A wonderful good morning, good afternoon, ladies and gentlemen. Welcome to the Munich Re Quarterly Statement as of June 30, 2024 Conference Call. My name is Francie, the conference call operator. I would like to remind you that all participants will be in a listen-only mode and that the conference is being recorded. The presentation will follow by a question and answer session. If you would like to ask a question, you can register at any time by pressing star and one. For operator assistance, please press star and zero. At this time, it is my pleasure to hand over to Christian Becker-Hussong. Please go ahead, sir. Thanks, Francie. Good morning, everyone, and a warm welcome to Munich Re's Q2 earnings call. We appreciate, today is a pretty busy day for most of you, as some of our peers have been releasing earnings as well. So many thanks for joining us this morning. Today's speakers, are our CEO, Joachim Wenning, and our CFO, Christoph Jurecka. Both will start with a presentation. Afterwards, there will be plenty of opportunity for Q&A, as always. And with that, I have the pleasure to hand it over to Joachim. Thank you very much, Christian. Hello, colleagues, at the other end of the line. After the first half of the year, we see strong performance across all lines of business. With a net result of EUR 3.8 billion, we are very well on track to our full-year target of EUR 5 billion. After such a pleasing second quarter, exceeding this target at the end of the year has become even more likely. In P&C Reinsurance, we continue to navigate in a favorable environment with highly attractive rates. Our Life and Health reinsurance business posted an excellent total technical result, almost achieving the full-year guidance just after six months. ERGO continues to be a very reliable earnings contributor for several years now. And finally, I'd like to add that we are also fully delivering on our non-financial targets. In terms of return on equity, we are well above the upper end of our targeted range of 14%-16%. So all in all, our ambition 2025 trajectory is based on really very sound underlying development across the board, but additionally, it benefits from an ongoing favorable market environment. And I'd like to say that even if the market dynamics should moderate at some later point, we will continue to deliver. By continuously expanding the earnings contribution of the less cyclical businesses like ERGO, Life and Health Reinsurance, and Global Specialty, we further diversify our earnings profile and facilitate increasing resilience of our overall earnings going forward. In the following, I'd like to summarize my key takeaways for each segment, as always, starting with core P&C Reinsurance. So for P&C Reinsurance, for the industry, less so for well-diversified Munich Re, I should add, the cycle outlook is, of course, of major interest. And here's my take. Looking at the factors that drive reinsurance rates, I cannot detect anything material that would point to a sudden end of the favorable market conditions. We see ongoing strong demand from cedants, which face higher capital requirements from exposure, inflation, and original business growth. Global insured Nat Cat losses are on the rise. Annual losses exceeding $100 billion seem to be nothing unusual anymore, and that's by far more than 50% more than the average losses that we saw in the last one to two decades. Trend going up. The reinsurance sector has struggled to earn its cost of capital in the last years. In four out of seven years, they couldn't, but their clients, the direct insurers, they could. On the supply side, we have not seen significant pressure so far. Honestly, on a net basis, there has been very limited inflow of new capital. Price discipline is high, and this also holds true for traditional capital. So let me come to the July renewals then. In line with the dynamics that I've just described, we posted a fully risk-adjusted rate increase of another 0.6% by actively managing our portfolio. At the same time, and this is important, we successfully defended the achievement, the achieved improvements in terms and conditions. In the July renewals, on the one hand, we selectively expanded our business with good risk-reward trade-off. This includes, for example, property proportional business, where we participated in rate increases of our cedants and seized new business opportunities. But this also holds true for Nat Cat business. There are still very attractive margins to be earned, but we had to remain selected, selective to safeguard profitability. On the other hand, we were as disciplined as ever in casualty lines. We heavily reduced exposures in proportional business, such as D&O business, general liability, and cyber business, where rate increases were not adequate to cover elevated inflation and or when clients failed to meet our requirements with respect to terms and conditions like cyber war exclusions. As a result, overall volume of our July renewal book decreased by more than 5%. In Global Specialty Insurance, you know that we have combined our specialty primary business to drive forward further expansion. Fueled by our strong franchise and value proposition in an attractive market environment, premiums are expected to grow by around 25% by the end of 2025 compared to year-end 2023, with attractive margins. Overall, our specialty insurance business is relatively less volatile over the cycle than our core P&C Reinsurance business, providing good earnings diversification. In more volatile lines, such as our North American specialty property business, we tightly manage our risk exposures, including through ceded reinsurance. Global Specialty Insurance has become an integral strategic part of the group's earnings contribution, we will separate it from P&C Reinsurance as its own segment in our financial report, report from next year, 2025 onwards. In Life and Health Reinsurance, earnings are developing even better than anticipated, as we have raised the underlying performance to a sustainably higher level. Ongoing strong new business growth has further increased the stock of contractual service margin, laying the foundations for reliable earnings delivery of more than and well ahead of EUR 1 billion in the coming years. This pleasing development is supported by the healthy state of our portfolio, which is reflected in a favorable biometric experience. With a total technical result of EUR 1.2 billion in the first half of this year, we have already come very close to our full year guidance. Let me come to ERGO, which has once more delivered a very pleasing performance. With a net result of more than EUR 500 million, ERGO is very well on track to meet its full year guidance. ERGO is consistently following its path of continuous growth in its core markets, rigid cost management and underwriting discipline, as well as digital leadership. I would like to say that going forward into 2025, there is even more earnings potential than the EUR 800 million annually. We are confident that ERGO management will get there step by step, as evidenced in the last years. In addition to benefiting from favorable insurance markets, we continue to enjoy tailwinds from capital markets. We are reinvesting new money at more than 4.5%, which will further increase the running yield. But we don't rest on the laurels of higher interest rates. For one, we defined levers to generate additional performance, such as being more rigorous in taking advantage of tactical opportunities. This has helped to accelerate the increase in running yield. Secondly, we are also mandating best-in-class external asset managers specialized in specific asset classes. The third source of active investment management is our steady expansion of alternative investments with a current share of 17%. I can summarize, Munich Re is in very good shape to further increase earnings. We have absolutely no constraints to deploy capital in an ongoing attractive market environment, but we will not do it for growth sake. As evidenced in the July renewals, we are leveraging our superior underwriting qualities to safeguard profitability and diversification, and we do not shy away from reducing volumes if necessary. At the same time, our shareholders participate via growing dividends and by share buybacks. The result can be seen in the leading total shareholder return against our peers. This brings me to my last slide and to the end of my presentation, concluding with the 2024 outlook, which is unchanged compared to our last announcement in May. Some of the KPIs, and I admit so, might look quite conservative from today's perspective, as we've already achieved 75% of our net income target. I agree, it looks quite conservative. No doubt, the likelihood of surpassing our financial targets in 2024 has even further increased.... Yet, we remain cautious and mindful of the hurricane season still ahead. With that, I'd like to hand it over to Christoph. Thank you, Joachim. Yeah, good morning, also from my side, a warm welcome. As always, I would like to give you some more color on our Q2 results, but without going through the slides, one by one. So just a few introductory remarks, basically. The story of the quarter itself is very straightforward. As you can see, our operating performance in all fields of insurance business continued to be very strong and has contributed to a really pleasing net income of EUR 1.6 billion. And with that, we made a further big step to achieve our, or even surpass our full year earnings guidance. If you then look into the Q2 earnings drivers in more detail, let's start with the investment result. There, despite having once more realized losses on fixed income investments to accelerate the upward trajectory of the regular income, we posted a solid investment return of 2.6%. This was supported by strong regular income of 4%, which benefited from ongoing high interest rates, but also from dividend seasonality. These effects were more pronounced in reinsurance, supporting its strong ROI of 3.1%, while ERGO, on the other hand, achieved a lower return of 2.2%, as increased interest rates led to negative fair value changes in fixed income investments and derivatives, particularly at ERGO. With a half-year group ROI of 3.2%, we are very well on track to deliver on our full-year guidance. Now, let's turn to the business fields, and there we start with reinsurance. The Life and Health business achieved a total technical result of EUR 617 million, again, well above the pro rata annual ambition. As in the first quarter, we continued to benefit from strong new business growth, overall positive experience, including positive mortality experience in the U.S., and a very pleasing development of our Fin Re business, which includes positive currency effects. As a result, after only six months, we have almost reached our full year guidance. Giving the underlying earnings potential, it is very likely that we will quite significantly exceed this guidance, if all goes according to plan. But please bear in mind that negative FX volatility or single large claims could lead to earnings somewhat below a best estimate run rate. In addition, as a result of some shift in business mix, the current CSM release is on a slightly lower trajectory, trending down from around 8%, as we guided before, now to closer to 7%. However, the further increased CSM level of now EUR 13.8 billion provides obviously an excellent basis to continue to support a strong total technical result also going forward. In Property- casualty Reinsurance, we posted a very good result with a combined ratio of 79.6%. Releases on basic loss reserves of 5 percentage points, as well as major claims of just above 14 percentage points, were in line with expectations. Even if not at the same exceptionally good level as in the previous quarter, the Q2 normalized combined ratio of 80.5% reflects an element of earn through of the improved margins and remains clearly below the full year guidance. The first two quarters benefited from a particularly benign current year basic loss development, while the expectation for the second half of the year is more balanced. For example, in terms of business mix, we will, to an increasing extent, earn the strong growth in proportional motor business due to underlying rate improvements, which comes with comparatively higher combined ratios. From today's perspective, it seems therefore reasonable to expect a higher normalized combined ratio in the second half of 2024. Nevertheless, the full year figure should end up better than our target level of 82%. In primary insurance, ERGO delivered a good net result of EUR 284 million in Q2, supported by countervailing net positive one-off effects. The German Life and Health business posted a very pleasing net result of EUR 119 million in Q2, supported by lower taxes and by temporarily lower project-related costs. Additionally, a small part of the first-time consolidation effect of Storebrand Health, a former 50% participation in a Norwegian health insurance company, which now is fully owned by ERGO, supports the Life and Health result, where the major part of this effect is accounted for in the international ERGO segment. The total technical result of PAA business or short-term business, improved from the low level in Q1, benefiting from tariff adjustments and lower claims in health as well as in travel. While the CSM release in life and the long-term health business was in line with expectations. In P&C Germany, the combined ratio of 88.4% in Q2 was affected by higher than expected major losses and loss assumption changes in motor business, while benefiting from positive seasonality of acquisition costs. Disposal losses in the fixed income investment portfolio, which accelerate the increase of the running yield, dampened the investment result. While the half-year tax ratio overall is more in line with expectations, an exceptionally high tax rate in Q2 finally led to a comparatively low Q2 net result for P&C Germany of EUR 19 million. The international business of ERGO continued the positive trend of profitable growth, with an extraordinarily strong net result of EUR 146 million, including the major part of the first time consolidation of Storebrand Health, which is reflected in the investment result. Adjusted for this, the high ROI of 3.6% would have been more in line with the investment return of the other ERGO segments. Operationally, we saw a good technical development in the Life and Health business, with positive claims experience, especially in the Belgian health business. The P&C business posted a solid combined ratio of 91.7%, with good operating performance in Poland, Greece, and the Baltics. While business in Spain, Austria, and legal protection saw elevated claims. Adjusted for positive and negative one-off effects, the Munich Re Group's overall net result for the first half, as well as for Q2 standalone, both fully support the full year net earnings outlook of around EUR 0.8 billion. I would like to conclude with some remarks on capital management. The Group's economic position remains very strong. Solvency II ratio increased to 287% in Q2, driven by a very strong operating performance and the issue of EUR 1.5 billion subordinated debt in May. Well, that's it then from my side. Joachim and I, we are looking forward to answering your questions, but first I'll hand it back to Francie. Yeah, thank you very much, and we can go into Q&A right away. Please, remember, not more than two questions per person, please. Otherwise, please rejoin the queue. Please go ahead. Ladies and gentlemen, we will begin the question and answer session. If you would like to ask a question, please press star and one. If you wish to remove yourself from the question queue, please press star and two. For questions, please press star and one at this time. Our first question today comes from Tryfonas Spyrou, from Berenberg. Please go ahead with your question. Hello there, and well done on a really strong first half. I guess first question is on capital returns. I appreciate maybe a little bit too early for this, but with the solvency level at the level it is and very strong earnings momentum year-to-date, I was wondering, how should we be thinking about the scope for capital returns for this year? And whether the 75% payout ratio over the last couple of years is a good starting point to have in mind, even on a much higher earning base. The second one is on GSI. I guess you highlighted once again, this is becoming a key driver of the group in P&C Re. I was wondering if you can share some additional thoughts on the performance of the unit year-to-date in terms of premium growth and underwriting profitability. I appreciate you don't have the IFRS 17 numbers, but any rough indication on what would be the contribution of GSI to the overall P&C Re operating result? Thank you. Well, first, good morning. Capital return, I don't think there's so much news today. I mean, our commitment is very clear that with higher earnings, also higher repatriation is absolutely not only necessary, but also something we are really willing to commit to. But as always, we await year-end until we'll say, finally make decisions on how much capital really it is going to be repatriated and in which way. But as you can see at our earnings level, I mean, we have probably doubled the size of our company five years ago. And very obviously then, if it continues like that, then also the repatriation numbers necessarily will have to go up. But for everything else, and I think our commitment is very clear. For everything else, I can only refer to, you know, to the year-end, and then our decisions finally will be taken in the first quarter next year. This is Joachim. With regard to how pleasing the earnings growth or the earnings growth is going in specialty insurance, I can say, in Q2, the earnings were not as good as in Q1. The reason simply being, as everywhere else with direct writers, that there was some Nat Cat-related losses that also GSI had to absorb. With regard to volume growth or premium growth, it's on target, and it's on target to what I said we think might achieve EUR 10 billion top line by end of 2025, which would mean 25% increase compared to end of 2023. If we look not quarter by quarter, but year by year or in two years period, three years time period, GSI is fully on track. Our next question comes from Will Hardcastle from UBS. Please go ahead. Hey there. Just first of all, just link with the July volume reduction. Thanks for giving us the color on where that's coming through. Very helpful. I guess on the casualty, just making sure that's not a reaction to some adverse data that you're seeing on your side. It's just a matter of purely pricing on new business. Is this—were you competing for this price and it got taken off you, or was it just you chose to structurally step away from that particular business? Presumably as well, that's from an absolute profit perspective, that's relatively low because that'd be, you know, weaker margin business. Second of all, just coming back on the Life and Health, really. We're seeing a bit of a track record building on experience variances. Just trying to understand how we should be thinking that on a forward basis. You know, we see PYD coming through on a regular basis in your P&C Re side of things. Is there a potential that we start thinking about that from a Life and Health re side, or would you very much steer clear of us doing that at this stage? Thanks. Okay, let me, Will, this is Joachim. So let me start with your first question. I can very firmly state that the reduction in the casualty volumes on our hand was not a reaction to anything adverse that that is new, but it is just, I would say, a response to not finding enough profitable business opportunities. Or in other words, the market could trade at terms that we considered unattractive. Life re is you, Christoph? Yes, and I think your question specifically was the PYD development in Life Re. And what assumptions to put in going forward, or what to believe going forward. And obviously, I cannot tell you what you should believe going forward. I can tell you what we think is adequate. Kidding aside, we saw two quarters now in a row with very positive PYD, which is really pleasing, in particular, as we also saw some more difficult development in the last couple of years, especially after COVID in the U.S. mortality space. So therefore, that's very positive. But also in the past, I mean, PYD is always depending on the actual development and of the assumptions you did set in the past. And our assumptions, I think in Life Re, what they are, is they are cautiously conservative. But clearly, in our view, different from what we do in P&C Re. When P&C Re, we deliberately put in, you know, a significant margin, which we would like, would then see developing over time and, and, and being, coming out of the business and again, years later. The approach in Life re clearly is, in our view, is significantly closer, much, much closer to a best estimate approach. And as you know us, our best estimates always tend to be, you know, have a bit of conservativism in them, in them, but it's significantly closer to best estimate. So therefore, I would be very careful personally projecting a positive PYD into the future. It can go either way going forward. Having said that, our assumptions tend to be a bit conservative again, and there is no concern at all on our side that the assumptions would not be adequate. That also has to be underlined. Thank you. The next question comes from Kamran Hossain from JP Morgan. Please go ahead. Hi, morning. Two questions from me. The first one is just on the Life and Health guidance, and just why maybe you haven't moved it up at this stage. I, you know, I appreciate for the group, you know, hurricane season, so, you know, a, a material issue if something goes wrong, but for the Life and Health side, it, I'm not sure why you wouldn't change it now. Were there any kind of good news one-offs in that number? I think at Q1, you said everything went well for the business. Was it the same again? Just interested in kind of why you wouldn't change that piece of guidance right now. The second question is on the underlying or the normalized combined ratio. You've basically seen, you know, within that, you've explained that some of it's like the earning of motor business, and so that it probably does, you know, provide a little bit of a drag on that number. Is the difference between the Q1 and Q2 normalized combined ratios just motor? And, you know, do you expect to get to 82% over the course of the year as more of the motor comes through, or even taking that into account, are things still running better than expected? Just, just interested in kind of more color there. Thank you. Yeah. Thank you, Kamran. I'll take both of your questions. I mean, the Life and Health guidance, don't interpret too much into it. This is clearly, I mean, just, I mean, for the twice, we try to be consistent in our overall table of outlook numbers. And if you don't change the net income numbers, basically you cannot change any other numbers, because otherwise, mechanically, the net income number would also go up. And we, you know, by only increasing life health to keep the net income stable, we would have to take down the P&C Re number, but there's no indication at all that this number should be any lower. So therefore, just take it as a, you know, as a mechanical necessity, given the fact that we didn't want to increase the overall net income number at this stage. So no intelligence at all in it. And by the way, for the entire guidance, it's true what I'm now emphasizing again, that we do not have any knowledge of any drag on our earnings in the second half of the year at this point in time. It's just the usual Munich re conservatism ahead of the hurricane season that we do not increase the guidance right now, nothing else, and nothing to be interpreted into that fact. The second point, the underlying normalized combined ratio and the trend, I mean, obviously, business mix is always a significant driver and also was a driver in the development between Q1 and Q2, and this is what we have been guiding towards the year-end, that it we will finally be a bit closer to the 82% number. I think we commented in Q1 that we had, you know, a few one-off exceptionally good developments in Q1, which are maybe also related a bit to the, you know, the arbitrary fluctuations you can have one quarter to the other in new claims development. And, you know, we normalize for the large losses, but our large loss threshold is EUR 30 million. So if you have a few EUR 25 million losses or not, that can make a significant difference. So therefore, I would still say Q1 was also just by the usual fluctuations that you can have in a book like that, probably a bit lower than what the long-term average should have been. On top of that, we have the big business mix change towards Q2, and then finally, we end up where we are in Q2. By the way, there's also quite a difference in the discount ratio. A few of you, of us have noticed probably. So there's also these kind of elements also, you know, playing a role in the overall transition from one quarter to the other. Thank you. The next question comes from James Shuck from Citi. Please go ahead. Thank you, and good morning, everyone. My first question is on the Life and Health re book. Just asking if you could flesh out some of your explanation around the U.S. mortality development in I suppose it was actually in a little bit last year and into this year. To what extent has that been driven by kind of lapse variances versus biometric changes, please? Any insights to that would be helpful. And then secondly, just in terms of the cycle outlook, we've seen this big shift away from the lower return periods up until kind of through the towers and moving away from the frequency of losses. How do you see pricing evolving in those low return periods at this point? At what point, you know, do you see that pricing will be adequate, and you can start moving back into those frequency layers because you're actually generating the returns that you would expect? Thank you. James, thank you. I'll take the first question. It took us a while to sort out who is going to take which question, so for the short delay. I'll take the first one. So the positive experience we are seeing goes more or less across all the risks. So mortality is clearly contributing significantly, but also on the left side, nothing negative to report. It also contributes positively to the overall positive experience. Oh, sorry, my question was specifically on U.S. mortality. The U.S. mortality was positively contributing to that development, and it was- Got it. It was a significant driver of the positive experience. Okay, thank you. The next question comes- Wait, wait, wait, wait. I'm sorry to interrupt. There was a second question from James that was on the lower layers. Maybe I can, James, I can differentiate a little bit. There is top layers, mid layers and low layers. The top layers have been priced attractive, and they are partly under a little bit of more pressure these times. The mid layers, very stable, if not positive, in their development, and the lower layers are those that the reinsurance industry or we are less engaged in or not engaged in. They fall into the retention of the direct writers. What is the outlook there? Difficult to say, but they are not attractive to be written by reinsurers at this point in time. Will the rates go up there? No. But if they should be reinsured, they would need to go up. Yeah. Okay, then. Thank you so much. The next question comes from Ivan Bokhmat from Barclays. Please go ahead. Hi. Good morning. Thank you very much. I've got my first question would be on the Life and Health earnings. I mean, firstly, maybe you could elaborate a little bit more about the CSM release. You suggested that 7% and not 8% is rather the more appropriate guidance. Is that driven by the strong new business growth? What exactly leads to lower emergence? Maybe you can also talk about the pipeline for that new business. And my second question is about GSI and the Nat Cat experience. Maybe, you know, within your total Nat Cat for the first half, could you share how much was related to the GSI losses? How much was traditional reinsurance? Perhaps in the light of your intention to have it as a separate division next year, could you advise how much reinsurance are you using right now? Do you intend to use more, and will that be more internal reinsurance or external? Thank you. Ivan, the first one, very simple answer, it's business mix driven, and the business mix is, of course, heavily impacted by the large portion of new business we've been writing in the last couple of quarters. And as an outcome from that business mix shift, and the significant new business, we guide now rather 7% than 8%. So no other science behind that. On the GSI side, I mean, we'll start reporting details only beginning of next year. Currently, GSI does have quite a bit of internal reinsurance, and also writes or takes out some but very limited external reinsurance. That this is our reinsurance strategy in GSI. So in a way, they pick up some losses also in lower layers, which in reinsurance, we would not pick up. So that's part of the large loss development also in the first half year. So there are our two, let's say, P&C Reinsurance segments behave a bit differently. Thanks. And maybe I can follow up on the first point. The 7% guidance for the CSM release, that's just for going forward, not just 2024, correct? Well, it's also for 2024. I think it's gradually developing towards that direction, is probably the right answer. Thank you. Next question comes from Ismael Dabo, from Morgan Stanley. Please go ahead. Hi, good morning, and congrats on the good quarter. I believe last quarter you mentioned that you could possibly realize bond losses if the net result gets exceedingly high. Well, I guess the question is, number one, what would you consider exceedingly high, given you're well above your run rate? And my second question is on the July renewals. Obviously, you reduced your casualty proportional portfolio significantly while you increased the casualty XL, notably. So I was just wondering if you could talk about the dynamics between the two types of treaties, and also maybe even discuss a little bit more around casualty lines, given that we've seen some U.S. insurers report some adverse trends in more recent accident years, not the traditional vintage years of, you know, 2015, 2016. Thank you. Ismael, thank you. Let me start with question one, and please be prepared. We didn't understand your question one, which you could then repeat. Let me start with response two. So the July re-renewals, what should you read into casualty non-proportional, and what should-- can you read into casualty proportional? The casualty non-proportional benefited from original rate increases that were very material in 1/7. So we grew through this, but we didn't actually write new business on casualty non-proportional basis. And the casualty proportional is one where we simply, in quite a number of cases, we didn't consider the proportional rate increases as sufficient, and we stepped out of that. If you would be so kind to just repeat your question one, please. Sorry that we didn't get it. Yeah, no worries at all. Essentially, what I'm trying to figure out is your earnings are running clearly above the run rate, and you've mentioned that you're going to exceed the EUR 5 billion net result target. What I was trying to essentially figure out is, if we get to the end of the year, I think people are expecting net results to come about EUR 6 billion and probably go up from this point forward. I think last quarter you mentioned that you could possibly dampen the earnings by realizing some bond losses, if results were exceedingly high. What I was trying to figure out is what would you define as exceedingly high, before you were to... Before you could possibly dampen earnings, if you were to dampen earnings, or would you just let it all flow to the bottom line? Thank you. Yeah, thank you. I mean, that's a very question because it's so future related and a little bit hypothetical as well, as we, I mean, don't know how the earnings development is going to be. And in any case, it would be a happy problem if, you know, results would so overarchingly positively, yeah, develop going forward. Of course, at some point, we would use the potential then to do something reasonable, which would help supporting the earnings trajectory going forward. So the realization of fixed income losses, I think there is two elements in that. One is earnings management, but think about also what central banks have been announcing and the potential reduction of interest rate levels going forward. I mean, the more we can benefit from high yields, the earlier the better. It would also support our long-term earnings trajectory. So it... There's always an element of course, managing the earnings and making sure we have probably continuous earnings trajectory gradually going up. That's not what we always said. But on top of that, also, we try to be economically reasonable, and this is why in the first half of the year, we also continued to realize some losses already on the fixed income book, just to, you know, benefit earlier from the higher yields, particularly as long as we can get them. Sorry, I cannot give you a precise trigger. What we would say is an exceedingly high earnings level, which would then result in even more action to dampen the results. But be aware, already in the first half of the year, we realized some losses on fixed income. So it's not that spectacular anyway, probably. Great. Thank you. The next question comes from Vinit Malhotra from Mediobanca. Please go ahead. Good morning. Yes, so my two questions. The first one is, Joachim, just picking up on your commentary that in July renewals, the terms and conditions were defended very well. And I think that's also very important, and not just the pricing. So when you said the market could moderate, and obviously you hav```e a strategy around it, but in that moderation comment, would yo`u say that the terms and conditions could help margin be defended better? So just curious on this comment around terms and conditions and the margin impact this could have as we see a slight reduction in pricing. So that's the first question, please. Second question is just on the Life and Health insurance. So, you know, this very, very high technical result, I'm just trying to get a sense of the big picture down, as in, is it super strong because there is some one-off effects in the market, either because of some competitive reasons or because of some other factors? Or is it because mortality is so good? Because, you know, you mentioned experience variances are pretty positive in mortality as well. Is it because, you know, post-COVID mortality has been very low, or...? I'm just looking for some top-down rationale for this very high level, also with the motivation to understand how to think of the future. But, yeah, at the moment, even if you comment, please, on what's driving this strong level. I know there's FX and other things, but just any top-down drivers, please. Thank you. Thank you, Vinit. This is Joachim. Good morning. So with regard to your question on 1/7, renewal terms and conditions. In hardening market environments, it's not only rates going up, typically, it's also that terms and conditions are being modified, all of them with the intention of creating a better interest alignment between the ceding company and the reinsurer. I mean, in the end, it's all about having aligned interest. And this, the reinsurance industry has achieved in the last years, and even going forward, we should not only look at rates, but we should also look at what is the quality of the terms and conditions that we apply the rates to. My comment just meant we, on a risk-adjusted basis, in 2017, we could increase rates by 0.6% without jeopardizing or not at the expense of weaker terms and conditions, but at terms and conditions that were as stable as the year before. That was meant to be said. In Life Reinsurance, the question that you ask is: where actually is the market growth coming from? Fundamentally, if you look into our book, both the in-force but also the new business, there is the bread and butter business that you're aware of, and there is what we call the financially motivated reinsurance business. It is more or less standardized capital relief transactions. It is financing the new business volumes of our clients or financing the embedded values of our clients. This is known. This is not new. What is triggering and fueling the recent growth, and very materially, is huge blocks that get traded to improve the financials, mostly the ROEs, of ceding companies, and often asset managers are involved in that to take care of the related investments of those blocks. And they would then cede all the biometric risk to a reinsurer, and we, as a large reinsurer, we are, of course, able to take it all when we like it. So when such a huge block transaction materializes and we are the reinsurance counterparty, then it's a massive new business volume that we are writing. This is the windows of opportunity that we are seeing now for some time. It will remain for some time. How sustainable that is into five or 10 years to come, nobody knows. But, just to follow up, I meant more the technical result also, not just of premium or the new business, but technical result strength in Life is obviously not probably coming from the blocks, right? The technical result strength is coming from a very sound underlying mortality and morbidity business from bread and butter. It's coming from a grown, financially motivated reinsurance business, is very stable, and it actually starts also coming from the huge blocks that I'm just referring to. And of course, the technical result is also benefiting from no longer excess mortality from past pandemic. That is helpful, and it is also benefiting from no longer suffering any legacy issues. Thank you very much. Before we continue with the next question, we have a follow-up to a question that was just raised by James. Yeah, just to clarify the U.S. mortality, because I think there was a little bit of hiccup with the years. We have now two quarters in a row with positive U.S. mortality experience. The quarters before that, they have been negative. Thank you. Please go ahead. The next question is from Faizan Lakhani from HSBC. Please go ahead. Hi there. Thank you for taking my question. The first one is coming back to the combined ratio mix. You've reduced your casualty quota share, which assumes lower margin, and you, and you're pivoting towards excess of loss. What does that do to your underlying combined ratio in 2025? And I guess linked to that as well, that, you, you know, you're growing your specialty business very strongly. Cross cycle, it's a low volatility business, but I see you now have a higher combined ratio. What would that mean for your sort of blended combined ratio going forward on that as well? And my next question comes back to your special problem that you mentioned. With yields potentially falling, and given the fact that your reinsurance book has quite a short duration, does that leave you a great deal of room to realize further fixed income losses by year-end? Or do you still believe you have significant room there? Thank you. Faizan, we again had had a bit of debate who is going to take the questions. I'll take both of them in this case. The combined ratio, I think I commented on already. I think we had a very good Q1. Q2 was also still below our targeted profitability, this despite some effect already also from business mix. Motor proportional was mentioned in that regard. And towards year-end, we expect it for the full year to be below 82%, but trend somewhat higher. And this is a guidance which encompasses both the traditional reinsurance as well as GSI. At this point, we wouldn't differentiate any further, but the business mix shift you were mentioning, so the significant growth in GSI, is obviously incorporated in that number and it has also an impact. So therefore, it's all included in there, but I cannot give you, you know, a separate number for GSI and a separate number for the traditional reinsurance. This is a debate we can—I'm very happy to have in a year from now, when we have a separate segment and also for GSI. The question with the unrealized losses and if the development of interest rates would change our potential, I think there's plenty of potential for realizing losses in our books still, independently of the near-term interest rate development. I don't see any restrictions in that regard. Sorry, just to come back to the question one. For the growth casualty proportional, what does that do to your 2025 underlying combined ratio? So again, whatever we know at this point already is included in the guidance and fully incorporated already, and going forward, it remains to be seen. The casualty proportional piece we have discontinuing is not that material that it standalone would have such a significant impact that it's worth discussing it. Thanks very much. The next question comes from Freya Kong, from Bank of America. Please go ahead. Hi, thank you for taking my questions. I'm just curious to get your current views on cyber, given the weaker primary rates we've seen, but generally you are quite supportive of the market longer term, and I noticed some of the business that you cut in casualty included cyber. So just curious on your thoughts there. And then secondly, just on Life and Health, after stripping out the FX, the underlying fee income is still quite strong, and it's really hard to get a sense of the trajectory of that business. Were there any one-offs in that, that we should be aware of? Thank you. Hello, Freya. Thank you. I take the cyber question. The cyber original market is growing. It's growing double digit. That has been going on for many years, and our best forecast is this is not going to change, as the need for cyber insurance is growing in the world. The primary rates, the pure rates development, in the recent years, one or two years, has been slightly, I would say, not discouraging, not disappointing, but rather slowing down a little bit. Not bad, but not great. So okay-ish, and in some cases, not good enough. The volume cuts that you see at our ends in 2024, they go back to a very firm position that we have taken on terms and conditions in the cyber business. We absolutely want to make sure that we do everything possible, that the conditions are as accurate as possible, legally, to exclude systemic cyber risk... because that cannot be absorbed by risk carriers. And cedents who did not follow this route or couldn't follow this route so quickly, they, they couldn't renew with us. That is our volume reaction. But we already see the first of them coming back after having taken, condition actions. So I think we took a small volume dip in 2024, and my best guess is whether we fully catch up next year or just half of that, I don't know, but we will go back onto a growth slope, I guess. The second question was on the IFRS 9 business, the Fin Re business. If there is any one-offs in these numbers, that's not the case. It's just very positive operating developments, which you also see in that number. Thank you. The next question comes from Darius Satkauskas from KBW. Please go ahead. Hi, thank you for taking my question. Sorry to come back to a few points that were already made. So the first one is on the sort of what is—I appreciate there's volatility, but what is management's expectation for what would be a normal sort of annual Fin Re contribution to the Life and Health technical result? You know, what would we expect in a pretty average year in the medium term? And the second question is just on the combined ratio. So I think in on the first quarter conference call, you suggested that you were somewhat surprised how good the normalized combined ratio was, and it seems that it remains good. So my question is really: Is your qualitative guidance that second half should be higher, is it based on you taking a closer look at why it was so good so far, or is it purely driven by conservatism? Thank you. Let me start with the second one. So, I mentioned business mix already. That was one of the reasons why the NCR would be a bit higher in the second half of the year. And, no, it has nothing to do with the one-offs in the first quarter. But, you know, we, I mean, business mix is one thing, and then generally, we are probably a bit cautious, but we'll see where we get. And that's it, I think. On the Fin Re, I think the best estimate for now is really just taking out the capital market-related effects. They are mentioned on the slide anyway, and if you normalize for them, I think that's, as of now, the best estimate what to expect in the quarter. Obviously, it always depends a bit on interest rate movements, but because it's IFRS 9 business, so we account for it. Also, you know, mark to market, according to IFRS 9. But the... I think that the best approach is really to normalize for interest and FX effects, as I just said, and the numbers are on the slide, and then take it from there. Thank you. The next question comes from Roland Pfänder from ODDO BHF. Please go ahead. Yes, good morning. Two questions from my side, please. First of all, coming back to your primary specialty business, you stated that you want to develop it into a more worldwide business. So that would mean, there are some maybe internationalization steps ahead. Could you maybe explain the strategy? Is it more organic? Would it be external growth, or what, what are your targets there? Secondly, terms and conditions in P&C Reinsurance, in which business lines do you see in the markets, most pressure on terms and conditions, so to say? Thank you. Roland, thanks for both questions, which I'm happy to take. Let me start with the second one. Where do we see most pressure on terms and conditions? If I say nowhere, it would not be real. But broadly, there is no pressure on terms and conditions, so the market is behaving disciplined enough to keep terms and conditions at the good quality level that it is today. The second question is Global Specialty Insurance strategy and ambition going forward to make it a worldwide proposition, where today, in reality, it is mainly a U.S. proposition and maybe a small U.K. proposition, but mainly U.S.. At this point in time, it's too early stages to even comment on any worldwide strategy going forward. We just reserve ourselves the option to say, if we are good in the U.S. market, wouldn't it make sense that we try to sort of export those capabilities into, into other markets as well? Then our answer is yes. Do we have well-worked-out plans in place and strategies in place in which markets concretely? I would say on an experimental basis, yes, but yet not nothing material, and everything is based organic at this point in time. The inorganic appetite would rather, and unsurprisingly, be in the U.S. at this point in time. Thank you. We have a follow-up question. Mr. Hossain, please go ahead. Hi, thanks for taking my follow-up. Just very brief one. Could you maybe talk about the development of the German GAAP earnings year- to- date? Obviously, the IFRS 17's looked very positive, just interested in whether that translates into good or kind of, you know, as strong German GAAP earnings. And then just on the comment that you made around the business, you know, being double the size it was a few years ago, does that mean at some point the, the capital returns will also double in size, too? Thank you. Yeah, Kevin, I'll take both of them. I start with the second one. I was a bit cautious how to phrase my answer. I did say we doubled the size of our business, which was a rough approximation. I did not say we double our capital repatriation, but I said we are committed to substantially increase it following the growth. I mean, any details and whatever you read into my messages, I'm sorry, we have to decide that later on. But a significant portion, obviously, of the higher earnings will be repatriated. You know, traditionally, our payout ratio always has been very high. It will continue to be very high. So rest assured, we will continue our repatriation strategy as we did it for decades already, and this will be- will not change. The bigger size of our company will be clearly reflected also in the amounts we are going to pay back to shareholders. In the light of that answer, I think it's all the good news what I can report on, on the German GAAP side. We do not do full closings at half year or at Q1 and Q3, so what we do is projections. But all these projections, as we do them, are currently indicating that we would not run into any shortfalls, any restrictions from a local GAAP perspective, in light of potential repatriation strategies going forward. Understood. Thank you. We have another follow-up from Mr. Spyrou. Please, go ahead. Hi there. Thank you for the opportunity. It's just a very quick one on the impact of interest rates. Clearly, we saw large movements over the last couple of weeks. I just wanted to check how much flexibility do you have in managing any earnings volatility due to the timing differences of discounting any fee over the next few months? Maybe another way to ask the question is, how much interest rates do you have to move for this to have a visible impact on the group earnings? Thank you. Yeah, it was, thanks for the question. I think we had the discussion half a year ago already, when the last time the market was discussing interest rate cuts and the potential impact. The general answer is unchanged. I think we are so broadly diversified and there are so many sources of earnings, which would react differently to changed interest rates. But at least short term, I would not see any need to even think about a different earnings level. And we can. Happy to go into any more detail, but the broad answer is really well diversified, different earnings components. It will all balance out. Long term, obviously, lower interest rates are kind of a burden because the more money we make on the asset side, clearly it supports the overall net income. So long term, it's a bit of different picture, but short term, we would be clearly unaffected by that. By the way, the realization of losses and reinvesting early now is, I mean, what we discussed just before, is also to be seen in the light of a potential cut of central banks. And as you can see, we always try to optimize ourselves also against the current environment and try to make the best decisions in light of also potential rate action, as it might happen or not. Great. Thank you. We have one more follow-up from Mr. Bokhmat. Please, go ahead. Thank you very much. I'll be brief. One question is about the PMLs, just in the light of your renewals and in the light of some of the comments you made about cyber. Could you perhaps refresh our memory? If we think about, let's say, a cyber 1 in 200 scenario, would that have been materially changed? I think last time we've discussed this, it was about $3 billion, EUR 3 billion in the gross basis. And maybe same about the cats, the Atlantic hurricane and so on. You mentioned you've increased the property exposure a bit. Would that have moved the PMLs substantially? Thank you. Yeah, well, thanks, Ivan, for the question. First of all, EUR 3 billion is not a number I think we ever communicated. The EUR 3 billion is clearly too high. I think in the past couple of years ago, if you look at our annual publication in light of our analyst conference, you would have seen a cyber scenario in the top five PML scenarios in our slide deck. This was no longer the case this year, as the cat scenarios were bigger than the biggest cyber scenario. And this also had to do with the reduction of exposure we had following the discussion on the war exclusion clause. So therefore, our cyber exposure is a bit more muted than what it was, also in comparison to other scenarios than what it was, two years ago, maybe, or three. On the cat side, also nothing significant really to report. All very stable or slightly lower even, but that's very much an ethics-driven development, so all very much in the same ballpark, I think. So I would just recommend you to look into the slide deck from our annual analyst conference from earlier this year. I think it was in February this year. I think what you see in there is quite a good approximation still for what our book is looking like currently. Thank you very much. Our last question today comes from Miss Kong. Miss Kong, please go ahead. Hi. Thanks for the follow-up. I just wanted to ask why the standalone discount rate for P&C Re was so high in the quarter. Were there any one-offs in that? Yeah, Freya, thanks for that question. The discount, obviously, first of all, would change from one quarter to other following the interest rate development. In the market, interest rates went up slightly in Q2, but there's also a second effect in there. The discount rate always depends also on the business and where we have which claims, which losses, depending on currency, for example. Different currencies have different discount rates. That would be one example. Or also then the distribution of losses between basic losses and large losses. Some large losses have clearly longer duration, so longer payout pattern than some of the basic losses. So a higher level of large losses usually would come with a higher impact from the discount rate. Thank you. All right. Thanks, everyone. I think we are about to wrap up. Thanks for joining us. And if you have further questions, please let us know. We are very happy to follow up with the investor relations team. Otherwise, I hope you have a nice remaining summer break, hopefully, and see you soon. Thanks again. Bye-bye. Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephones. Thank you very much for joining, and have a pleasant day. Goodbye.