of the inflation problem, however, we cannot deal with the next crisis with the medicine of the past, meaning more stimulus on the monetary front and fiscal stimulus. This is also another reason why to expect more macro volatility. This is why we need to take good care in getting also it right on the economic policy front and have supply side measures. Third, this Sigma is about repricing of risk. We have been seeing the repricing of risk on equities. We have been seeing the repricing of risk on credit markets and financial markets, seeing the repricing of risk in insurance markets, in terms of insurance market prices. I think it has further room to run. If you look at what the insurance industry overall provides to the market, I think it's very strong, very positive. Again, in this very difficult environment for the insurance industry and primary insurance industry and to provide almost now this year to surpass the $7 trillion mark of earned premium annually for the direct insurance market industry. I think this is great news because this means there's more resilience being provided to the marketplace. Definitely the insurance industry, I think, remains super important in an environment like this, which is marked by high volatility. With this, thanks for your attention so far, and happy to give over to you, Michael, for Q&A. Yeah. Thank you very much, Jérôme. We'll have a Q&A session now. If you'd like to ask a question, please use the raise your hand function in Teams. We'll see you come up on the screen here. When you ask your question, please give us your name and your publication, and it would be nice if we can see you on camera on Teams. With that, I'll give you all a moment to raise your hand if you would like some clarification. Okay, we have a Marc Kaufmann from AWP, has his hand up. Marc. Yes. Good morning. Can you hear and see me? Yeah. We can hear you well. Thanks, Marc. Good. On a scenario with a deep recession, what will this mean to the insurance industry, to the premium evolvement growth? Will this harm maybe more than other factors could if a recession comes up? Mm-hmm. If you have a severe recession, it is severe and then you see right on that slide that we have shown before, you see equities going down further, -40% before recovering the next year. That would be a hit for the insurance industry. Would be another hit for the insurance industry that you see credit spread widening, and it would also be a hit for the insurance industry in terms of earned premiums. Because in a severe recession, we don't have it as severe as the lockdown. We don't have it as severe as the global financial crisis. For the U.S., we would expect in a severe recession to mean about -2.4% of real GDP growth decline, but that would definitely mean much less earned premiums. The good news, however, is this is a scenario with less inflation pressure. You feel the pressure on the asset side, at least the temporary pressure on the asset side. You would feel the pressure on the personal lines, especially because of, but also commercial lines because of less demand. If you look at our severe recession scenario, you also see recovery the year after. Now, I think the severe recession is definitely not a good scenario, right, for the insurance industry. For the insurance industry, the 1970-style stagflation definitely is the one that one should be much more cautious about and worry about. Why? Because there you have a combination of GDP growth not contracting as much but still contracting. We would see, not in a severe global recession but in a 1970-style stagflation, you would see real GDP growth contracting in the U.S. by -0.7%. On top of that, having inflation of more than 10%, 12%, 11.9% to be exact. On top of that, assets coming under pressure. That is really, really the worst for the insurance industry. The mix of higher inflation, even increasing further, growth coming down, less demand for insurance products and at the same time pressure on the asset front. Yeah, hope to answer your question. Severe global recession is not a good one. It's a negative one, but the real negative one is 1970-style stagflation in our view. Yeah. Thank you, Marc. Thank you. Okay. Thanks, Marc. Our next question comes from Ronan McLaughlin. Um, hi, Jérôme and Michael. Thank you very much for the present- Hi, Ronan. Presentation. I hope you're both well. I just wanted to ask Jérôme, do you have any advice on the tools that insurers and reinsurers can use to model and address inflation risk? Are there any particular tools you would recommend they should be using? Oh, yeah. First of all, what's the best tool to use for the inflation risk? It's to price correctly, right, inflation. That's why I think it's super important, yeah, to think through and to have a good analysis on inflation weighting to monitor the inflation risk. It's good always, not just in our view, in my view, to have a baseline view. We have our baseline view, and we have flagged inflation risk as being a top one concern now, not for just a quarter, not just for this year, for since last year at least. If you expect higher inflation then you can include in your pricing and your costing. That's number one. Do the right analysis. Obviously, we don't know how the future is going to develop, so that's why it's important to think about scenarios as well. That's why in our Sigma outlook, we also share our scenarios. Obviously do the next steps and include it in costing. Second, obviously it's also important to be clear in terms of contracting, right? In contract terms. To have the contract terms that you don't have surprises. You have to think about clauses index. It's important as well. You know, everything starts, I think, with economic inflation, the analysis, and then bringing it over into the costing side, and then obviously the whole machinery that comes with it, costing and reserving, but then also contracting. That I meant. Yeah. It's a whole package. Sorry for long answer. No. Thank you. Thanks for answering. Thank you. Thank you. Great. Thanks, Ronan. Our next question comes from Simon Schmidt. Hey, Simon. Hey, Simon. We have you up on camera. Yeah. Thank you. Simon Schmidt from Zurich. Can you see me? Can you hear me? Yeah, I can see you, and we can hear you very well. Yeah. Sorry, Simon. We just missed your publication there. From Republik in Zurich. Thank you. Yes. The question is about the inflation outlook for the Eurozone. Obviously inflation in Europe hasn't peaked, in the U.S. it has peaked, in Europe not. You're also forecasting that it will not go down as fast in the Eurozone as in the U.S. What are the main reasons for this? Is this mainly due to energy prices? Perhaps baseline effects not going into reverse mode as fast as they have been going in the U.S. or what's the main story there? Thanks for the question, Simon. I think a number of reasons. Our forecast, right, for the Eurozone is 8.6% for year-end 2022. You're right, declining, but not as fast as the U.S. In the Eurozone, we expect the headline CPI to go down from 8.6%-6.2%. If you compare it to consensus, we're also more cautious for the Eurozone. CPI consensus has it at 2023 at 5.6%. Now, what are the reasons? Reasons are several-fold. You mentioned some of them. Energy prices. Europe being much more exposed to energy prices. Yes, energy prices and gas have come down. However, natural gas, year-to-date, still up 40%. Also if you look at overall commodity index almost up, and oil prices almost up 1/3. That's one reason. Second reason, government interventions. Government interventions in Europe are super important in the energy sector. It has dampened the effect of inflation. However, there's likely to be step-ups or step-downs, step-downs would be the right word. Step-downs in terms of government support for energy, and that also needs to be thought about. It's energy prices has a very prominent role to play for its exposure, but also for the government reaction. It's also the fact that Eurozone, if you think about the growth picture, the business cycle and compare it to the U.S., it has been lagging the U.S. That's why we also expect for these reasons, but also for the reason of the ECB, right? If you think about the ECB, if you think about the central bank policy rates, we forecast the ECB to increase rates up to 3.5%. That's more the market consensus at 2.75%, but it's nowhere near it is in the U.S. at a little bit above 5%. That's why it will take more time for inflation to come down in the Eurozone. Yeah. Thanks, Simon, for the question. Okay. At the moment, we have no further questions. This is the time to raise your hand. Okay, well, if there's no further questions, you're always welcome to reach out to the Media Relations team after the event if anything does come to mind that you'd like to ask, and we can get Jérôme to clarify that for you. There will be the presentation, the Sigma report. The news release will go out shortly, and there will also be a replay of this event, which we'll get up as quickly as possible. That will all be available on swissre.com. As I said, please reach out to us if you have any further questions. With that, I think we'll end the event. Thank you very much, everybody. Thank you very much for attending. Thank you.