AXA SA (CS) Earnings Call Transcript & Summary

Good afternoon, and welcome to AXA's Full Year 2024 Results Presentation. The results will be presented today by our Group CEO, Thomas Buberl; Group Deputy CEO, Frederic de Courtois; and Group CFO, Alban de Mailly. For the Q&A session, we will also have Scott Gunter, CEO of AXA XL; Guillaume Borie, CEO of AXA France; and Patrick Cohen, CEO of AXA Europe. With this, I turn it to Thomas for the results.

Thank you, Anu, and good afternoon to all of you. Very happy to see you in London here and to present to you with my colleagues a good first year of our 3-year plan Unlock the Future. When you look at the key highlights, you see that the business is in very good shape. We have achieved an 8% growth on revenue across all lines of business, across all geographies. And this has also translated into an 8% underlying earnings per share growth, which is, as you know, at the top end of our range of this plan. Very importantly, the solvency is 216%. So a very solid balance sheet, a strong capital position, which has led the Board to decide that delivery for shareholders based on these results is very positive. The dividend per share will increase by 9%, which also is a clear indication of the confidence we have in the business and also being able to deliver for the rest remaining 2 years. And an annual share buyback, a new program of EUR 1.2 billion, which represents a 75% payout ratio. So you see that the excellent operational performance is underpinned by an attractive return to shareholders. If we go a little bit deeper, we see that AXA today is simple, is balanced and is focused on insurance. Today, we are only an insurer and it's good that we are only an insurer because that's the business we know best, that's the business we focus on. We are simple in a way that we are serving enterprises from the small SME to the large global commercial. And we are on the retail side, top 3 multiline insurers in Europe and we have leading positions in protection and health in Japan and Hong Kong. Balanced because both of it is 50 to 50. And certainly, when you think about diversification and the different dynamics of these businesses over time, it's important to be balanced and to have within this balance, very high-quality businesses with leading positions because that gives you attractive and scaled businesses and then certainly also predictable earnings growth, which we have shown over the last years. If we look at the top line development, the last years were always a little bit blurred because we had many disposals, we had business rightsizings, but the underlying dynamic was always 6% organic growth. From '23 to '24, we were not -- and the numbers were not disturbed by any disposals and large rightsizing. And you have seen the organic growth power that is amounting to 8%. This 8% is very consistent across all the lines of business, plus 7% in P&C, plus 9% in Life, plus 8% in Health and is also very consistent across all the geographies. So the attractive positioning we have in growing markets helps us to develop these and to generate these numbers. This is very much based on a high customer satisfaction. When you look at our NPS numbers, you see that they have steadily grown over time and have reached very high standards. And what we are very proud about as well, a very high customer retention in almost every market. We are also very happy to see that the investments in growth initiatives that we have been mainly focusing on 2024 start to pay off and we will hear later on from Frederic more detail around it, be it in midmarket, be it in employee benefits, but also be it in expanding our distribution footprint. So what you look -- what you see here is the very disciplined execution of the plan that we have presented to you about a year ago. As I said, this top line growth also translates into very strong bottom-line growth, the underlying earnings per share being plus 8%. And so when you look at the time line, there is -- again, you see that AXA has been delivering consistently earnings year after year in very different environments that have, over time, become more and more volatile. And if you go even further back to 2016, when I started as a CEO, the increase in profit and underlying earnings is north of 40%. So what is nice to see is that top line is translating into bottom line, that we have consistent earnings. And if you look at these numbers, EUR 110 billion revenue and EUR 8.1 billion of profits, these are numbers that we have never seen in the history of AXA. What is it due to? As I said, it's due to the very disciplined execution that we have on clear strategic priority. It's our focus on excellent technical profitability. And as you know, the year 2024 was very focused around getting the German operation, the German retail business and getting the U.K. retail business and health business right. And you have seen that we have delivered on it. And certainly, the investment in technology and AI, as I said earlier, has shown its first effects, has also been a drag on our earnings in 2024, which will not repeat in the remainder of the plan, but will enable us to continue this dynamic going forward. So we've built a business over the last years that is now in good shape, that is global, that is performing well, that is giving steady and consistent returns and that is a reliable profit generator for the future. When I talk about the future, we need to also look what are the catalysts for near-term growth in the last -- in the next 2 years, but also beyond that. And on the commercial insurance, you clearly see that midmarket is an area where we see significant growth. We've already delivered good growth numbers in the high single digit. The energy transition is still a growth factor for us. But also when you think about companies, they want to do more for the wellbeing of their employees. They want to care more about their employees in terms of talent retention. There is an area to capture growth with our digital capabilities and the global pricing assets that we have. On the retail side and it's important as well because of our balanced model to have a strong and large retail presence. We can certainly do more and want to benefit more from a new pension and savings area where people think more about retirement. If you look, for example, in France, the public debate is very much again around retirement. And so revamping our product offerings, making sure that we are becoming even more present in this area. This has already started last year, in particular, in France and Italy. We want to benefit from this. And certainly, when you think about the retail P&C environment, we are now at a level where we have done all the necessary work to be at the technical level that is necessary. And now we need to use our large franchise to also gain more market share across all the countries. We have achieved that already in those countries where we didn't have this significant restructuring to be done, so the U.K. and Germany. But if you look at the net new customers or net new contracts across all the other markets, you see that we have been very successful already. So we are very confident that we will sustain this momentum also for the years going forward. What does it mean in terms of shareholder return? We are -- the Board of Directors is proposing to the shareholders a dividend of EUR 2.15, which is an increase of 9%. And when you look at the total yield, it's about 7% dividend and share buyback based on a very clear capital management policy. And what does that mean? If you again look over the last 4 years, AXA will have returned 40% of its market cap to the shareholders. 75% is paid out to shareholders. What happens to the other 25%? The other 25% is invested in our business at attractive returns. And when you look at the book value and the compounding book value per share over time, you see that it's very attractive as well. So our strategy will continue exactly what you have seen in 2024, continue to generate sustainable and predictable earnings, while making sure that this value is also being created for our shareholders. And when you look at where we are along the key KPIs of our plan, we see that we have had a strong start of our plan on the underlying earnings per share area at the top of the range, on the return of equity in the middle of our range. And certainly, when you look at the cash, bang on, if you look at the 3-year plan. So we have high confidence that over the next 2 years, we will also deliver the plan. We need to remain focused on our execution, which we have proven in 2024 and which we are dedicated to do with my whole team. And that's why I will now hand over to Frederic, who will go more into details and show us what 2024 looks like, but also what the outlook will look like. Thank you.

Thank you, Thomas. Good afternoon. First, a few words on the context. It is clear that we are operating in a changing context. But we believe the context is positive. If I look on the left part of the slide, first, we have political uncertainty in the U.S. and in Europe. We haven't seen any impact on our business and we believe it will remain so. Second element, inflation in Europe is receding and this is good news for insurance companies. Third, you know that we have diverging interest rates, U.S., Europe and Japan. We are exposed to these 3 areas. But overall, interest rates remain at a good level, which is good for the insurance industry. On Nat Cats, you've seen that our exposure to Nat Cats has decreased in '24. This is a mix of good underwriting of geographical mix, but we remain cautious. We believe that Cat will keep increasing, the severity and the frequency will keep increasing. So we will manage this in a very disciplined manner. Last element I wanted to highlight on AI. We are absolutely convinced that AI will have deep positive consequences for the insurance industry, be it on technical excellence, be it on productivity, be it on the customer experience. So we are convinced that it will have a very positive impact and this is all a matter of execution. On the right part, on the business performance. So we've delivered in line with our plan on all dimensions. First, on Commercial lines. So we've seen good growth in P&C Commercial lines with margins at an attractive level. On retail, we've been delivering on margin recovery in the U.K., in Germany motor and we've been growing where we wanted to grow, so in other key markets. On the short-term Life business, on short-term Protection & Health, we are seeing higher profitability and good growth coming especially from the recovery of the U.K. health business, but not only. And we see improving net flows in savings. Last but not least, we continue to be extremely focused on cash with an 82% remittance ratio in '24, which is in line with our targets. So what is the overall message? First message is we are done with the fixing. All our business units are on track and in good shape. Second message, this is, we believe, a strong start and it reflects disciplined execution. Let's look at the Commercial line business. So you know that we have a leading franchise on Commercial lines with EUR 35 billion premiums with a good balance between SME and midmarket, mainly in Europe and big corporates at AXA XL. Margins are in a strong place with a 91% combined ratio. And we see good opportunity to grow. We see good opportunity to grow and I will highlight especially 3 areas. Overall, in our Commercial line business, retention is increasing. And you see the figures here at AXA XL, which are very good. And this is especially important for Commercial line business to keep your profitable clients. Second opportunity area for us, which is the midmarket area. You know that we have a specific initiative on the midmarket. We have a specific initiative to grow in areas where we are not strong. And be it in the U.S., be it in Italy, be it in the U.K. and Ireland, we are really happy with the results, both on the top line and on the bottom line. Third area, we believe that there is a good economic momentum in the U.S. and we are investing there to grow more on big Commercial lines, on midmarket and on E&S. But at the end, our focus is on sustaining our good profitability and our good margins. And as you see on the right side, this is all about cycle management. This is all about the mix and the cycle is different according to the business lines. So we are keen to grow in some business lines where the profitability is good. We are less keen to grow in some other areas. This is what we call portfolio management and we think we are doing it well. And we do not hesitate to decrease our business where we don't like the profitability level. Last but not least, as you know, the cost of reinsurance is moderating and it is supporting margins for our Commercial line business. So what is next on this P&C Commercial line business? We expect to see good top line growth in '25 and some improvements in margins in '25, which will drive earnings growth. If I look at retail now, so we have a good franchise on retail, especially in Europe with EUR 19 billion premiums. You know that some of our peers are including SMEs in the retail line, which we don't. So if we included SMEs in the retail lines, it would be a EUR 30 billion business. So we could do both. We've decided not to include it, but this is important for you to know. So this business benefits from, first, a good customer satisfaction and we are very proud of this and you see here the figures. It also benefits from a strong proprietary distribution. We had said last year when we communicated our plan that we would grow our physical distribution channels. This is what we are doing in -- especially in all Europe and in France. And we also have a very good direct franchise in some markets in Europe and in Asia, which is doing well. We are also happy about our execution in '24. I said it already, we have delivered on the turnaround in the U.K. retail and Germany motor and this is good. This has led to a 2 points improvement of our retail technical margins. This turnaround has been based, of course, on underwriting, on pricing, on claims initiatives. But overall, I would say that we have been more courageous than the market. We've increased our prices more. We've been tougher on the underwriting and this is good because we are now in a good position. Second area on which I would like to insist on the good execution, which is that we've grown in some markets which we like and we have not grown in some other markets where we believe that margins were not adequate. Overall, the balance has been 0. So if you look at our retail portfolio, overall, the balance has been 0, but you see that we had good growth in France, in international markets, in Italy and Switzerland. And we've accepted to decrease our portfolio in Germany and in the U.K., but also in Ireland and in Spain because the prices were not adequate. You will see positive growth of the portfolio in '25. So what is next on the retail business? First, we believe that margins will continue to improve in '25 because pricing will be earned through and inflation is moderating. So in this context, we are focused on growing our portfolio and growing our volumes. Let's move to our Life & Health business. So first, this is important to understand that our Life & Health business is made of 2 different parts. The first part is what we call the short-term business. So this is pure protection business, P&C like, annual repricing, managed like P&C business with a combined ratio. And here, we had a good growth last year. We had a 10% growth of this business with a good profitability. This is overall a EUR 16 billion premium business. And it includes our very good and very profitable employee benefit franchise. We had told you, I think, last year that the EB business was growing fast in a post-COVID environment. And this is again confirmed. Our EB business has grown by 12% last year and we are very happy about this. This EB business is really a priority for us. We have a good franchise. We have a very good platform that we have rolled out now in 14 countries. And we continue also to invest in the individual protection business, especially for professionals and self-employed. In Health, I would like to highlight the good job done in the U.K., the good turnaround done in the U.K., which was well executed with a 7.5% improvement of our combined ratio. You haven't seen everything yet. In other words, you will continue to see improvements in '25. And all of this has helped to deliver half of the 3 points margin improvement that we had announced for our plan and this is good. So going forward, what do we expect? We expect that our margins will continue to grow in the U.K., as I've just said. We will recapture the Laya premium for the first time in Ireland in '25 and the Laya premium in '25 will be around EUR 1 billion. And you will see overall further margin expansion as we systematically leverage our global capabilities on health care pathways, data set and pricing model. So in a nutshell, what is next on this business? First, we have a good potential to grow, to grow the top line. And we believe that we have also the capacity to grow the margins of this business and the growth of the margin of this business will drive the earnings growth of our Life & Health business. Last business I would like to mention, which is our long-term Life & Health business. So long-term Life & Health business is mainly a savings business, but this is also the health business in Japan and in Germany. We have a total of EUR 36 billion premiums. So this is a CSM-driven business. So this is why we manage this business in the short term and the long term in a different way. So the short term is P&C like. This one is, again, a long-term business driven by the CSM. And I think this is important here to look back at the history. The history for us on this business is that we've been extremely disciplined over the past years in a very low interest rate environment. And absolutely no regret on this. We believe we've done well. Now the objective is to regain momentum, to regain sales momentum, knowing that in contrast to the short-term business, here, you regain sales momentum, but it takes some time to see it in the bottom line. But again, now that the context has changed, of course, we remain disciplined, but the priority is to regain momentum. In addition, you know, if I look again at the history that we had outflows over the past 2 years linked to high short-term interest rates, the strong competition from short-term banking products. This negative effect is now disappearing and you will see that it will gradually disappear. So to be more specific, where do we see the momentum? We start to see the momentum on premiums and you see that be it on unit-linked or on capital-light general account business, we have a good sales momentum, especially in our proprietary distribution network. The good news is that we are also seeing a strong improvement of surrenders, as I've seen. So we had strong surrenders in '23. We again had significant surrenders in '24, but you've seen that over the quarters, all of this has gradually improved towards a much better situation. Having said that, we are clear that we can do better on this business. Again, we have to regain momentum. For a few years, the priority was to be disciplined, to be disciplined on the mix, to be disciplined on what we sell, to be disciplined on the volume. Now that the context has changed, we can do better and we know what we have to do. We believe that we have a strong competitive advantage, especially against asset management companies. We can offer lifelong whole life annuities, which is good in a moment in which pension are growing. We can offer protection riders. We can offer guarantees when it makes sense. So we believe that we have a good competitive advantage. And we believe also that the partnership with BNP Paribas on asset management will bring some benefits to us. We had some underperforming asset classes at AXA. And we believe that with this new partnership, it will boost our Life business. So in a nutshell, what is next on this business? From now on, we will invest and focus more on this long-term business and especially on pension. I had said it already at the -- when we communicated our plan. To put things in perspective, a 1% increase in Life & Health earnings requires a 0.3 point improvement in the short-term combined ratio or 1.5 points of change in long-term CSM release growth, which gives order of magnitude. So on this Life business, we are very confident with the business. We are very confident with the potential and we are very confident that we can do better than what we are doing now. It's all a question of focus. One sentence to conclude on this first year, we are fully on track with the execution of our plan. Thank you.

So good afternoon to all. Let's go now to the details of our earnings for 2024. Yes. And I'll start with P&C, which is our largest line. What's remarkable about P&C in 2024 is that we had both very good top line growth and margin improvement and we had also a good balance between volumes and price. So if I start with Commercial lines. So it was another good year for AXA XL, which benefited from good volumes. Others from new business in lines where pricing was dynamic and better retention in the other lines where the pricing was more stable. And you saw in Frederic's slide how retention improved at AXA XL. On the price side, you know that overall, it's not one cycle at AXA XL, but different lines. When you look at casualty, prices were still up quite significantly, 4% in Europe, 10% in the U.S. When you look at property, still, it was also more than sufficient with plus 4% in Europe and 7% in the U.S. But as we said also last year, on the financial lines and notably in the U.S., the market remains soft. But overall, prices were up 2% for the whole year for AXA XL. In SME and midmarket, we saw absolutely no sign of a cycle. Pricing conditions remain favorable overall and demand remains strong. AXA XL Re, plus 10%, half from pricing, half from volumes. And finally, in retail lines, so it was up 7%. When you look at it this way, pricing was plus 10% and volumes was minus 3%, but it's obviously due to the very strong repricing and turnaround that we executed in Germany and in the U.K. You know that in the U.K., we increased prices in retail by more than 30% and close to 15% in Germany. If you adjust for those 2 countries, we were at plus 6% in the other countries, half from volume and half from prices. And we grew, as Frederic showed, in those countries where margins were good. So very good mix and very good top line growth in P&C. As I said, that we were also able to improve our margins. And I think what matters most is the undiscounted loss ratio, excluding Nat Cat, that improved by 1.1 point. That came obviously from the retail lines and again, Germany and the U.K., but not only Germany and U.K. because we also saw improvements in retail in the other countries. And we also saw margin improvement in Commercial lines AXA XL. If you remember 1 year ago when we were here presenting our plan, we told you that we saw potential for margin expansion in Commercial lines AXA XL and that's what we saw. And margins remained stable at XL in '24. So we managed to improve our margins with the attritional loss ratio. On Nat Cat, we had a good year. We had a Cat load of 3.8 points below our annual Cat load or budget of 4.5 points, partly because of the exposure management, partly probably also because some Nat Cats were not in the geographies we're in. So we cannot always take credit for everything. And we remain cautious for our Nat Cat load for '25 and we keep our 4.5 points budget for '25. Expense ratio was slightly up 30 bps. That's exclusively due to acquisition costs, commission and that's a business mix point. And finally, on PYDs, it slightly increased. That's simply a proof of our prudent reserving. I don't think there's much more to say about it. But as Frederic pointed out, we had planned for a 2 points improvement in our margins in P&C in -- over the plan period. We delivered more than half in the first year of that plan and we see room for further improvement with the pricing dynamic that we see this year. So how does that translate into earnings? So you see the very significant amount of additional margins in euros, close to EUR 1.5 billion coming from higher volumes and the better margins. On the financial result, you remember that last year, we told you that we would have a significant increase in the unwind effect, EUR 550 million and that's exactly what we have here. I think what is good to notice is that we could offset most of it, thanks to higher investment income. We are very pleased with our performance on the investment income. And I just want to spend also a minute on our taxes. In 2023, we had a positive one-off in P&C and taxes, notably because Bermuda introduced new taxes and that allowed us to recognize a DTA in '23 in Bermuda at XL. Conversely, in '24, we have the first year of the OECD tax Pillar 2 and that's a negative. So between the 2, it's a shift of EUR 200 million of profits and less profits. And so we had the unwind, we had the taxes. Nevertheless, despite all this, we managed to increase underlying earnings in P&C by 10% and that's a clean base to grow from now on. Life & Health. So on volumes, as Frederic and Thomas pointed out, we have very good growth in volumes, 9%. That's 3% in protection coming mainly from Japan as often and from Switzerland. It's unit-linked plus 18%. That's driven very much by Italy, where unit-linked growth was above 40%, but also France, where through new products, new campaigns, unit-linked volumes growth was 12%. So we see good momentum here. And same on capital-light general account, 15%, again, driven by Japan with a single premium whole life product, which, by the way, we will probably sell a bit less of it in 2025. We need to be a bit cautious. But nevertheless, a good year in volumes for Life. Same on the Health side. We had a growth of 5% on the individual part, that's mostly pricing and 10% on the group part and that's a mix, probably 1/3, 2/3 of pricing -- of volume, sorry, and pricing. Net flows, as Frederic said, that matters a lot to us. Now that we have cleaned our in-force and that we want to grow our savings business, it's important to have positive inflows. That's what we have, EUR 1.5 billion. If you exclude Health and just focus on savings, it's not yet positive, but we are confident that it should become positive in 2025 and that will help us grow our CSM. One word on the unit-linked, EUR 0.8 billion negative is obviously not something that we want from a business which is capital-light. One thing to keep in mind in our French business is that we have an automatic rebalancing in what we call Gestion Pilotee for our customers. When markets reach a certain level, we automatically move part of their savings or the client savings from unit-linked to general account to secure some of the capital gains. That was exactly EUR 800 million in 2024. PVEP and new business. So on PVEP, really the story is the same as for premiums. I would just comment on the new business margin, which is down slightly from 5% to 4.4%. That's really a matter of business mix or geographic mix. We sold less of a high-margin health product in Japan and we sold more of a lower margin but still profitable protection product in France. At the end of the day, what matters to us is the fact that we grow our NBV, and that's what you see, we grew our NBV by 2% in '24. CSM. So you remember that we did 2 in-force transactions last year, one in France, the other one with AXA Life Europe. That had an impact of minus EUR 600 million on the stock of the CSM. Our normalized CSM growth is 2%, which is a bit below our expectations. Economic variance was negative by EUR 1 billion. That's entirely due to the widening of government bond spreads and you will see the same in our solvency numbers. But as you know, there is a pull to par on this. And as we get closer to maturity, we will recoup that amount. And operating variance was positive EUR 400 million. So as you know, we don't put it in our normalized CSM growth, but nevertheless, it's future better margins because of better mortality, better lapses or whatever, that will be a positive for our CSM going forward and our CSM release. Earnings. So we like to think about our Life & Health earnings in 3 parts. The first one is the short-term part, which is P&C like. And you saw that there, sorry, that we increased revenue very significantly, 10%, but we also massively increased profitability by 149%. It's obviously due to the turnaround that we operated in the U.K. on the Health business, but not only, it's also a good performance in France in Protection and a good performance in Health in other countries than the U.K. Thanks to that, we have already delivered half of the combined ratio improvement that we wanted to have in Life & Health over the plan period. CSM release minus 1%, but plus 2% if you exclude the 2 in-force transactions that I mentioned. And last, net financial result, on nonparticipating business, plus 10%. Same story as in P&C. We had good investment income in Life that more than offset the increase in the unwind. So it's a good set of results in Life & Health. But very importantly, we see the potential for more growth in earnings from that basis. Trying to move to the next slide. Yes. Here, it's just the summary of what I've just said. Just want to highlight the fact that Health earnings grew by 24% for the reasons I said. Life earnings were stable or plus 2% if you exclude the impact of the in-force transactions. You remember that, obviously, that loss of earnings was compensated through buybacks done last year. Asset Management. So the closing of the AXA IM transaction should take place at the end of Q2 or beginning of Q3. Until then, we keep on consolidating AXA IM's earnings. The AUM are up 4%. That's a mix of good market conditions and net inflows, EUR 3 billion coming from third parties. We had a good management of our expenses at AXA IM. Stable management fees, slightly up, which allowed us to have underlying earnings grow by 11%. So in this table, you have the summary, P&C, Life & Health, Asset Management. I haven't commented on holding costs, including debt expenses, obviously, yet. So it increases by EUR 150 million. Again, that's in line with what we told you last year for our plan. That's due to investments in technology and investment for growth. Very importantly, this will remain flat for the other years of the plan, i.e., '25 and '26. So underlying earnings grew by 7%. If you add to that the benefit of the share buyback and you deduct the fact that ForEx was a negative, our underlying earnings per share grew by 8%. One word on net income. It grew by 11%. Compared to underlying earnings, it's always the same difference. We had capital gains on real estate, but we also had the traditional amortization of intangible assets and that explains the difference between underlying earnings and net income. I come back to taxes. There were, as I said, a number of one-offs in the past and the significant variation in our taxes in '24. The effective tax rate that you can take into account going forward, excluding any one-off is 24%. That's what you should have in mind, which is the consequence of the changes, notably of the Pillar 2 tax. If I move to shareholders' equity, EUR 50 billion. When we look at true shareholders' equity, i.e., excluding undated subordinated debt and excluding OCI, it's EUR 53 billion, up 6%. And that reflects, as was said before by Thomas, the fact that we want to distribute 75% of our earnings, but we want to keep 25% and grow our book value. ROE was 15.2%, in line with our target range of 14% to 16%. And debt gearing was 20.6%, slightly above 2023 number, not because we increased debt, it remains flat, simply because the OCI, which is a negative amount, increased by EUR 1.5 billion. So it's a denominator effect, not a numerator one. That's why our debt gearing increased slightly. So 7% underlying earnings growth, 8% underlying earnings per share growth, 9% dividend per share growth, to which we will add EUR 1.2 billion of annual share buyback and that brings us to the 75% overall payout that you are now used to. We will do a EUR 3.8 billion share buyback to offset the loss of earnings of AXA IM. We will start that share buyback as soon as practicable after the closing of the transaction. Given the amount at stake, part of it will be done in '25. Part of it most probably will be done in '26, which means that the full compensation of the loss of AXA IM earnings will be achieved at the end of '26. A word on cash. The cash remitted by our subsidiaries was EUR 7.7 billion, so an excellent year. That EUR 7.1 billion organic remittance or ordinary remittance, which means an 82% remittance ratio. And in addition to that, we got EUR 600 million, which was the materialization of the in-force transactions and the release of capital that we did in France and in Ireland. And you know that last year, we paid EUR 4.4 billion of dividend and we did EUR 1.8 billion of share buybacks, EUR 1.1 billion annual share buyback and EUR 700 million, again, to offset those in-force transactions. Holding costs, interest expense, I already commented on and I insist on the fact that they will remain flat. Last word on solvency. We generated 28 points of solvency, so within our range of 25 to 30 points. And that is despite the fact that we grew all our lines of business between 7% and 8%. So we managed to do that by being very strict on the management of our required capital. We give 22 points back to our shareholders and that is the dividend and the share buyback to be done. That excludes, obviously, at this stage, the share buyback that we do for AXA IM. We have a economic variance that cost us 13 points. That's what I mentioned earlier on the widening of government bond spread. And finally, 3 points less of solvency due to the fact that we substituted senior debt to the subordinated debt that we redeemed or repaid in 2024. And going forward, that's something that we can do. I mean, we will use all sorts of debt to replace the subordinated debt, which will lose its solvency status by the end of 2026. So overall, solid growth everywhere. Growing earnings in line with our plan, with our expectations. You remember that we said we would grow P&C earnings and Life & Health earnings between 4% and 6%. So Life, we are exactly in line. P&C, we did better than that in 2024 and still a very strong level of solvency. Thomas, I'll let you conclude.

Thank you, Alban. To conclude, 5 key messages. Number one, AXA, as you've seen, is a balanced global franchise with a very solid balance sheet. Number 2, we have shown in the first year high execution discipline of a couple of key priorities. Third topic, the high growth that we have shown has translated into predictable earnings growth. Fourth one, this has resulted in an attractive shareholder return with, as you've seen, plus 9% dividend per share and a new program of share buybacks of EUR 1.2 billion. And lastly, we are confident to deliver our plan, Unlock the Future for the remaining 2 years with focus on the one hand, further improving our technical profitability and on the other hand, increasing our dynamic on the Life & Savings business. Thank you for your attention and we will now go to your questions. And we will be joined by Scott, Guillaume and Patrick.

Let's start with Michael here in the front.

I basically wanted to ask for more. So you've delivered and it's nice, but the 8% and I'm kind of thinking, so you said this time last year, 6% to 8%. Today, we've got 8%. And I'm just wondering, is there a chance that you might reset the plan to, say, maybe 7% to 9% like some of your peers or even 8% to 10%, like some other peers. So that would be my first question. And then the second question is with all this cash coming in, and I know you're doing buybacks and stuff. But if I was CEO, I'd always be thinking I want to buy something. What are you -- have you stopped buying anything? Have you kind of given up and said, no, no, no, this is it, we're done?

So it's interesting that you only have 2 questions today. I'll try and answer them both. So on the plan, I mean, obviously, this question is a very normal one. If you end your first year at 8%, the upper range. But as we know -- as you know, we are a prudent company. So we are now going into the second year and see what is coming and have decided to remain at 6% to 8%. If we go into year 3 and we still see high numbers, we should have a look again. But as of now, let's stick to what we said to you last year. On the second question, it's true that cash is coming in. I think that should always be seen as a positive sign because we always said that cash at the holding should be somewhere around EUR 3 billion. You've just seen from Alban that it's at the end of last year at EUR 4 billion. We are very much focused on implementing our strategy on delivering on those priorities. And you've seen the operating and organic machine works very well. Yes, we do look at deals here and there, but we don't spend 24 hours a day on this. And I think keeping a good balance between core focus on the operations and occasionally looking at what's out there is important, not forgetting the clear priority that we have, dividend, share buyback first and then we can have a look if there is anything interesting coming. Let's stay at the same table, Farooq, and we have to wait for the mic.

Farooq Hanif from JPMorgan. So it sounded, Frederic, when you were giving your presentation that you're basically saying high single digit growth would not be a stretch next year. Just digging into some of the segments, I mean you talk about midmarket. In midmarket in P&C, is that a higher-margin business for you? Because you talk about pricing still being very strong versus inflation or stronger. So would we expect some positive mix effect if you grow more in midmarket in P&C? And similarly, in Employee Benefits, it feels like the momentum there is very strong. You've got some special skills. Again, is that a good mix effect? So that's question area number one. And question two for Alban is I remember the guidance you gave in P&C about the difference between investment income and [ IFFI ], your CMD, you talked about, I think, a EUR 500 million hit net. Given what you've seen in markets, would you be -- I mean, what are the trends that could revise that?

Good. Thank you, Farooq. I would suggest that you start with the first question and maybe we also let Patrick and Scott talk. Because you have 2 people there that are very much -- Scott, in the midmarket in the U.S.; Patrick, in the midmarket in Europe that has been strong in Spain, Italy and in the U.K. And you also are responsible for Employee Benefits, Patrick. And then Alban, if you could do the second question.

I'll start with midmarket. So as you know, we have experience on mid-market because we have big businesses in France, in Germany, in Switzerland, in Belgium and they are excellent businesses and we are often market leaders in these various countries. And yes, our experience is that we have on midmarket business, higher margins that we have on big corporates. Now the new phase is to continue to grow these historical countries, historical business units and to grow the midmarket business in some other countries. And we especially have identified the U.S., the U.K. and Southern Europe. It's a bit early to say, but Scott will comment. But first, we are absolutely on track with our plan on the top line, which means that there is appetite from brokers to have a new player on this business. And second, the first signals are that, yes, margins are higher than on the big corporate business. That's a bit early, but the first signals are positive. On EB, so we have -- as I said, we have a very strong franchise. On EB, you need to be able to offer worldwide covers to big companies. I would say that on EB compared to Individual Protection & Health, margins are pretty similar. Pretty similar because when you negotiate with these big players on EB, they have a strong procurement department, if I may say. And the negotiations are tough. But on both businesses, so be it EB Health, EB Protection or EB Pension and Individual Protection and Individual Health, margins are fine.

So maybe let's zoom into the U.S., Scott, and then we go to Patrick on the continent and the U.K.

Yes. Is it working? Okay. Good, it works. Just on the U.S., we've launched midmarket about 1.5 years ago. And similar to what Frederic said, the reason we're in the midmarket business is the large account business is a little more cyclical. So the margins can get better when the markets rock hard, but also under more pressure when it goes very, very soft. So either ends of the marketplace, it's a little better. Midmarket for us helps -- is a little more less susceptible to the cycle. It still is, but the highs aren't as high, but the lows aren't as low, if you want to look at that way. And it's adjacent to our expertise. So we've got the distribution, the underwriting talent, the capability. So it makes a ton of sense for us to be in that business adjacent to what we currently do. So we've been building it out. We're very excited by it. And as Frederic said, so far, it has performed very well for us over the last 18 months. We expect to continue to build it.

Thank you, Scott. Patrick?

Yes. So in Europe, midmarket is also in Continental Europe, a very strong opportunity. It's 45% of our business. It's a growing business. It's a profitable one. We've got a very strong position in the U.K. We've got a very strong position in Germany, where we are top 3. We are growing that business with a very, I'd say, organized go-to-market strategy that is paying off, being very close to our customer through market-facing underwriting, bringing the right expertise, strengthening also our risk engineering. And it shows in the growth of the number and also positioning ourselves on lines and segments who are high growth. So for instance, in Germany, we are leading position on renewables. We've been growing that book of business 15% CAGR in the outer years and we got similar plays in the U.K. So a strong model and a growth opportunity and we have a no drop ball strategy with XL, where we are making sure that we're managing jointly the pipeline to serve those customers.

Guillaume, do you want to say a word because midmarket is also key in France, and then we go to Alban.

Yes. So midmarket -- good afternoon, first, everyone. And midmarket is indeed a critical business for the French operation, where we are the leading insurer of French companies on the market. And where we had in '24 yet another year of solid performance, both on top line development, mostly driven by the increase in our average price and in the combined ratio that further improved starting from already a very low basis. So I'm confident in the current trends. And for '25, we see exactly the same trends on the market with the same strong commercial dynamic.

Alban?

And so on investment and [ EB ]. So there's probably another EUR 200 million of unwind of EB to come, which is in line with what we had told you last year for the full plan. I mean, overall, we will have EUR 800 million. So that's mechanical and that's easy to determine. We did, as I said earlier, we did better than we thought on the investment side. We thought we would get EUR 200 million to EUR 300 million. We got EUR 400 million, which are there to stay. And we will probably offset at least half of the additional EUR 200 million that are coming with additional investment income.

Dominic?

Dom O'Mahony, BNP Paribas Exane. Just 2 questions for me. The first is, Frederic, you talked about reinvigorating the pensions proposition. I wonder if you might just give us another layer down on what that looks like in practice, both on the product side and the distribution side. This time last year, there was an emphasis on expanding the agency force. How is that rolling out? Second question just on XL. It looks like casualty is an area of growth. Curious to hear your views on the debate, I guess, in the market about whether pricing is adequate and I guess, which bits of casualty you're looking at?

Good. Frederic, do you want to start with the first question? And then also bring in Guillaume and Patrick because you have launched in France with Gestion Pilotee and Patrick in Italy, in particular, this movement. And then Scott, if you can take the second question around casualty and is the pricing adequate? Frederic?

So on pension, there is only one certainty, which is that pension will be the big topic for us over the next 20 years, for sure, because of the demographics. And because governments become more open on this topic, I mean if you see the debate, and Thomas mentioned it in France today, what we call [indiscernible] is again on the table. So for sure, it will be a big topic. This is a market on which insurance company compete with asset managers and we don't have the same assets, if I may say. As I've said before, insurance companies can offer whole life annuities, which asset manager cannot. We can offer protection riders that are especially useful for pension products because, for instance, you can commit to paying the remaining premiums if somebody has died or whatever, these are regular premium products. And we can offer some kind of capital guarantees when it makes sense. So again, it will be a harsh competition. You can offer these products in an individual way or in collective group way, if I may say. If I look at the French example, which is a good recent example, so the [indiscernible] was launched 3 years ago and I will let Guillaume comment. And at the end, insurance companies did take all the market. Now 15 million people in France have a [indiscernible] and we expect to see the same trend in some other markets. So this is about having good products, having good distribution and having a good asset management company as a partner, knowing that in pension products, you can have also passive asset management.

Guillaume? Gestion Pilotee?

So maybe a word to complement first on what Frederic just said on the retirement market in France, where we are the leader both in group retirement and in individual retirement. So in group retirement, we provide retirement solutions for companies working both on Pillar 2 and Pillar 3. And in individual retirement, it's a market that recently opened, as Frederic indicated and on which we are by far the leading provider. It's only Pillar 3, but with a strong growth on the market. In both cases, we have a bit more than 20% market share, developing consistently over time. On top of that, the structure of the French market is leading us to also work a lot on this topic with the life insurance products because today, it's a fact that most of the French consumers are also using life insurance to prepare for their retirement and long-term savings needs. So on that market, we have in 2024 managed really to reaccelerate with very good commercial dynamics in '24. So you see that in our figures, more than 5% growth on the savings and retirement business ultimately. And there, the good news also is that we managed to reduce persistency on the existing portfolio. So lapse rate went down by approximately 1 point of percentage. So when you look at that, how did we do that? It's mostly about strength of the distribution networks, especially indeed our [indiscernible] and salaried sales force that we did increase during 2024, a bit more than 250 additional distributors on the market. Second, revamped offers that work on Gestion Pilotee. So it's a discretionary portfolio management solution that we provide to all customers on the market, extremely helpful with mass market and affluent customer. Of course, for high net worth individuals there, we need to put in place more wealth management solution through a dedicated team that is also working very well. And on persistency, we also worked on really training our distribution workforce in order to reduce the lapse rate that we saw in '22 and '23. All in all, it led us to strongly improve the net flows in our savings business by a bit more than EUR 2.7 billion in '24. And all of this will drive for us future CSM release. So this year, we managed to have a growth of the CSM release of 5% when you adjust it for the in-force operation we did last year. And going forward, we see very much the same trend due to this new dynamic on the net flows. So I'm positive on the prospect of this activity. And to put that in perspective with the group figures, it's more or less half of the group savings activity. So you will see that as a material effect on our release going forward.

Patrick?

So same dynamic in Europe. Is this working? Yes, it is. You can hear me. Okay. So Life is back in Europe and we are really positioning ourselves on long-term savings and pension. I'd start with the numbers. So the premiums grew 11% this year, 26% in unit-linked. And what is nice to see is that the growth is really coming from all the places in Europe. We got 7% in Switzerland, 8% in Belgium, 20% in Italy. So it's quite remarkable. I mean, 12% in UL growth in Germany. So how are we doing this? It's a little bit what Guillaume just explained. We want to be the trusted partner for the customers when it comes to their retirement. So I'll talk to a very specific, I think, good example that comes from Switzerland. In Switzerland, we are #2 in Individual Life in the market. Our ambition is to become #1. We have a clear target segment. So clear ambition, clear target segments. We're targeting the 50-plus to capture the outflows basically. And this segment is the one concentrating most of the wealth. So we came up this year with a new proposition, which combines accumulation and decumulation solution, very competitive fees and a very, I'd say, simplified thematic offer on the unit-linked. And you saw the number, this is paying off. What is very interesting as well is we are leveraging our strong position in employee benefit. We're the leader on employee benefit protection. So through that connection, we can steer customer to a digital portal. We got 500,000 customers -- potential customers connecting to this portal, where they will get advice, where they can consolidate their pension and we leverage from this basis to move them into our savings proposition. And this is working quite well. We have similar plays organized with the same logic in Belgium, in Germany and across the board.

Thank you, Patrick. Let's go to Scott around casualty and the pricing adequacy.

Yes. Good question. The sort of the good news to start with is when we look at our excess -- mainly at the excess casualty portfolio in the United States, when we look at that, we feel pretty comfortable that we're adequate in terms of reserving. As you all know, we purchased an ADC back for '19 and prior. We haven't touched that ADC. So that gives us pretty good comfort that we kind of got those years right and we've been building on top of those years. So the good news is we think we're pretty adequate across that piece. The more challenging news is given the litigation abuses that you're seeing in the United States, you're going to need significant rate to keep up, low double digit sort of that 10% to 12% kind of rate number just to sort of hold serve on trend. And now we achieved that in '24, but we're laser-focused on keeping that. We know what you have to do there. If you fall behind, it's going to be a problem, right, at that level of loss trend, right? But in terms of the portfolio we have and what we need to do, we're pretty clear-eyed on that portfolio and what we ought to get done there.

Let's go to William.

I'm William Hawkins from KBW. The outlook for the CSM, you've talked about that, but I wonder if you could just be clearer, please. I think the plan was originally talking about north of 3% growth. I'm not sure if you're telling us that after a weak year, we're going to accelerate to be above that. So we're back at north of 3%. If we assume north of 3% from here or if we're going to be structurally lower? And within that, I'm still not quite clear the expected unwind fell really sharply year-on-year when I expect that to be quite a stable number. So if you could just help me understand that, please? And then secondly, could you just remind us the amount of Solvency II grandfathered debt that's still outstanding to be dealt with? And roughly what you think the impact on the solvency may be this year from dealing with that or maybe over the next 2 years?

Alban, I propose you take those 2 questions, outlook on CSM and the outstanding amount on grandfathered debt.

So the CSM fundamentally is a function of the amount of reserves that we have. And we will grow that through positive net flows, as we explained earlier. Now when you look at our numbers, there are 3 things I want to mention. The operational variance that I discussed earlier, which was a positive and that will flow through the CSM release over time. Then new business CSM, when you look at the growth there, it was a growth of 1% only. But volumes, it was -- I mean, meant a growth of new business CSM of 5% to 6%. But then we were down with FX because of the Japanese yen and also because of financial assumptions still in Japan as rates went up. And therefore, as it's protection business, that had an impact on our CSM and our new business CSM in Japan. That will not happen every year. And again, that financial impact, we will earn it over the next years because it's discounted at a higher rate. So keep in mind that the new business CSM grew at 1%, but that's not its normal growth rate. And then the third element is the unwind. And on this, it's a function fundamentally of 2 things. One is simply the fact that you discount at the previous year rates that were been down. And therefore, you unwind this year in '24 was a bit lower than it was the year before. And the second impact and then you need to have a Ph.D. in CSM to -- is the following. When we sold products with a lot of options and guarantees, when you unwound the options and guarantees, they didn't materialize in real world. And that, therefore, meant a higher unwind in your CSM. Now we have moved to products that have less options and guarantees and better ROEs. And therefore, when they unwind for the amount of CSM, you have less unwind. So that's the other reason why the unwind was lower, but the main reason was the first one on the discount rate. On the amount of Solvency II grandfather debt, let me come back to you. I don't have it precisely in mind, but I will give it to you.

And William, I think not to be forgotten, this is a 3-year plan, not a 1-year plan. The focus in the first year was clearly to get Germany and the U.K. right, which is done. You have clearly heard around the, let's say, vital dynamic around Life & Savings. So this is clear a focus area now for the remaining 2 years, and we will get to where we need to get. Let's go to Andrew, I think.

Great. Andrew Baker, Goldman Sachs. First one, just on the Commercial lines margin expansion for next year. Should we expect this to be outside of AXA XL? Or have you turned incrementally more positive on AXA XL and the margin development there? And then secondly, are there any personal lines markets outside of the U.K. where you're seeing any softening in pricing?

Frederic, do you want to answer both questions? One on the Commercial lines margin expansion outside or including XL and then the second one, any personal lines markets outside the U.K. that show a bit of softening.

So I'll start on Commercial lines and Scott will help me. So first, on the non-XL business, we continue to see on the midmarket business, so the European business, price increases that are higher than claims inflation. This is very clear. And again, at the renewals on the 1st of January, this is the trend that we have seen. So on the non-XL business, we continue to see margin expansion. Scott, I'll let you on the XL business.

Yes. Part of the Unlock the Future 3-year plan is that one of the goals for AXA XL is to sort of maintain our undiscounted current year loss ratio, right? So ex-Cat. And then we did it in '23 to '24, we did that, and that's sort of our plan. And it's all about managing the mix, right? So some of the dials that we turn, plus our growth initiatives that we talked about with midmarket and a couple of other ones, those will come on as well and we'll continue to obviously grow the premium. So right now our plan is essentially to continue what we said when we did the Unlock the Future.

So to your second question, simple answer, the U.K. is the only market where we see the prices decrease again. And I would say, on the contrary, in other markets, we continue to see good price increases. No comment.

But the good news, Frederic, is that we have done our job. So even if prices were to decrease, we don't have to restructure anymore and could react to it.

It's Fahad Changazi from Kepler Cheuvreux. Could I just follow up on the CSM growth? So in 2025, could you give us some color in terms of your business mix and swap rates where the Life expected return is going to go in the roll forward? And just a second thing to confirm. So in terms of the grandfathered debt, are you going to be looking to do the same thing of swapping it for senior?

Alban, I guess those questions are for you, again.

So on the debt, as I said, we will look at what makes most sense for us. We will not replace one-for-one sub-debt by sub-debt and notably in anticipation of the Solvency II revision that will give us the benefit. We will know probably more in the second half of this year. We have a better view of this, but it will be a clear positive. So we don't see a lot of -- we don't see as very interesting to issue Tier 2 and even Tier 1, even less Tier 1 going forward. Bear also in mind that we will have more cash at hold collateral with the sale of AXA IM. So there, again, we need to take that into account when we look at the stock of debt. On the CSM, as we said, that's something that will improve progressively as we build up reserves. We're not happy with the 2%. We will look to grow in line with our plan, the -- our CSM.

Maybe I'll add a word on solvency and debt because you know that not only do we have a good solvency margin, but we have a Solvency II revision coming up on the 1st of January, 2027. All the debates are not closed. So now we discuss with the commission about what we call the Level 2 and Level 3. It will be finalized around the summer, but the probability is very high as we know that we will have a positive impact on our solvency margin. The debt for us and the mix between sub-debt and senior is a good way to manage our solvency margin. In other words, we are happy to have a good solvency margin, but we are not happy to have an excessively high solvency margin. It's very different at the level of solvency of 200 and above 200 versus 9 years ago when you were around 170, 180.

Let's continue there, David.

This is David Barma from Bank of America. Firstly, on the P&C combined ratio, and sorry, another one for you, Alban. You were talking quite a bit in last year about managing the volatile parts of the combined ratio, so Nat Cats, discounting PYD. In the second half of this year, this changed quite a bit and despite Nat Cats being lower, discounting being a bit lower than expected to, you increased your PYD. Do you see that -- so first, can you talk a little bit about how you're managing the 3 together going forward? And whether this level of PYD, so closer to the top end of what you used to do is what we should expect going forward? And then secondly, on capital return and the AXA IM-related buyback. The way I understood the EUR 3.8 billion was that it was based on the share price at the time of the transaction in last summer. Your share price has increased since then. So -- but you're still talking about EUR 3.8 billion today. Which one of the 2 is it?

EUR 3.8 billion. Alban?

Yes. So on the PYDs, I did say that effectively, we would try as much as possible to manage together discount PYDs and Nat Cat. That being said, you also need to recognize the fact when you look at your reserves and when you have your actuary say, well, we have some excess reserves. I'm not seeing 1.1 versus 1.6 '23 versus '24 as a big difference and 1.6 is a reasonable amount. I think we still have prudent reserving. For instance, we didn't release any reserves at XL. So going forward, there can be some variations around that level of PYDs. But again, it's first and foremost, a testament to our prudent reserving. On capital release and the EUR 3.8 billion, the way we think about it is simple. It's EUR 400 million of earnings, as you saw. It's a P/E of 9.5x. So when you multiply one by the other, you come to the EUR 3.8 billion of share buyback that's needed to offset the dilution of earnings.

Let's go to the table over there. Hadley, I think.

Hadley Cohen, Morgan Stanley. First question, if I could ask one of Michael's questions in a slightly different way, please, around there's a lot of positive talk here around momentum in the top line. You've fixed the problems in the U.K. and Germany, in terms of you should start seeing net customer growth. There is still margin expansion coming through on the Life side, on the P&C side, on the Health side, we should get a bit of a recovery in the CSM growth. There's no incremental drag from holding expenses, no incremental drag from tax as well. So I guess the point -- my question is, why shouldn't we expect 8% or more earnings growth in 2025 versus '24? That's my first question. Second question is just a bit of clarity, please, around the timings of the buybacks. So you've announced the EUR 1.2 billion today and I think you've got until the end of the year to complete it. But presumably, that needs to be completed before you start doing the EUR 3.8 billion. And I think the deal is expected to close at the end of the second quarter. And presumably, you want to start doing that -- the subsequent buyback as quickly as possible. Can you just talk me through how we should think about the timing of this? And is it reasonable to assume that all of this could be done before we're back here this time next year and you're proposing the next buyback?

You're projecting very far in the next year. So I think, Alban, you talk about the question of buybacks and I'll try a second time -- your first question. But I think on the buybacks, Alban has been quite clear. The EUR 3.8 billion will be done post-closing. The closing will most likely be in summer and there is half of it this year and the other half next year roughly. So I would probably not expect at the end of February to be done with it, but Alban will go more into detail. On the first topic, you are absolutely right that there is great momentum in the business model of AXA. Nevertheless, we still have got a couple of jobs to do. In the first year, we focus very much on fixing Germany and the U.K. This is done and is behind us and the teams have all done a great job on this one. We still have work to do, as we mentioned earlier, around the margin expansion a bit in P&C, in Health and certainly work more on the dynamic around our Life business. And therefore, we would like in the second year of the plan, see more of this happening before we have a debate is 6% to 8% the right number. And that's why I have adapted to be very French over 9 years, but the German prudency is not out yet. And so I will remain on this 6% to 8% for the time. Alban?

So the fact that we said it would be done before year-end, that's sort of prudent legal language, let's put it that way. The experience is that in previous buybacks, we could buy, say, EUR 150 million a week. So that gives you the idea that fundamentally, we should be done with the EUR 1.2 billion buyback before we start. Now I want to make sure that my lawyers are happy with that. I would still want to be prudent. It depends on market condition and so on. But normally, we should be done before we start the AXA IM buyback.

Will?

Will Hardcastle, UBS. Really quick one on the grandfathered debt. There's been a few on that as of now. Just presumably just working out, is that in the logic in the plan on the EPS that there'd be a reduction there? I guess it will be on solvency and leverage. But just wondering if there's any thought process in the target plan EPS on that already? And the second one is just really thinking about the dividends. We've seen the odd change of announcement on timings of dividends by some European and French domiciled businesses, financial services businesses. Is there anything structurally that makes you have to have an annual dividend? Or is this something that the Board considered this year?

So thank you, Will. Alban, you take the first question. I'll do the second one because it's a quick answer. Obviously, the Board is looking at this on a regular manner. And since some of our French, other companies have gone to this, we obviously had a look at it and weighing all options, the Board has decided to stay at the current policy of a yearly dividend. Alban?

So in the meantime, thanks to Anu, I have the answer on the grandfathered debt. So it's EUR 4.5 billion left, EUR 3.4 billion in Tier 1 and EUR 1.1 billion in Tier 2. As we said last year, we will not necessarily repay everything because some can become senior debt and we'd be happy with that. So again, that's something that we can consider. Look, again, we have a Solvency II revision. We have AXA IM that allows us to manage our debt slightly more freely than what we could think probably a year ago. So yes, there's potentially a bit of upside there, but it's not massive for us.

Let's go to the front row.

Rhea Shah, Deutsche Bank. So 2 questions. The first, just on XL. In the slide, it showed that the retention has been increasing over time. So if you could just talk about the actions you've been taking to improve it and if that could continue to improve in '25, '26? And then the second question is around the -- just a clarification around the commission ratio within P&C combined ratio. Should we expect this to change any more going forward because of business mix?

So Scott, do you want to start on the first one and then Alban on the second one, knowing obviously that when you go into more attractive businesses, automatically, your commission will increase, but Alban will go into detail. Scott?

Just on the retention, that has been a deliberate part of our strategy. A couple of years ago, we were in a fixing part of the portfolio, right? So there was some terms and conditions we had to fix. Pricing wasn't quite where we wanted it to be on some of the product lines. So by definition, we ended up with a little bit lower retention. For the last couple of years, we really like the book of business. We like the adequacy of the pricing. So we've been laser-focused on retention of the portfolio. And we do it a couple of ways. We've implemented a rather than -- on large account rather than just an individual product, we also have client managers now, who meet with clients directly and speak about the various products we provide and the services we provide to help them see sort of the overall AXA, One AXA approach. What that goal is to make AXA smaller for the client. So rather than trying to figure us out, we make it simpler for them to do business with us. And that has actually given us an uplift not just on additional business with that client, but retaining that business. And there's been also -- in the last few years, things have been a little -- there's lots going on between Cat and other poly-crisis happening and so a little bit of a flight to quality. And our financial strength really plays into that over the last few years where clients are looking for that stability and that's been a very strong value proposition for us on the renewal book.

And on your second question, the short answer is, no, we don't expect an additional increase. And just to clarify, we are not willing to pay more commissions for a given business. So it is a question, as we said, of business mix. The business mix issue is more an XL issue because we want to adapt to the various cycles of the various lines of business. But we don't see the cycle in '25 to be massively different from what it was in '24 when it comes to property, casualty and financial lines. That's why we think the acquisition ratio should be fairly stable.

In the corner there and let me go to Abid.

It's Abid Hussain from Panmure Liberum. I've just got one question left on the Health business, if I can. How are the margins trending across health insurance business? And do you still see avenues for growth following the step change that we saw since COVID? Any additional color on the Health business by geography would be useful.

Very good. Frederic, do you want to talk about it, knowing that we have focused...

Maybe Patrick?

Or Patrick, yes, exactly. We have focused in 2024, very much, on getting the U.K. on track, which Patrick and his team have done. And so Patrick, maybe you talk about the other geographies, knowing that there is still some potential left to do more.

So I would start by saying we are quite pleased with the performance we got on Health this year. We increased earnings by 24%. And to make things simple, roughly 2/3 of this is the U.K. turnaround and 1/3 is coming from other geographies. So we got very strong performance in a number of markets. France earnings are going up double digit. It's the same in our international markets. We've got some other European markets that performed very well at double digit growth. So we believe we have leeway in our margins on Health from basically 2 factors. The first one is everything we have been doing on the Health front in the U.K. will have its full impact. And the price increase were all through the claims programs that we've led will have full impact this year. So I'll give you one example. We've increased our steering towards our preferred networks in the U.K. from 40% beginning of last year to close to 80%. This is a lot of value attached to that and this will be fully embedded. So pricing earning through, new pricing increase to follow the inflation and business much stronger. And it's a big chunk of our business. And then there is another thing which is very encouraging for us and that is reflected in those numbers, which is, as you know, we've organized ourselves differently on Health. We've put together a Global Health Unit that is managing this portfolio in a global manner. And that is basically specializing far more all of our entities and upskilling, in particular, on the technical front. So what are we doing there, very specifically? Well, we're leveraging our scale. You must know that we are a leader outside of the U.S. when it comes to Health, certainly when it comes to EB. What does this give us? It gives us, first and foremostly, global data sets. So we're putting the power of this data in improving the risk selection and leveraging that. That's number one. The second thing you must know about us is that we have developed proprietary technology, proprietary tools that we implement across all of our countries and 2 fronts. One is automated renewal portfolios, so far more sophisticated way and automated way to drive renewal at a very granular level. So you are able to chunk your portfolio and be extremely specific account by account. Another one, a good example is what we're doing on fraud waste and abuse. I would add one last thing that ties to the U.K. actually. We've worked on the U.K. on pathway management. We acquired a company last year in the U.K. that does pathway management. Pathway management in simple terms, it's fundamentally implementing medical protocols that are doing 2 things: a better outcome for the customers and a cost reduction ultimately. There's a lot of science and data behind that and we plan to roll out what we have now in the U.K. and it's proven creating a lot of value in other countries.

Thank you, Patrick. We do 2 more questions, Andrew and then Mike.

It's Andrew Crean from Autonomous. Could I ask actually 3 questions. Firstly, what's the benefit of lower reinsurance costs in terms of your combined ratio, '25 over '24? Secondly, all the shenanigans going on in Italy with your distribution partner and everyone else, could you give us a quick teach-in as to what your opportunities, threats and plan Bs are? And then thirdly, I mean, you say that your Commercial lines business is stable. If I look at the second half combined ratio ex-undiscounted, ex-PYD, ex-Cat, 93.6%, it's 140 basis points worse than the first half and 50 basis points worse than the second half of '23. That doesn't look stable to me.

Good. Thank you, Andrew, for 3 questions. The benefit of lower reinsurance costs, Frederic, if you could do that question, I'll do the Italy one and if Alban could do the third one. Maybe let me start with Italy. What is quite interesting, Andrew, is that our joint venture partner has gone through a lot of different times of stormy waters. But when you look at the performance and Patrick can go into detail, it actually is going quite well. We are growing very well with BMPS. It's a partnership that has been going on for a long time that will come to a point of either end or renewal in 2027. And we are doing everything we can to continue this partnership and it has worked well again through different stormy phases. I'm not going into speculation, what will happen in Italy because the landscape of different alliances is very complex. Therefore, let's wait and see what happened and let's not lose focus operationally on continuing to performing well on this partnership. Frederic?

On reinsurance, ceded reinsurance for us is a huge lever. We cede EUR 2.7 billion result every year to our reinsurers, to our partners. Of course, we have a benefit because we require less capital, but this is a big amount. So there is a big lever for us if reinsurance costs are decreasing. We've seen on Cat, for instance, that reinsurance costs have decreased by somewhere between 5% and 10% at the 1st of January of this year. So for sure, on our primary insurance business, it has a positive impact. You could argue that we also have a reinsurance company with AXA XL Re, so that there is a partial hedge between the 2, which is true.

Alban, Commercial line businesses, stable, yes or no?

Yes. Andrew, can you say again the numbers that you are referring to because I...

If you strip out PYD Cat, is the -- Andrew says it's 140 basis points worse. Is that true? Yes or no?

So if you compare H2 to H2, you will not see such a difference. But the question is, obviously, at the end of the year, that's the moment we look at our reserves. We do that twice a year, but we do it more formally in the second half and that's the moment where we have -- when we look at our reserving. And as I said, we want to have a prudent reserving. So you shouldn't look into that with more -- there's no trend and you shouldn't think of H2 '24 as being the basis for the loss ratio of '25.

Michael, last question.

The same as Andrew, but maybe you can make it even more clear. How do we calculate how much your excess reserves have gone up? I think you kind of gave us some guidance on this. And the other one is a really silly one is AI, you said the costs were higher this year. What's the benefit of them not increasing next year?

Good. First question, Alban and second question, Frederic.

So on excess reserves, that's the silly thing about IFRS 17. It's -- we have to say it's the best estimate. And we can't say that there is an identified amount of excess reserves. Nevertheless, we are prudent. That's the way I would put it.

Michael, your question on AI specifically on what?

[indiscernible].

So the benefits on AI first are on various areas. I said we see some -- or we see and we will see some benefits on the technical results. We will see some benefits on pricing and underwriting. We will see some benefit on claims. We will see some benefits on productivity and costs. And there is an impact on the customer experience. These are the big pillars of our programs. It is fair to say that for the time being, with all the use cases we have and so on, we haven't seen yet significant impact on our P&L. And I think this is the challenge that we have over the next 2 years of the plan and over the 3 years of the next plan, which is to make sure that what works, we are able to scale it up and see really impact on the P&L. And today, and I think many companies are in the same situation we have. We are testing, we are experimenting, we are piloting. But if you ask me have you seen big benefits, not yet. We know enough to believe that there will be benefits, but we haven't seen big benefits yet on our P&L.

And Michael, AI, I would say, is more a cultural challenge than a technical challenge because putting the machines right is easy. Making people come up with ideas and apply it is probably the more challenging one. And so we went on a journey which was relatively simple. We gave everybody access to AI through a secure GPT, so they were in a safe environment, being able to test things out. We also taught them how to prompt and so on. We then went into an area we said, look, launch many, many projects and pilots and see what could work and not. And we are at a point now where we say, look, we've seen what works and what doesn't work. Let's now focus on 3 areas: pricing and underwriting, claims and customer experience and let's scale in these areas because we have seen and you can afterwards talk in particular to Patrick, Scott and Guillaume, where they have seen areas where we can really scale. And we are at this point now and I would rather go a controlled journey than spending too much and never see any benefits except the cost. Thank you very much for all your questions. Thanks for listening to us and we wish you a great rest of the afternoon. Thank you.

Thank you.