Okay, welcome everybody. Our global economic out and insurance outlook event for 2023. I'm Michael Gawthorne from the media relations team. Welcome you all here in the room and those of you on the line. We'll get started in a few moments with Jérôme Haegeli, our Group Chief Economist, and Charlotte Mueller, our European Chief Economist. A few little technical things. For those of you on Teams, if you have your camera on, it's possible your heads will appear in the presentation, the way Teams are. So please turn off your camera during the presentation. You can switch them on again for the Q&A. When the Q&A comes in, we'll take questions from the room, and also questions online. If you're online, just use the Raise Your Hands function in Teams. And with that, I'll hand over to Jérôme. Hey, fantastic. Thank you very much. Thanks very much, Michael, and thanks very much everyone for coming here in person as well as joining online. I'm gonna be joined in momentarily by Charlotte Mueller, who's Chief Economist for Europe. So this is our sigma for the economic outlook, insurance economic outlook, and economic outlook for 2024, 2025. Now, if you look at this picture, I think it basically covers already the bottom line, what we expect for markets and for the macroeconomic outlook. It's chilly out there. We see the risks on the rise. It's not all that bad. You see also some sun. However, it's definitely pretty cold. We expect the economic slowdown to start globally pretty soon, and we see actually already Europe and Germany in a technical recession. Not all that bad, because we are now also at the peak, peak of interest rates. And interest rates, we talk about that very briefly, is also something which is definitely very, very positive for the insurance industry, but not just for the insurance industry, also for financial markets. In terms of the broader outlook, and as covered in our sigma report, the letter R, it stands for resilience. The resilience insurance industry can't be right, and there we definitely need more resilience. Second, R, it stands for risks. No question, risks have increased. It's not just the macro risks, legacy of past crisis, it's also the geopolitical risks and the question: how are we gonna fight the next crisis? And the other R, it stands for real rates. Real rates, we are in a different regime. Real rates will stay higher, and that's the really, really good news for our industry, but not just for our industry. Real rates being positive is what we were used to before the global financial crisis. Positive real rates, here to stay and not going back to negative territory anytime soon. As covered in our sigma, as an extremely important topic, we also see R like reindustrialization. I will come to that later on. Reindustrialization, resilience, in all these areas, the insurance industry has a very, very important and positive role to play. The last R, it stands for number one question out there, more immediate number one question out there: are we gonna go in a recession environment in the U.S.? Are we gonna have a soft landing or not, or are we actually re-accelerating? And there's no question that 2023 was a year with many surprises on the macro front, positive surprise, that it's the consumer was able to withstand the shock, and consumer resilience definitely was a big surprise. I'm gonna speak about that later on. With the key point being made, we shouldn't be too hopeful in terms of a soft landing. Soft landings are extremely rare. Now, with this, and before going into the details for our forecast, and we'll see our point forecast in the next slide. But first, on the question, how 2024 will look like? How 2024 will look like? Will it look like 2022? Remember, 2022. 2022 was extraordinary. Why was it extraordinary? It was extraordinary because you had both on the interest rate front, fixed income front, as well on the equity front. You had a total return loss of more than 15%. More than 15% on the equity and more than 15% on the fixed income. That was 2022, and you had that because of the interest rate shock. 2022 was the year that all central bankers, or most central bankers, were thinking and communicating, that inflation is transitory, but it wasn't transitory, and they had to increase rates. You weren't protected by a 60/40 portfolio, 60% equities and 40% in fixed income or the other way around. There was nowhere to hide. 2024 will not look like 2022. We see markets being up this year, and we would expect also, especially fixed income markets next year to do pretty well. 2024, the question might be also, maybe will it look like 2008, the global financial crisis? I don't think so either. Global financial crisis, you had a lot of weak parts in the system, and you had also a weak banking system. Banks are much better capitalized, and I think also the framework surrounding capital markets with unconventional policies is much, much stronger and established, and established the frameworks that we didn't have in 2008. Now, maybe the last question you wonder, why do I show 1969?... I show 1969 because it's important. 1969, you had the moon landing. Moon landing, yes, the moon landing in, U.S. landed on the moon, 1969, the first person, human on the moon. 1969 was the start, actually, when you looked at academic research from the Fed, but not just from the Fed, a lot of economies were talking about soft landing. You had the moon landing, and then, you had, you had the imagination of economists getting up and running and starting to believe in soft landings. Now, 2024 or 2025, are we gonna have a soft landing in the U.S.? We are not forecasting a recession, but we are forecasting five quarters of subtrend growth rates. Five quarters of subtrend growth rates, that's very weak environment. And, I think, if you think about moon landing and soft landing, it's definitely the case that the soft landing is much rarer than moon landing. You had basically post-war period, you had maybe one soft landing, and you had human and non-human moon landings, you had 21. Just to give some perspective. Well, now, let me show you the key, the key figures in terms of our reports and in terms of our outlook, first on the macro front, and then later on, I will on the insurance front, likewise, the highlights. On the highlights for the global economic outlook, yes, bottom line is the global economic outlook and the, the momentum on the global economy is slowing down. We are forecasting, as you see on the table, we are forecasting global growth to come down from 2.6% to around 2.2%. Which is noticeably slower than market consensus at 2.6%, and market consensus already discounts a weak growth environment. Four key points: number one, there's a lot of divergence in terms of economic growth momentum. We see the U.S. and euro area growth diverging, and this divergence will continue in 2024. As mentioned before, Germany likely in a technical recession, and the same might happen to Europe, and Charlotte will speak more about that. U.S. growth stellar growth rate at 2.4% expected this year. For next year, we see that slowing down substantially to below trend growth. As mentioned, monetary policy transmission will have an effect on global growth and also on the U.S. economy. Second point, inflation. Super important, right? What's happening on inflation front for insurance companies through its effect on claims. Now, inflation and its disinflation, economic disinflation. Economic disinflation is prices coming down. That we continue to expect in 2024. And if you see at the figures for the U.S., we expect CPI inflation to come down from 4.2%- 2.7%, but still above target. And for the euro area, from 5.6%- 2.7%, and from the U.K., from 7.4%, around half to 3.4%. So the course and direction is definitely good, but the last mile, the last mile on the inflation front is what is the hardest to do. And we do not believe that 2024 central banks will be able to really finish that last mile. They will need to require to be restrictive in monetary policy, because we also see core price pressure inflation. On the core prices front, be it services also, or also shelter inflation, keeping the inflation levels high. And what's more, labor markets are also very, very tight. And you cannot have inflation coming back to target if labor market doesn't weaken. The second point, inflation is still a key risk. It will come down, but it will take longer. And number three, on the monetary policy and interest rate front, the regime shift that we had seen in 2022 with the interest rate shock, which was needed, and interest rates will be higher for longer. Could be even the case, we are expecting the Fed to cut next year. But it could be the case that monetary brakes are not strong enough to bring back successfully inflation to target. So the risk in the U.S. is rather no rate cuts than cutting much more. So monetary policy will remain restrictive until they have the confidence that the inflation target is within reach, and for that, you need to continue on a restrictive monetary policy. Number four, on the terms of the economic risks, we see the economic risks to be on the downside. Yes, we had the Middle East, and we have the Middle East tensions on top of the war in Europe. And Middle East tension opens up another channel to which the inflation pressure could increase again if the Middle East tension actually would enlarge regionally. So definitely, stagflationary risks are here. You could argue that Europe has a stagflationary environment. I'm sure Charlotte will speak more about that momentarily. In terms of looking a little bit deeper at U.S. and Europe before handing it over to Charlotte. In terms of U.S. and Europe, we had seen this year, U.S. doing much better than Europe. This will remain the case next year. We continue to see this divergence in terms of growth.... Within Europe, but also Europe versus U.S., but also in Asia, we continue to see that happening. So Europe is pretty weak, U.S. surprisingly strong, but will weaken, and China has its problem of its own with its real estate issues. However, there in China, if you look at policymakers' stance, there are also clear, very clear signals and efforts to stabilize the situation, which is definitely positive. Two points I would like to highlight in terms of the graph. Point number one, if you look at the graph on the left-hand side, you see economic surprises. This is an indicator which tells you how the macro data comes out against expectations. You see, for the Euro area, you see for United Kingdom, and almost also for China, surprises on the macro front are negative, meaning the data do not meet expectations or negative surprises. This is not the case in the U.S., where you had now for a number of quarters of positive surprises. Probably this line that you see with the pink line in the U.S., that is going to come down. On the right-hand side, what do we watch in the U.S.? We definitely watch very closely labor markets. Labor market situation is still too tight. If you look at the vacancy to unemployed rate, it's 1.5. It's down from the level peak of 2.0, but usually you have for each unemployed, one vacant position. If you have 1.5 open positions for each unemployed, it means the wage pressure. This is also super important for an insurance company. If you think about workers' comp, you will have inflation and workers' comp inflation remaining, remaining strong. Capital expenditures, CapEx, that you see that, with the dark blue line, that is also something which is worthwhile to watch closely, and you see it's, negative territory, and this is maybe also an early sign, but an important structural sign that also a downshift in terms of growth is to be expected in the U.S. economy. So with this, let me hand it over to Charlotte to highlight the U.K. and Europe. Perfect. Thank you very much. So I'm Charlotte. I'm covering the macroeconomic research and forecasting for Europe at Swiss Re, and it's great to be back in the U.K. So I'm gonna dive in a bit more on the themes, what Jérôme mentioned, but specifically on the U.K., and I think here the key story remains inflation. So Sunak, he has achieved his goal of halving inflation, but I would just say that that does not mean that the cost of living crisis is over. And in fact, I would say that there are still some underappreciated risks to watch. And there, I would say there are three key reasons. First of all, sure, inflation rates have halved, but the price level has not halved. So if you look at the actual aggregate consumer price index, it's still higher than before. It's just increasing now at a slightly slower rate. Why is this important? It's important for consumers because they still are worse off, and it's also important for insurance companies when we think about claims. Second reason why the cost of living crisis is not over is also if you look at real incomes. So yes, if we look at current data now, average hourly earnings, they are also higher than the current inflation rate. That's great. But if we zoom out and look at the last two years, you still see that real wages haven't fully recouped all the inflation surge of the past couple of years. Also related to that, if we look at the wage increases, a lot has been due to one-time bonuses or sign-on bonuses, rather than a sustained increase in the actual base salary of employees. So still, consumers are going to be struggling, and I think that also speaks very much to the inequality topic, which is the chart you can see here on the left, where there you can see that real incomes have been decreasing, but also widening in terms of inequality. And there are some stats. The Gini coefficient, for example, for the U.K., is worse than Germany or France, but and not far off from the U.S. And if you look at some other stats, for example, low-income households their situation has also been deteriorating. A latest stat shows that in October, you had 1/4 of low-income households essentially use debt to pay up for food. So that can also affect insurance demand. Third point I wanted to also say, related to the cost of living crisis, is we have the Autumn Statement tomorrow, and we also expect that support from the government is also gonna reduce or not be as strong anymore for lower-income households. So as a result, that brings me to the other chart here on the left, which are strikes. So while we do think that the peak is behind us in terms of strikes, we would still not underestimate the risks of some potential flare-ups still, not just this winter, but maybe we have some seasons of discontent in the future. And if you zoom out, the strikes that we saw over the past year, they don't look that bad compared to, say, the seventies or eighties, but they still have a cost for the economy. So from June to December last year, the strikes that were in the U.K. were estimated to have resulted in 2.5 million working days that were lost, which equated to roughly GBP 1.5-1.7 billion lost for the economy. So it still has an impact, and that's also key to watch when we think about the overall health of the consumer, but also keep in mind for the insurance industry. That brings me to my final point before then also we look at different scenarios, which is recession. So the U.K. is going to be facing a recessionary-like environment, and actually, if you look at polls, two-thirds of consumers actually say they think the U.K. is in a recession. We're not officially in a technical recession, but certainly, the environment will feel like one also for the next year. There, it's not just because of higher interest rates filtering through. By the way, actually, only roughly one-half of the rise in interest rates has actually filtered through to the real economy, so there's still pain ahead. The second point is also a lot of the tailwinds that has helped us so far, such as excess savings from the pandemic, they are also winding down. So the overall outlook is still one of very subdued or almost flattish growth, and that's also where we differentiate from consensus. So we have a 0.2% real GDP growth forecast for the U.K. next year, versus Bloomberg consensus is at 0.4%. And that's also why, later on, when Jérôme will talk about the insurance outlook, this subdued growth environment means that we do expect real premium growth, so net of inflation, to decline in the U.K. to around 1% versus around 2.3% this year. One final slide before handing back to Jérôme. I think as all economists, it's always key to look at alternative scenarios, too, given it, the extremely uncertain environment. And there, I would just flag two downside alternative scenarios to watch. The first up is a 1970-style structural stagflation scenario. This is the case where we have potentially further inflation shocks, say, from, for example, geopolitics or further wage price spirals. Think again about, you know, an unexpected rise further in, in wages that could lead to inflation being higher for longer, and then also the Bank of England having to unexpectedly raise interest rates higher. This would have serious consequences. Otherwise, the alternative could be a severe global recession, where what could happen is the economy turns much faster than what we are expecting. You could have potential financial market accidents that lead to a much more significant growth slowdown, and then also that could actually bring down, potentially, inflation. But I'll hand over now to Jerome to speak a bit more on what this means for insurance. Thanks a lot, Charlotte. Now, let's turn the page to the insurance, with our insurance premium forecasts and also a key topic on insurance front, before then going to three key themes, and then we'll open up for the Q&A. So number one, on the insurance outlook. On the premium side, we expect global premiums to grow above the last five years. So that's the good news. However, it's still below the trend growth we have been seeing pre-COVID. So premium growth, it's stronger also because of some of the lagged effects that we had seen washing out in terms of health insurance. That is one of the reasons, but it's below the pre-COVID growth rates. EMs, if you look at what drives growth in the premium side for insurance markets, and this is for direct insurance premium scope, you see still emerging markets are powering ahead insurance market premiums. Number two, on the pricing front. On the pricing front, we expect a hardening market to continue. We still see a lot of economic price pressure, and we shouldn't mistake that economic disinflation; it means inflation coming down, but it doesn't mean price level coming down. And also, we have social inflation. And social inflation, I would expect it to go definitely the other way to economic inflation. Meaning social inflation going up, economic inflation going down, and that together will continue to provide for a hard market. Number three, in terms of profitability, higher interest rates, and this was also the topic, right, of the Monte Carlo or sigma cost of capital. Higher interest rate, without a question, is positive for insurers' profitability, and we expect insurance profitability, ROE, the return on equity, to be around 10% over the next two years. However, the interest rates are higher, the cost of capital is also higher. And according to our estimates, sigma estimates, we do not expect that the prime insurance industry is actually able to earn the cost of capital next year or in 2025. So there will be still a gap, there will still be an underwriting profitability gap, but the underwriting profitability gap is narrower than what it used to be. In terms of the risks, what we need to watch, looking at, I mentioned already, social inflation and the effect it has on longer tail lines, like casualty. And obviously, when interest rates calm down again, then the casualty business will also be more exposed, especially than if social inflation increases. That's number one. Number two, we should also watch on the life side, given the sharp interest rate repricing and regime shift, we should also watch the lapse risk. So with this, maybe coming back to what mentioned just before, right? The higher interest rate definitely having the nominal... Financial repression that we had over the last 15 years. Having had that was bad news, bad news for savers, bad news pension industry, bad news for long-term investors and for insurance companies. And now good news is we are back to normal in terms of the interest rate environment. Finally, risk-free rate is not return free, and a 100%-- 100 basis point or 1% point increase in investment yield, we are estimating leads to an improvement of the Combined Ratio of around 2.5%. And if you look at U.S. interest rates, what we have seen in terms of changes over the last two years, we saw U.S. interest rates increasing through at least reinvestment yields by 2.4-5% to 150 basis points, and that leads to a Combined Ratio improvement of a little bit more than 6%. And that's huge. 6% Combined Ratio improvement is really huge in terms of additional claims, in this case, U.S. P&C industry can take on board. Additional claims they can take on board is $50 billion, around $50 billion, 50 dollars, and which is, roughly speaking, Nat Cat budget that U.S. P&C industry has. I think we give you this, these figures just to show you the power of interest rates, and showing that, with interest rate back to normality, insurance industry can provide much, much better and much more resilience. I think this is really the key message, that we can provide now more resilience in the market while we really need it, given that the risks are up. Risks are up, you still see that with the graph on the left-hand side, protection needed on the Nat Cat front for U.S. P&C industry. It's the blue line protection needed. You see divergence with, with the capital, which is around. And with higher interest rates, we would expect now that the capital is being restocked, or the capital increases, and that which between protection needed for Nat Cat in the U.S. and capital available, that that declines. Global protection gaps, $1.3 trillion, that is, a record high, and having higher interest rates will help to narrow the protection gaps. With this, let me turn to three key themes. Number one, why do we expect the global economy to slow down so sharply? Why didn't we have a recession this year in the U.S.? Well, first of all, the consumer was much, much more stronger than expected, but also, and you see that on the graph on the right-hand side, the corporate as well as the household, market structure in terms of how the loans are structured, whether they are fixed or flexible, and how long-term, the loans are. It's after 15 years of low to negative rates, U.S. is standing out at having about 90% of the corporate bond market being fixed and also extremely long-term, loans. U.S. certainly stands out and is best protected, at least the corporate market, best protected from the increase in yield costs, as well, an increase in yield costs, as well as the increase in mortgage, rates. However, it doesn't mean that it's protected forever. It just means the monetary policy transmission lag takes longer. So key point here, the economic pain will also be coming to the U.S., but probably what's more the case for now is that the U.S. is exporting its strong dollar and strong yield environment, and other economies than the U.S. feel that pressure actually more. On the graph on the left-hand side, you see real yields. You see that sharp increase in the real yields. Real yields across all jurisdictions are positive except, again, exception is Japan, but Japan might also join the club of positive real yields next year, and that would be, again, a push-up for higher interest rates environment. So definitely, economic pain is yet to come, and it's not because a recession hasn't happened that a recession will not happen. What's more, a recession averted is not a recovery either. Theme number two, we should watch out fiscal risks. And this is the question also of how are we going to be able to fight the next crisis? We used monetary stimulus like we didn't know it existed before 2008 with unconventional policies. We used, for COVID, we used fiscal policies. We definitely needed it, given the government shutdowns. However, we have now legacies of past crisis. And legacies of past crisis, if you look at public debt in the U.S., public debt to GDP is about 122%. So public debt around the world has increased, but the flip side is also that debt servicing cost increases because of higher interest rates. We expect debt servicing costs in the U.S. to double over the next 30 years. Higher interest rate, fiscal risks on the balance sheet and high debt is especially making the situation for low and middle income challenging. About 20% of low to middle income countries have actually debt distress. The other point I think which is important to look at, and this is also a fallout of higher interest rate and what it meant for the bond holdings, is the unrealized losses on asset holdings of the key central banks. Here, the Bank of England is actually standing out with having almost 8% of unrealized losses because of the repricing of gilts. I mentioned this because it's important, because it means that when you have a negative equity for a central bank, a central bank doesn't go out of business, but a central bank will either ask for recapitalization, and when you ask for recapitalization, you go back to the government, and then the mandate is being it will be scrutinized, and you are exposed to the political risk. And that's the risk. The politicization of central bank is the risk. Having missed inflation target and now obviously also carrying the costs of its own activities of the past. Theme number three is very important one. It's a longer term one. It's the reindustrialization. It's the rise in industrial policies. And there are a number of drivers for the rise in industrial policies. It's geopolitics, it's the reconfiguration of supply chains, and it's also greening the economy. This all leads to a rise in industrial policies that we see all around the world. For the insurance industry, this has a number of important effects, and we expect the commercial insurance coverage to benefit actually of the rise industrial policies. And the insurance industry has a really, really special role here because it can help to de-risk the transition that we have with the rise in industrial policies. And in the table here, you see the various effects for the line of businesses. And maybe just to add there also from the U.K. perspective. So I think this is also an opportunity. If we think about regardless who will be in power, whether it's the Conservatives or whether it's Labour next year, as polls would suggest, I think both will want to have increasing presence of the private sector to help to fund growth in the future. Because of the prior slide that also Jérôme mentioned, the government is going to be much more constrained with fiscal risks. And there, we already see in the headline news some initiatives, for example, in the pension funds, in where invested assets can be used to potentially fund investments in the real economy. And I would watch potentially, this space could be some further opportunities, maybe on the regulatory front, also for insurance companies, but it's a, it's a growing, it's a growing topic. So, I think that's also just one area also on the U.K. side, which is relevant to watch. Thanks, Charlotte. Where I'm extremely positive is in terms of the infrastructure investments and the various initiatives that exist to actually increase the investment into sustainable infrastructure, because that means more jobs, more growth, and it also helps the net zero of the economy. Let me with this wrap up and then with the key takeaways, and then we can open up for Q&A. Key takeaways, number one, global economic pain is yet to come, and global economy will slow down. We see higher interest rates for longer. Inflation is also coming down, but it will take at least another year until the central banks are able to meet the inflation targets. Number two, while we see growth slowing down, thanks also to higher interest rates, but not only because of the higher interest rates, we see profitability of insurance companies, of primary insurance companies improving. I spoke before about the return on equity of around 10%, which is our estimate for primary insurance markets, but still there's an underwriting profitability gap. And that's why, not the only reason, but that's why you continue to see and expect a hardening of the markets as primary insurance players do not earn the cost of capital yet in 2024. Number three, uncertainty. Uncertainty, without the question, is very high, they're very difficult to price in, and this is why scenario monitoring, which we do, on a continuous basis and always do as a tradition in this sigma outlook, which Charlotte presented, it's really important to have this close to home and look at the scenario and the scenario signposts, and you will find more in the sigma report. So with this, thank you very much for your attention here in the room, and also thanks for the attention online. I pass it over to, to you, Mike, for- Yes, thank you. Thank you. So, we'll now open up for Q&A. There's a microphone going around in the room at the moment. If you want to raise it, ask a question, holler out to one of the ladies there, and otherwise we'll also open up for questions online. Online, please use the raise your hand function in Teams, something like that. And, do feel free to put on your camera if you're on Teams. And, give everyone a... Ronan in the room would be first, yeah? Yeah. Ronan, could we use a mic because of the stream? Yeah, no problem. Also, your name and publication for the people online. No problem. Thanks. Yeah. Ronan McCaughey from InsuranceERM Publication. Just want to get your thoughts more on the Israel-Hamas war and geopolitical risk. Generally, how concerned are you about that war and the possibility that the conflict might spill over to the wider Middle East? And your thoughts on how concerned you and insurer should be about geopolitical risk and anything they can do to prepare for that? ... Yeah. Well, thank you. Happy to take that. Well, first of all, I'm concerned as a citizen of the situation in Ukraine, but also in the Middle East. Extremely concerned. As an economist, and we have more in the sigma report, we look at the scenarios, and if we see that the situation escalates, and escalate means that if the situation in the Middle East, if you see more countries being involved, then you have a high risk of commodity price shock. And it's mainly through the commodity price shock, where actually the effect of the war in the Middle East would be felt economically. If you have a... Just to give you numbers, if you have an escalation, you're probably gonna see oil prices at $150 per barrel or higher, and then it opens up the scenario of a global recession. And again, that's why for us, if you look at the scenarios that Charlotte presented, that's why we overweight the two downside scenarios, stagflation and global recession. We attach a higher likelihood than for an upside scenarios. I would- Yeah, and as an insurance company, it's obvious, right? If you have a higher inflation, which would be the result of this commodity price shock and the recession, that's a drag for the industry. That's a drag for the real economy. Yeah. I would just add, we have two pages on it, on page 17 and 18 of the sigma, where we talk exactly about those scenarios which Jérôme mentioned. Perfect. Thank you. All right, so there's no questions online at the moment. So if you're online, please do raise your hand. Otherwise, I won't see you. Otherwise, in the room? Thank you. Vincent from Insurance Asset Risk. Can you say a bit more about, the outlook for chief investment officers for the coming months, when you consider-- you mentioned fixed income market doing well next year. You also said infrastructure, an area of opportunities, but you mentioned lapse risks. What, what's the outlook for a chief investment officer at an insurance company for the next year or so? Well, you would have to ask a chief investment officer. But give you the outlook from a chief economist's point of view. From a chief economist point of view and from our analysis, and please, Charlotte, also add, I mean, who would have thought 2023 fixed income is boring? And who would have thought that you get with T-bills, so short end of the curve in the U.S., you get 5%+, and you get... It's great returns. I'm positive for fixed income returns, I'm positive for higher quality credit, higher rated corporate credit. You get 7%-8% in the U.S. That's great returns. These are returns pre-crisis we wouldn't have dreamed about. Equities valuations are stretched. Dividend yields, it's lower than the yield that you get on the bonds side. For me, equity investment is very much a sector-driven investments. So positive on bonds, positive on certain sectors on the equity side and on the infrastructure point. Yes, infrastructure point, especially for insurance companies. I think for any CIO of an insurance company, given we are long-term investors, we need a duration, we do ALM, asset liability matching, and you get a duration in infrastructure investment. The problem is just there are not so many bankable projects. But definitely, that's why also I think it would be a win-win if you would have finally more infrastructure investments and infrastructure projects to invest in. That's why we have been calling for a tradable asset class for quite some time. It's a win for the real economy. It's win for the asset investor. Yeah. I don't know if you wanted to add anything. Yeah. No, I think, yeah, Jérôme, you added it. In terms of impacts for then the investment portfolio, of course, it takes time as in how bonds mature and you reinvest, but for sure, the end game is it helps to narrow the profitability gap. Yeah. Okay, we have a question from John. It's John Guy, Emerging Risk. Charlotte, can I pick up on your comment around the, whoever wins the general election in the U.K., the likelihood is they're going to lean far more heavily on the private sector to drive growth. How do you see that playing out? Yeah, sure. So I think it will... Of course, it will take time, but I think the current Labor government, or sorry, the future Labor government, if they get elected, they will be constrained from the fiscal side and will have to look into the private sector to tap growth. And there, it's about looking at incentives. So we may already see some incentives unveiled tomorrow at the Autumn Statement, but it will take time in the sense of subsidies, tax incentives, that could encourage private companies to invest. On the reinsurance side, or insurance side, GBP 1.7 trillion assets are under management in the U.K. So if you can tap into those GBP 1.7 trillion pounds of assets, part of that, to bring growth opportunities, be it for climate initiatives, digitalization initiatives in the real economy, that will be positive. But of course, this is something which affects more the structural outlook, and what we have presented here is more the cyclical outlook for the next one-two years, and that's something that takes a longer term, view. But I think also, something that we've seen in the news is- ... There's also a lot of pressure for company financing. A lot of companies, also in the U.K., have been going abroad, say, to the U.S., because of more favorable financing initiatives. I think we will start to see also increasing pressure, whoever is in power from the U.K. government, to also attract financing for growth opportunities in the U.K. We have another question in the room? Hi, it's Ben Dyson from S&P Global Market Intelligence. Just wanted to wonder if you could clarify the point about higher interest rates and improving underwriting profitability. I can see how it might improve the profitability of insurers overall, but just on the point you're making about the effects on the Combined Ratio. And also, what sort of you mentioned about the cost of capital, and- Yeah ... and the insurers not yet meeting that, and not for, maybe not for the next two years. Just what the level is you're thinking of that they need to hit now- Yeah ... that interest rates are higher? And I did also have a quick question on lapse risk. Yeah. You mentioned that there's the, we've seen a bit of that, I think, in 2023 on the, on the live side. Just interested in, in whether you're, you know, what you're expecting there, whether it could get, get worse. Thank you very much. Yeah, thanks a lot for the question. And maybe the first one, on lapse risk, we see it, we see it as being contained. We see, certain smaller European countries having higher lapse risk. But yeah, we are not overly concerned. And, if I say overly concerned, I'm thinking about—I'm talking about the market overall, right? The primary insurance markets. But definitely something, to watch out, given we had this interest rate, shock. But that's, that's a lapse risk. Now to the, to the effect of higher interest rates, on, on, on the Combined Ratio. You have asset leverage. That's. Asset leverage is about 2.4-2.7. Higher asset leverage, or asset leverage in general, it means that if you have a 100 basis points increase in the reinvestment yields, you have a multiplier effect of what it means for the combined ratio. Happy to share with you more detail and the mechanics, but the bottom line is, about a 100 basis points increase in reinvestment yields leads to 250 basis points improvement of the combined ratio because of the asset leverage. But again, if you look at U.S. P&C industry, and that's the reference I made in the slide. For the U.S. P&C industry, we saw over the last two years, around 250 basis points improvement in the reinvestment yields. And that 250 basis point improvement leads to an improvement of the combined ratio of a little bit more than 6% points. And if you, if you would translate of what a 6% points combined ratio means for the U.S. P&C industry, there, then you get it is $50 billion of additional claims, that the P&C industry in the U.S. could carry over. And again, that's about the, the Nat Cat budget U.S. P&C industry has. But happy to share more information with that. Our expectations for the, return on equity for next year, and as well the year thereafter, for primary insurance markets, are about 10%, so it's a clear improvement. Before, it was around 6.5% or 6.8%. Clear improvement. However, the bar is also higher because of the interest rates and the cost of capital, on average for primary insurance players is about 12%, so there's still an underwriting profitability gap. Yeah. Thank you. Great. So we, Ronan, we have a question online. Can I come back to you? Oh, yeah. Yeah, great. So we have Maximilian Vaultz has his hand raised. Can we hear you? Yep, Mr. Vaultz. Thank you. Thank you for taking my questions. I have three ones. Maybe you can say some words about the German markets developing in P&C and Life and Health. And to the greater look, how will the result of the report influence the planning of the Swiss Re? This is the most important question for me. And third, you spoke about the improve of interest rates. What does it mean for the managing of assets for the Swiss Re? Thank you very much. Okay. Well, the first last two question of what it means for Swiss Re and what it means for the managing of assets, we're gonna have to investors', Day very soon, and you will hear more about it. But just to be clear, the forecast that we provide here, we also use it right in our, in our group planning. These are the last two questions. In terms of the first question, you asked about the German P&C and, Life and Health, to give more updates. Charlotte mentioned, the difficult environment that we have in, in Germany, so technical recession, and that means lower premium growth. Premium growth in Germany, we see more subdued relative to European, average. So that's number one. On the Life and Health side, the really positive news is also in my home country, Switzerland, but also in Germany. You have finally the whole interest rate curve, Bunds, right? Not being in negative territory anymore, meaning you get also positive yields for investment in German Bunds, and that's a big driver for the savings industry. Now, the savings industry is coming back alive, and you have more numbers for that in the sigma report. But globally, on average, we expect Life and Health to grow by 2.7%, and especially in economies like Germany and Switzerland, where you have negative rates. You can't have the annuity business the way we used to have if you have negative rates. So that's definitely positive news for the annuity business, that you have, again, rates where they used to be pre-crisis, pre-global financial crisis. So good news, I would say, for Life and Health industry. For the P&C, more challenging. Thank you very much. Thank you. So, Ronan, you-- thanks for waiting patiently for that. Could you just grab the mic, if you don't mind? Maybe more of a niche question. I'm not sure if you can cover it. Okay. In the Pension Risk Transfer- Yeah -area, bulk annuities, and so on, I just wondered if you if Swiss Re has a particular outlook. For example, in the U.K., the market's very buoyant. People are predicting GBP 40 billion-GBP 50 billion. I just wondered if Swiss Re has a particular outlook, say, for the U.K. or PRT generally? I would have to come back on that. We have definitely a global picture. We just Swiss Re Institute published a report on the global savings gap, and there, the point is, given where interest rates are again, back to normality, it's definitely for all savings industry, including here in the U.K., it's a positive driver. Now, to the specific U.K, pension projections, I would have to come back, but I would be happy to share that report. Quite a niche, question. Thank you. No problem. Thanks a lot. Thank you. What... Do you have any expectations for COP next month? And, what would you like to see to come out of this year's meeting? Well, I would like to see, first of all, policy commitments for 1.5 degree temperature increase by 2050. Policy commitments which are consistent with the Paris Agreement. That's one- number one. Number two, I would like to see a cooperative approach across the key countries. Because if you don't have the global cooperation, it's just much more difficult and challenging to reach the net zero agreement and to fulfill the Paris Agreement. And then number three, but you won't see it at COP 28, policy commitment is one thing, policy action is the other. And it's important that all commitments, whether it's private sector and public sector, that these commitments are being followed through. Yeah. I don't want to make a prediction on that. Yeah. Okay, so we have no more hands up online. Are there any further questions in the room? Well. You... I can see some furious note-taking here, so I'll wait till that's done and see if anyone has any any questions. Okay. Otherwise, we will have coffee- Exactly outside, so you can join us. Great. So thanks, everyone, for joining us online. Please feel free to drop us a line at media_relations@swissre.com, if you have any follow-up questions. For those of you in the room, there's some coffee and hopefully some food outside. It's lunchtime here in the U.K. So, thank you, everyone, for joining. Well, thank you very much for coming and engaging.