Ladies and gentlemen, thank you for standing by. I welcome you to today's Hannover Rück conference call on the Q2 2023 results. For your information, this conference is being recorded. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may press Star followed by one on your touchtone telephone. Please press the Star key followed by zero for operator assistance. I would now like to turn the conference over to Karl Steinle. Please go ahead. Thank you. Good morning, everyone. Welcome to our earnings call on our results for the first half of 2023. One of our peers have also scheduled their analyst call for this morning, we are starting a bit earlier than usual today to avoid a conflict for all the analysts covering both companies. The speakers for today's call are Jean-Jacques Henchoz, our CEO, and Clemens Jungsthöfel, the CFO of Hannover Rück. For the Q&A session, we will additionally be joined by Claude Chèvre, Klaus Miller, and Sven Althoff. I would like to ask Jean-Jacques to kick things off. Thank you very much, Karl. Good morning on my side, and thank you for joining our call today. I'm very pleased to present a successful first half-year performance today. The Group net income of EUR 960 million, and the return on equity of 21% reflects a healthy profit level across our business groups, and this puts us very well on track to achieve our full-year guidance. In P&C, reinsurance revenue increased by 7.8%, adjusted for currency effects, supported by the successful renewals this year. The new business CSM and the loss component combined increased by 75% to EUR 1.8 billion for the first half of the year. This reflects the sharply improved quality of the business and will translate into an increase in earning power in the coming quarters. Driven by a benign NatCat impact in the last quarter, large losses were €144 million below our budget for the first half. As always, we have, nevertheless, booked the full budget, and the EBIT of €869 million is in line with our expectations and includes a material increase in reserve resiliency. The business performance in Life & Health reinsurance was particularly good, based on a strong underlying profitability and some positive extraordinary items, like the EUR 50 million from positive derivative valuations. The EBIT of EUR 525 million is better than initially expected. Financial Solutions continue to be highly profitable. A normalization of profits after the COVID pandemic and an uplift in profitability following the unlocking of assumptions at the transition to IFRS 17, resulted in significantly improved results for our mortality business. Reinsurance revenue was stable, mainly reflecting volume effects connected to in-force management actions in our US mortality business, which has offset the growth in other areas. With a return on investment of 3%, the investment performance was very satisfactory. The strong ordinary income is mainly driven by higher interest rates and additionally supported by the contribution from inflation-linked bonds. Last but not least, the capitalization of Hannover Rück remains very strong, with the solvency ratio increasing to 270%, which positions us well to seize new business opportunities and grow our book of business going forward. Overall, the shareholders' equity increased by 2.2%. The dividend paid in Q2 is already more than covered by earnings in the first half-year. The impact of changing interest rates and credit spreads on the OCI is much more balanced under the new accounting regime, in particular, as we adhere to strict asset liability matching. The negative valuation impact on reinsurance liabilities is offset by a higher asset valuation. The CSM increased by 11%, driven by the new business value generated in both Life & Health and P&C. Additionally, updated assumptions for UK longevity had a positive impact in Life & Health. Please bear in mind that the traditional renewal dates in P&C result in strong CSM growth in the first half of the year. For the full year, the CSM growth in P&C, is naturally expected to be, slightly lower. The risk adjustment decreased by 2%, mainly driven by changes in, estimates in, Life & Health reinsurance. Looking at all three balance sheet items together, it becomes clear that we have been successful in creating significant value for, our shareholders. On that note, let me hand over, to Clemens. Yes, thank you, Jean-Jacques. Good morning, everyone. Starting with the development in P&C reinsurance, the growth in reinsurance revenue is in line with expectations. As you know, the shift towards non-proportional business and some portfolio pruning for larger proportional treaties resulted in limited premium growth at the 1/1 renewals. As regards reinsurance revenue for the current period, a good part of the growth from the 2022 renewals is released into revenue. Additionally, the CSM release from favorable 2023 renewals is resulting in growth compared to the previous year. The very attractive market environment, with a material increase in expected profitability in 2023 renewals, is reflected well in the new business metrics. The new business CSM increased significantly to EUR 1.8 billion. At the same time, the new business loss component has decreased, as the likelihood of having a positive CSM instead of a loss component is lower in the current pricing environment, and particularly with higher interest rates, on top of that. Large losses amounted to EUR 607 million. This is EUR 144 million below our budget, driven by the benign NatCat experience in the second quarter. As mentioned by Jean-Jacques, we have reserved the full budget anyhow, and COVID-related claims from our accident and health business in Southeast Asia amount to around EUR 60 million, and have decreased quarter on quarter. The discount effect on the combined ratio in the first half year was slightly above 5%, and the resulting combined ratio of 91.7% is within our target range of 91%-92%. As you know, our target range includes a desired increase in reserve resiliency, and this is also a factor in the reported number for the first half-year, as Jean-Jacques already mentioned. If you compare the 91.7% with an underlying IFRS 17 combined ratio target of around 88%-89%, the difference can really be explained by an increase in the confidence level of the reserves. On the one hand, as you know, we are aiming to bring the reserve resiliency back to 2021 levels, and I would say we are well on track in this regard. On the other hand, the difference between the positive discount effect and the interest accretion was almost EUR 100 million in the first half-year, and we have also kept this temporarily, tailwind in the reserves as well. The run-off result was positive EUR 168 million in the first half-year. In general, the run-off result is usually more geared towards the second half of the year, furthermore, I just have to assume that the number for the first half-year would have been materially higher, excluding the increase in resiliency of our reserves. Investment result is strong and mainly reflects the increased ordinary income from fixed income securities. This is mainly driven by higher interest rates. In addition, the amortization of our inflation-linked bonds contributed EUR 74 million in the first half-year. The other result is comprised of the currency result as well as other income and expenses. The latter amounted to minus EUR 168 million. This number mainly includes non-directly attributable expenses and is not at an extraordinary level. The currency result was positive at EUR 59 million. Altogether, the EBIT of €829 million is in line with our expectations, as mentioned, also regarding our target for an increase in reserve resiliency. On the next slide, we have included some additional details on the components of the IFRS 17 general measurement model. The main driver for the reinsurance service result, as you can see, is the regular release of the CSM. The experience variance on initial assumptions was rather high in the first half of the year. This is mainly a retrocession effect. On the one hand, we have bought a material amount of retro protection, and the expenses are, to a certain extent, front-loaded in the first half year. On the other hand, large NatCat losses which incurred in the first half year were benign, and in the case of the earthquake in Turkey, not covered by our retro program. Furthermore, reserving the difference between actual and budgeted large losses does not assume any benefit from retrocession either. Overall, we are rather on the prudent side here when it comes to retrocession, and that is also reflected here. Altogether, this resulted in a significant experience variance, hence explaining the bulk of the EUR 506 million, as you can see on the slide here. In a normal loss environment, of course, this effect is expected to normalize over the course of the year. The runoff result, as mentioned earlier, can be seen as an experience variance as well. Although we thought it might be helpful to provide this information separately, you might wonder why there is no separate information on the impact of the risk adjustment. In the GMM, this is not straightforward because you have different effects in the revenue and in the LIC. The release of the risk adjustment from the LIC, from the liability for incurred claims, is connected to the runoff of claims. We have included it in the runoff result that I mentioned earlier in the 168, and in the first half year, 2023, this was around EUR 40 million. The new business loss component was rather small at EUR 35 million. On the right-hand side, you can see the CSM development since year-end 2022. New business is significantly increasing the CSM. The natural counterpart is the CSM release. The new business CSM follows seasonality. In the second half of the year, it will continue to grow with the impact, of course, of the first of July renewals, and additionally, business or additional business, for example, from our structured reinsurance and facultative business. It will certainly grow at a, a slower pace in the second half. At the same time, the CSM release is more stable over the course of the year. Therefore, the growth in the balance sheet item CSM ex- is expected to be lower for the full-year than the current number that you can see here. On large losses, as mentioned, the overall impact from large losses was below budget, thanks to a benign NatCat experience in the second quarter. Man-made loss activity was above expectation. The largest individual events were the riots in France, with an estimated impact of around EUR 50 million. The fact that we have not released reserves in response to underutilization of the budget means that we have a bit of an extra buffer for large losses in the second half of the year. Let's move on to Life & Health. Reinsurance revenue in Life & Health increased by 0.8%, adjusted for FX effects. The moderate decrease in revenue and mortality is largely connected to the in-force management actions for our US mortality business. This has been compensated by growth in Financial Solutions. The service result of EUR 525 million is very strong. As a reminder, the profitability is structurally higher under IFRS 17 because loss-making mortality business has been revalued and should not longer materially affect the income statement. In addition, the overall mortality experience was favorable in the first half of this year, and we recorded a positive one-off in the amount of EUR 23 million from the recapture of a retrocession treaty. The performance of Financial Solutions and longevity continued to be positive. The reinsurance finance result is slightly better than our pro rata expectation for the first half-year. In Q2, we recorded a positive one-off in the low double-digit millions from changing interest rates on retro ceded business. The increase in ordinary investment income in Life & Health is driven by higher interest rates. In addition, the fair value of financial instruments was a positive EUR 50 million due to valuation effects on derivatives. The previous year's period included positive contributions from our extreme mortality cover and at equity participations as non-recurring items. Other income and expenses was a negative EUR 98 million. Currency effects were also negative to the tune of EUR 25 million. Overall, the EBIT does include, as you can see, some positive extraordinary items, but it's based on a very healthy underlying profitability. Still, it exceeded our expectations and should not be taken as a quarterly run rate for the next quarters. Let's move on to the IFRS 17 components of the Life & Health reinsurance service result. As in P&C, the main driver, as you can see here, is the CSM release, which includes the positive one-off effect from the previously mentioned retro recapture. Furthermore, the updated assumptions for UK longevity, which have a significant impact on the overall level of the CSM on the right side of this slide, have also supported the CSM release in the current period, albeit only to a modest extent. In contrast, the recapture effect, however, this will also support our future results, though. Unlike in P&C, the change in risk adjustment in the LIC is less relevant in Life & Health. The impact on the service result derives largely from the re-release of the risk adjustment to revenue. The overall number of under EUR 23 million is higher than our normal expectation and includes some extraordinary releases from our US business. The effect from the loss component is driven not by new business, but by changes in estimates for in-force business. Due to the long-term nature of Life & Health business, any change in estimates can have a major impact on an individual quarter as soon as it not only affects the CSM, but also-...The overall CSM has increased by 6%, since year-end 2022. Apart from the new business CSM, there's also value creation in extension of existing contracts, which in some cases are not recognized in the new business CSM. As explained, the change in estimates is largely attributable to updated assumptions for UK longevity business. I already commented on the regular CSM release as well. Let's move on to investments. I think it's fair to say that the development of our investment was very satisfactory. The ordinary investment income is strong and continues to benefit from the portfolio turnover into a higher interest rate environment. As mentioned, in the comments on the business group, the contribution from inflation-linked bonds in P&C, and from reinsurance-related derivatives, and life and health was positive as well. Otherwise, the investment income is pleasantly unremarkable. Particularly in terms of the new expected credit loss, as well as real estate and private equity funds at fair value through P&L. However, we have included some negative P&L effects for private equity and real estate valuations in the ROI guidance, and the absence of these effects at per end of June resulted in a moderate seasonal outperformance versus our guidance. All in all, the ROI of 3.0% is clearly above our 2.4% target. To conclude my remarks, the first half year of 2023 was very much in line with our expectations. Hence, the business performance supports us reaching or exceeding our Group net income target of EUR 1.7 billion. On that note, I'll hand back to you, Jean-Jacques, for the comments on the outlook. Thank you very much, Clemens. On the next slide, you can see an overview of the, the latest renewals. June and July renewals were characterized by a, a market environment similar to the January and April renewals. The moderate inflow of capacity in the market was mainly targeted at specific pockets of cat business, and it did not have any larger impact on the overall prevailing underwriting disciplines and pricing trends. In the U.S., both reinsurance and primary rates increased meaningfully, in particular for property business. Also in Latin America and Australia, attractive rate increases could be achieved for reinsurance. In a less dynamic pricing environment in Asia, we also continued to manage the quality of our portfolio by slightly reducing shares on the lesser attractive proportional business. Altogether, the premium volume increased by 12.6%, with a risk-adjusted price increase of 4.8%. As the business development in the first half year supports our expectations for the full year, we continue to expect growth in revenue for both P&C, Life & Health, combined of at least 5%, even though there has not been any material impact from valuation volatility on the investment side during the quarter, our ROI target of more than 2.4% still includes the initial assumption of decreasing valuations for private equity and real estate. Additionally, the ambition to restore our reserving strength in P&C reinsurance to the prior year level continues to be embedded in the guidance. In Life & Health, the performance was very strong and provides us with additional confidence with regard to our Group net income target, which is especially welcome as we're just at the beginning of the Atlantic hurricane season. Our dividend approach remains unchanged. We continue to be fully committed to securing attractive dividends for 2023 and beyond. Moving on to the underlying assumptions of our two business groups, we have only made minor changes compared to our initial planning. Interest rates are expected to be a bit higher. This will have some impact on both the discounting effect in P&C reinsurance and also the finance expenses in P&C reinsurance as well, which we now expect to be around EUR 570 million. As Clemens explained, there is a temporary benefit due to the timing of the two effects. Just like in the first half-year, it is our intention to not just let this tail tailwind flow into the P&L in the current year, hence, the combined ratio target remains unchanged. The expectation for the service result in Life & Health remains between EUR 750 billion and EUR 800 billion, with an increased likelihood of outperformance of this target. Altogether, the expected EBIT numbers for our two business groups are unchanged, and the at least in front of the numbers leaves us with room for potential upside. This concludes our remarks, and we're now happy to answer your questions. Thank you very much. Ladies and gentlemen, at this time, we will begin the Q&A session. Anyone who wishes to ask a question may press star followed by one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. In the interest of time, please limit yourself to two questions only. Anyone who has a question may press star and one at this time. We have the first question from Kamran Hossain from J.P. Morgan. Please go ahead. Hi, morning. Just two questions from me. The first one is on the combined ratio, where you've obviously talked about 91%-92% being the right range for 2023, but on an underlying basis, you're running well below that. Obviously, I understand, you know, the reserving side, you know, the desire to increase the buffer or the resilience of, you know, the reserves this year. What stops you moving into 2024 and saying, "Actually, we've done that. We've managed to get through the year. We've increased the reserve buffer." What stops you moving the combined ratio next year to 88%-89%? Is there anything technically that would stop you? Also anything, like, philosophically, would you rather have, like, a smoother earnings trajectory than that? The second question is on US liability trends. Last week, one of your peers talked about maybe things being slightly worse than they've anticipated. What's your experience so far at the moment? Are you seeing similar trends, and kind of should we be concerned about this? Thank you. Let me, let me start with the second question, Kamran. That's when, of course, we are closely observing the trend in the U.S. when it comes to liability claims. When you look at awards from the various court rulings that have happened over the last 12 months, you can see that the interim low due to COVID, and the fact that the courts were not sitting during that time. You can see that it's back to normal, and there's even a little bit of a catch-up effect. It is so, so higher than the long-term averages. From that point of view, the trend for high awards, the topic of social inflation, which we have discussed in the past, continues to be high on the agenda. Not surprising in a sense, when it comes to our portfolio. I think we have explained in the past how we have structured that, and that we are de-emphasizing certain exposures, on the bodily injury side, for example. From that point of view, we are not seeing any adverse developments in our triangles that would concern us at this stage. That's certainly an area which we are continuously observing very closely. Thanks. Kamran. Kamran, on the, on the first question on the combined ratio, particularly when it comes to the target combined ratio 2024. As mentioned, it's really the inline with the underlying performance of the P&C book, the 88. That's roughly the target we are looking at right now, 88-89, I would say, on a discounted basis. The difference, as mentioned, is explained by the reserve rebuild, also by to some extent, buffering the discounting effect, and of course, also on the more, I would say, conservative treatment of the retrocession in the first half of the year. That explains mainly the difference to the reported number. As you can see, that sets a very robust basis for a clearly favorable development on the 2024 combined ratio. As you know, we are still ahead of NatCat season, which is, of course, essential to determine our reserve level at the end of the year. We are very positive on the target combined ratio for 2024, and we will share our expectation for 2024 on the Investor Day in more detail. Thanks, Clemens. The next question is from one of Will Hardcastle with UBS. Your question, please. Oh, hi, thanks very much. It's just one, actually. It's just trying to understand the... There was a sizable re- buffer rebuild that you discussed at Q1. Just trying to get an understanding at Q2. I guess I'm trying to understand, you talked about that discount rate VFE, effectively benefit not being taken. Should we think about that therefore as buffer rebuild? Also the cat budget not being consumed, should we also think about that? Is that how you're thinking about it, or is that cat budget component just too early in the year to consider? Thank you. Well, if you look at the difference between, let's say, a target combined ratio of 88 to a reported combined ratio of 91.7, the way we think about it is twofold. The difference is when you take the advantage, let's say, of the discounting effect, we have a discount impact in the first six months of roughly EUR 380 million, whilst we have an interest accretion in the P&L of EUR 285 million. That's roughly EUR 100 million, EUR 95 million, to be correct, and that is part of the difference. The remainder, which is roughly EUR 100 million-EUR 150 million, is really seen as a buffer rebuild. We don't see the discount impact as included in that in that resiliency rebuild. That really goes on top. Again, there's also some prudency in the numbers when it comes to retro. For example, when we reserve our budget or our cat, or our large loss reserves to the budget level, we do not include any retro expectation on that, so there's also some buffer building into that. Overall, that's the way we really look at the buffers. The next question is from the line of James Chuck with Citi. Please go ahead. Yeah. Hi. Good morning, everyone. A couple of things on my side. Firstly, on the June, July renewals, appreciate the, the volume's up 12.6. The, the, the premium income is, is, is not necessarily the, the best measure of kind of capital deployment. You used to disclose in the annual report the capital limit for NatCat and the utilization rate on that. I'm just keen to know where you're at in terms of your appetite for, for NatCat. If you could just give an update on that utilization rate for 2023, that would be helpful, please. Secondly, in terms of the downgrade of the U.S., just keen to know if that has any implications for either your investment rate mix or for your solvency levels as we go to later in the year. Thank you. Yeah, on the NatCat side, we are well within our defined risk appetite. As you know, we have bought significant, significant amounts of retrocessional coverage, which has limited the growth in our appetite due to the long-term view we take on client relationships. It was important for us to be able to write more business on a gross basis, without the, the distorting the long-term expectation from our clients, hence the additional retro buy. From that point of view, we have continued to shift from pro rata to excess of loss, also at the 1st of June, 1st of July renewals. Within excess of loss, we have put more emphasis on event versus aggregate coverages. Those trends in our portfolio are very similar to what we reported on the first of January renewals, and we would have enough room to continue growing our NatCat risk appetite during the course of the year if short-term opportunities should arise. For the time being, the increase compared to last year is not very significant due to the additional retro buying. As for the US downgrade, James, in terms of the investment, the asset allocation, that won't have any material impact on our, on our investment mix. As for the Solvency II impact, we are looking into this, but I wouldn't expect any material impact on our Solvency II ratio. The next question is from the line of Andrew Ritchie with Autonomous. Please go ahead. Oh, hi there. First question, apologies if you discussed this already. Could you just give us some sense as to how to think about the Life CSM Growth? I appreciate, when I look at the walk, you know, it was helped by those changes in estimates, but I'm, I guess I'm more thinking about the new business flowing in versus the release. The release was very high. I appreciate new business is lumpy, but can you just give us a sense as to where you think in general, the new business coming in should, should match the release? How to think about the balance between the two would be useful. That's in Life & Health. In P&C, just a question, if we go back to one of the topics, which was mentioned again at Q1, which is the Asia COVID A&H losses. It's not mentioned in Q2, so I assume there's no material noise. It is notable that there are some Asian insurers, listed Asian insurers, that have flagged potential non-recoverability of some of their reinsurance recoverables that they've booked. I just wondered if you had any comment on that. Are there any potential recoveries on your, your Asian losses that you've booked? I'm assuming you took a conservative view of those, so there would be upside, not downside, but maybe just update us on the status of those claims. Thanks. Yes, I, I'm going to take the Life & Health question maybe first. You're mentioning that. It's global speaking. You're mentioning the comparison between the regular release that we're showing of 4.9 and the new business, in the CSM. First of all, as Clemens mentioned already, this release has a special impact, which is coming from, a retrocession, a UK retrocession treaty, which was recaptured, or EUR 23 million claims that you have mentioned already. The second comment maybe is also, when you look into the new business generation, you shouldn't look into just the new business CSM that we have generated, but you need to combine that, and I think Clemens also hinted to that already, with the extensions. On the life and health business, what you need to understand is to keep a life and health treaty open, which is open for new business. ... needs as much effort as to write a new business, because you need to convince the client every year again and again, keep the treaty open. It's particularly difficult when the treaty is, is, is a good treaty, a positive treaty for ourselves. You need to take these two bars together, when you sum them up, you will end up at approximately EUR 350 million new business generation, which is close to what we were reporting in the past in terms of value of new business. Andrew, on, on top of that, the release looks a bit higher, of course, due to the fact that it is impacted by the higher release in Financial Solutions. We are looking at a release pattern of roughly, I would say, 12%-14% on an annual basis in Life & Health. But at the same time, as Claude indicated, we are clearly seeing the CSM overall as a growing number. This will be replaced by new business, which, as, as you mentioned, Andrew, comes in a bit more transactional, and a bit more lumpy. Again, that's clearly a growing number. On the COVID Asia question, as Clemens, in the first half of the year, we have posted an additional reserve of roughly EUR 60 million, EUR 58 million, to be precise. There was relatively little incremental increase during the Q2 standalone quarter. We are in constructive discussions with our seeding companies on this topic. As expected, the incremental increases have slowed down. You will remember that we have canceled the relevant treaties at around March and April 2022, and with the business running off, with COVID slowing down, this is the expected development. What we have reserved for the complex overall is our best estimate view on what is covered under the treaties we have engaged with. We have not taken a view on any potential recoveries per se, but as I said, it's the best estimate view we are reserving to. Can you remind us what the total stock of claimed reserve is there now, roughly? In total, it should be roughly EUR 600 million. Okay, that's great. Thanks very much. The next question is from the line of Ashik Musaddi with Morgan Stanley. Your question, please. Yeah. Hi, good morning. Just a couple of questions I have, and apologies in case you have already answered this to Will's question. With respect to P&C buffer reserving, and now that you are adding more as well, would you believe that by the end of the year, you will have more buffer reserving than you would typically have like on the previous accounting basis, i.e., this discounting versus unwinding buffer that you are at the net number that you are adding further to reserve? This is on top of the regular buffer build, is what I'm trying to get. Would that be straightforward, like 2% of the premiums, or do we how do we think about that extra buffer build? That's the first question. Secondly, if I look at the, if the, first quarter versus second quarter, the, the interest accretion has gone up from EUR 125 million to, I guess, EUR 155 million, whereas, if I look at the second half, your guidance is more or less similar from the first half to second half. Can you give us some dynamics on that as to why it has increased in second quarter versus first quarter, but not increasing going forward? Just the last question is, this year, combined, your P&C profit guidance of EUR 1.6 billion, how much of that includes the P portfolio decline, the valuation decline? Does that include all of it or some of it? Any color on that would be helpful. Thank you. Ashik, I, I'll start with the first question on the resiliency buffers, and you might want to help us on the last question. I didn't understand the last question. Sure. The last question is very simple. Is EUR 1.6 billion of your P&C operating reserves, does that include the entire P portfolio devaluation that you had referred earlier, in past, the private equity portfolio? Okay, perfectly fine. Let's start with the buffers. The way we think about the resiliency reserves is really that we said, well, our guidance included a one-off effect of roughly EUR 300 million-EUR 400 million for the rebuild of the buffer in 2023, to bring it back to a level of roughly EUR 1.7 billion of undiscounted redundancies that we had reported end of 2021. That, that's the way we really think about this reserve resiliency. When it comes to the discounting impact, Ashik, I, I think it's not easy to assess, but, we have roughly EUR 285 million of interest accretion. We do believe that number will sit somewhere between EUR 550 million-EUR 600 million for the overall year. That's really just the rough estimate. There will be a slight increase in the second half of the year, but it's not, not, not easy to assess. Any impact that we have from discounting versus the interest accretion, also in the second half of the year, will go on top of this resiliency buffer, so that will not be included. We've kept it in our loss reserves. As for now, we might revisit this when we look at our overall Q4 results, of course. Then we'll see also to see if we might sell fixed income securities which are in a loss position, so we might realize some unrealized losses, but that's a decision that we will make then in Q4. On the EBIT guidance for P&C, that's perfectly right. We included an assumption there for both revaluations, potential revaluations on the private equity side, but also allowed for some real estate markdowns, both on the direct investment side as well in the fund. Overall, that's roughly EUR 200 million of potential markdowns that we might see with a P&L impact in the second half of the year, and that is included in the P&C guidance. Yes. That's very clear. Thanks, Clemens. Thank you. The next question is from the line of Vinit Malhotra with Mediobanca. Please go ahead. Yes, good morning, Clemens. I hope you can hear me clearly. So my main question is just back on this, you know, the life, the P&C new business CSM, which at 75% is phenomenal growth. I mean, I'm just trying to understand what's the logic of or what's the reasoning behind you saying that the rest of the year this should really come down? Now, I can understand that the renewals are done, but they were also done last year at the same time. So we're talking of comparable numbers going up 75%. I'm just curious as to why we should not be more excited about that point. Thank you. Vinit, happy to answer that. We probably misphrased that a bit when it comes to the expectation for the second half of the year. To be clear, it was just the dynamic of the stock of CSM, that has grown quite significantly because with the strong one-one renewal and one-four and one-six, we have more dynamics in the growth of the overall CSM versus there is a release in the first half-year. The dynamic of the overall growth of the CSM, that was meant. Of course, we are looking at EUR 1.8 billion now. We have a very strong one-seven renewal, as Sven mentioned. I think we have a very healthy pipeline on structured, on facultative business, we do expect also significant growth in the third quarter and in the fourth quarter. Therefore, of course, that number will increase, that new business CSM will increase materially also in the second quarter. That was really the rationale behind it. I hope that that's more clear, Vinit. Yes. You, you meant second half it will increase? Yes, sorry. Second half. Yeah. Apologies. Yes. Yes. Secondly, just to, just to be clear, wasn't it the case that the structured solutions were not getting the same insurance revenue kind of treatment as in IFRS 4? That doesn't bother this new CSM, new business CSM, right? Exactly, Vinit. Exactly. That is captured then in the net reinsurance revenue because, you know, that's the, that is, if you like, and IFRS 4 a bit inflated when it comes to sliding scales and commissions, et cetera, that is being stripped out. The revenue is impacted by that, but not the margin, the new business CSM. Okay, lovely. Thank you very much. The next question is from the line of Tryfonas Spyrou with Berenberg. Please go ahead. Well, hi there. I just got one question, or maybe two on life and health. We, I guess I'm just wondering, what are, what are the assumptions you, you, you changed for UK longevity that resulted in a strong contribution to the CSM? Just to confirm my understanding on how this works, given the update in the assumptions, does it mean there will be less contribution going forward from positive experience variants, but rather it would come from amortization of a larger CSM stock? I guess related to that, it, it looks like you're, you're almost sort of 70% there when it comes to Life & Health EBIT target versus the full year. Is there any reason you haven't updated your, your, your guidance there? Thank you. This is Claus speaking. I'm just taking the first question. The second, I'm not sure I understood it completely, but my colleagues are going to help me. On the first one, the assumptions on UK longevity business is that we revised our mortality assumptions for the UK pensioners, and we raised the mortality assumptions for these pensioners, so we're expecting these people to die faster than what we expected, this leads then or ends up in a change in estimate, in a positive change in estimate from the UK longevity business. The second question? Yeah. I'm happy to add to that or take the second. The way you have to look at this number is really on a quarterly basis. The movements within the CSM when it comes to update of assumptions can be a bit volatile, really on a quarterly basis. I would really look at this on a financial year basis, and we do not make all the updates and of assumptions, et cetera, just in one quarter. That was really just a singular longevity effect. As you rightly assumed, that will have a positive impact on the CSM release going forward. however, there's also assumption updates on the mortality side that we will see in the third and fourth quarter, so I wouldn't be surprised to, to see also some movement there in Q3 and Q4. But overall, I think it just, you know, it, it, it really just adds to transparency, I think, when it comes to update of assumptions. As for the guidance for, for life and health, yes, I think it's a very strong underlying performance of the life and health. But as Claude Chèvre mentioned, there are really a couple of extraordinary one-off effects included there. One, namely, the, the retro, one-off effect, then we had some one-off effects in the investment income. There is a one-off effect in the reinsurance finance result. Therefore, we have not yet adjusted our guidance, for the Life & Health side. We are very confident now, of course, given the very strong result in the first half-year. Thank you. There's nothing to suggest that the one-offs would in any way reverse in, in the second half of the year, right? No, no. We just, if we just look at it on a normalized basis- Yes. Don't expect that. Again, if we, we, we will be waiting for any assumption updates probably in Q3, and then revisit that number again. Excellent. Thank you very much. The next question is from the line of Ivan Bokhmat with Barclays. Your question, please. Hi, good morning. Thank you very much. I've got two questions. The first one, it's a, a broader one on your thoughts about the cycle. Maybe you can comment on whether you think the, the prices are, are adequate. Would you be content with pricing being flat in risk-adjusted terms in January if it comes to the, the, the way the year is looking right now? Then the second question, it's related to the, I think to the demand for NatCat covers and your own retro buying. I was just wondering whether, you know, throughout the renewals of this year, have you been seeing, growing demand from cedants for lower attaching layers? Would you be ready to, to write them, or if not you, would you think the market will be ready to write them? Maybe related to that, when you were buying your, your retro for this year, were you, do you think you, you have maybe too much, considering how much the attachment points have moved? Would you, would you need to, to buy kind of higher attaching excessive loss, for example, considering that the cedants now have to retain a bit more? I don't know if the questions are clear. Thank you. Yeah, I've, Ivan, I'll take the first one. Jean-Jacques speaking, just, just in general terms, and then we, we'll complement on, on this and, and also on, on retro. Generally, I think the, the momentum in the market has continued this year, and and we, we haven't seen any significant pockets of of capital coming into the system, just very targeted at at short tail US. So the supply-demand equation will, will not fundamentally change in our view. So we, we would expect continued price adjustment. Fair to say that this year was probably more geared towards the, the shorter tail lines of business, and we, we hope to see further momentum on prices and conditions in the, in the long tail business. Generally, I would say that we, we, you know, best estimate view at this stage that 2024 will continue to be a very successful year from our point of view. You know, depending on the lines of business from stable to improving terms going forward, we, we don't see any major shift in terms of capacity allocation in reinsurance. If 2023 is a very low NatCat year, that might trigger some thinking among the finance community, and we might see some emerging changes, not of any significance in my view. We're very optimistic about 2024. On the NatCat side, most of our clients are working to reinsurance budgets, so how much do they want to spend? Given inflation, many of them had the need to buy additional vertical top-end coverage. Therefore, it was a combination of those budgetary considerations and the hardening of the reinsurance market that we saw a lower layer NatCat move retentions up and, and to a certain degree, disappear. Structurally, there would of course, be demand from the ceding companies, to also buy at a lower level. As I said, given, given how much they are willing to spend, how much they need to cover vertically, we are not expecting reappearance, given also what Jean-Jacques said about the cycle of lower layer cat, any time soon, i.e., within the next 12 months, nor would we see a major comeback of aggregate protections, which also were de-emphasized from a buying point of view, and from a selling point of view, during the course of the last 12 months. Again, an area where, where clients like to buy the coverage, but they have to make, often enough, they have to make a decision, where we have to put the money, and most clients made certain that they have enough vertical event coverage in place, and therefore de-emphasized lower layers and aggregate layers. Would we potentially write them? Well, that always depends, at the right price. ... we, we would be able to, to, to look at it. It's fair to say that both low layer Cat and aggregate protections are not our sweet spot when it comes to natural catastrophe business. On your retrocessional question, I mean, we have increased our retentions on both of our non-proportional towers, which we are buying. That was a reflection on the quality of the business we are taking in, so we were willing to take more risk when, when it, when it comes to that. On our proportional vehicle, K, your question was, do we have too much? From a risk point of view, you can say that we have slightly too much, but then you have to remember that the NatCat experience of the industry and us has been challenging over the last couple of years. Given that particularly K, we view as a long-term strategic partnership with our retrocessional partners, we, of course, also wanted to honor payback obligations we had under this contract. From that point of view, the amount of placement under K was driven by two aspects. One, risk aspects, but also very clearly reflecting on the balance those partners have accumulated with us over the last number of years. Okay, great. Thank you. The next question is from the line of Thomas Fossard with HSBC. Please go ahead. Yes, good morning, everyone. I've got two questions on your solvency ratio of 270% at the end of Q2. So Clement, I would be interested to better understand the drivers of it, and maybe if you could comment on the evolution of the SCR since the start of the year, seeing that you reported at the full-year 2022, you reported almost EUR 7 billion. That would be the first question. The first question related to this one is, with 270, which I think is close to historical high, so let's see, 2 ratio reported. What, what's your thinking? What's your thinking if you were to be at, let's say, 270 at the end of the year? Thank you. Yes, Thomas. On the drivers of the solvency II ratio, Q2 stand alone, I think that's twofold. It's mainly really the decrease in SCR, whereas own funds remain stable in this quarter. As for the own funds, the strong operating capital generation compensated the hybrid bond redemption. And in addition, I should mention that we do not accrue foreseeable dividend on a quarterly basis, so that will only be included later in the year. There's a bit of a, a, a tailwind on the, on the own funds there. And the decrease in SCR is in the second quarter, at least, driven by higher interest rates, and also by the positive development of the in-force management actions in the U.S. There's a, a positive SCR effect overall. Also in the first quarter, we had some reduction of the SCR when it comes to exposure in terms of cyber, including our retro coverage. That was an impact that we all have already seen in Q1, though. Those are really the main drivers. Again, for, for some reason, we, we do believe that number is very strong and very stable, but that will diminish over the course of the year, but it will remain a very strong number. I don't have a number to hand, what is our forecast for year-end, but that, that, that will be a lower number. But as you know, the, there are other capital regimes, as you know, particularly on the S&P side, which we then look at at year-end. Next question is from the line of Freya Kong with Bank of America. Please go ahead. Hi, good morning. I'm sorry if I missed it on the call. Your, your buffer rebuild guidance implies EUR 300 million-EUR 400 million of rebuild for the full year. Can you confirm that you're on track with this? Maybe EUR 150 million-EUR 200 million done, and is there any willingness to go beyond this, above the EUR 1.7 billion if the year shapes up okay? Also, why aren't you counting the net benefit from discounting accretion as part of this rebuild? Why didn't you accelerate the rebuild to get to a 91% or 92% combined ratio for Q2? Secondly, could you maybe explain again, possibly the seasonality between your growth and your net revenues on a quarterly basis, just so we can model it better? Thanks. Yes, Freya. On the buffer rebuild to sort of EUR 300 million-EUR 400 million, I mean, we don't do a reserve study, as you know, during the year, it's not an academic exercise, my best guess would really be that we are well on track for the first half-year to rebuild that. Are we going, are we going beyond this? I would really want to wait for Q3 and for Q4 to see where we are. That, that's really something we would look at at year-end. When it comes to the discounting impact, we really keep this separate or let's say, on top, and it does explain some of the difference between the reported combined ratio and... Target combined ratio, because again, we've, we've kept this in the, in the liabilities. The reason is really that we don't see this, as you know, as a, as a buffer that will remain. I mean, of course, the higher interest rate will come back in later periods, so we do expect already in 2024 and 2025, higher interest accretion than we see as discounting impacts, and this buffer is really just temporarily to, to cover some of that. That's just the way we view these two, two elements. The next question is from the line of Philip Ross with Exane BNP Paribas. Please go ahead. Hi, good morning. The first one is just a clarification, please, on the P&C re experience variance, the EUR 506 million. Did you say that that included the benefit on large losses on net? I couldn't quite follow whether the budget was booked in this number or whether it was booked elsewhere. Then secondly, just on Bermuda corporate taxation. Appreciate it's an emerging issue, but can you remind us how much business you book in Bermuda? Maybe is there anything you can say on the potential impact on the introduction of a corporate tax rate there? Thank you. Philip, on the... I hope I got the question right, but then you just have to help me. On the large loss budget, what we do is, we keep our reserves at budget level, so we have an underutilization of roughly EUR 150 million, and we book that on a gross basis. That's included in the combined ratio. That has impacted our combined ratio, if you like, negatively. We do not take advantage of any retro coverage that would probably come along, of course, with these large losses, so there is some prudency built into that. On Bermuda, I mean, yes, I mean, we've, we've been expecting this development. We've been watching this. I mean, you also have the German tax regime, therefore, there's some interaction there as well. That's on our radar. We, we are looking into this and really too early to say what, what impact that would have. Of course, there is some, some tax implications, but again, we are, we are looking in detail into this. Thanks for that. I'm sorry, the, the P&C re-experience variance, large loss question was just about whether the large loss budget was accounted for in the minus EUR 506 on slide seven, on the reinsurance service result walk. Okay. Now I get it. No, that's really- Sorry. The, the, the P&C re, the variance there, that's mainly really due to the fact, that's really an estimate update on the, on the retro side. That's mainly a retro impact, and it's mainly due to the fact that our, the way we look at the retro in the first half of the year is rather a bit front-loaded. I briefly mentioned the effects on. We bought more retro than expected. That is to some extent in there. It's not only a premium impact, it's also a claims impact. We've bought more retro, so the premium, the retro premium, is higher than we initially expected, but at the same time, we have more prudency in the way we have looked at expected claims. The first impact I just mentioned, you know, not allowing for any benefit from the retro from, the large loss buffer reserving. On top of that, in general, our retro costs are a bit more front-loaded in the first and second quarter. That number will come down over the course of the year. Okay, understood. Thanks very much, Clemens. I've just, I've just noticed, I think there was a question from Freya on the on the revenue in P&C. Freya, I hope I, I got the question right, but I, I, I didn't answer it yet. The, the decrease in revenue in Q2 versus Q1 is to some extent driven by the exposure-based pattern for the release of expected claims into revenue. You know, the IFRS 17 concept is very much about the, the exposure pattern and how that will release into revenue. We've seen more revenue in Q1, given the high exposure that we observed. We will also see higher revenue in Q3. There are some seasonal effects in the revenue. However, this does not change our growth expectation for the full year, and as you know, we are looking to grow the reinsurance revenue by at least 5% for the full year. The currency-adjusted growth in reinsurance revenue should again be stronger in P&C than in Life & Health, just to be clear. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star and one on your telephone. One moment for the next question, please. So far, there are no further questions, and I hand back to Jean-Jacques Henchoz for closing comments. Well, thank you very much. I think we covered the ground very well, and wanted to convey the message that we're very pleased with the performance to date across all business groups. Obviously, the P&C renewal momentum, the normalization of the mortality business due to the end of the COVID period, and the interest rate environment create a context where we're very confident about the full year results. You've seen that we have built in quite some conservatism in our assumptions. We want to make sure that we can hit all our targets, but as of today, we can say that the confidence level on reaching or exceeding these targets has increased, and I think the earning power for not only 2023 but also beyond is increasing, including our dividend capacity. On that note, thank you very much again for joining, and we can close today's call. Ladies and gentlemen, the conference is now concluded, and you may disconnect. Thank you very much for joining, and have a pleasant day. Goodbye.