Good afternoon, ladies and gentlemen, and welcome to the SCOR H1 2022 Results and Strategic Update conference call. Today's call is being recorded. There will be an opportunity to ask questions after the presentation. In order to give all participants a chance to ask questions, we kindly ask you to limit the number of your questions to two. At this time, I would like to hand the call over to Mr. Yves Cormier. Please go ahead, sir. Good afternoon and welcome to the SCOR H1 2022 Results and- Hi, everybody. It appears that Yves, who was connected remotely, has a problem. I would just welcome you to the presentation today. I would ask you to pay attention to the disclaimer on the second page of the presentation of our H1 2022 results, and I will hand over to Laurent, the Chief Executive Officer of the SCOR Group. Thank you, Ian. Good afternoon and welcome, everyone. If we move to the page number 3, please. Before taking you through our H1 results and our strategic updates, I wanted to take a step back and share with you a few thoughts on the events of the first half of the year. I would like to address 3 points. Increased uncertainty, accelerating our actions, and keeping a sense of the long term. Firstly, on the complexity of the environment that led to the postponement of the Investor Day, the uncertainties have only increased in the past five months. With hindsight, I do believe that it was the right decision to postpone our IR Day initially planned on the end of March. Since then, some of the structural uncertainties have not clarified or got any simpler. Our planning was prepared before the outbreak of the war in Ukraine, making all the references used for inflation, interest rate, economic growth, and market cycles susceptible to higher volatility. In 2022, we are transitioning to new risk regimes. We are making good use of this extra time to build a robust strategic plan framework suited to a highly uncertain environment. Our financial trajectory will account for the new macroeconomic environment, the refragmentation of the world, and the changes in the reinsurance supply and demand dynamics. We are building this plan in a new accounting framework. IFRS 17 should better capture the economic value of SCOR and will more closely align the accounting framework and the other internal economic frameworks used by SCOR to drive performance. Our plan will focus on creating economic value over the long term. Second, we have accelerated our actions to improve performance. There was a necessity to speed up our ongoing action and empower to build a strategic plan. The silver lining of the recent developments is that it confirms that we have set out the right priority and are taking the necessary actions. From a business perspective, we have finalized the first round of granular business and portfolio reviews that will lead to a reduction of our exposure to markets or segments where we felt the risk was not adequately rewarded and where the industry is at risk of not achieving payback after a major event. It led to a reduction in our growth ambition in markets that require locked-in capital locally that could not self-finance their growth. It will lead to reduction of our footprint where our setup is too large compared to the size and the potential of the market, and it will lead to a confirmation of our ongoing portfolio management actions and business plans when appropriate. The underwriting strategy will take time to be implemented, and its effect on our financials will emerge gradually over the course of the next strategic plan. Although we are accelerating our actions, the effects will take time. This will be an ongoing process to drive the business performance and the capital allocation of the group. From an organizational perspective, we are moving forward, and we have defined a new operating model that will accelerate the transformation and the simplification of the organization. Our priority is to run the business in an efficient manner without disruption, to simplify processes and focus more on value add tasks, thanks to automation. We want to reinforce operational excellence. Ultimately, our ambition is to absorb the inflationary pressure on management expenses that will increase in the coming years. Thirdly, the long term. Once we acknowledge that we live in a stochastic world and take short-term actions, it is critical to keep a sense of the long term. The world macroeconomic drivers are changing, and we are moving away from a world of perceived abundant capital resources. What do I mean by capital resources? First of all, the financial capital. Companies have enjoyed abundant and highly fungible capital available at a low cost, thanks to low interest rates and globalization. The interest rates rise will create competition for capital, and we should anticipate less globalization and the refragmentation of the world around a few large countries and regional platforms. The second form of capital is the natural capital. What do I mean by that? It is the health of the planet and the health of the people. There was a perceived abundance of natural resources and low environmental externalities while life expectancy was rising. The pandemic and the climate crisis have shifted this paradigm, and the value of health is becoming a central decision-making factor. The third form of capital is the human capital. People and culture will remain critical, intangible assets that embody the raison d'être of SCOR, with capabilities enhanced through training, personal growth, and the development of technology. We are currently on a bumpy road going through great transformation, which will lead risk carriers to a much better place with greater demand at an adequate price of risk. During this great transformation, SCOR's outperformance will be driven by its ability to be a disciplined capital allocator, a capital builder, and a holistic risk taker. Our life reinsurance leadership makes us strongly placed to respond to increased health demand. Our people and culture will successfully respond to and leverage the challenges to human capital. If you turn to page 7 of our presentation, I'll come in just a few slides, but to be brief, and we can maximize Q&A time. 2022 will be a year of transition, and this I think on three accounts. First account is the pandemic, which has become endemic, shaping a new normal with an increased demand for protection and increased digitalization of the value chain. Second, the concrete impact of climate change are clearly visible in our industry, and the first half of the year was again marked by high frequency of severe Nat Cat. Finally, insurers and reinsurers will be evolving in a new macroeconomic environment. Many countries are now experiencing levels of inflation that had not been observed in decades. This shift marks a new era for our industry, and the transition brings its own challenges. For SCOR, this has translated into a net loss of EUR 239 million for the first half of this year, 2022. Despite the strong winds, SCOR is staying the course. These challenging developments confirm that the proactive actions we have been taking are justified and appropriate. Our teams are working intensely to reduce volatility, improve profitability, and grow the franchise. You will remember these three priorities were the ones I set out in September 2021 at our Investor Day. They remain our priority. SCOR is navigating the environment with a strong solvency ratio at 240%, and we seize the opportunities arising from these new priorities. We shift to page 8. Here we outline the key actions we take. First of all, we take action to manage climate risk. Climate change has impacted our industry and will continue to do so. We are not standing still. We constantly reassess and update our models and our approach. As announced in September last year and implemented since, we aim at reaching a better balance by taking a more conservative view on cat. We should not assume that the past five years are exceptional, but instead we should run our business assuming these past five years are indicative of the new normal and manage our portfolio to deliver on our 8% cat budget. June 1st and July 1st P&C reinsurance renewals led to a 21% reduction of our 1-in-250-year PML for the 2022 underwriting year, significantly ahead of our original 11% projection for 2022, which we had announced in January this year. Since, we have reshaped our cat risk profile, reducing both earnings at risk and capital at risk. Other lines of business can also be impacted by climate risk, and agriculture is one of them. It has been under detailed review and will reduce volatility by cutting the net PML by 50% in agriculture. Additionally, we will rebalance the agriculture portfolios towards non-proportional business to improve the profitability. Second, we take action to manage pandemic risk. We are acting on three levers to manage our Life & Health portfolio. To contain the pandemic exposure by delivering a controlled growth in US mortality and exploring options to protect the in-force portfolio. We implement management actions. We leverage our continuous investment in actuarial analytics to engage proactively with clients and partners and improve the overall performance of our in-force portfolio. These efforts are completed by the internal capital management initiative to reduce our cost of financing and capital. We also diversify pandemic risk, and we will further expand in Asia Pacific and EMEA and continue to diversify outside of the U.S. market with a focus on global opportunities and transactional lines of business such as longevity and financial solutions. Third, on this page, we take action to manage inflation and benefit from higher interest rates. We have prepared for inflation on investment side. Our relative low duration of 3.5 years of invested assets is a competitive advantage, and the regular investment income will benefit from higher investment rates more quickly. We have prepared for inflation on the business side too, and we'll continue to do so. Firstly, we're implementing new guidance to underwriters ahead of the renewals. It's going to be a new playing field for many of them, with inflation having been benign for decades. Secondly, we are calibrating our pricing assumptions by market and by line of business. As a price maker, we have a role to play to ensure the market reflects the right level of inflation in the prices. Thirdly, we manage our reserves prudently. We benefit from a significant weight of the Life & Health and short-term lines of business in P&C. As usual, we will launch our detailed annual reserves review in Q3. We have prepared our operations to manage our expenses despite the inflationary pressures. We have deployed a new operating model in June 2022 with a focus on simplification and execution, and we'll maintain a strong cost discipline. Now, let me move to page 10 and look at the opportunities we see out there. Firstly, the market dynamics are improving for both Life & Health and P&C. In Life & Health, the pandemic has highlighted the still very large protection gap in many regions and market segments. The awareness of the need of life and health insurance coverage has triggered increased demand for protection products. This is particularly true in Asia Pacific and in the U.S. There is a demand shock that will drive future growth. In P&C, the growing uncertainty and volatility driven by climate and macroeconomic environment has shrunk capacity providers' appetite for volatility. This is more of a supply shock, and the increasing willingness to pay adequate cost of risk will drive the P&C cycle harder for longer. Beyond the market dynamics, we keep investing to adapt to two secular long-term trends that will transform our industry, the disruption of new technologies and the transition to a sustainable economy. We'll become a technology-driven company building on the foundations of the Quantum Leap. Quantum Leap has identified the right key strategic issues in technology. We have to deliver them over time. Second, SCOR has outlined its long-term vision of a sustainable world. This was highlighted by recent commitments relating to underwriting, investment, culture, and people, and have been recognized by the non-financial rating agencies, MSCI and Moody's more recently. Thirdly, we see the evolution of accounting and solvency regimes as an opportunity for SCOR. Let me now hand over to Ian to take you through to the first half of the year financials and as well explain why we think IFRS 17 will be a net positive for the group. Thank you, Laurent, and good afternoon, everybody. Let's begin with slide 24, where we show the key impacts affecting the results this quarter. As Laurent highlighted earlier, the impact of climate change continues to be felt. The first quarter had been impacted by the Brazil drought, but this developed in Q2 into one of the worst droughts experienced in Brazilian history. The damage exceeds $ 9.2 billion in crop production losses. At SCOR, during the second quarter, we received additional information on the cost of claims, which now total EUR 193 million, of which EUR 158 million was incurred in the second quarter. Because of this major claim, and aligned with our ambition to reduce the volatility from climate sensitive events, we have fully reviewed our agriculture portfolio to reach a better balance across our four core markets, India, the USA, China, and Brazil. We target a 50% reduction in PML for the underwriting year 2023. On natural catastrophes, there were developments in Australian floods, heavy floods in South Africa, and storm events in France occurring in June, which have also severely marked the second quarter. Again, we are acting to manage cat exposures with the PML reduction of 21% expected for 2022. Regarding man-made events, there are two specific developments. First, the materializing of claims related to sexual molestation occurring in the USA in the 1980s. The reported claim in our accounts amounts to EUR 76 million. Second man-made development in the first half is the provision booked in Q1 related to the war in Ukraine, which remains unchanged at EUR 85 million. The pandemic continues to impact the group's profitability, and particularly our Life & Health business. COVID-19 claims total EUR 254 million for the first half of 2022. That said, the bulk of this occurred in Q1, and claims are much reduced in Q2, and we continue to act through management of the in-force portfolio. Finally, the group's results are also impacted by two non-operating items, a EUR 45 million tax charge provision following negative taxable results in certain jurisdictions, and the negative pre-tax impact amounting to EUR 30 million for the first half related to the option on our own shares granted to SCOR, which are measured at fair value through income. Let's go to slide 25, presenting the key financial results of the semester. The impacts just described lead to a net loss of EUR 239 million for the first half of 2022, of which EUR 159 million is reported for Q2. While this illustrates the volatile environment in which the group operates, the group remains well capitalized with a solvency ratio estimated at 240% at the end of H1, increasing from 226% reported at the end of 2021. Further, we have grown the franchise with gross written premiums increasing by 8.3% at constant exchange compared to H1 2021, amounting to EUR 9.7 billion. Looking more closely at the business units, SCOR P&C reports a strong growth at 20.9% at constant exchange, benefiting from both the continuing solid growth of specialty insurance by 31% and growth from recent underwriting years in reinsurance global lines. On profitability, the net combined ratio stands at 107.7%. The Nat Cat activity was high in Q1, as I noted, with the Nat Cat ratio standing at 10.5% above our budget of 8.0%. The net attritional loss and commission ratio stands at 90.9%, up 9.5 points from last year. Claims related to the drought in Brazil account for 5.2 percentage points of the increase. The remainder of the increase is driven by the latent claims in the United States related to sexual molestation and the provision booked in respect of the Ukraine war. Moving to the results of the June-July reinsurance renewals. The results of the renewals reflect SCOR's disciplined objective to reduce property exposure in the U.S. while taking advantage of the hardening market. Premiums decreased by 9.8%, principally driven by reduction in the North American portfolio, mostly in Florida and in the property segment. North America now accounts for 47% of the renewed portfolio versus 56% at the same period last year. Excluding property, SCOR achieved premium growth of 3.5% driven by reinsurance global lines. Overall price increases achieved were 6.7%, reflecting a hardening market in an inflationary environment. Moving on to Life & Health. Life gross written premiums decreased 1.8% at constant exchange, reflecting the ongoing efforts to diversify the portfolio. SCOR continues to expand its franchise in Asia, where underlying demographics fuel the demand for private health and life insurance coverage. In mature markets, SCOR Life & Health continues to build its franchise through innovative products and services. SCOR Life & Health delivers a strong technical result of 6.3% in H1 2022, and the technical result amounts to EUR 245 million, despite the impact of the COVID-19 pandemic previously mentioned of EUR 259 million. On the investment side, in Q1 2022, we successfully implemented IFRS 9, which importantly does not change valuation in the balance sheet, which is at market value, but it does change how movements in value are reflected in the P&L. In H1 2022, SCOR generates a return on invested assets of 1.6%, reflecting the negative impact of change in expected credit losses, which reduces the return on invested assets by 30 basis points year to date. Under the IAS 39 standard, the return would have reached 2.0%. Regular income yield is increasing at 2.0%, and the reinvestment rate has effectively doubled since the year-end to reach 4.1% as at the end of June 2022, which is positive for the group in picking up on increasing yield relatively more quickly. If we now look at other key financials, group shareholders equity remains strong at EUR 5.6 billion, resulting in a book value of EUR 31.21 per share. The net operating cash flows were negative in H1 at EUR -368 million as a result of the payment of COVID-19 claims on the life side. Nevertheless, liquidity remains strong at EUR 2.5 billion. That concludes the financial results. I did, as part of today's update, also want to say a few words in respect to IFRS 17. As Laurent noted, we clearly see the introduction of IFRS 17 as a positive development, not only because it better reflects the reality of the business and its true economic value, but also because it will help us better explain our business decisions. As a capital-driven company, our business decisions focus upon long-term economic value creation. As you can see on slide 37, the value of SCOR is not fully recognized by the current accounting standards, and we believe that IFRS 17 will provide a clearer vision of the economic value of the group. Having said this, IFRS 17 does not change the performance of the underlying business, only the timing of the recognition of the income will change. IFRS 17 will help us align the accounting framework with the internal capital-driven framework currently used at SCOR to manage our business and to support the decision-making process to build long-term value. A key metric to track the value of the business will be the IFRS 17 economic value, which represents the shareholders' equity plus the contractual service margin or CSM. We expect the economic value of the 2022 opening balance sheet to exceed EUR 9 billion under the new accounting standard. Moving to slide 39. At the opening balance sheet, the CSM will represent a stock of value in respect of anticipated future profits. This stock of CSM in the opening balance sheet will naturally be significantly larger for Life than P&C, given the longer duration of the Life business. The stock of CSM from Life reinforces the value of SCOR's long-term strategic commitment to Life business. Each year, we will be reporting the new business CSM generated from the Life & Health and P&C business units, which will represent the flow of value that has been created by the new business during the year. There's also obviously a significant convergence between IFRS 17 and Solvency II, reflecting that both have an underlying economic basis. One difference to note, as you can see on slide 40, is the use of a Risk Adjustment as opposed to a Risk Margin under Solvency II. The Risk Adjustment allows for full diversification benefits, which we consider to be sensible and appropriate. When we publish our strategic plan in November, it will be on an IFRS 17 basis, giving an opportunity to start providing you with a better view on financial reporting outcomes within this new environment. We will also look forward to providing you with a clear view on the expected trajectory of our economic value over future years. With that, I'll hand back to Laurent. Thank you. Thank you very much, Ian. I'll go through very briefly on the concluding slide, page 27. During this great transformation, core outperformance will be driven by stability to be a disciplined capital allocator, a capital builder, and a holistic risk taker. Sorry, progressively building our financial capital and creating long-term value for shareholders. We will protect capital. We want to lead by offering a differentiated value proposition factoring in the sustainability imperative, and will enrich our human capital and growing a nimble and innovative organization whose capabilities are enhanced by science and data. The current environment requires us managing transition periods. We build on our high diversification, one of our strategic cornerstones, and achieve the right portfolio balances in both Life & Health and P&C. The current sources of volatility require adequate risk-adjusted remuneration. The underwriting decisions are driven by disciplined capital allocation and rooted in sound risk appreciation and our strong underwriting culture. The capital is allocated based on a holistic view of the performance. The volatility-driven businesses need to rely on the right balance of premium to absorb shocks. We build a simple and disciplined organization with the right alignments and controls in place. We'll keep a sense of the long term and prepare the organization to seize opportunities from new paradigms. We will apply a few principles, be a price maker. We deliver a differentiated value proposition to drive adequate returns for risk underwriting. Be a risk taker. We share the fortune with our clients. We will leverage our medium size and show nimbleness and agility to better serve clients and navigate the market. We do not track the overall market, and we can deliver a unique financial performance. We will allocate our capital to the most attractive segments and create economic value over the long term. Despite strong winds, we have a clear course. We have accelerated our actions to improve performance and at the same time, we keep a sense of the long term, and we are planning a resilient strategy to win in the new environment. This will be presented to you on the 9th of November. I now very much look forward to answering your questions together with the entire Comex around me, and I turn over to the Q&A moderator. Thank you. Thanks very much, Laurent. On page 46, you'll see the forthcoming scheduled events. With that, we can move to the Q&A session. Thank you. Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please signal by pressing star one on your telephone keypad. We do have our first question from Will Hardcastle from UBS. Please go ahead. Hi, afternoon, everyone. Thanks for taking the question. I'll leave it to for now. Big picture, if we take a step back and ignore important factors like return on capital and just consider the combined ratio for the exercise, I guess we usually expect capital to have a better combined ratio in the line that you're growing in. To the extent of the recent changes are probably a bit sharper than we previously expected in both directions. Does the business mix change make recent consensus that are around 95% forward combined ratio harder to achieve or absolute? I accept there's a great degree of confidence, but do you still feel comfortable with that sort of forward trajectory? Second one, a bit more specific, just relating to the reserve strengthening claim. Presumably, this is to the Boy Scouts of America settlement. I might be wrong, but I guess is this now a finalized reserve, whether it's paid or not, and so there's no scope for further change? Was this development, I should know this, but because of the settlement itself or have you extrapolated to other reserves beyond one individual case? Just so I'm clear on that, is it just a historical cover or a more recent sort of adverse development cover that's being captured? Thank you. Sorry, a couple of questions there. Thank you, Will. Ian, do you want to take first one and have Fabian take the second one? I think, Jean-Paul on the combined ratio and the business mix. Yeah. Well, on the question on the combined ratio going forward, actually, although we're reducing our PMLs, we're not exiting property cat. You know, we're still providing significant cat capacity to our clients. What we're doing is, you know, as we mentioned before, we're moving away from proportional treaties and low cat layers. Those typically have actually combined ratios that are higher than I'd say typical cat program. By reducing this, we don't deteriorate the overall combined ratio, and we significantly reduce the volatility of the portfolio. That's why we expect, you know, to be able to still deliver the net combined ratio that we have targeted, as well as reduce the volatility. On your second question, related to the sexual molestation, the reserve we booked in Q2 relates to a specific program that is not Boy Scouts of America, that relates to sexual molestation claims affected by the revival statutes in a few states. The booking in Q2 reflects some claims received this quarter, which were higher in terms of number of claims, the severity of claims that we had booked in our reserves. This new information will lead us to review our overall reserves for this segment and then put into the context of the overall reserve study that we do throughout the course of the year. Maybe, Fabian, I can pass it to you to give more details on that. Thank you, Jean-Paul. Yes, this is something we have already reserved and taken into account as last year, where we built reserving models to capture these kind of claims. As explained by Jean-Paul, the latest two claims came relatively late in the quarter, and we will need to update as part of our Q3 and Q4 usual reserve analysis the further development of this. We have in front of these claims still a bit of IBNR, but we see it in a range of best estimate, but that's definitely something we will look at, but also see how other reserves development positively influences our overall reserve position. Hi, just coming back, to understand, I mean, this is my lack of knowledge, but this sort of business that was written, you know, 20, 30 years ago, or is this business just being captured somehow on all these old policies? No, these are all underwriting years. The underwriting years affected are, you know, late 70s and 80s. Okay. Thank you. Our next question comes from Kamran Hossain from JP Morgan. Please go ahead. Hi. Two questions from me. The first one is just on, I guess it's coming back to the cat reductions that you've talked about. I'm just a little bit confused because I think you've in the comments just now, you talked about, exiting lower layers which come at a higher margin. I kind of understand that. In your kind of PML in your kind of cat reduction headlines, you're talking about the 1 in 250 reduction of 21%. Could you maybe help, probably small for me, but just help me to understand what the reduction has been at the lower layers. So like kind of more, you know, kind of far tighter, closer return periods than 1 in 250, because clearly, you know, 1 in 250 has not been the issue in the last few years. That's question one, kind of what's a good number for me to kind of hang my hat on there. The second question is on the S&P rating and being on negative watch. Just noting in the beginning, the introductory comments, you talked about high levels of uncertainty that led to the delay of the Investor Day from March until we did the update now. Obviously the rating review is still kind of ongoing. Could you maybe update us on that and whether that might influence your view of kind of dividends for this year, given that the first half of the year, given how tough it's been, suggests it might be an uncovered dividend for this year. Thank you. Jean-Paul, do you want to cover on the first question? Sure. Thank you. The cat reduction, as I mentioned before, is a result of both reducing on the low cat layers on the cat XL book. We also have a significant proportional property book, which is cat exposed both through treaty business and through MGA. As we mentioned, at the beginning of the year, we basically exited MGA business that was cat exposed to the first dollar. On the property proportional, we also dramatically reduced and accelerated this reduction throughout the year. The other big effect, you know, why we're actually landing at a higher reduction than initially forecast is our exit of the Florida-specific company market where despite the, you know, significant price increases, we had also significant concerns about the viability of the companies and the viability of the business model per se, and therefore reduced completely our portfolio to those exposures. That reduction accelerated the PML reduction. Sorry, if I could just come back on that. I think I may ask a similar question in Q1. You know, you've referred to the 21% at 1 and 250. If you're thinking about 1 and 10, 1 and 25, 1 and 50, what would a similar reduction be? 'Cause I've seen there has been quite a material reduction. It would also be double-digit. Okay. Thank you. On the second question, in respect of the rating, we place strategic value on our credit rating. Irrespective of the actions of our rating agencies, we maintain and offer to our clients a A A level of security. We currently hold today a AA A level of capital to be able to do that. Were there to be any specific rating actions that wouldn't have any material impact on the business. Certainly no impact on the life side and limited impact on the P&C side. Really the threshold is A+. I come back to, you know, what we do, what's in our hands, and that is the capital that we hold and the level of security that we provide, and we'll continue to provide that A A level. Is there a timetable for, I guess, the next update? That is a question for the rating agencies, and we don't drive that timetable. Got it. Thanks. You referenced the dividend. In respect to the dividend, that is really premature in terms of process around the dividend. This is a board decision. This would be undertaken in 2023. The board at that stage would take into account all the appropriate information, the financial information, the solvency, the result for the full year, the ratings, capital that we hold and so on. That's the process that will be followed. They will make that decision as a board in 2023. Got it. Thank you. Our next question comes from Andrew Ritchie from Autonomous. Please go ahead. Oh, hi there. I wonder if you could just help us understand, are there any benefit in year-to-date experience from what you've done on reducing the cat experience? I guess I'm trying to reconcile, you know, a significant miss of your cat budget versus actions that you started last year, and I think you even did quite a lot at 1/1 in respect to some of the European risk and again in April. Why I guess maybe can you give us any examples where the loss turned out to be less than it otherwise would have been because of actions so far? Or is it just really a timing issue? I mean, are we? I'm just trying to understand to what degree the 1H outcome is highly backward looking. I suppose that relates to what, you know, is there significant material difference in your positioning in Q3 already? Say Q3 this year versus Q3 last year as we go through wind season. Really, I'm just looking for. Just, I think you need to really explain a bit more why your first half was what it was in the context of the actions you've taken. I guess the only other question is, I don't understand the comment, nor the one you said wanted to flag a reserve review in Q3, and that was flagged again in relation to the molestation claims. Are you trying to flag something more material or a need to look more thoroughly at inflation assumptions? It seems to be a bit of a change versus a degree of reassurance we were given by your chief actuary only, I guess, a month, two months ago. I'm not quite sure what you're trying to flag with that. Thanks. Okay. Thank you, Andrew. Let me pick up on both and then I'll hand over to Jean-Paul. Let me start with second one. No, there is, w hat I said is actually a reiteration of what our chief actuary said on a recent analyst call. It's a usual process that we do, which is quite a thorough one. My simple answer is that we do as we did, nothing more, nothing less. On the year-to-date benefit, I mean, Jean-Paul will pick it up more precisely, but simply put, we started taking actions on the portfolio, on the cat exposures, really starting in September last year, 2021. We haven't gone around the clock, if you wish. Even those actions that we took on our U.S. MGAs in end of Q3 last year would not have the full benefit already. You have your normal in force, if you wish, of that runs over one year, and then you have the full benefit. You know, when it comes to U.S. winds, as of today, we would have 75% of the benefit of having canceled those U.S. MGAs book. Now, when it comes to the overall actions. The U.S. MGA was only the start. We took more going forward. You should see the full benefit essentially 12 months after having taken the portfolio action. This is quite mechanical. Now, my last point, and then I hand over to Jean-Paul, is on page 14 of our presentation. It's not exactly an answer to your question, but it still goes in the same direction, is if we rerun our past five years portfolio with the management actions, the portfolio actions we took so far, as opposed to an 11.7% cat ratio, we would have had 8.5%. You might say this is still above 8% target, admittedly, and so this is why we'll keep pushing. But we, when you do an as if analysis, this is the kind of results we're getting to. So the question is, you know, how quickly does the underwriting years feed into financial year? Here you should expect the next 12-18 months or so to have 100% of it. I hand over to Jean-Paul and then Fabian. Yeah. Thank you, Laurent. To your question, as Laurent explained, I think it's both a question of timing and a question of where the losses occurred. Q1, it was really driven by Australia and some of the European windstorm losses. Q2 is driven again by an increase of the Australian losses, now going from EUR 3 billion to EUR 5 billion market loss, as well as South Africa, which is driven by really one large risk that's been flooded in South Africa. The French hailstorms, which are not property driven are more agro-driven in terms of losses. Now, as Laurent said, I think we would expect in Q3 to see the benefit of our actions for any U.S. cat losses. You know, if it was small to medium-sized losses, this is what we're trying to move away from. I think we'll see. You know, we'll take further actions at 1/1. We've taken some actions on our Australian portfolio July 1st. We'll take further actions throughout the year in 2023, and further actions on our European book and the U.S. book come January. It's a question of both where these losses have taken place and the timing for the actions to sort of emerge through the portfolio. Maybe a word on inflation. I mean, while the CPI is now moving up and we're all looking at that for the first time in several decades, claims inflation has always been higher in certain lines of businesses, and it has been part of actuarial work since always, I would say. We have reinforced this work beginning of almost a year ago with starting on the pricing and reserving side. The last year reserve cycle was already driven by looking closely at inflation. We'll continue that in this year's cycle. We have also taken direct actions on our pricing. We have increased inflation assumption at 1/1, at 1/4, and we are preparing now inflation assumption for the 1/1 renewal next year. As Laurent said, I think that's the normal course of our actuarial work at the moment and we continue this as usual. Okay, thank you. Our next question comes from Ashik Musaddi of Morgan Stanley. Please go ahead. Yeah, thank you. Good morning, Laurent. Good morning, Ian. Just a couple of questions I have is, first of all, I mean, if I look at all the portfolio management actions you are taking, such as reducing cat, reducing agro, taking actions on the legacy portfolio and also looking at the mortality, I mean, it just feels like it's a bit more reactive than proactive. I mean, how would you say that you're not getting out of these businesses at probably the best time, basically? I mean, if cat pricing keeps on going higher and some of your competitors are saying this is the time to get into it. What would you say on that? I mean, if you can give some color on your thinking process around that. Is it just to reduce the volatility and change your portfolio role for longer term or is it, or you believe that your exposure is just outright high at the moment that you need to reduce? That's one question. Secondly, just under IFRS 17, I think there is a slide in appendix which shows that, the total economic value will be EUR 9 billion, but the IFRS equity per se will be similar to IFRS 4. Could you just confirm, is it similar, is it lower, is it higher? In case you could give any color on that. Just one more question. I mean, this legacy claims, I mean, how do we know more about these kind of legacy claims? I mean, do you have more in the blocks that you're aware of, and that could create some headline concerns at some point? Or would you say this is just one of its kind, basically, and there should not be more? Thank you. I can take the first one. I hand over to Ian on the second one. Look, on are we reactive or proactive and is today the right time to write cat? Look, as I said in my intro, you know, I think we have to base our current view of risk on the past five years. I don't think there is any kind of scientific or anecdotal evidence that the cat frequency and severity is going to improve anytime soon. Admittedly, prices increase. Is it completely adequate? Where we think it's not, we get out. I think this is the most rational decision we need to make. So the first point is, you know, betting on the reverse sort of a five-year trend, I think is a view that we don't take. Point one. Point two, however attractive the rate adequacy is, the question is what should be the balance of the cat portfolio in the overall business? This is the cat ratio by definition, is what is the overall cost of non-Cat business that we won't traumatize the cat volatility with. So here, what we're essentially saying is we have too small a ballast, too small a base relative to the cat volatility. So our statement is not just a statement on the cat adequacy. It's also a question, a statement on what is the right balance of portfolio. In order to deliver an 8% cat ratio, we need to amend that balance. Thank you. That's clear. Yeah. Sorry, go ahead, Ashish. No, I'm just saying that's clear. Thank you. Yeah. On IFRS 17, we're still calibrating. There are choices that we're finalizing at present. I would say we're conscious of the balance between hard and soft capital within our balance sheet, and we would be targeting a similar level of equity at transition. Now, obviously, the shareholder equity will be impacted by certain events, and then there will be impact under the new standard from that opening balance sheet at transition from the shareholder equity that you see opening 2022. Yeah, that's the position. Okay. Maybe Fabian, just to pick up again on the reserve comment. Sure. I can reiterate what I tried to explain. I mean, we have built reserving models last year, different ones, because by nature of these claims, it's quite tricky to assess them. The kind of standard actuarial methodology doesn't fully work. At the time, and I think also now, we are in a reasonable best estimate range where we can absorb some further claims. But there's also clearly a slightly open uncertainty around this, and it's an evolving theme. Okay. Thank you. Our next question comes from Vinit Malhotra of Mediobanca. Please go ahead. Yes, thank you. Good afternoon, Laurent. Good afternoon. First question is just on the agriculture business model. I mean, if the AgroBrasil was acquired or maybe acquired more in February 2020, and that was obviously based on your 15-year-plus relationship with them. And then you also said this was the worst drought in history in Brazil. I mean, and now you're cutting back based on this year. Again, Laurent, is this quite a sharp reaction to probably a one-off event? Or could you explain that when you bought the AgroBrasil, look, you know, what has really changed enough for you to now think of it like something you need to reduce the exposure to within a space of two years now? That is in AgroBrasil. Second question is on the P&L reduction fee. Yes, while the return periods, you have to accept over years. Just wondering if there is also another way to cut that pie into sort of the extreme peak risks, like hurricane, earthquake, and then sort of the secondary perils which seem to dominate at least the first half, whether you think of Australia or South Africa, or even some of the agro losses in France. I mean, have you thought of a number in terms of secondary versus peak perils in terms of the P&L reduction fees? There's one more clarification, on the U.S. casualty reserve, review that is coming up or that is going on. Laurent, you said that, or you implied that it wasn't anything out of the ordinary, but just the last answer has very suggested that there is full review going on, and so one could expect something more has to happen in the next few years on the casualty front. Thank you. Jean-Paul, do you want to pick up on the agriculture? Yeah. Yeah. Regarding the agriculture, you're right. We acquired the MGA fully. I think it was 2019. You know, we also have an insurance company which carries the business. Given the level of profitability of the business, we decided to retain a large part of it. What happened is, as the Brazilian government decided to emphasize the program of subsidies, the portfolio grew substantially, and the result, the Brazilian portfolio became outsized compared to, I'd say, the rest of the portfolio. The action we've taken is to continue to write the business through the MGA, purchase more reinsurance so that our net is better under control. We're also looking at sort of adding some carriers in addition to this core carrier for this business to help the MGA grow the business, but not necessarily affect our balance sheets. You know, you are right that the rates are increasing. We've seen the business very profitably, but as I mentioned on the cat, it was an outsized exposure compared to the overall portfolio. We're trying by cutting it in half in Brazil to bring it back in line with the portfolio size overall. Thank you. In terms of the PML reduction, we do track two metrics. We track the 1 in 250 PML, and this is part of our risk framework as we follow this. We also have a second parameter that we track is the earnings at risk, where we look at the 1 in 10 PML and put that over the expected profit that, you know, that we have in our plan. Our target is to reduce both. The PML that we mentioned has been reduced by, you know, 20%. Our earnings at risk is also a double-digit reduction compared to last year. As we move forward, you know, this is going to be the focus of, I'd say, the rest of the remediation actions is to further reduce the earnings at risk. Okay, thank you. Our next question comes from Freya Kong. Sorry, there was a last question on the reserve development in Q3. Sure. I mean, I don't think we can see the reserve development of this segment in isolation. It's really I reiterate the position that Eric conveyed or made two months ago. It's really we need to see that in an overall portfolio. I think that we're very comfortable in the best estimate range. Nothing has fundamentally changed. That's the way we look at this. Obviously, in an inflation environment, and now with this, it's also clear that reserving risk, not only for us, but I think in general, the industry has increased. Okay. All right. Thanks very much. We will take our next question from Freya Kong from Bank of America. Please go ahead. Hi, good afternoon. I mean, given the outsized exposure to Brazil that you had is triggering a pretty meaningful portfolio review of agriculture on top of your Nat Cat book, do you think that there are other areas of the book, not necessarily climate related, that might be worth looking into to manage your overall exposures to single events or geographies? My second question is on the Nat Cat charges in Q2. Could you give us a relative split between the negative development in Australia, South African floods and French storms? Given we've had more French storm activity in Q3, what market share of losses should we be expecting? Thanks. Jean-Paul. Yeah, yeah. We've done a thorough review of what other lines of business do we have significant exposures for, and have performed you know a review and plan to reduce PMLs for a number of lines of business. I think in our plans you know we had the significant growth in cyber, for example, in terms of PML. We think that you know it's a very attractive line of business, but from a volatility point of view, it's also very volatile. There, I think we will probably restrain some of the growth plan there. The other lines of business, I think you know are more modest in terms of the expected loss. I'd say cyber is really the only significant one. In terms of your question on the losses. If we look at the cat ratio for the first half of the year at 10.59%, 9.5% of it comes from 2022 events. We have the remaining coming from negative development in some events in 2020 and 2021 and some positive developments. You know, what do we expect going forward? The storms in France, you know, there's been some storms and some fires in France. We don't think that's going to be a significant loss. You know, we still need some further data on what exactly are the agricultural losses that will generate. Again, you know, the property should be mainly in the retention of insurance companies. With regards to the floods taking place in Australia right now, again, we think it's a much smaller event and should be, you know, probably more in the retention of the companies than the ones that we experienced at the beginning of the year. Thanks, Jean-Paul. We'll take our next question from Darius Satkauskas with KBW. Please go ahead. Afternoon. Two questions, please. First of all, you have a target for normalized combined ratio of 95% and below. I don't know whether you will deal with this target for next year, but given that your reinvestment yield increased materially, do you think it will have an impact on what combined ratio you can achieve in 2023? I mean, do you expect pressure on the underwriting margins essentially? My second question is, after you released a lot of capital from the Covéa transaction and then deploying it into the market and guided to deploy into the P&C market, are you able to give some sort of color on the expected combined ratio you've been deploying this capital at? Another question is on COVID. You had losses roughly EUR 59 million in the quarter. How should we think about the losses, as we head into sort of winter months from COVID? And lastly, on Solvency II, your ratio didn't change since the first quarter, even though interest rates rose materially, and there's obviously been negative sort of experience variance. There's also capital model adjustment that you're flagging. Can you give more color on that, please? Thank you. Can you pick up Jean-Paul on the 95% and below and how and if pressure will come on that from increasing interest rates. Yeah. I think that is a question that I'm sure, you know, a lot of people in the industry are thinking about. Will the rise of interest rates reduce the discipline of the reinsurance market? Frankly, I don't believe so. I believe you have interest rates, but you have inflation, which today outpaces the interest rates. You know, we see it accelerating, not decelerating. I think the central banks have sort of missed it. They're trying to correct it. How successful they will be is unclear. This is economic inflation. You still have a lot of reconstruction cost inflation due to supply chain issues. You have social inflation, which drives casualty claims. The claims inflation is not going away. That requires discipline, underwriting, both on the insurance and the reinsurance side. You know, again, 2022 for the reinsurance industry overall will be another difficult year. You know, Ukraine conflict, you know, still unresolved as to how it impacts the insurance and reinsurance industry. There's no reason for the market discipline to reduce. Therefore, I think actually what we expect to see at the upcoming renewals is increased pricing discipline with probably, you know, double-digit price increases on cat, whether there's, you know, future losses or not, and more pressure on casualty and other lines of business in terms of price increases. On the solvency ratio, we can look at slide 27, where we highlighted the four main drivers of this quarter. We have a positive effect of the interest rates, roughly in line with our published sensitivities, maybe slightly lower. That's always a bit difficult because it's obviously just a kind of a parallel shift and the simplification in our sensitivities when we run the real model. The second effect is that we have the losses that we have seen on the IFRS 4 also affect Solvency II. This is kind of a mechanical translation. We have also accrued the dividend as usual in 1.8 that we do every quarter. We have a one-off effect on how we model certain asymmetries on the life side in our internal model. Thanks, Fabian. I noticed we had a series of questions in respect of the reserves, and we haven't shown where all of the impacts of inflation can occur and some of the protections on the book. Fabian, I don't know if you want to pick up on that and maybe talk briefly to slide 18 and highlight how some of the i mpacts of inflation are managed and limited through the position with the liability. Sure. I didn't talk to this because I thought it's quite clear. We have also a slide 90 in the appendix just to illustrate work that we do and have done, how sometimes our reserving position is affected by different kinds of inflation. The first thing I would like to highlight, and that's also on slide number 18, 41% of our Life & Health reserves are not affected by inflation. This is kind of a stabilizing factor after all. Also when we look at the split of the P&C reserves, the 95%, 59% of our overall reserve position in the different lines of business. We have a significant amount of short-term business that is again, not as affected by inflation. We have also, on the very long-term, business, a lot of motor or European motor exposure where we have, inflation, risk mitigated by stabilization clause and so on. You can see the split quite nicely. What I would also highlight that we are market leader in decennial, which is part of our long tail book, where we have a lot of, in some sense, pricing power and can influence rates, reasonably directly and how we can manage the portfolio. Thanks, Fabian. Go to the next question. I think there was a question. Oh, sorry. Yeah. On COVID. Yeah, just to pick this up. Frieder speaking here. Let me first just say that Q2 claims load for COVID with EUR 59 million was significantly lower than in Q1, and that is just what we had expected. Where we landed is pretty close to our expectation at the end of Q1, given infection numbers had dropped quite significantly at the end of Q1 and then early in Q2. Going forward, I mean, there continues to be a fair amount of uncertainty. We don't know what new variants will occur. The waning of immunity in the population, uptake of vaccination behavior, other changes, and so on are quite uncertain. It's hard to predict the next quarters precisely. I think it's fair to say that given the much higher level of immunity in the population due to both vaccinations and the very high number of infections, in particular due to the Omicron wave, we are not in the same situation anymore as a year ago. Yeah, it's quite likely that there will be, you know, some further waves in the coming quarters, maybe in the summer, when in the southern states in the U.S., people tend to spend more time indoors or in autumn and winter in the northern further north in the northern hemisphere. We do expect those waves to be, you know, less severe than what we've seen in the past two years. The capital that you sort of deployed from Covéa transaction, combined ratio. Can you repeat the question? The question was, you released a lot of capital from the Covéa transaction. You guys are deploying that over two years. Since then, you've been writing quite a lot of business with that. I'm just curious if you can give some sort of color what combined ratio you're sort of writing that business, you know, given that sort of capital being used to write. The new business we're writing on the P&C side, for underwriting year 2022, is significantly better than the 95% and below. You know, we would estimate a point or 2 points below that target, but it's for underwriting year 2022 only on an unexpected basis. Thank you. Our next question comes from Thomas Fossard from HSBC. Please go ahead. Yep. Can you hear me? Yes, Thomas, go ahead. Yeah. Okay. Good afternoon. Good afternoon, everyone. A couple of questions on my side. I just wanted to come back on the business mix shift and the expected reduction in the volatility. On the combined ratio side, I mean, can you be a bit more precise on the kind of combined ratio you are expecting on the business where you are growing the most at the present time? Maybe rehash a bit the view we should have on the combined ratio, especially property cat that you are exiting at the present time. I would have expected some negative effect on the 95% combined ratio, to be fair, because on volatile lines. If you're not writing this business on significantly lower combined ratio, I'm not sure how you could meet your required cost of capital. I'm not sure I get the math right, so maybe you can shed some light around this. The second question also related to the business mix change is, if you're reducing so much the volatility of your business, how should we think about the optimal Solvency II range, the 185%-200%? Should we expect this to be lowered as a consequence of all the mergers that you are currently implementing? The other question would be again related to U.S. legacy book. Just to better understand if we should be aware of other exposure to well-known U.S. cases, such as opioid or, you know, any MeToo claims or everything which is well-known in the U.S. I know you commented in the past, but I'm taking the opportunity of what you've announced today to just, you know, get an update on any material exposures that we should have in mind when it comes to well-known cases in the U.S. The third and last question would be related to your change in the board today, with the head of the Audit Committee leaving or resigning. I don't know exactly what the right term. Should we see any negative implication from this or any negative signs? Thank you. Jean-Paul, do you wanna pick up on the combined ratio on the existing and then writing? Yeah. You know, you're right, Thomas, that for some of the cat business on an expected basis the profitability tends to be better than some of the business. For example, some of the remediation we've taken the cat de-risking in June, July you know led to an increase of that you know the expected net combined ratio of that book of roughly half a point. You know when we compare it to the overall portfolio we had some significant improvements of the portfolio at the June at the January and April renewals. When you put it all together we think the you know the improvements outweigh sort of the small negatives that come from that. In addition, we still see the specialty insurance portfolio where we have significant growth as still being producing a better expected net combined ratio than the reinsurance today. You know, we think in 2023 reinsurance will likely catch up. In today's market, we still see specialty insurance as producing a better overall net combined ratio. On the solvency range, maybe. Just on the solvency ratio range, pick up on that. There's no change to the target range or the optimal range of 185%-220%. Were we to revisit, we would take the opportunity of the strategic plan to consider that, but at this point, there's no change in that range, Thomas. Understood. Yeah. I mean, should we expect this to be the logical consequence or direction of travel, given the change in business mix? I was going to say, I think there is a case for the opposite, Thomas. In a sense, if you look back our solvency scale range, we've put it in place, was it 2013? In that area. The interest rate environment at that time was radically different from today. I think just the mechanical interest rate impact means that at constant solvency ratio it's just situation is very different. Here we have some kind of a wealth effect where the solvency gets boosted by a mark-to-market mechanism. We haven't got necessarily return in terms of cash, since it's mark-to-market effect. This is clearly an area where we are doing some work for the new strategic plan. You could expect that actually across the board in the industry, the solvency ratios are going to be mechanically reviewed upwards at constant financial strength otherwise. Laurent, sorry to argue on that, but I mean, should the better investment environment be a positive for cash generation going forward? I mean, I guess- Yes. This bring a bit more profitability to your business. Absolutely. In this interest rate rising environment, the mark-to-market effect is much faster than you would take all of the credits as of today in terms of cash flows. In reality, the current solvency ratio has this rate effect from interest rates. You should adjust the solvency from the interest rate environment, or you should kind of put it in the comparison to it. I don't see the solvency range having to come down as such. In terms of your question on the U.S. legacy portfolio, we haven't identified any exposures beside the portfolio that affected us in Q2. We continue to have very limited exposure to opioid, to Boy Scouts of America and other known sexual molestation or class action claims. That's as of today. A lot of this litigation came from changes in statute law which made closed claims reopen. For the time being, we don't see anything in the future, if there's again a reopening of closed claims, we will have to review. Laurent, do you want to pick up on the changing board? Yeah. On the last question, should we see negative signs? Look, no, I don't think so. I mean, Corey has left for personal reasons. We have the new chair of the Audit Committee, Bruno Pfister, is a very experienced, very seasoned first of all board member at SCOR. Before that, some of you might have come across him when he was CFO of Swiss Life and then CEO. Extremely strong, extremely involved already. He was the chair of the Risk Committee, so he's very familiar with the company, and that's a very good news. Bruno is replacing his position as chair of Risk Committee by Adrien Couret, who as well has been on the board for two years now. We see that actually positively. We go to the next question, please. We will take our next question from James Shuck from Citi. Please go ahead. Hi. Good afternoon. Thanks for taking my questions. Just wanted to circle back on the capital position. I think at the time in the 2019 Investor Day in September, there's talk about wanting to retain capital in order to be able to fund growth in the business. I think you talk quite a lot about deploying capital. If I look at the IFRS and I look at the underwriting risk allocated to P&C, that number has actually come down. Well, it's actually been increased over maybe up a little bit in 2021. I know you're showing today at H1 just based on the group SCR has not really gone up very much in H1. Obviously, you're hedging to PML and volatility and whatnot. I can't actually see how you're deploying capital into P&C on an overall net basis. When I look at your optimal range, maybe your uncertainty, I hear what you're saying about interest rates being higher, but it's difficult for me to join up all the pieces and then see how you're deploying the capital into a hard market. That's my first question. The second one, really on the right and left sides of things. The technical margin ex post, it was well above your plan in Q1, well above plan in Q2, I think 10%-12%, something like that. What are the drivers of that? What are the management actions? What are you seeing in terms of positive effects excluding COVID? How should we think about that life technical margin for the remainder of this year? I guess your update on that at the Investor Day in November and obviously the outlook over the medium term. Thank you. Fabian, on the capital deployment. Sure. When you look at what we deployed on capital in the first half of the year, almost EUR 200 million has been deployed new capital, and that's part of why also in some sense our solvency ratio didn't increase a lot further. That's the normal business where we bring the capital at work. There's over, in some sense, EUR 200 million newly deployed capital for writing new business. This is obviously compensated by an amount of capital relief through the increase of interest rates, which was almost double, so big. That's why you will not see it fully in the solvency ratio as of H1. Can I just circle back on that quickly before you go back to the other question, sir? It's just, you know, over the last 12 or 18 months about how you are deploying capital into a hard market. I hear what you're saying in terms of H1, but in 2021, the underwriting, you know, capital allocated and the SCR, you know, it's not really gone up. I would still struggle to see the plan that delivered on the growth goals in 2019, that we can leave that in the past. Just are you actually intending to deploy capital from your optimal range, you know, level at this point in the cycle? I mean, one thing, I think I explained that in the past also on the analyst calls, is the how we calculate the SCR also contained in some sense the expected profit we make with this capital that we deploy. In some sense, you have a dampened effect on the additional risk we take is compensated by the additional profits we will make. That's in some sense. That's why often if you look at the reporting or if you look at the way our SCR evolves, people underestimate the amount of SCR reduction we get from additional expected profit in the year. That's kind of a mechanical definition of how the Solvency Capital Requirement is calculated under Solvency II. We can take into account the expected profits that you make during in sometimes the modeling year. Yeah. Okay. Thank you for that. On the question on the Life & Health business. First of all, the underlying performance of the business is strong, and we see good levels of profitability from different parts of the business in different parts of the world. And that's been very, very favorable in the past two quarters. We do work a lot on managing our large in-force portfolio in different parts of the world, and that's become an area of focus over the past couple of years, and that's certainly something which we are intensifying. You know, we do have, on a number of treaties, contractual rights to increase premium rates where the performance of the business is not satisfactory. This is something which we exercise on a routine basis where that is appropriate. We work with clients and also with retail partners on other solutions which help the business perform better, and that can take, you know, a variety of forms. More generally, we have a very strong reserving level, and the development of the reserves is helping us, you know, generate the level of profitability which we have seen in the past quarters, which, as you said, is somewhat in excess of the increased guidance which we have given at the 2021 Investor Day. Has there been any release of the margin over that estimate, in the Life & Health business in advance of IFRS 17? There was nothing unusual. We have worked on our in-force portfolio as we've done in the past. We continue to build up new reserves on new business which we are writing, so there wasn't a particular one, no. Okay, great. Thank you very much. Our next question comes from Vikram Gandhi with Société Générale. Please go ahead. Hello. Hi, it's Vikram from Soc Gen. I hope you can hear me all right. Just a couple of quick ones. Firstly, the floods in Australia. I'm aware it's quite a significant event for the industry, but if I look at the past 10, 12 years of history, I really do not recollect any year where SCOR has had any notable exposure to Australian Nat Cats. So just curious, why are we seeing such a large impact from Australia this year? That's one. The second question is, what's the group's level of comfort with respect to BI losses related to COVID? What are you seeing in the market in terms of the latest developments? If I can squeeze in another one, the pullback from cat and agro lines versus the growth in specialty and global lines. Can I just request your comments on how you think a recessionary environment can impact the specialty lines? Finally, I'm a bit confused on the messaging around casualty. Slide 14 seems to suggest there will be growth in casualty as one of the later actions, whereas slide 87 talks of scaling back from some of the U.S. casualty treaties. Any color there would be helpful. Thank you. Thank you, Vikram. With regards to the floods in Australia, you know, these floods occurred in Queensland. We have particular exposure, I'd say on the lower cat level to these types of events in Queensland. It comes from, you know, some of the low cat layers that we wrote there as well as some of the proportional treaties we wrote there. That's why you know, the floods that are taking place in New South Wales, we expect to have less exposure because we have less exposure to low cat layers and less exposure on a proportional basis. That's where our gross exposures are coming from for this particular event. In terms of your second question, With regards to BI and COVID losses, we still have some uncertainty on a limited number of contracts and disagreements, I'd say, with our clients of how to view the claims and how to aggregate them. What is the cause, what is the peril? We're continuing discussions with them. I think the insurance companies themselves are gathering additional information. The claims settled by insurers is still ongoing and far from finished. I'd say right now, we had some small increase on a gross basis, but believe on a net basis, no net impact. We continue to feel comfortable with our estimates to this date. Your third question relates to specialty lines. You know, we do believe that specialty lines will be impacted by recession, especially in an inflationary environment. The key question is, you know, how much will price react? Right now, we think a lot of these specialty lines of business are adequately priced. We've seen, you know, year-on-year price increases slow down in those areas because we're at a good rate adequacy level. The key question mark is, you know, will rate increases pick up again to account for deteriorating environment or not? I think if the answer is not, we'll probably have to review our growth plans in those areas. To your last question on casualty, we do believe, again, the rate adequacy on the insurance side for a number of markets on the casualty side is good. You know, we have grown our casualty book of business on the specialty insurance side. On the reinsurance side, especially for U.S. casualty, we believe the reinsurance terms are still inadequate in terms of the expected returns to the reinsurers compared to the volatility. We've seen, you know, commission increases at the beginning of the year. The July first renewal, we saw less of that, more stabilization of commissions. The growth in that segment will be really driven by what happens to reinsurance terms, comes 1/1. Okay. That, that's really helpful. Thank you, Jean-Paul. Thank you. Our next question comes from Dominic O'Mahony from BNP Paribas. Please go ahead. Hi, folks. Thanks for taking questions. Just two if that's okay. I wonder if you could just give us a little bit more granularity on the specialty exposure, both of where you've been growing into and also how you think about the prospects looking forward. I mean, you've described on the side in the appendix the sort of property energy liability pieces, but I wonder if you could go down another layer and talk about where you see sort of the best rating yourself and best opportunity. Secondly, just on the sort of 95% combined ratio, when I sort of strip out the drought, the molestation claims, and the cat, I think I still get to above 95%. Is that sort of on plan for yourselves? Are you seeing sort of other challenges in the quarter that maybe mean that you are still feeling very comfortable with the progress there? Or are there sort of headwinds that are impacting your glide path through to the sub-95%? Thank you. Yeah. Thank you for your question. If I look at the July renewal, the lines of business where we've grown the most are, in terms of specialty, were credit and surety, marine and energy and IDI. For example, on the credit side, we see that segment is being really reactive to forward-looking economic scenarios. We saw price increases on the credit and surety side of roughly 7% at the July renewal. Marine and energy, IDI are decent rate adequacy levels. The price increases were more around the 2% level. That, you know, that's where we saw good opportunities at this renewal. If you look at the through year-to-date, marine and energy is an area where we've grown significantly this year. IDI is another one where we grew significantly. Now looking forward, again, we expect the credit surety to be affected in terms of loss ratio by a negative market environment. We believe a lot of the insurers are already baking some of that into their rate projections and the rates they're pushing through. You know, there's been a lot of portfolio cleanup done during COVID and all that. We can see that through the very stellar performance that most of these portfolios have experienced in 2020 and 2021. You know, then it's a question of reinsurance terms, and we expect reinsurance terms to improve going forward. Again, that's how we're building our projections. If these do not materialize, we'll have to review our plan. Fabian. In terms of specialty insurance of large corporates. Looking at slide 89, the property rate increase are actually holding a bit better than we were expecting. We are seeing rate increases of 8% in property. In energy, we're seeing quite a lot of competition on the market. Here the rate increases are, you know, barely flat. There has been some loss activity on the market for energy. We think that it could potentially lead to a reversal of this trend for energy rates. Actually beyond the rates themselves, our focus is very much on, you know, the funds insured and making sure that they really reflect the claims inflation that we are seeing. Also bearing in mind that in the claims that we see typically, say, in property, there's a property damage component that is sensitive to inflation. There is also a business interruption component, which is more driven by other things like tensions on supply chains, rather than inflation per se. Our next question comes from Freya Kong from Bank of America. Please go ahead. Hi, thanks for taking my questions again. Just to follow up on the Life & Health business. There was a comment in your press release about more volatility on excess non-COVID deaths in the U.S. Is there any color you can offer on this, and what increase are you seeing here? Just on the agro business, you said you're moving into non-proportional. Does that mean you're moving from more primary business into reinsurance? Thanks. I can take the first question. What we have seen repeatedly over the past quarters is that in periods in which we've received significant number of claims which were labeled COVID, we also tend to see somewhat higher number of claims which are not labeled as such, but for which there is, you know, a fair likelihood that at least some of them are, in one way or the other, related to COVID. Be it because the death certificates are not precise, be it because the persons are deceased have not been tested, or be it because they have died in the period in which the health system has been strained. Our definition of COVID claims is quite narrow. What we report as such only captures claims which have been officially labeled as COVID claims. You know, we do see that correlation, and that has become part of how we plan and anticipate performance on a quarterly basis, you know, as that trend has manifested itself over the past quarters. As I said, we have anticipated this. We are reserving for this and have got used to that. On the agro question, just to clarify, Brazil is the only country where we actually have the whole chain of owning the MGA, having insurance carrier and being a reinsurer. In all other geographies, we act only as a reinsurer. When we talk about the non-proportional, you know, I described before how we plan to reduce our exposures in Brazil on a net PML basis. In the other territories, what we want to do is shift our portfolio from predominantly proportional today to more balanced between proportional and non-proportional. Okay, thanks. We will take our next question from Thomas Fossard with HSBC. Please go ahead. Yes, maybe a question for Frieder. You know, Frieder, in 2021, I think that you had a lot of benefits from portfolio actions. Actually, I think it was for 2022 indicating that we should expect a much lower level on a comparative basis. Now if I'm looking where you stand today, you seem to come through still very significant in a positive way. Yeah, you indicated a couple of items like through pricing and things like that. But I was wondering, you know, how much of the EUR 600 million benefits from the Covéa deal you have already used up. And is there any incentive for you to use up this reserve before moving into IFRS 17? That's the first question. The second question would be for, maybe for François on the investment side. Actually hearing from the U.S., there is some people saying that they could accelerate the exit of some of the fixed income portfolio realizing losses in order to get more exposure to higher interest rates and picking up the yield. They are seeing it. They are signaling kind of an acceleration in the turnover of their investment portfolio. Is it something that you're thinking or you're planning, you'll be planning to do? That would be my two questions. Thank you. Frieder, do you want to start? On the first question, at the Investor Day in September, we announced that we are increasing our run rate ex-COVID technical margin expectation, you know, from 7.2% to 7.4% up to 8.2% to 8.4%. That was, to a large extent, driven by the fact that we had a stronger reserving position after the in-force retro transaction of about one year ago. Beyond this, that continues, you know, to be the case and is, you know, unchanged compared to September. What we've seen in the past two quarters is that management action and portfolio management have added significantly to the performance of our book. That is, as I said, that's an activity which we continue to strengthen and focus on given the large size of the in-force portfolio. I wouldn't expect this to, you know, trend down. This is a continuous focus activity. We will maximize the financial benefit we can generate out of this, working closely with our partners and clients to reach favorable outcomes for everybody. On the investment side, maybe we could go to slide 20 of the presentation. I think we have a big advantage at SCOR, you know it, that the relatively short duration of our investment portfolio that is linked to the relatively short duration of our liabilities. You see the pickup in the regular income yield already in Q1 and in Q2 with our investment rate that has been almost double, as mentioned by Laurent in his introduction, between the end of last year and the end of June this year. If you look at the positioning of our portfolio, almost 40% of our portfolio is going to mature, and mostly through the fixed income portfolio, is going to mature over the next 24 months. That's a deep conviction. Our portfolio, our investment, our regular investment income will increase faster compared to peers in such an environment. If you take, we did a simulation. If you take with the current asset allocation, and we maintain this asset allocation up to the end of 2025, our regular investment income will increase from 2% to 3%, 3.5%. If you take the middle of the range, it's an increase of EUR 300 million pre-tax from the investment portfolio that is expected in 2025, which is a massive pickup. We won't accelerate. I mean, the acceleration of this investment is already in place given the positioning of the portfolio today. Keep in mind also that the unrealized losses that result on the fixed income portfolio, which are sizable today, are just unrealized losses. Which means that given the positioning of the portfolio, which is short, we won't have any liquidity issue, so we can hold until maturity those securities. Through the time effect, this amount of unrealized losses will evaporate over the next three years. Ladies and gentlemen, this concludes today's question- and- answer session. At this time, I would like to hand the call back to speakers for any additional or closing remarks. Thank you. Thanks, very much for attending the call. I'll just hand across to you Laurent. Thank you, Ian. Thank you for all of your questions. I think, you know, if I recap some of the key points that came up in the call, I'll start with the one, actually the very last one from François on the benefits to be expected from investment return in the next few years and has already started. Just as, you know, another area of questions which we got today, how quickly do we see the benefits of the P&C reshaping into the P&L? I think the benefits of the investment portfolio reshaping in the P&L is going to be progressive, but it's going to be meaningful, both of them. My third point, interest rates is gonna be positive. P&C is going to be positive over time. The third point is indeed the current state, the current change in macroeconomic environment and assumptions clearly bring some questions. We're addressing them very hands-on. The reserving process of 3.2%, I think is a standard one. There's nothing else to be seen in there. There's going to be, and we have been seeing, some buffers and areas of conservativeness, which we're going to use as we always have. For sure, some areas of the portfolio will show some deterioration. I think this is normal course of business, and this is a normal dynamics in our industry. We have showed you, I think today, the actions we take. We have showed you very candidly the areas of pain and the areas of benefit that we think forward. You can expect from us this continued transparency. On this, I'd like to thank you for all of the questions today and look forward to our next call. Thank you. Thanks, Laurent. The reminder that the call for the Q3 results will be held on November the 9th, at which point we'll also reveal the new strategic plan for the group. Thanks very much. Good afternoon. This concludes today's call. Thank you for your participation. Ladies and gentlemen, you may now disconnect. Thank you for calling.