Good day, welcome to the Munich Re analysts and investors call on annual results and January renewals. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Becker-Hussong. Please go ahead, sir. Yeah, thank you very much. Good afternoon, everyone. Welcome to our call on our full year 2020 earnings release, including 1/1 renewals and the outlook for 2021. I have the pleasure to be here with Joachim Wenning, our CEO, and Christoph Jurecka, our CFO. Both gentlemen will kick it off with their statements. Afterwards, we will go right into Q&A, and we have ample opportunity to answer your questions. I suggest, Joachim, the floor is yours. Thank you very much, Christian. Good afternoon everybody out there. Thanks for joining this conference. As said, Christoph and I would like to report the final figures 2020, the outlook 2021, and again, highlight one or the other essentials of our Ambition, 2025. To start with, the corona pandemic has had, no doubt, a decisive impact on 2020. Also, without any doubt, in the absence of corona, today, we would have celebrated an excellent business result. Despite COVID-related losses of around EUR 3.5 billion, we closed the year with a profit of EUR 1.2 billion. Despite the very material COVID-19 losses, despite the further drop in interest rates, and despite significant business growth also requiring capital, of course, we closed the year with a solvency ratio of 208% in the upper quarter of our optimal range that you know. Subject to the approval of the AGM later in April, we will pay a dividend of EUR 9.80 per share, unchanged from the previous year. We, as you know, have been keeping our dividend promise now for more than 50 years, even in challenging years, without any one exception to date. We don't want to change that. Looking back, we have delivered on our midterm Ambition 2020, and also successfully mastered the three-year period, 2018, 2019, 2020. I may add, despite quite some challenges in that period, like falling interest rates, above average large losses, and barely any significant tailwind from the P&C rate cycle, because P&C rates really only started going up more broadly since last year, only in 2020. Overall, our success was driven by good growth and good earnings and reinsurance, the turnaround of ERGO, and savings. Every year, if you look on slide five, every year we report on how natural catastrophes are developing. In our most recent report on the year 2020, we again highlighted that climate change is coming with ever higher costs. Weather-related natural catastrophes become more frequent and more severe. In this context, we are a proven partner of our clients with expertise and, in many cases, large or even very large insurance capacities. The message that we would like to add again now, today, is that in addition to all that, with our climate ambition announced two months ago, we are also committing ourselves to targets in line with the Paris Agreement. Our targets are science-based. They are very concrete, they are binding, and they are measurable. Just to recall, we are committed to net zero without exception in all areas. Firstly, on the investment side. Not only net zero in 2050, we commit to five-year milestones. The next one in 2025, we will have reduced our carbon footprint by at least 25%, maybe slightly below 30%. Secondly, that ambition is the same on the liability side, net zero by 2050. Of course, but we will be out of thermal coal business already by 2040, and that business footprint we will already reduce by 35% points in the five years to come. Also, with regard to oil and gas, we start reducing that footprint by 5%. At a lower pace, because systemically, these energy sources are still very important as science suggests. You will see, we will be out of the business with explorers and producers of fossil energies at the latest by the point in time when science suggests that those fossil energies are no longer compatible with Paris 2050. We hope that this good example is a good example for other industries and companies to follow for the sake of climate change or climate protection. Thirdly, of course, we also have a net zero ambition with regard to our own emissions from buildings and from traveling, et cetera. We have reduced that dramatically already the last 10 years by little less than 50% CO2 emission per person. We're going to reduce it by another 12% in the five years to come. We will be net zero by 2030. Let's move on. A systemic risk like COVID-19 poses many challenges to risk management, of course, because too much of this risk can be poison and undigestible, but also to business continuity. With regard to both aspects, we can be very satisfied with how we have dealt with the pandemic. Although the COVID-19 losses are material for the whole industry, including ourselves, they are well manageable, and they are digestible. At no point they have weakened our capital strengths, so that not only we pay a dividend, but also benefit from current growth opportunities. Let me move on to the 1/1 renewal in reinsurance. We have taken the opportunity of the hardening market to grow further in P&C. Prices have increased, as you know, risk adjusted, so margin improving by 2.4%. In 2020 and in 2019, January renewals, those rate increases were then only 1.2% or 0%. You see the trend increase in the rate development. We've seen the strongest increase in the Property XL business, so non-proportional Property business, as well as in particularly loss-affected businesses. In these areas, often double-digit, and in some cases with very large capacities, deeply into double-digit increases. In all other areas, I would say across the board, single-digit rate increases. As planned, we seized this opportunity and were able to expand our business by 10.9% in terms of premiums, so that we can say we are really pleased with a really good renewal, which fully supports the target combined ratio as we have communicated it for this year, 2021. If you allow me, the outlook for the 1/4 renewal and the 1/7 renewal this year should be even better because those renewals typically are Nat Cat heavier. We will see when we come there. Slide eight shows the regions and the lines of businesses and how they have seen rate changes and how we could leverage these rate changes for business growth. I think what becomes obvious is that in no region and in no line of business have we seen any rate deteriorations. This is different from previous years, and to us, this is another good sign of markets hardening. With regard to investments, Christoph is going to give you some more details in a moment. However, I'd like to just take this opportunity to reiterate that not only was the 2020 investment result very pleasing with a return on investment of 3% and in difficult years with ups and downs. Also, I'd like to reiterate that the investment strategy in place has the power to partially counterbalance the yield erosion, which is the consequence of declining interest rates, while we are not increasing our appetite for market risk. All in all, the path we took three years ago has had a very positive impact on our total shareholder return. In the three years since 2018, the TSR has increased by more than 50%, and compared to our peers, this was first best. We will work hard that the five years ahead of us will hopefully look similarly positive. Then you have the slides 11, 12, and 13 in your deck, which are a repetition, if you like, from our Investor Day presentation last December. What they are saying, in summary, is that this year, 2021, the expectation of delivering a EUR 2.8 billion result means that we will be already back at the pre-corona earnings level this year. We will maintain our capital strength. We have strengthened the growth elements of the proven strategies at ERGO and in reinsurance. As a consequence, we expect growing earnings and returns on capital on equity of 12%-14%, and we aim for an average annual dividend growth per share of at least 5%. With this introduction, I'd like to hand over to Christoph Thank you, Joachim. First of all, welcome also from my side. It is a pleasure really to lead you through the financial update today. Let us start actually with the financial results 2020 on page 15. We are very pleased, Joachim mentioned it, I think already, we are very pleased with the 2020 financial performance considering the severe impact of the COVID-19 pandemic. Our IFRS result, EUR 1.2 billion, would have met our guidance if adjusted for COVID-19. If you look at the drivers in reinsurance, we digested COVID losses of EUR 3.4 billion pre-tax, and delivered ongoing profitable growth of around 10%, both in P&C as well as Life and Health. ERGO successfully concluded the five-year strategy program with a net profit of EUR 517 million, which is quite close to the guidance, EUR 530. Adjusted for COVID, I think it is fair to say that ERGO would have exceeded the guidance. The economic capitalization remains strong, 208%. With that Solvency II ratio, which is after the deduction of the dividend, we are still close to the upper end of our optimal range, and we are very comfortable on that level. Local GAAP, HGB, German GAAP. Here, we see an increase in the earnings also compared to last year, largely driven by one-offs. To remind you, very obviously, local GAAP accounting in Germany is differing a lot from the IFRS rule. We are all used to having differences between IFRS and local GAAP. These differences have been negative in quite some years in the past. This year it's the opposite. Nothing else to mention here, I think. On page 16, you see the COVID-19 impact in some more detail. I think what you see here is that we almost fully confirm the guidance we had given back in December. The provision for 2020 increased only marginally, and also the expectations for 2021 are largely unchanged as well. We are confident that we are solidly reserved. Of course, we can only monitor the situation closely since there remains a high level of uncertainty in all these estimates. Going into a little bit more detail, P&C. The loss estimate of EUR 3.1 billion overall is sufficiently prudent. On top of that, at the end of 2020, only 22% of this amount are losses reported to us by cedents. Of the total 78% of IBNR, a significant portion has not yet been assigned to a specific loss or a specific contract. This indicates, on one hand side, the high degree of uncertainty that exists in the estimates, but then also the degree to which we have built large provisions for losses, even where we do not know exactly already then and where they will eventually be reported to us. I think another signal of prudence here. Referring to Life and Health, we are strongly provisioned for 2020 claims as well, including also prudent IBNRs for claims incurred in 2020 but not yet reported. The IBNR makes up approximately half of our booked losses for 2020. Our projection of claims costs for 2021 anticipated a strong winter surge in cases, with an improvement starting late in Q1 driven by the rollout of the vaccines. While the level of the winter surge in cases in the United States, in the U.K., and also in some other countries, are higher than what we anticipated, whether or not this ultimately will translate into higher full-year costs than anticipated, this is still very much dependent on how the pandemic will develop over the course of 2021, and there particularly, of course, in the United States. Let's have a look at the Q4 figures on page 17. Q4 is actually really fully in line with the guidance, so I think we can be very quick here. Reinsurance contributed EUR 75 million, ERGO EUR 136 million to the overall EUR 212 million net result. ERGO, once again, posted a strong result in that quarter despite the COVID-19 impact. On the reinsurance side, we benefited from a favorable major loss experience apart from COVID-19. At the normalized combined ratio, a very nice signal of the very good underlying profitability of our book was 96.6%. To some extent, lower than the 97%, which was a full-year guidance. In Life and Health Re, we continue to see elevated mortality in the context of COVID-19. Related to that, we established an IBNR to cope with reporting lags, but also in the field of living benefit covers. In addition, we observed a further negative experience in the U.S. that goes beyond COVID-19. We must say there's evidence that at least a significant share of this can also be associated then indirectly with COVID-19. There was a single large claim in Asia in Q4, which also influenced the result. Fee income business continued to deliver pleasing contributions like it did already for a large number of quarters. The investment result, 3.3%, was above the full-year guidance and driven by realizations to offset derivative losses. Next page is a quick reminder on the ROE. As you know, we discussed it in December. We introduced the return on equity now as a key performance indicator throughout our group. This slide now shows the number at year-end, nothing more than that. The group ROE came in at 5.3%, which is below our current cost of capital. If we adjusted it for COVID-19 effects, the normalized ROE would have been around 12%. Let's have a closer look at our investment result, page 19, which fully met the guidance of 3% for the year. Starting with the regular income. The attrition of 30 basis points was unusually high. Of course, affected by COVID-19 and the de-risking of our portfolio we did in that context. Specifically, we recorded lower income from public and private equity investments. On top of that, of course, the even lower interest rate levels also hurt us here. Going forward, we turn to an expectation for a negative attrition of around 10 basis points, in line with the former guidance. The unrealized gains increased up to a level of now EUR 37 billion. In that context, I think we discussed at various times, it's a normal course of things that reserves get realized anyway in the course of the normal portfolio management activities. On top of that, some reserves have been realized for compensating losses on derivatives for hedging. Also, to compensate some write-downs we had, especially in the first quarter. Also as usual for the financing of the so-called ZZR, so the additional interest rate reserve we build up in our German primary life businesses to prepare them for an ongoing low interest rate environment. All in all, in the very volatile year we saw in 2020, we are pleased with the investment income, also with the overall development of the portfolio and the stable outcome of the activities here. The next two slides cover ERGO now. ERGO fully met its net income target if we would take out the COVID-19 impact. I think that's another year with very good news on the ERGO result. The premium volume was almost stable. There was some pressure due to COVID-19 in some lines, especially travel, which is shown here as part of the Life and Health segment. On the other hand, P&C Germany was growing very nicely in the retail and commercial lines. We don't have any market figures yet, but we are convinced that this growth is above market, and therefore, ERGO was also possible to increase its market share in Germany. Internationally, the volume is stable, but as you know, we sold a number of companies last year. The stable development means that the companies which we want to grow, that they're delivering nice growth. Net result was supported by all segments, which is very pleasing. In particular, the international business posted strong results. The combined ratio in international came in at 92.7%, which is an excellent number given that the target was 94%. In Germany, the combined ratio remained on the very good level, which we had last year already. 92.4% in 2020 is also a very good outcome. On the next slide, what you can see here is a collection of key performance indicators of the ERGO Strategy Program over the last five years. What you see here is that ERGO has completed the Strategy Program, delivering on its financial targets without any exception across the whole five-year period. Not only financially, but also operationally, ERGO has successfully finished the ERGO Strategy Program and regained a competitive position in Germany by establishing the so-called hybrid operating model across all distribution channels. Internationally, the portfolio has been optimized, as mentioned before, and also there, ERGO is in a much better shape now than it was five years ago. If you look at that, I think it's clear that ERGO now did an important step and is well prepared for the next step of our strategy, which we presented already in December to you. On page 22, reinsurance. First of all, in P&C reinsurance, we show significant organic growth in almost all lines of business, taking advantage of the hardening markets and also of new business opportunities. Also, our Life and Health business expanded by around EUR 1 billion across all core markets. The bottom line results though, substantially declined, this is due to COVID-19 related losses. In P&C, these losses were to some extent mitigated by low average and low Nat Cat losses, which came in below our budget, both for Q4 as well as for the full year. The underlying profitability improved significantly over the last year. We show a normalized combined ratio just below 97% for the full year, as I said, the last quarter was even better than that. Given the pleasing outcome, Joachim was commenting on that of the January renewals, we are very optimistic that this trend will persist. The Life and Health reinsurance technical result, including fee income, fell also short of a full year ambition. Again, this was exclusively owing, or nearly exclusively owing to the impact of COVID-19 mortality claims, then also some related trends, as mentioned before. We had strong results in other geographies outside of the U.S., also strong at increasing fee income, which strengthened the underlying profitability of our life and health book. Adjusted for COVID-19, we continue to see a gradually increasing earnings path in Life and Health. On page 23, just a snapshot on our risk solutions business, which also had a very pleasing development, with strong business growth and a combined ratio improvement of almost four percentage points compared to prior year. We benefited from better market conditions and also expanded our footprint, substantially across all units. As you can see, and that's also something we, I think, commented on a lot already in December. Risk solutions remains a growing and profitable segment and a key part of our strategy going forward. Yeah, we will just continue to organically grow this business. Turning to reserving on page 24. I think the first item on the list here, COVID-19, I think everything has been said already before. Also on asbestos, there's nothing I would like to comment other than that we are very safely being reserved here, and reserves continue to be at a strong level. Therefore, I'd like to concentrate my comments on the slide here on U.S. casualty. As you all know, the U.S. casualty loss trend is a topic that continues to affect the whole insurance industry at the moment, and we are also seeing adverse loss developments in our U.S. book. We have to distinguish, though, between different areas. We have observed adverse development, in particular in the U.S. commercial liability lines, and strengthened our reserves here again in 2020. On the other hand, areas such, for example, the personal lines business, have shown a much more favorable development. From much broader perspective, again, our book overall continued to have a very pleasing and positive reserve development. The pockets where we had to strengthen the reserves are not visible overall, as the ongoing reserve releases continue to be above our guidance of 4% with 4.2%, particularly this year, fully in line with our expectation and despite the challenging environment. Our reserve strength is unchanged compared to prior years. As you can see on page 25, our Solvency II ratio decreased to 208% due to various drivers. First of all, we grew our book significantly over the last year, growth means deploying capital. On top of that, of course, COVID-19 and related capital market effects most prominently the lower interest rate also left its mark, with negative economic earnings. Also what we saw, and I'll comment on that on the next slide, is an increase in required capital. It's important to notice that the 208% Solvency II ratio already includes the deduction of the dividend of 7 percentage points. I think at this point, I traditionally remind you of our conservative way of calculating the Solvency II ratio. I would just like to repeat that again today. We have not included any transitional measures in our numbers here. We also do not use the dynamic volatility adjustment, and even the static volatility adjustment is only used for a very small number of subsidiaries in our group. Despite this conservative calculation, our ratio is still close to the upper end of the self-defined optimal range. As said already at the beginning of my presentation, we feel very comfortable with that level. More details on the sources of economic earnings will be provided with the release of our annual report on March 17th. On the solvency capital requirement, I can release some more details already today, this is done on page 26. What you see here is an increase of the Solvency II capital requirement from EUR 17.5 to EUR 19.2 billion. What are the drivers? In P&C, the SCR increase is mainly growth-driven, while in Life and Health, it's also growth, but mainly the result of the lower interest rates. On the investment risk side, so market and credit risk, we have diversified our book further, and we partially de-risked also the portfolio. Still, the SCR went up. Mostly by the decline of the interest rates and also by higher risk charges, which we applied considering the elevated volatility in the capital markets, especially in the first half of the year. Overall, we maintained the balance between insurance and investment risks, which is important to us, and continue to see that as a very healthy balance, as shown on page 26. Last but not least, on my page 27, a few comments on German GAAP. The German GAAP result of EUR 3.2 billion came in much higher than the IFRS result. As said before, this is due to the differences we have between the two accounting standards, which lead to timing variations with respect to the recognition of earnings in the P&L. In 2020, this was mainly due to high dividends from subsidiaries into some real estate transactions within our group. Once again, of course, also due to the requirement to build up the equalization reserves in our German GAAP accounts, as you can see on the right-hand side of the slide. There's one point on that slide I would like to particularly emphasize. The very high level of distributable earnings we show here now with EUR 4.3 billion will not lead to higher capital repatriation over and above the plans and the capital repatriation strategy we discussed at our Investor Day. You should interpret it as a strong basis to fund the growing dividends and to support our opportunistic approach to share buybacks in the future. With that, I'm at the end of my presentation. Thank you very much for your attention. I'm looking forward to your questions. Back to you, Christian. Yeah. Thank you, gentlemen, for your statements. We are now ready to go into Q&A. Just one usual housekeeping remark, please limit the number of your questions to a maximum of two per person. Please, go ahead. Thank you. And if you wish to queue for a question, please signal by pressing star one on your telephone keypad. Again, that is star one to queue for a question. We will now take our first question from Kamran Hossain of RBC. Please go ahead. Hi. Afternoon. Yeah, my two questions. The first one is on P&C Re. The expense ratio there looks to have reduced about 3 points year-on-year. How much of this is permanent or is this less COVID spend? I guess looking forward, should greater operational leverage from growing at the 1/1 renewals and further growth to come in later years improve this further? The second question is on Life Re. Given how U.S. mortality has increased pretty substantially even since your December guidance, are you still comfortable with the EUR 400 million life target? Thank you. Kamran, good afternoon. Christoph here. I'm going to take both of your questions. Expense ratio development, there are some one-off elements in there. As we, for example, released some provisions also in Q4. Fundamentally, a major driver is growth here. As we have been growing our book quite significantly and continue to do so, I think there is continued pressure also on the expense ratio going forward, despite the fact that some of the one-offs will not repeat themselves again this year. On the Life and Health Re side, U.S. mortality. Indeed, the winter spike was probably a little bit higher in the first couple of weeks of this year than what we had in our mind when we came up with the estimate in December. However, this is a long year ahead of us, and therefore, I think it would be by far too early to say that our guidance would no longer be the right one. Maybe the risk is a little bit higher that we will not achieve the target. But the guidance is what it is, and it is unchanged. That's brilliant. Thanks very much. We'll take our next question from Andrew Ritchie of Autonomous. Please go ahead. Hi there. First one, I don't normally ask about top line for non-life, but I'm going to ask this time. At the Investor Day in December, you gave a 2021 premium number for P&C Re, including risk solutions of EUR 24.6 billion of GWP, which was anticipated to be a growth on 2020. It turns out 2020 ended at that number, so it looks like it ended stronger than expected. Therefore, is your expectation still a flat GWP over the course of full year 2021? I appreciate there's currency effects and possibly COVID-19 effects, but maybe if you just update, or was there something funny about Q4 and P&C which inflated the premium? The second question, could you just remind us what your sort of approach or view is on U.S. casualty? I think looking at slide 83, which allows for renewals. You have kept your U.S. casualty book essentially flat year-on-year. Is that the case? Am I right to interpret you're not entirely comfortable yet growing that business, mindful of loss cost issues? Thanks. Hi, Andrew. This is Joachim. Let me give you the answer on the premium expectations of the premium outlook. Frankly, we don't pay so much attention to our premium planning because we don't steer premiums. It's just a number that comes out at the end when we do the accounts. We do the economic steering, we do IFRS steering, and there we apply quite some accuracy. We do not care so much for premium. That doesn't give you a precise answer, but it just means, yes, the outlook that we talked about in December may, in the meantime, tend to be at the lower end. We should end up higher. Yeah, Andrew, U.S. casualty, I'm happy to take that. I think you were referring to page 83, and you're right, the book is stable. You're rightly saying that we are not significantly growing the book. I would even go beyond that. What we had in the 1/1 renewal is also a shift in our casualty book from XL, from the excess of loss treaties, to proportional treaties. Further reducing the amount of excess of loss treaties we are having and then increasing the share of proportional, which also gives us more confidence going forward. Yes, indeed, we continue to be cautious in that segment. Okay, thanks. We'll take our next question from Vikram Gandhi of Société Générale. Please go ahead. Hi, it's Vikram Gandhi. Just a couple of quick questions. One is on P&C Re. I noticed the attritional loss ratio for the full year has actually increased by a full percentage point. Just wondered what could explain this. Secondly, it's on the expense ratio, and you've kind of partly answered it in one of the previous questions, whether you had a one-off in Q4. For Q4 specifically, we are used to seeing a bump up in the expense ratio, generally due to sliding scale commission adjustments. I wonder if there's any other specific driver this time around, and whether this is the sort of new pattern that we should be expecting going forward. Thank you. Yeah. Christoph again. Well, thank you for the question first. I'll start with the second one, Q4 expenses. I think I was mentioning before already that we were able to release some provisions also, so cost provisions. We did specifically do so in the fourth quarter. That might already be the explanation you're looking for. On the attritional loss ratio, I think a couple of statements here. First of all, business mix always plays a role. It's not that simple to compare just the nominal values against each other. On top of that, as you know, we are always taking conservative loss picks in the current year, which we also did again this year. If you look at our triangle, where we have two years with negative runoff, we might have felt inclined to even be more conservative than traditionally in the current year. Maybe that also plays a role when you look at that number. There's not a single reason for that. Yes, your observation is right. Okay. Thank you. We'll take our next question from Vinit Malhotra of Mediobanca. Please go ahead. Yes, good afternoon. Thank you. My questions, the first one would be on risk solutions, please. The 96.8%, I think the medium term plan, or at least at some point in yesterday plan, was to get to 92% for this part of the business. My question is that, is this 97% sort of consistent with the planning? Could you remind us how the walk should be? As we know, this is not really the pure commercial lines exposed book. That is the first topic, risk solutions. Second topic is, apologies just for going back to U.S. liability, where I understand obviously you've taken conservative reserving. Just if I look at slide 76 of the pack of the renewals, the biggest line is proportional casualty, and you mentioned you have increased in it. Do you mind, is this more into Europe? Could you also please clarify, you said that you were careful about U.S. commercial liability, but not sure about personal lines. Could you please clarify a bit more on the U.S. casualty, please? Thank you very much. Yeah. Okay. Let's maybe start with U.S. casualty then. Sorry for the very general answer, we are always cautious where we do not see attractive enough prices in the market. This is very often the case in the commercial space, and sometimes also the case in the personal space. Generally spoken, the personal lines business is less affected by social inflation and all these trends, and therefore, we are generally more confident in this personal space. The other statement is, I think that we generally feel more comfortable in the casualty area with the proportional treaties. That's why we also shifted exposure from XL to proportional in the renewal here. That's also one of the reasons here, and this is what you can also see on slide 76 you're referring to, where you see a positive volume change in proportional and at the same time, a reduction in XL. If you look at the order of magnitude, often a proportional treaty just has higher premium volumes because you participate also in the premiums of the primary insurer, whereas the XL premiums are pure risk premiums, and the nominal value sometimes tends to be much lower. You always have to keep that in mind when you look at volume changes, going up in proportional and going down in XL. The absolute numbers sometimes differ quite a lot. I think that's the whole story, really. Nothing else to be reported here, and we continue to be cautious. We took decisive action on the reserving side. Maybe last remark also on reserving. We reserve the business relying on our own assessment. We do not take the picks from our clients, the last picks, and then their expectation, but really do it in our own way and well, looked at the business as prudent as always. On the other hand, of course, it was another year where we had to take some action at certain pockets of our casualty books. Clearly, we are not happy with that. The other question, risk solutions. I think two answers to that. First of all, also our risk solution business was quite heavily affected by CAT events. Whereas on our overall business, we came in below our CAT budgets. For risk solutions, and particularly in the U.S., we exceeded the budget quite significantly. Therefore, the 96.8% this year was also still driven by above-average CAT exposure. Therefore, I would say it's a journey down to lower numbers. Obviously, also that business, despite being more stable, has some volatility in it. In this year 2020, the CAT experience was not great in risk solutions. Also, we will see rate increases, going forward on that book, of course. It's a journey down to that target level of 92%. Thank you. We'll take our next question from Thomas Fossard of HSBC. Please go ahead. Yes, good afternoon. I've got two questions. The first one would be relating to your pricing of 2.5% positive in the 1/1 renewals. Could you explain to us a bit how you've taken positive original rate momentum in your proportional book? How has it been factored in your 2.5%? What is the claims inflation and maybe the model changes also that you have factored in? To phrase the question differently, you're reporting 2.5%, which seems to be the less positive pricing momentum of the European peers. I guess that you believe that you had very strong renewals. Maybe if you could give us a bit of granularities around the 2.5%, just to make us understand why these are very strong economic renewals. The second question would be related to your local GAAP number. You highlighted EUR 800 million of additional equalization reserves increase in 2020. What's going to be the incremental number that we have to expect in the coming years, given, I guess that due to COVID, maybe some of your equalization reserves have been depleted? What would the run rate be beyond 2020? Thank you. Yeah. Thomas, thank you for the question. Starting with the 2.4% price increase. I think I have to talk a little bit about methodology now. I think that the very general high-level remark would be the 2.4% is a number we would fully expect to be earned through in our combined ratio over time going forward. This means this number includes not only claims inflation effects, but also changed business mix effects, for example. This number includes, for example, if you have different growth numbers in different lines. It includes also if you have XL contracts versus proportional contracts. That's all included. Also included claims inflation, not only on our level, but with proportional treaties, of course, also the underlying business. Again, as I said before, on the reserving side, based on our own assessment and not just by what we hear from our clients. It's really our own best estimate what we think claims inflation will be. Trends like social inflation or all these nice little events which led to higher reserves this year on the liability side. All these kind of things are fully included as claims inflation in the pricing assessment as well as model changes or our most recent expectation, let's call it that way, on the property side and on the CAT side. It's to the best of our knowledge, our best estimate expectation on the claims side, and that's fully deducted, mixed effects, fully deducted. What remains is the best estimate, what we think will be fully earned through in the combined ratio. HGB. Sorry, I thought I covered it already, but I was taken away by the methodology, sorry. HGB, yes, equalization reserve. There is every year a theoretical maximum number, which in German is called the so-called Sollbetrag. This is the number where you would end if each individual line would be filled up to the maximum possible in that reserve, which is an unrealistic scenario, because it would mean over many, many years, all the lines are outperforming, and you have to fill it out every single year. The Sollbetrag is also very much growth driven because it's premium proportional. If you grow your book, the Sollbetrag also goes up. Currently, the Sollbetrag is still a mid-single-digit billion number above our current level. Then it has, of course, not to be filled up in a single year, but it will be distributed over time. Having said that, the expectation needs to be that the contributions of equal size, not unrealistic going forward. Everything else is really hard to predict because the formula and the way to calculate it is not only very complex, it's also sometimes counterintuitive what happens there. Therefore, it's really hard to predict sometimes. I would not be surprised to have similar orders of magnitude in the next couple of years to be built up. Thank you. We'll take our next question from Michael Haid of Commerzbank. Please go ahead. Thank you very much. Good afternoon. Two questions from my side. First, on Nat Cat. One of your competitors materially reduced its exposure to secondary perils such as hailstorms, wildfires, mid-sized storms, and so on, and thus reduced the exposure to frequency as they think that these risks in times of climate change are not adequately priced yet. How comfortable are you with this lower layer on secondary perils, unmodeled risks? Second question on [Nat Cat] 3. You mentioned that higher mortality during the course of 2021 may not necessarily increase or lead to higher losses. Can you explain why this is the case? Do you have any mechanisms in place, reinsurance or whatever? Is your exposure just too small? First one. Let's start with the mortality question. I think the answer to the question is just very straightforward, that our reserve level is already quite high, a lot is covered already by the reserves. The second question, secondary perils, non-modeled Nat Cat risk and so on, and frequency risk and so on and so forth. I think the general answer is that, of course, we try to include in our models as much as possible. Of course, we are feeling much more comfortable as soon something is properly modeled in our risk models. Frequency risks and events not fully included in our models, I think we are careful and have been historically, and try to be a little bit reluctant in underwriting there. Okay. Thank you very much. We'll take our next question from Jochen Schmitt of Metzler. Please go ahead. Thank you. Good afternoon. I have one question regarding the dividend proposal. Could you just update us on your talks with the German regulator in recent months, and what are the key metrics they have been focusing on in Munich Re's case? That's my question. Okay. Yeah. I'm very happy to do so. As you can imagine, those discussions were quite intense. They took a lot of time and they were very constructive. The German regulator was already constructive last year. This did not change at all. Key metrics. Well, to be honest, it was a very holistic conversation we had. Similar, like in the call today, we are talking about economic view, IFRS, local GAAP, risk budgeting, SCR. Similarly, of course, also our regulator is interested in all these different perspectives. It was a very holistic discussion, more or less across all the different perspectives you could have on our company. Thank you. We'll take our next question from James Shuck of Citi. Please go ahead. Hi. Thank you. Good afternoon. Good morning. A couple of things from me. I just wanted to dwell a little bit on frequency benefits, which we tend to focus a little bit, perhaps too much on the primary side. The reinsurers, to some extent, I can understand on the proportional side, particularly on retail, that should be just a mechanical thing. Equally, just less economic activity and changes in societal behavior. How are you thinking about frequency benefits in 2021? I know you had your target combined ratio. Do you allow for any frequency benefits in there or would that come on top? I suppose the flip side of that is when you're setting loss picks, how are you thinking about potential supply chain disruption through COVID-19? Second question was on slide 53, which shows the life VaR. I think the VaR has gone up a little bit, but it's mainly market-driven and business growth driven. My question is really about, well, when you look at these, given your experience with COVID, particularly on the mortality and the morbidity side, when we think about long COVID, have you not reassessed your models and rise up with some of those VaRs or should you not do so? Thank you. Okay. First of all, frequency, and I understood your question in a way that you're talking about motor frequency, the benefits some primary players are primarily seeing when looking at their combined ratio development in 2020. I think the remark I can make here is that on the reinsurance side, we benefit to a much, much smaller extent, if at all, from that development. Why is that? In most of the treaties, sliding scale commissions are pretty common, and therefore the benefit would only sit at the primary insurer. We have some frequency benefits on the motor side at ERGO. Probably a little bit more in the international book because it has a higher portion in motor than in Germany, but probably also to some extent in Germany, as we also have some experience there that the frequency went down during the lockdown phases in Germany. Is it very significant? No, it's not. It's clearly overcompensated already at ERGO by higher claims due to COVID-19. The frequency effect is fully included in the quantification of the COVID-19 effect we gave you in the deck. It wasn't specifically just on motor. Is it not logical to think that a reinsurance company should benefit from frequency across all parts of the portfolio, commercial and retail, proportional and excess of loss? I think it depends really a little bit line by line and then also how the business is structured. I think the most obvious is really motor. Already on the fire side, I'm not so sure, really. As soon as people stay at home more, there might even be a risk of more fire claims. I don't think it's that straightforward. It's clearly not a trend which is so significant that we have been discussing it exhaustively here. Okay. Life VaR. The increase is indeed mostly interest rate driven, but that's for sure by far the more important driver than any consideration about long COVID-19 or morbidity or you name them, because it's just the much more important sensitivity on this value at risk. We are updating our models also on the life side quite regularly, with recent experience and with recent claims expectations. What we also have to say is, another maybe interesting and relevant question, so it's hard to find an answer right now is, if you look at the increased mortality right now, what's going to happen with mortality once this pandemic is over? Will we see a compensating reduced mortality going forward, or will it just fade away in a sense that we go back to normal, but without any offsetting effect? In that sense, I think from a biometric perspective, there are more open questions than just the question of long COVID. All of them are hard to really analyze and include in the models at this point in time, because we just lack data. In any case, the interest rate component is the much more material one in any way, for Life and Health risk for the slide you were referring to. Okay. Thank you very much, Christoph. We'll take our next question from Iain Pearce of Credit Suisse. Please go ahead. Hi. Thanks. Two from me, please. On the strengthening you took in 2018 and 2019 accident years. Is this sort of all U.S. liability related, mainly U.S. liability, or were there any other sort of problem areas where you had to strengthen? If so, could you provide some color around those? Secondly, I just had a question on the cyber book. We've seen some peers increase their loss ratios and seem to have deterioration on some recent underwriting years there as well. If you could just comment on your experience in cyber, that'd be useful. Thanks. Yeah. I'm very happy to do so. On the claims triangle, I think if you look into our releases over the last couple of years, what you will see is that a negative development in the first year is not fully unusual. We had that once in a while, the reason often was that we used the first year to further increase solvency in our reserves. There's an element of that this year also included in our triangle again. The other year, so the second negative year, this is clearly related to U.S. casualty. This is more or rather uncommon for us to have two years in a row with negative development. On the ERGO side, ERGO has some parts of its book where a clear allocation to years in the triangle is not easily possible, and therefore some COVID-19 experience of 2020 is also shown for technical reasons as negative run-off in 2019. This is clearly just, let's say, a very approximate presentation or a mispresentation of what's going on there. These have all been COVID-related. Without COVID, the ERGO run-off would have been positive. That's what I can say on the triangle, I think. On cyber, of course, we are aware that there has been a lot of talk around recent events in the cyber space. We do not observe to that extent. If at all, it would be maybe a loss ratio shift of maybe up to 5 percentage points or something for our book, which continues to be overall very profitable. Perfect. Thank you. We'll take our next question from Will Hardcastle of UBS. Please go ahead. Yes. Hi, guys. Couple of questions on SCR, if that's okay. We got the uplift for the P&C exposure growth. Presumably, that's incorporating the successful 1 Jan renewal. Is it already including similar exposure growth assumptions for later renewals? You mentioned, they're more Nat Cat heavy, but you're expecting higher prices. Just a sort of an idea as to what's incorporated within that uplift this time. The second component is, what do we need to see in the market for you to reduce these additional risk charges on the volatility side? Is there any way you can give us an indication of how much that SCR uplift was, perhaps year-on-year for these higher volatility charges specifically? The first question is simpler to answer, let's start with that one. We include in the SCR calculation business, which is already bound. This is true only for the 1/1 renewal business, if you have treaties but been signed. As this is not the case for 1/4 and 1/7, it's not included in the calculation. The additional risk charges, that's hard to say. Honestly, I'm not even sure if we did internally a separate calculation. Not changing anything in our book, just changing the risk charges and run the full stochastic calculation. I don't think we did do that. What we can say is that it made quite some role already in Q2. I'm not aware that it did intensify a lot over the remainder of the year. It was mostly in effect already visible in Q2. The order of magnitude, I'm sorry, I do not have any answers on that. Okay. Just to come back on the forward renewal expectation. Presumably, you've baked something in because there's a 12-month projection of a normal level of growth per se. Just trying to understand where that stacks up relative to the 11% volume growth from January? Well, it's hard to say today. It will depend on the volume and the outcome. I think here, a similar answer like on the Life and Health VaR before holds true. I think the interest rate is a much bigger driver to our SCR than the quotes which we might be able to achieve in 1/4 or 1/7. On the other hand, yes, of course, if we grow, it will mean additional capital deployment, and then we would also be very happy to do so. It's just the expectation that in a market phase like where we currently are, we will easily earn the cost of capital with the business we are writing right now. Absolutely. Okay, thanks. There are no further questions at this time. I would like to turn the conference back to our hosts. Thank you. Thanks to everyone for joining us this afternoon. A pleasure as always. If there are further questions, please don't hesitate to get in touch with the investor relations team. We very much hope to see you all soon again. Stay healthy. Bye-bye. Thank you. That concludes the call. Thank you for your participation. You may now disconnect.