AXA SA (CS) Earnings Call Transcript & Summary

Thank you, Anu, and good morning to all of you. Very happy to see you here today. And we are very glad, together with my team that we can present to you the new strategic plan. which I believe will further strengthen our leadership in the insurance industry. Let me maybe start where we stand today. AXA has, after a long time now, become a pure insurance group with leading positions in markets where we operate and where we have a strong commitment to our customers. Our business today is deeply diversified across all lines of business, across all geographies, across all customer segments and distribution channels. . Over the last 10 years, we have built a very distinctive insurance franchise, and this plan is about taking it to the next level. When we talk about the next level, we should have a look back. And if we talk about the last 10 years, we talk about a decade of reshaping AXA in -- which we have made deliberate choices to transform AXA, simplify our portfolio and focus on the parts of the business where we believe we can create the most value. We have fundamentally shifted our portfolio towards insurance risk. In P&C and Health, we strengthened underwriting discipline and pricing. And in the current plan unlock the future, we have significantly improved our margins and we are now best-in-class across all our markets. On the life side, we have completely overhauled the in-force portfolio, reducing massively the exposure to high guarantees and refocusing the new business on capital-light business with attractive returns. And what for me is the most important, we have returned our franchise to growth across all lines of business. At the same time, we have also worked on our customer proposition. We have sharpened it significantly in a way that we have simplified and digitalized our customer journeys. We've equipped our networks with better tools and digital was always at the help of our physical channels and never at the expense. As a result of this, we now enjoy a market-leading Net Promoter Score in all of our key markets, which for me is a great indicator of loyalty, but also our future growth. We've also worked hard over the last 10 years to make the business future ready from a technology perspective. I'm very pleased to tell you that the majority of our applications is now AI ready and that we have also heavily invested in equipping our teams and also training our teams when it comes to AI tools. This has helped us to drive efficiency across the organization. And I'm very pleased that 80% of our people, of our employees tell us that they use AI regularly and that this regular use of AI presents a real advantage in their daily work. And this makes us very confident that we are now able to turn the technology into a practical advantage rather than an aspiration. So where do we stand today? AXA is a fundamentally different business today. It's an insurer and an issuer only with industry-leading underwriting expertise, a very clear customer focus and a modern technology stack that is AI ready. And this combination gives us a strong foundation for long-term success and also a great confidence to pursue to the next chapter of growth. When we look over the past decade, we have not only talked about what we want to do or refined our strategy, we have also shown that we can execute it. We have set clear priorities at the beginning of each plan, and we have shown across the last 2 plants that we've been able to deliver in a culture of accountability and delivery. On top of this, we have also shown that we are doing this in a very disciplined capital allocation framework and a framework of great predictability. This also makes us very confident that for the remaining months of the current plan unlock the future, we will be able to deliver at the upper end of the underlying earnings per share growth target and the return on equity target. So you see the track record of execution and the disciplined capital deployment is something that we will absolutely maintain and continue over to the next plan. This has obviously also led to delivering industry-leading returns for our shareholders. 76% of our market cap has been returned to shareholders across the period of the last 2 plants. And this has been done through dividends and share buybacks sharing the value we create with our investors. We are very confident that our strategy will continue to compound value for our shareholders and that this journey continues over to the next plan. When we look at the combination that AXA presents today, it is, on the one hand, predictable earnings combined with balance sheet resilience. All of this, coupled with the fact that the environment that we are most likely be facing will not be the same that we experienced over the last plan. However, we have built a business that is able to continue to deliver predictable and consistent performance. Our confidence in this resilience reflects from our very diversified model. We have multiple earnings engines that are not tied to one single market or not tied to one economy or pricing cycle. We have a disciplined focus on margin and we have a very active management of volatility. All of this, as I said earlier, is supported by a very strong balance sheet, a high-quality asset portfolio and prudent reserves that we have further reinforced during this count plan. So today, we have a business that has a proven ability to generate reliable and predictable earnings across very different environments and that is underpinned by a very robust and resilient balance sheet. We are well positioned with a strong right to win. We are entering now a new plan with distinct competitive advantages. And one topic that we have probably not stressed enough in the past is the topic around our distribution. We have a distribution that is extremely well diversified. Whether customers choose to buy through agents, through brokers, through direct or other digital channels, we are present and we are able to capture the demand and underwrite their risk. We are not dependent on one single route to market. Secondly, with the focus that we have achieved over the last 10 years, we are now in each market and in each line of business at scale, which also allows us to offer very competitive propositions. A third factor for me that is very important is that our insurance expertise and the depth of our insurance expertise is a real differentiator. We have an underwriting bench that probably not many others have to be able to price and underwrite a very wide range of risks at attractive margins. All of this, and certainly, in a time of big volatility and almost a crisis of confidence in many countries, the brand, the trust in the brand and a strong brand are very important. And we are very happy that AXA has always been considered a very strong brand and that in a world in which risks are more present than ever in which complexity is more present than ever. The insurer that customers trust will be the one that matters most in the decision of the customers. So with this combination, from distribution to brand, we've got the strong right to win in our markets also in the next chapter of our plan. The next plan is called Growing Forward. Growing Forward has 2 notions going forward, which is a continuity of our approach, but growing forward. And therefore, our next plan is, first and foremost, about growth, taking market share across all our businesses and leveraging our strong positions and our clear right to win that I was just talking about. Growth will not come at the expense of margins. And I think that is a very important point to remember. We will continue in our efforts to grow, to strengthen our technical capabilities, our tools and processes, so that every additional unit of growth is underwritten with the same rigor than it was beforehand. If you want to remain and stay competitive, we also need to accelerate efficiency, continuously simplifying processes in the way of working, which should ultimately drive us to lower unit cost. And obviously, one very powerful lever in all of this is artificial intelligence. And as I said earlier, we are going to deploy it at scale now after having trained and equipped ourselves in terms of data and applications, and we are rolling it out across all pillars. Automation, margins and growth because we do believe that certainly on the customer front, sharpening the personalization of pricing and offers equipping our sales teams and our underwriters with better insights and more data and driving efficiency while enhancing customer experience and employee productivity are absolutely key levers for the next phase. And so all levers, growth, technical excellence and efficiency amplified by AI will deepen our competitiveness and will give us the confidence that we can deliver stronger organic growth while maintaining robust margins that have underpinned so far and will underpin AXA's long-term value creation. When we look ahead, the main tailwind for our industry is -- are the large trends around us. Many sectors are complaining about a lack of growth. Insurance is in the fortunate position of not being part of this crowd, we are one of the rare sectors with structural growth drivers. Think about widening protection gaps, think about new and more complex risks, think about aging populations with growing needs for retirement and health coverage while public systems have difficulties to sustain. At AXA, growth is and will not be concentrated on a single product or a single geography. It is broad-based across all our main segments: P&C, Health, Life & Savings, which is also one of the key strengths of our multiline model. AXA is especially well positioned to capitalize on this growth given its scale, its distribution diversification and its depth in technical expertise. It is important to note that we start this new plan from a position of strength. All countries, all lines of business, everything is working well. We have no turnaround case and with excellent margins, we can now focus fully on capturing growth even more rather than spending time on turning around underperforming businesses. So we operate as one of very, very few sectors in an industry with structural growth. We have the breadth and the capabilities to capture it across all our businesses, countries and line of business. And we are entering in this phase now in a very strong position, ready to turn these advantages into sustained organic growth. But we are not just dependent on industry growth that would not be enough. We have a clear plan to accelerate growth and to take market share across all our core segments. Let me go a little bit into detail by line of business. In P&C, our first priority is to increase retention. There is still room to improve. And this is a growth engine that leverages our existing customer base. So every percent of growth we generate from our customer base, we know we know these customers. We know we want to keep more of these customers that we already serve across retail, across SME, across mid-market and also further strengthen at XL, the depth of the relationship we have with our strategic clients. So better retention is a low-risk and high-quality source of growth. And obviously, when I was talking about AI earlier, AI will amplify a lot to work better than the traditional means on this question of retention. We will complement this focus on retention with very targeted expansion in some segments, capitalizing on the structural trends I was mentioning earlier. And to give you 2 very concrete examples. one, direct. We are seeing now that the direct market is at an inflection point. There is more growth, and we are now ready to lean certainly after the acquisition of Prima to lean into the momentum and leverage our leading position. A second example is inclusive insurance. In France, for example, 20% of French people have difficulties to access to insurance solutions. We have decided not only in France, but across all the footprint in developed markets and developing markets to build a franchise of inclusive insurance that already contains more than 20 million customers because there is a growing demand for affordable solutions from more modest income customers in both, as I said, developed markets, but also in the emergence of a new middle class in the international markets. And so this proven solution that has worked for 20 million customers will also be able to be scaled for more customers. At AXA XL, the situation is slightly different. We do see, as I said, structural growth opportunities. But given the fact that we see a pronounced cycle at AXA XL, our primary focus is disciplined cycle management in a market that is currently transitioning. Let me quickly also zoom on Life & Health. On Life & Health, we intend to build on the positive momentum by broadening distribution and by further improving our customer proposition when it comes to capital-light products. In Health and Protection, we will continue to drive our health specialization strategy because we are one of the largest health insurers outside of the U.S. with unique integrated offers and services, capturing growth in a segment where demand is rising, where margins are attractive, but where also customer needs go beyond paying claims, which is around help me to organize my medical journey. So when you look across all the segments, we have a very clear and focused growth agenda, stronger retention and targeted expansions across a few segments of our business. When we think about the next phase, -- we also need to then think about how are we going to achieve it. And as I said earlier, growth will not come at the expense of margins. Today, we have achieved a level of profitability. We are profitability leaders, which is also reflected in our disciplined capital allocation. The discipline that brought us here will also be the discipline that will guide us in the next plan. And this is fully embedded in how we steer and manage the day-to-day business and the further growth. As I said earlier, we are continuing to invest further in technical excellence, not be in pricing, in underwriting, claims, accelerating efficiency, but also accelerating our acumen when it comes to the appreciation of risk. AI will be an absolute core component embedded in these processes and making sure that we can now move from what we have piloted and seen it works to rolling it out to scaling it to accelerating in order to deepen our competitiveness so that growth comes with attractive margins and with the same sustainable returns that we have seen it in this plan. So our ambition is clearly to grow market share, but we want to do it while we keep a clear focus on technical excellence and capital discipline. If we move to the next slide, I want to go a little bit deeper on AI because it's important that we understand clearly where it plays a role. We believe that at AXA, AI is a great opportunity for us and not something that is forced on to us or that we need to do to do it. It is something that will fundamentally reshape the insurance model. And for those who can leverage it, AI, as you see on the slide, is really a positive flywheel because it helps in the beginning to acquire and to retain more effectively customers by offering greater personalization by offering faster policy issuance, giving more accurate pricing and underwriting, being more efficient in claims settlement while improving service at every touch point. And so AI is absolutely core for us, and we will implement AI across the whole value chain and not just in a few places where we think we can automate and save a few costs. AI is a competitive advantage, and AI compounds that advantage with more data because what we learn from our customers, not only through data, but through interaction gives us much more smartness and our models will become better. We want to be the leader in AI. We have now the right foundations, large data sets, a technology stack that is more than 80% ready to go there. And certainly, and that's the most important thing, the teams that are hungry to implement it and use it in their daily work. And with the specific operating model that AXA has, combining the group's scale to build common AI and data capabilities, but at the same time, empower the local businesses to implement and to decide where it's best to deploy. This combination has been one of the success factors over the last plans and will be going forward with a very clear framework of accountability and responsibility. So we have already seen tangible value from AI and this gives us the confidence that scaling it now across the entire business will further translate into a benefit around growth and margin. So we have the foundations. We have the operating model to use AI and to further deepen our competitive advantage which will enable us to compound more growth while sustaining our margins. So it's always important to look at the beginning of the plan towards the end of the plan and say, look, when would we all be happy in 2029, what would success look like? And success would look threefold. One, if we grow and gain market share, we obviously and our shareholders will have a bigger business. but it will also be a better one because it will be even more diversified when you think about sources of earning and when you think about the balance between P&C, health and life. Secondly, growth means also growing in terms of customers, and we want to achieve the barrier of 100 million customers, not only by growing the numbers, but also by growing the depth of the relationship. And with AXA, our customers will get something very distinctive, which is a differentiated access to the best-of-breed asset managers for their savings and retirement needs and preferred access to high-quality needs and medical services because the personalization element in a customer journey has become so much more important and AI will help us to better use our assets. So implementing AI deeply across all the businesses will reshape our ways of working but will also improve the ways of working and the way we are acting towards our customers. So 2029 will take AXA and will take our franchise to the next level. We have become a larger business with more customers, but also more depth. We'll have higher profits, and we will be more competitive while implementing AI and scaling AI across the entire business. So when we go to the next slide, the formula is relatively straightforward. We will leverage our strong starting point of this plan, which gives us the right to take market share while keeping attractive margins that we have very -- that we have worked hard to build using AI as an amplifier across the board and this will underpin sustained growth in earnings, dividends and book value. So we are confident that our plan will translate into attractive and durable value creation for our shareholders, and that we will continue the same execution discipline that we have done over the last plan and this plan. If we move to the next slide, I want to say a word around the financial targets because the financial targets are very much aligned with this ambitious growth agenda. We are targeting for higher growth in underlying EPS and return on equity and our underlying EPS growth target will, in the next plan, benefit less from share buybacks than in the last plan. While the underlying earnings ambition itself is increasing by 2 points versus the previous plan. We are now very happy with the cash remittance that we have. The level is good, and we intend to maintain it at that level while continuing to support a 75% payout, which is as it was over the last plan, composed of 60% in dividend and 15% in share buybacks. But we are also introducing a new force target because if 75% is paid out, 25% remains invested and reinvested and this book value per share that represents the retained earnings, including dividends, needs to also have a clear discipline, and we are putting up a new target, which is mid-teen growth in the book value per share. This metric captures the intrinsic value we have built over time through disciplined capital management and deployment. So AXA is ready for the next chapter. A leading insurance franchise growing across all its segments, deepening its competitive texture to benefit -- to the benefit both for its customers and its shareholders. If we move to the next slide now, which I guess is the next section that will go -- that Guillaume Borie will guide us through. It is the execution plan of the initiatives that I laid out, the key pillars of the plan with very concrete examples so that you can see again how we are moving from having piloted something successfully in one country in scaling it up across all of AXA. Thank you for your attendance.

Good morning, everyone, and thank you very much for being with us today for the presentation of this plan. And so building on what Thomas just shared with all of us I will now explain how we intend to execute this strategy and how concretely speaking, with all of our colleagues across the world, we will focus on a low-risk growth strategy that is not based on new market entries, but on leveraging the quality of the franchise we have today to bring it to the next level and to make sure that we capture broad-based growth out of the well-diversified model you see on this page. Our point there is to say that AXA is not meant to compound through the cycles -- is meant to compound through the cycle, sorry, and not to bet on them. So what we want to achieve is leveraging this diversification in order to compound growth and earnings above the level of the industry and for the long term. We will do that again, starting from a very strong position. We have all businesses firing on all cylinders, and as you can see here, for the 5 businesses of the group, we have delivered over the past plan, the churn plan, the one we are going to close this year, a strong track record of both growth and margin improvements. The next level for us is not to leverage our best-in-class underwriting and operational excellence and accelerate growth. That's what you see here. We will keep improving technical excellence with clear targets that we present on this page, and we will keep improving efficiency. And in both cases, it will be at the service of an accelerated organic growth. You see on this page, the measurable outcomes we target to have over the course of the plan and I want to insist on one element. Our top line target is meant to deliver 1 to 2 points above the industry market average. Thomas outlined the strong growth we see in our industry, and we believe that with the current model of AXA, we have the ability to outpace that by 1 to 2 points. And that's what we're going to do over the course of the next plan. How concretely by having a clear execution plan and making sure that we apply consistently this playbook across all of our businesses. Arguably today, we have to address 2 big questions. First, P&C. In P&C, we do see growth opportunities, leveraging our great customer base in retail and SME, while staying extremely disciplined at AXA XL, I will come back to that. Meanwhile, in Life & Health, there will be a stronger momentum, and we are fully ready to seize it. That will be the next engine of the growth for the group. We will accelerate now that we have a well positioned derisked more profitable franchise, both in long-term Life & Health and its short-term life and health. We have a strong growth driver in this business, which is the demographic evolution across all of our markets. And now AXA is well positioned to seize this opportunity. I will now go through those 2 segments. P&C first. And on P&C, let's start by the elephant in the room, the P&C cycle. How do we look at it? I will start by AXA XL Yes, there is a softening cycle at AXA XL. It's 1/3 of our P&C business. I want to insist on an element, what we usually call soft cycle is when, generally speaking, we are no longer able to price at the level of the claims cost. This is not the situation of AXA XL today. And that's why arguably with Scott and the XL teams, what we see today is what we call a softening market. Yes, prices are decelerating, but yes, in many cases, we still find very profitable business opportunity growth opportunities, and we will be in this plan extremely disciplined in the way we manage AXA XL in order to keep growing while being selective in capital allocation. And first, and foremost, protecting our margins. That's going to be the XL playbook. I will come back to it in a minute. Meanwhile, 2/3 of our business, 2/3 of our business is retail and SME mid-market, mostly in Europe, in France, in Continental Europe. Arguably, the bread and butter of XL. It plays to all of our strengths, great distribution networks, customer base that is already very large and where we have strong relationship and a great opportunity to expand, depend the quality of those relationships as indicated by XL, that's where we will grow first and foremost by more than 5% every year on those 2/3 of the business. 5% growth on those 2/3 of the business, that's exactly what we have delivered in the first half of '26, that's what we will keep delivering while accelerating through very clear initiatives because we have multiple levers to further accelerate this growth. And on those 2/3, I want to insist on a very significant element. Yes, even when you look at the price the level of price increases currently. It's a bit lower than what we had in the past 2 years in the middle of the inflation crisis in Europe. But the reality is that it is still above claims cost and that we have a conducive pricing environment. And again, this pricing environment, we will beat it in terms of top line growth because we will have accelerated volume. How are we going to do that on retail and SME? First and foremost, we will activate much more the level of the retention. When you look at our current performance, the reality is that in the current plan, as Thomas indicated, we focused a lot altogether on strengthening our margins. But now that we have margins at strong levels, we can focus on improving retention, and that's what we're going to do. On retention, we lagged behind today. Only 30% of our entities have a better performance than our competitors in their respective markets. Any basis point of improvement of the retention will yield good growth for AXA, profitable growth out of a book that we know. So the playbook here is clear. The reality is that the growth of the next plan is already within our customer base. We know those customers and what we have to do is to invest in the quality of the pricing and offering in the quality of claims and customer services in the quality of customer value management and to do that, AI will help us. That's what, for example, we are doing as we speak in France with a program called ARIA. And the French teams are reviewing systematically the customer journeys at the point of sale in order to make sure that for the distributor when they have the customer in front of them, they know what to sell. How exactly they could cross-sell and how they could accelerate retention. It's yielding very concrete results, and that's a playbook that we will now expand to all of our entities in order to gain new customers and to improve the retention of the existing one that will lead to the growth of our customer portfolio. We will apply the same playbook to our SME and mid-market book in Europe. This book of business is arguably the conjugal of AXA, a very good book of customers, SMEs, in most of the cases across Continental Europe where we have a long-standing relationship and where our TIDAGEN networks have very close intimacy with their customers. We want to bring it to the next level by better equipping our agents with new tools, including artificial intelligence by enhancing our relationship with brokers where in this segment, the name of the game is the quality of the underwriting tools we give to the brokers and by scaling our prevention and risk advisory services. That's what we are doing, for example, in Italy, where we launched recently a new offer powered by artificial intelligence called Prevencia that is helping the head of the SME to assess the risk of his company and then benefit from lower price points if they implement some tangible prevention measures in their company. We can scale that also to other markets. Ultimately, it will lead to better loss ratios, better retention, an increase of the retention by 60 bps over the plan. This retention playbook is going to be applied consistently across our entire retail and SME mid-market book. Beyond that, as Thomas indicated, we have some structural growth opportunities that we see in the market by some structural shifts of customer expectation and needs and we believe we are very well positioned to benefit from those where indirect, in inclusive insurance in the emerging markets. Starting with direct, you see that Direct has experienced over the past few years in the markets where we do have direct operation, a faster growth than the average P&C market growth. There is stronger customer expectation for that kind of solution. We are today the largest player in Continental Europe in this business. It's a very profitable business, as you can see. And we have 2 amazing assets with the 2 leading direct brands in their respective countries, direct assurance in France and Prima in Italy. The reality is that we can leverage this expertise in order to further accelerate in the other 3 markets where we see a good opportunity, Ireland, Spain and Belgium having a much more tailored pricing, improving the way we manage claims costs and even more fundamentally, very competitive products that are helping us capture this book of customers. You see that we expect to grow out of this segment by more than 10% every year. So the growth of the direct business will be accretive to our global growth. And another element that we need to have in mind is that over the course of the next plan, we will recapture Prima premiums. Today, you don't see them, you will start seeing them in our GWP in the second half of this year for a small portion of it, most of it next year in '27 and a residual portion. In aggregate, just recapturing the existing book of Prima will yield an additional point of reported growth to our metrics. So it will be supportive to the 5% target we give. Second, significant growth opportunities, inclusive insurance. Thomas mentioned the affordability challenge. I don't come back to it. The important point for us is to execute on this playbook by accelerating our effort to review our products and offers in order to make them more affordable for this customer segment and to make sure that we have the right distribution partners everywhere because in most of the cases, reaching the low to middle class consumers that have affordability issues, goes through new type of distribution. That's why, for example, we have implemented dedicated partnerships in Spain, in France, in Mexico, and that will help us accelerate our growth we expect to generate 8% every year out of this unit. There also this 8% will be accretive to our global growth. Last but not least, on the P&C side to support our ambition to grow out of the retail and SME book, we will also accelerate in international markets. International market is today the dedicated unit for 17 countries in the emerging world. An accelerated growth, as you can see over the past 2 years and we believe that we have concrete tangible actions to implement in order to increase our penetration in those markets. In those markets, the play is a lot about penetration acceleration rather than taking share from the competitors because you still have a lot of customers who basically do not have insurance at all. That's exactly what we will do with those markets. And to do that, it's a lot about activating more distributors and making sure that they are as productive as possible. There also we can use AI and technology to do so. For example, in Turkey, we launched a new tool for our distributor called [indiscernible], which is helping them concretely speaking, driving their own productivity and increasing the number of policy per customer. So from a base that is already significant, these international market units, close to 10% of our P&C book, we intend to grow more than 15% every year being accretive to our global P&C growth. That's how we will grow more than 5% out of the 2/3 of our P&C book. Moving now to XL in more details, and Scott is with us from the U.S. for the Q&A session later. I want first to underline the quality of the franchise and the extremely strong quality of the performance of AXA XL. The combined ratio is today below 90% with no PYD at all. Going forward, obviously, in terms of top line development, we will take a more cautious approach into what we call a softening, not soft commercial line markets. Again, I want to insist. We still see some very good growth opportunities at AXA XL. Short term, we will be extremely focused on a disciplined cycle management. Our top priority there is to defend high margins. The organization of Scott is ready for market cycle. And everything is organized in order to choose where we can go above capital hurdles and where we have to take a much more cautious approach. You have a good illustration of that on this page on which I would like to spend a minute because we believe it's extremely important to share with you how we focus on margin through disciplined cycle management, which could be counterintuitive from time to time. Tech in the first half of this year, property and casualty, property, price minus 7%. So strong deceleration. But we grow volumes. And in aggregate, our premium has increased by 3%. Why so? Because we still have an excellent profitability of this book. In many cases, around 90% combined ratio. Margins are very attractive even with this level of prices. And we need to keep in mind that together with this minus 7%, we also had much more attractive reinsurance pricing and therefore, it's helping us protecting our margins. So that's property. Yes, price effect is negative, but we still want to grow. At the opposite of that casualty pricing is positive, plus 5% in the first half of the year, but the reality is that we decreased our exposure. In aggregate, our premiums have decreased by 5%. Why? Because the book is still profitable but less than property, and we are extremely cautious in the management of our exposure to this book, in particular in the U.S. So the playbook is to do exactly what I just shared with 2 examples, but across 26 countries and 400 products. So there is not a single cycle. There are 400 products, 26 countries, and we will apply there also technology and AI in order to help us better understand the profitability patterns of each and every book and adjust our underwriting triage accordingly. While we do that on the short term, again, to focus on underwriting discipline, we will also continue to prepare for the long term. At AXA XL, even more than in other parts of our business, we see structural growth opportunities for the long term. We believe we need to accelerate our diversification in the U.S. by going more towards mid-market and across the world by leveraging some structural changes we see in terms of customer needs. The expansion of companies, for example, in the defense sector, the energy transition, we are amongst the leading insurance companies on renewable energies and autonomous vehicle. Those are 2 examples where we play really to the AXA XL strength. How do we underwrite complex risk? How do we bring tailored solutions? And how do we provide proper risk consulting expertise? That's why also recently, we decided to take control of risk advisory firm where we were a shareholder and where we are now 100% shareholder in order to bring it to the next level on risk consulting. So to conclude on XL, it's a great franchise, and we are very much confident in our ability to keep developing it at attractive margins while managing the cycle and therefore, we believe that there is room to grow earnings out of AXA XL going forward. That was the P&C playbook to grow. But I want to insist on an element that Thomas mentioned several times. As you know, AXA's DNA is one of underwriting and operational excellence. Yes, in this plan, we will go for accelerated growth and market share gains. But yes, in this plan, we will keep the same level of discipline on underwriting and operational excellence. We will never compromise on it to deliver the growth. And yes, we believe that we have tangible operational levers to activate in order to keep strengthening our technical excellence. Technical excellence is a constant work, almost a iGen work as we say within the company. And every morning, you need to ask yourself, how can you improve your pricing, your claims management policies, your underwriting quality, and the good news is that it's a lot about data. And now with AI, we can leverage data very differently in order to scale concrete solutions and deliver much better pricing, much better underwriting and much better claims management. That's what we do, for example, with PHOTON, one of our AI tool that is a pricing engine that has helped us improve our loss ratio by 2 points in all the businesses where we have implemented it, mostly retail P&C so far and that progressively, we will scale to all of our business. Going beyond P&C and now moving to Life & Health. There, again, we see a structural acceleration opportunity and we believe we can capitalize on this structural growth in order to turn our Life & Health book into an even stronger earnings growth engine for AXA in the next plan. Why now? Because now we have repositioned the franchise by derisking our long-term portfolio and all the work we have done to clean the balance sheet and by restoring attractive margins in our short-term portfolio with very significant improvement of the margins over the past 3 years. So we believe now we are already to go after stronger volumes without compromising capital and technical discipline. On long-term Life & Health, I don't come back to the structural opportunity mentioned by Thomas, but we do have the assets to win in these markets, starting with our multi-specialist model and the very fact that on the retail customers, the strong retail customer base I was mentioning earlier and our effort of prevention will have tangible results in the growth of our long-term life book because we will sell more savings products to this customer base. What do we need to do to leverage this? Activate distribution. And there, it's mostly a play on diversification. Building stronger relationship with IFAs across the world. That's, for example, what we are doing more and more in Hong Kong having more solid distribution partners recently in Hong Kong, we initiated new partnerships with banked distribution across our high net worth business and also pursuing some greenfield opportunities, for example, distributing savings much more on the direct channel. That's what AXA France has started doing with tangible impact, as you can see. We believe we can replicate this playbook to accelerate our growth. Another critical element to grow in the Life & Health business, as we know, is the competitiveness of the solutions we provide to our customers. There, to be extremely explicit, it's about the fees and loadings we have, and we did a lot of work in order to improve the competitiveness in order to reduce our loadings while keeping similar net margins for us. That's what we did, for example, in Switzerland with a new solution called SmartFlex and over 3 years, we increased our market share in the individual savings market in Switzerland by 13% to 19%. And it's a clear demonstration also of the benefit we expect to have from our new model on the investment solutions side with access to a scaled asset manager partner, BNP Paribas Asset Management, while also retaining an open architecture solution with access to third-party asset managers to secure every time the most attractive funds for our customer. All in all, this playbook, this expansion strategy will support sustained positive net flows across all of our long-term Life & Health books and therefore, reserves will increase. While doing that, we will remain extremely disciplined on the excellent level of margins we have today in the book. that we expect to maintain at this level, therefore, growing reserves, keeping stable margins, this will lead us to deliver strong CSM release annually. Moving to the short-term business. Short-term business, mostly health, as you know, we did a very significant work over the past 3 years in order to improve both the value of the proposition we make to our customers in this market, both on the retail and on the employee benefit side, but also to improve our margins. And go much closer to best-in-class players with today a combined ratio around 96%. We therefore believe that while continuing to benefit from sustained claims inflation on the health side that will drive price upwards, we can also have much better volumes out of the segment and that's out of a proposition that is quite unique in many of our markets, this verticalization, integrated health care proposal we have ways to differentiate ourselves and therefore have an accelerated growth around 6% to 7% every year. While doing that there also, we will continue to focus on our monoline specialization strategy. For example, expanding PHOTON, the pricing tool I was mentioning earlier to the health business, but also by rolling out a new tool on claims life cycle management in order to better detect Fraud Weight Standards and reduce leakage. Those tools, we intend to double the size of the business we cover with those technology tools, building very concrete results, and therefore, improving our margin by 1 point in order to reach 95% combined ratio. So you see that how across all the businesses, we intend to drive growth to accelerate market share gains while protecting our margins and staying at a very level of attractive -- a very good level of attractive margins. To that extent, obviously, we will keep accelerating our efficiency efforts. Basically, over the course of the next plan, the pace of efficiency will almost double when compared to the current plan. The current plan, we improved the expense ratio by 50 basis points. In the next plan, we expect to improve it by 90 basis points. How? By being extremely disciplined on cost management with 3 main levers that you see here, Alban will comment them in more detail in a second, but I'd like to spend 2 seconds on what is the most operational lever, which is how we will improve productivity across the whole organization leveraging an accelerated plan for automation. The reality of our workforce is that, in many cases, due to natural attrition, due to the demographics we will have to face a sustained pace of replacement over the past -- over the next years, sorry. To compensate for that, we believe that we need to accelerate productivity even further, and that automation is giving us a great opportunity to do so. So we will apply that extremely systematically. A good example of that is the work we are currently doing in our contact centers. For example, in Italy, where we deployed a new AI tool, that is demonstrating a 10% increase in the speed of customer files treatment. So it's concrete tangible results that we can now have in all of our contact centers. That's precisely leading me to say a word on AI. And how concretely speaking, we will leverage AI in order to amplify the level of margin improvement and our level of organic growth throughout the plan. AI today doesn't sit in a lab within AXA. It's live and it's already everywhere. That's the impact you see on this page, tangible business impact from AI initiatives and tools that are already used by our teams and our distributors across customer and distribution across technical excellence across efficiency. So AI is not experimental. It's a reality with business impact. The question for us is now to turn what is proven local solution with tangible impact that you see here into group-wide margin expansion and to use it to amplify our priorities, growth, technical excellence, efficiency. I don't come back to the examples I mentioned earlier. But what you need to have in mind is that we expect to generate EUR 500 million to EUR 700 million of recurring value out of this AI initiative. Also by leveraging our unique operating model, where we combine the strength of a global group, including to make sure that we manage the cost of implementation and the likely increase in BAU cost due to those new technologies, together with our local agility and making sure that on the ground, all of our teams, they fine-tune what we do around the reality of their respective business, they scale fast and the drive adoption. Because, again, the name of the game with AI will be about adoption by our teams, by our distributors and by our customers. So that's the execution plan, and that's the road map we will apply consistently through the next 3 years in order to deliver the clear measurable outcomes you see on this page and on which the entire management team is committed. We believe that we have a clear plan to execute a clear playbook, and we will deliver on this ultimately driving value creation that Alban will now comment, but as a short break before the part you prefer. We will have a short video to summarize how we use AI at the service of growth and customer acquisition and retention. Thank you all very much. [Presentation]

Okay. So good morning to all. Let me now take you to the financial details of our plan. The simple message is, we are increasing all our targets. We are increasing our underlying earnings per share growth to 7% to 9%. And we are increasing our ROE target to 15% to 17% and our cumulative cash remittance over the next plan to circa EUR 25 billion. And we are keeping the payout ratio policy that we have of 35% made of 60% dividend and 15% share buyback. But we are also introducing a new objective of book value per share growth, inclusive of dividend per share that we position at mid-teens. And for us, that new objective, that new KPI reflects the value that we are creating by reinvesting the 25% that we are not paying to shareholder into high ROE business. So those -- that set of targets demonstrates our ability to grow earnings, but to also give visibility on dividend and share buyback and build the future through growing book value. So investors get visible midterm EPS growth and an attractive cash yield and also compounding growth in book value. And all this with a resilient balance sheet and a resilient business. Before I go into the details, I want to spend 1 second on the last 2 plans. Just to show again that we have met or exceeded all our financial targets over the plans, which shows our strong delivery capacity. We have, I think, an excellent track record and we have built a very strong platform, very strong foundations to build on for next plan. So let's start with EPS growth. So we aim at a 7% to 9% underlying earnings per share growth. That's made of 6% to 8% on underlying earnings and 1% from share buyback. So it is an increase -- a 2-point increase in reality in terms of underlying earnings growth compared to the current plan because the benefit of buyback will be lower because of a higher share price, and that's good. But we are clearly increasing our ambition in terms of underlying earnings growth. And that ambition will be very balanced between P&C and Life & Health because we want both business lines to grow between 5% and 7% their earnings. I said we were increasing our objectives. I want to highlight the fact that we do that in a context, which is probably less easy than 3 years ago. Less easy because, as Gill mentioned, we have a softening cycle at XL, but less easy also because we have no business to turn around, all our businesses are performing. So there is no quick fix, no quick win. It is an improvement that we want to deliver in all our businesses. Let's start with P&C. As we showed, we have built now an extremely well-performing P&C platform throughout the group. So the purpose of the next plan is not to grow further our margins. The purpose of our next plan is to keep our margins stable and to grow our businesses. They are already at scale. That's why the -- we are delivering that economic performance, but we believe, as Thomas and Guillaume said, that we can then -- we can grow them further. So the various levers that we'll have or revenues that will be -- that will grow above 5% overall, a stable all year discounted combined ratio at 91%. And investment income that will grow at 6% to 7% simply because we will have a larger balance sheet thanks to growth, but also because we will be replacing lower-yielding assets with higher-yielding assets, thanks to higher rates. But the earnings driver in detail would not be uniform in the sense that for personal lines, SME, mid-market, we will have good top line growth, and we will crack everyone working on our margins. But for XL, the focus will be on profitability. We know how to manage the cycle. We have levers to manage the cycle, and I'm not coming back to what Guillaume has described, and there will be opportunities to grow the business at XL, but the focus will be on profitability, which means that we expect XL to show muted growth on top line while managing the deterioration of the current year combined ratio. But there is room to grow XL's earnings and notably, thanks to higher investment income. For the whole group, we are confident that we can keep an all-year combined ratio stable. First, because we will remain disciplined on our technical excellence and on our expense efficiency. But also because we have built reserve buffers over the last years, taking advantage of the low Net Cat years that we had over the last 2 to 3 years, and those -- that reserve prudence gives us a level of safety when it comes to the next plans all year combined ratio. If I now move to Life & Health. So you know that we like presenting our Life & Health businesses in 2 blocks. One is the short term, which is annually repriceable, renewable policies in protection and in health. And the other one is the long term. in the transition of earnings for that long-term part, which is the savings business is through the CSM release. On the short-term part, we believe we can grow our revenues 6% to 7%. And thanks to higher demand, but thanks also to our competitiveness. And we can further improve the profitability. We reduced our combined ratio in short term Life & Health by 300 bps over the current plan, we believe we can do another 100 bps in the next plan. And on the long-term business and the savings, we think we can grow our CSM release by 4 to 5 points. I'll come back to that in a second. And finally, the third lever to grow earnings in Life & Health will be investment income that we will grow at 4% to 5% at a lower pace than in P&C, simply because the duration of our assets is longer in that business than in P&C and therefore, it takes more time to replace the lower-yielding assets. A word on the CSM release. If you take a simple approach, at the end of the day, the CSM release is the margin applied to an amount of reserves. That margin, and you have it on screen has been relatively stable around 80, 85 bps over the last years, and we believe it will remain stable over the next years. But the results will grow. They will grow with a positive net cash flows that we are generating. And our ambition is to increase those net cash flows going forward. And they will also increase simply because of the credited rates that we give to our policyholders and the revaluation of unit-linked. All in all, reserves should grow 4% to 5%. So if you apply a stable margin to growing reserves at 4% to 5%, you have a CSM release that also grows at 4% to 5%. I A word on expenses. Guillaume mentioned 1 lever. I will talk about 2 others in a minute. Overall, we will double the pace at which we improve our expense ratio. In this plan, our ambition is to decrease the expense ratio by 50 bps. We will do 90 bps in the next plan. And it's a mix of good growth in our revenues, 5% or more and contained cost base because we don't want our costs to increase by more than 10% -- 2%, sorry, a year. And just to make it very clear, our investments and notably our investments in technology will grow at the same pace as our revenues, so 5% or more. So the efforts will be on BAU expenses, not on investments. And through that cost containment and that strong growth, we will have positive jaws and therefore, a 90 bps improvement in our expense ratio. The 2 levers that Guillaume has not mentioned are: one, the cost of our corporate center. And second, what we do on non-staff cost. Through the reorganization of our operating model with entities through simplification of our tasks here, we believe we can reduce the cost of coverage center by 15%. And on non-staff costs, when we compare ourselves to the best ones outside our industry, I'm thinking about carmakers or retailers, what they do on procurement is significantly more powerful than what we've been doing. So we believe there's a lot to be done on nonstaff costs, notably through procurement, and that will contribute 20 bps out of the 90 bps of expense ratio improvement that we are targeting. So that's about earnings. Now let's move to capital and cash. We are maintaining our target for normalized capital generation at 25 to 30 points. Even though we are increasing our top line target, that's because we have a very efficient model derivation operating model in terms of capital generation. There will probably 7 points of additional capital requirements every year. Nevertheless, we maintain that 25 to 30 points target. On the cash side, we have reached over the current plan, a remittance ratio of 82%. And we believe that in the next plan, we can maintain that level of 80%, which is sustainable, and that will take us to circa EUR 25 billion of remittance from our entities to the group. So 80% will be remitted to us, 20% will be kept at local level for organic growth. When we look at our capital model in general, at group level, that translates into the same 75%-25% that we've had over the current plan. 75% will be distributed to shareholders through dividends and buyback. 60% and 15% and 25%. And we will -- 60% and 15%, sorry, and we will keep 25% for our organic growth, which means that we have a clear hierarchy when it comes to capital and cash. First is organic growth. Second is dividend and share buyback. And third is M&A. So we have, with this model, clearly, with the fact that we reinvest for future growth at a 15% to 17% ROE, the ability to deliver good cash now and also in the future. That's why we are introducing this new objective of book value per share growth, inclusive of dividend that we position at mid-teens versus 12% in the current plan because there, again, we see an acceleration. And for us, that KPI will reflect the value we create now and in the future. All this would have little value or less value if we didn't have a resilient business, a low volatility business and a resilient balance sheet. The first reason why our business is resilient is simply the diversification. Diversification in terms of geographies, diversification in terms of lines of business. We have multiple earnings engines. We are not dependent on any geography, any single line of business, any single regulator, any single economic environment. That's a source of low volatility and of predictable earnings. But if we go into low volatility, I want to dwell for a second again on P&C. We have one of the best combined ratios of the industry. But -- and it's probably less well known, we have also the least volatile one, and that's extremely important. We have regularity in what we deliver. So that comes, obviously, from the diversification of our business. That comes from all the efforts we have made on our net cat exposure in the past that allows us to be less exposed to that payroll. But we also demonstrated how we manage inflation 2 or 3 years ago when we had a peak in inflation, and that might prove useful in the coming months and years. And finally, as I said, we also built some prudence in our reserves, we've never been a company that releases excesses PYDs, but we have been extremely prudent over the last 3 years, taking advantage of are low net cat losses. And as I said earlier, that will play as safety -- safety net for our next plan. What is true for P&C is also true for Life & Health. We have a predictable low volatility business there. Again, if I take the same 2 businesses, short term and long term. On the short-term side, we have annually renewable -- annually repriceable policies, and we have demonstrated that we can improve the earnings there even when we have headwinds in some of our markets. But it's also true on the long-term part on savings. That is thanks to all the work that we've been doing on the runoff of some portfolios, the sale of sessions of some portfolios. The fact that we move to capital light, the fact that we reduced our duration gap. At the end of the day, you now have a business for which the CSM release is not very sensitive to say the least, to external financial shocks. So that's again a source of predictable earnings. On the balance sheet, what is true for the CSM is also true for our balance sheet. We have reduced significantly the sensitivities of our solvency to financial markets. And we also have a high level of solvency which will be further enhanced next year with the benefit of the Solvency II revision. So we have a robust balance sheet and that acts also true for our level of debt where we believe we have flexibility and we could increase our level of debt by EUR 2 billion to EUR 3 billion per year in the next plan. So overall, the balance sheet is strong, but that also shows in our assets. We've always been prudent in our asset allocation. We will just in the next plan takes talk of the fact that rates yields are higher. And by definition, in that context, you are better off having debt than having real estate and private equity. So to some extent, we will rotate part of our assets from those 2 real estate employed equity to private debt, below investment grade and investment grade. Still on our low volatility. Here you have what the sensitivity of our earnings overall would be to a minus 100 bps shock. So clearly, the world is not going in that direction these days. But if that were to happen, you see that it would have an impact of minus 4% on our earnings before management actions, i.e., something which is very manageable. And you also see the impact on our solvency of some external thanks. So at the end of the day, the message is that we are very confident in our planned targets. They are built on realistic assumptions, notably when it comes to the softening market at XL. And our plan relies first and foremost, on our ability to execute, not on external factors. And given the strength of our business, given the strength of our balance sheet, we have room to manage potential deviations. And we, therefore, believe we can deliver a predictable financial trajectory. So in summary, we're confident that our plan will deliver good growth in the cash we deliver to our shareholders and good growth in the value that we generate year after year for the future as we reinvest at a high ROE. We have a strong starting point, and we will build on this to deliver our plan. Thank you very much.

Thank you, Alban and Guillaume, and we now have roughly an hour to talk about and answer your questions. Who would like to start? Let's start here. .

William Hawkins from KBW. Maybe I'll kick off just with 1 question. We just got a few parts to it. your new financial focus on book value growth. Personally, I really like to see that, and I understand the discipline you're putting in place, but it does kind of lead to some questions about how it's going to affect your behavior in the future. So around that, it's going to be an impediment to any acquisitions of high multiple or fee kind of or distribution businesses in the future and we haven't really discussed most about M&A, but in the context of your solvency ratio, that must be a talking point. So I wonder could that actually be a strategic impediment to how you think about growth over time? And then secondly, I know it's slightly nerdy, but your share buyback is going to be dilutive to book value growth. So shouldn't you be thinking more creatively about how to repatriate capital rather than repeating the last plan? And then lastly, if you're going to focus on book value growth, why aren't you including CSM?

Thank you, Will, for your 3 questions. I'll take the first 1 at Alban, if you could take the second and third around dilutive share buybacks and the book value question. So I think the question around M&A. For us, it's very important that we have this measure around book value to make sure that the means that remain within the company are well invested and well followed up and also follow about the mid-teens that you have seen. And if you look in the past, this is absolutely achievable and has been achieved. For us, this plan relies very much on organic growth well, and this is the main focus. If we do spot M&A opportunities like we did in the past, when you think about Prima when you think about layer, when you think about credit Mitral in Spain, we will certainly look at it. But it needs to fit into the concept of the book value development. And so if we happen to find acquisition targets that have multiples that are a little bit higher, then needs with synergies that justified. So -- and again, I want to stress what I said in my beginning. The discipline that we have put in place over many years now, will remain in place. So we have not fought for something very hard to give it up as of tomorrow. When it comes to margin discipline when it comes to capital allocation discipline, we will remain the way we did before. Alban, on the second and third question that we'll ask .

Thank you, Thomas. On the share buyback that leads to a dilution, you're right mathematically, now from a value standpoint, we still believe that our share price does not reflect order value, and therefore, buying at this level of price, is still accretive in terms of value for our shareholders. Then on your question on the CSM, I think the reason why we didn't include it is twofold. One, I think book value generally is better understood globally when you go to the U.S., Europe or Asia? And second, when you include CSN, it gets you to something close to the embedded value. And we obviously have a large life business, but we are a composite insurer. So I think it would draw the attention too much to the embedded value part versus the book value, which is more reflective of our total businesses.

Let's move from William too Will.

Will Hardcastle, UBS. The first one is thinking about the improving retention that's going through. It's sort of resonated and I've heard it from some others, and it seems to be a key part of the efficiency tools of AI. I guess, as others are also doing it, does it create somewhat of a risk on the reduction in new business acquisition costs, so your ability to grow the volume? And how are we trading that off. So -- and I guess if that's getting more competitive, that could create a faster softening. So I was just trying to understand how you're managing that? Or is it just that you think you're so far ahead of the competition and the competitive mode that they can't catch up? It's understanding that relationship. And then where have you struck the yields? Obviously, yields have moved a long way quarter-to-date year-to-date and understanding whether there's any risk years ago, if we took a step back, we'd always say that's linked with the P&C cycle, if it takes time, but how much you're factoring that into any potential softening?

Good. I suggest I'll ask the first question in Alban, if you could talk about the second question also stressing in the second question or the answer to the second question that when we talk about cycle, we really only see the cycle today in the segment of large. When it comes to retail, when it comes to a medium-sized business, we do not see the cycle and that is also maybe linked to the answer on the first question. Retention is the best possible where you actually have, I would say, in control over your customer which is very much in agents markets. And AXA has always been very good and very strong around developing the agent networks. We have probably one of the biggest agency networks in Europe. And there, the question is, yes, others are also investing in AI, but the number of insurers that invest in AI, if you look at the portfolio, of customers that it represents is relatively small because in order to invest in AI in order to benefit from it, you don't only need to have the financial means, but you also need to be able to entice your employees and the agents to do it. And the big challenge in AI is not have you got the best technology or have you bought the cheapest license for co-pilot? The key is, are you able to engage your employees and your agents to use it. And I think that's where the difference will be made. And therefore, when you look at the market, most likely, we will take market share from others and retain customers against smaller companies that have -- don't have the means and don't have the ability to engage their -- to engage their customers and their agents and their employees in that and because -- and you said it in your sense and yourself, we are probably one of the first ones to push it not retention as such because I mean when I was head of distribution in 2006, retention was already an issue, but to push it now with AI. And what we've seen in some areas that AI is really making a difference and does increase retention rates. And you've seen -- I mean, Alban was talking about it earlier.

So on your question on yields and impact on pricing. So you can never say that no competitor will do some cash flow underwriting to take advantage of the yields. That being said, we don't believe it will be -- it will be a major phenomenon. For the simple reason that where you get a strong benefit is for a long-term business and casualty end-to-end financial lines. I think we have strong support on pricing in casualty, notably in the U.S. with the loss trend. Today, pricing and casualty overall is up 4%. That's already below the loss trend, which is 6% to 8%. So I don't believe that we should see a further significant reduction in pricing and casualty for that reason. And if you think about other lines such as professional lines, which are also long tail, we are clearly seeing bottoming out of this after a softening part of the cycle for that line despite the higher yields. So I don't think we -- that's a major risk.

Let's move to the next, Farooq.

Farooq Hanif from JPMorgan. Going back to your to growth pillars, which are new lines, particularly direct and then retention. If you had just one or not the other. So for example, if you just improve retention to the to the bps levels that you want to, what would that do to your growth rate. So when we look at your more than 5%, how much of this is really more about retention and how much is direct. Second question on the 91% combined ratio. So you alluded to reserve strength. But if I look at your net cat budget as well, it feels to me, I may be wrong, but it feels to me like that is a higher confidence level. So your 4.5% is a more extreme event than it used to be, given the amount of derisking you've done, for example, at XLR. So could you comment on that? And within that 91%, are you saying loss ratio may go up and expense ratio goes down. Is that the mix? Or are you leaving it uncertain just because you want that flexibility. And maybe one more question, if I may. So when you look at your Solvency II ratio, clearly, it's going to be a big number, but we know that Solvency II isn't the same as cash, and you talked about keeping capital locally. I'm kind of wondering why you're doing that. I mean you've always run a -- you're running a capital-light model. It seems like you have adequate capital in the group. I'm just kind of wondering why there hasn't been this desire to sort of turn some of that in force into cash and maybe improve payout?

Thank you, Farooq, for your 3 questions. Guillaume, I suggest you do the first 1 when it is about retention versus Direct. The answer is probably we have to do both. But I think you will get into retention more. And then if Alban, you could talk about the question of Net Cat and also about the question around Solvency. And I think Farooq you said a very important sentence. Solvency is not cash. not always cash. And I think that is something that we need to keep in mind. Yes, our solvency ratio will most likely be quite high, but because solvency also accounts for future profits it's not cash.

So on your first question, Farooq. Obviously, when we look at growth, we are looking first at what we could call natural growth meaning being exposed to the fastest-growing segments of our business. And that's exactly the point we make with direct, but also with inclusive insurance and international markets. Those are territories, customer segments where the natural growth is faster than the average growth of the market. By increasing our exposure to those segments, we will accelerate and it will be accretive to the global growth. So that's for this part. . And on this part, the play is a lot about new customer acquisition for direct, for inclusive for our international markets where we want to increase penetration. Retention is how indeed we work better on our existing customer base, as Thomas indicated. And when we look at the value it will give us, that will be a very significant contributor to the increase of the volume effect in our largest geographies, in particular, in Continental Europe and in our French business unit. That's the way we look at it.

So on the combined ratio, when the 4.5% cat load is determined with the help of Francoise, I'm looking Here, our Chief Risk Officer, in the sense that we have a model that tells us on an average year, how much cat losses we should have. And it comes to 4.5%. We are very happy that over the last years, it was below. But as it is an average year, you will have years below and years above. So I prefer sticking to that 4.5%, if there is some prudence there, so much the better. . When it comes to expense ratio and loss ratio, yes, you have well understood that our non-commission expense ratio will go down with all the efforts that we -- that I went through that I described earlier. But we will reinvest part of this and part of our technical excellence because there are still a lot to be done on technical excellence, even in P&C, in our competitiveness. And in our competitiveness, that means potentially higher commission ratios and it could also mean a deterioration potentially of our loss ratio here or there. But overall, we will maintain our all-year combined ratio. And then on turning in-force into cash. At the end of the day, we had a couple of transactions, as you know, where we sold some life reserves. It's not easy. There are not -- there aren't so many buyers and the price they offer is not that great. And by doing this, you also compromise your ability to grow earnings on the life side. So we're happy with the 75, 25 or 80, 20 when you look at local level because at the end of the day, we can generate 25 to 30 points of capital. And that's also due to the diversification we have between P&C and Life. And that diversification would probably be hindered if we were to sell our life business or part of it.

Andrew?

It's Andrew Crean for Autonomous. Three questions, if I can. Firstly, could you tell us what the interest rate and inflation assumption is behind your 3-year plan. You said, I think that 100 basis points of interest rates would hit the earnings by 4%. What would 100 basis points on the inflation assumption above you above your assumption do? Secondly, the whole plan seems to be based on an assumption that large corporate will be softening, but all other P&C markets will be sort of stable and flat, that's beyond your control. If you get a soft large corporate market and that tips down into the mid-market possibly into retail, is there a plan B -- and would it be possible for you to hit your earnings targets under that scenario? And then thirdly, in the last plan, I think you said 6% to 8% and said that you'd do that in each of the 3 years. Is that something that is likely during this plan? Or do you think it may be less even delivery?

Thank you, Andrew, for your 3 questions. Alban, I suggest that you do the first one and the third one, and I'll quickly answer the second one. First of all, Andrew, what we see today is that the so-called softening, and I've talked about softening and not soft market because what is important is that even in a softening market, profitability in most lines of business is still very good and growth makes sense, as you've seen beforehand. We do not see it in retail, and we do not see it in the commercial mid-market yet. What is the reason on the retail side, we have precisely, as you mentioned earlier, still 2 things. One is inflation. So there is a reason and an opportunity to increase prices. And secondly, you see that we do have many insurers that have not gone the same route that we have, meaning sorting out the issue in one go. When you think about the beginning of last plan or of this plan in the U.K., in Germany, where we went straight ahead and closed our gap immediately, whereas others did it over many years. So on the retail side, I have big difficulties to see the softening market. And when you talk about the mid-market and the SME market, the question is there as well, mostly softening comes with more capital and more competitors. And the SME market works like the retail market, you need to have a distribution presence and need to be in front of your customers. If you come into the market and have nothing, it's very difficult. It's very different to, let's say, a reinsurance market where you can come in with alternative capital very quickly. And the U.K. is probably one area where this could be more pronounced because you are much more in a broker market. But on the continent, a very large part is distributed by agents and it's very difficult to get in there.

So on the assumptions we took. In terms of interest rates, we are not betting on higher interest rates nor for that matter on low interest rate, it would be broadly stable. That's our assumption over the plan. And I believe the plan was under a couple of months ago. So recently, rates have gone up. They could come down as well, but broadly stable. When it comes to inflation, I think, and that's what I said on commenting one on one of the slides. We -- the assumption is that the inflation will remain between 2% and 3%. But at the end of the day, what matters is our ability to manage inflation. And that's what we demonstrated in 2022. When we had that spike in inflation, at the end of the day, it was not visible in our loss ratio because we know how to manage the claims and we save on the claims probably I'm thinking of the motor claims, 2 to 3 points every year compared to the natural claims inflation. So we know how to get notably through procurement better claims inflation than the general inflation would lead you to think. So I'm not concerned if we have an increase in inflation, that it will impact our profitability. And on your second question, I do remember 3 years ago, you asked me whether 6% to 8% was every year. I said yes, something also that the 7% to 9% is every year.

Let's stay at the same tariff at.

Regarding your asset reallocation from real estate into private debt, how much -- what's the quantum we're talking about there? And how much of the 7% increase in cap requirements perhaps relates to this? And also on the CSM growth target of 4% to 5% when you gave the breakdown where the CSM was -- can you give some color in terms of relative growth between your major the breakdown of the CSM by country, could you give the relative growth of the countries for that 4% to 5% target? . And I just wanted to ask you on health, we're talking a lot about retention. You've turned around the portfolio, you're going after more claims leakage. How has retention developed in health and how is that going to go from here onwards?

Thank you for these questions. I suggest Alban, you take the first 2. And on Health Patrick Cohen, CEO of Europe; and also the CEO of Health will certainly answer and has got also the field experience from the U.K. on this. Alban and then Patrick, afterwards.

So on the -- on the first one, we're talking about roughly 3% of our balance sheet that will move from real estate and private equity to private credit and notably below investment-grade private credit. The 7% increase in SCR is the capital required to grow the business. We don't believe that, that move from private equity and real estate to private credit will lead to a significant increase in required capital. And on the CSM, we are not giving specific guidance by country. But simply, you can see the 2 drivers, which are credited rates and net cash flows. We plan to have good net cash flows everywhere. And by definition, credited rates are lower in places where interest rates are lower, like Japan and Switzerland. But overall, the ambition is group-wide when it comes to growing our CSM release.

Patrick, on health.

So thanks for your question. On health, you said it, we've increased our earnings 20% a year, we've very strongly improved the combined ratio. If I look at Europe, it's down 7 points probably 4 points overall. So we have an extremely healthy portfolio, and we're coming back with growth now. We're at 7% growth. We see retention being stable. Obviously, all of that has been driven by our specialization effort and strategy, in particular, as you said, on price, claims and underwriting. When it comes to retention, we believe we have a model we have assets that are really distinctive. I out mention the 3. First, our EB Workplace Solutions, where we help HR leaders through analytics to understand the root cause of absenteeism and their health population and direct their prevention business to the right places. We are betting very strongly in promoting prevention, Hassan is close to me here. For instance, in Colombia, 20% of our premium goes to prevention. And it has a fabulous effect on customer retention and also profitability. And last but not least, we are scaling our care delivery in some markets. So we're giving faster access. We're giving a great experience with a 30% claims cost reduction. We have now 84 centers, and we plan to grow that further in the coming years.

Patrick. Did you have still -- you were okay because you raised your hand again. Let's move here to the middle. I think it's Kalis.

Kiswire Bank of America. Two questions. Just coming back to the Life or Life & Health CSM point. I think you've been quite careful about phrasing it as CSM release in the various slides. You also gave us a margin on reserves. Obviously, most of our models are built on normalized CSM growth, et cetera. Does that imply that you're assuming a higher release rate throughout the plan? Because I think consent is probably around 3.5% for normalized CSM growth. So that's the first one. The second one is coming back to this topic around retention, et cetera. Obviously, it's an important driver of the plan in the developed markets. Can you talk a little bit about how much of the capabilities to affect that are already in place? And in particular, how you've adjusted incentives of distribution or management in order to drive that or if that's coming down the road?

I would suggest, Alban, you take the first question around the CSM release and Mathieu Godart, if you could take as a CEO of AXA France, take the second 1 because -- when we look at retention and cross-selling, I think AXA France today is probably the best practice example in the group, Alban?

So the simple answer to your question is that the pace at which we will increase the CSM release will be regular. So it's not going to increase. The 4% to 5% increase is something that we want to have every year. The -- it's true that our normalized CSM growth is not at that level. But I want to emphasize the fact that they are not equivalent. Over the long term, obviously, they would converge. But over the long term, as Ken said. So the -- I just want to take an example to illustrate that. When you look at our Japanese business with higher rates, the new business CSM of our Japanese business will come down. simply because of the discount. Does it affect in any way the margins that we do in Japan that we released No. So we need to keep that in mind. .

Mathieu on retention and what is already in place?

es. Thank you very much for your questions. So I think I will mention 3 things that are already in place. The first one is the tremendous work that we did regarding customer data. Today, we have developed and embedded in our systems, a 360 vision of customers that is made available to our distribution networks, which gives them a fantastic lever to work on AI that is now implemented as well in the CRM. What does that mean concretely means that I will have the information on your situation, the events in life that might occur to you that will drive the behavior and next actions for distributors. And yes, you mentioned that we are going to work together with our networks to align the incentives and with the stake of retention. Thank you very much.

Ben.

Ben Cohen at RBC. Two questions, please. Firstly, in your prepared remarks about the book value growth, you flagged, I think, a headwind from the sort of the value of the Prima minority buyout. Could you just quantify sort of what that headwind can be maybe sort of lower and upper band in terms of how much that acts and secondly, in terms of reinsurance, I mean, no mention in terms of your own reinsurance business and your expectations for, I guess, margins and growth there, but also if you could give us some sense in terms of your assumptions about your own reinsurance costs and how you see that changing over the plan? And are you looking at sort of more alternative capital to your remarks, Thomas, about capacity coming in the to reduce those costs?

Very good. So I suggest that Alban, you take the question on Prima and I guess the better prima, the more difficult the buyout is and then on the reinsurance side, we have Scott Gunter online. He can talk about our reinsurance business or assumed reinsurance. And then Francois, do you want to talk about as Chief Risk Officer around our reinsurance and the role of alternative capital. So Alban, Scott Francois.

So first, consolidations for spotting the debt sentence that we added on Prima because the accounting is not absolutely obvious, but it's true that when we buy Prima, the 47% that we don't own it in 2029, 2030. The -- we will not book a goodwill. We will -- it will come as a reduction in our net assets. That's why we flagged it in the press release. So how much will it be? It will be for the increase in the value of those 47% and that increase is both the reflection of the discounting because today, we have discounted that in our book and potentially the increase in value of Prima over the next years. . We have not disclosed the price formula at which that we would use to buy the minorities, but you can assume that it would be multiple, which will not be far from the ones we have used for the acquisition of the 53%.

Scott, if you are with us on reinsurance and the expectations.

Yes. And on the assumed side, we have a very diversified portfolio, the folks in the room probably remember when we derisked it on the cat side over the last few years. So it's diversified. And look, we're going to grow that selectively where the returns are attractive. But our real focus is on the adequacy of the pricing and getting the appropriate return for our efforts. This is also where we utilize a lot of the alternative capital ILS capabilities is mainly in the reinsurance portfolio, and that helps smooth it out a little bit in terms of the earnings. .

Thank you, Scott, and Francois on the other side of the reinsurance.

On the reinsurance that we buy. So the short answer to your question is, yes, definitely, we look at all sorts of capital which is available there, including alternative capital. So we look at that and indeed, the availability of that capacity allows us to broaden the discussions that we have with the reinsurance market, not only on the price, but also on the conditions of reinsurance, notably also the clauses that we can negotiate, including also the collateral management, the attachment points, et cetera. So we look at it holistically.