Hannover Rück SE (HNR1) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and thank you for joining this conference call, presenting the outcome of the January renewal for our P&C treaty reinsurance book. As usual, I'll start with an overview before our Executive Board, P&C Business Coordinator, Sven Althoff, goes over the details of the renewals outcome. I'll then comment on the outlook for the year thereafter. Let me start with a few general comments on the market environment. Overall, I'd say the positive momentum we have observed in the last couple of years and in particular in 2020 it's continued, and we've seen another year of improving rate quality for the reinsurance industry. Additionally, the primary insurance markets have experienced a significant improvement in many geographies and lines of business. In some cases, we've seen the second or even the third consecutive year of increased premium quality, which is, of course, particularly positive for our proportional reinsurance business, where we directly benefit from the developments in the primary markets. Drivers for these developments, as you know, where the higher-than-average loss experience in the past 4 years and the continued challenging interest rate environment. As COVID was a significant loss complex, but not capital event in 2020 for the reinsurance industry, we're not in a disruptive market environment. We have seen capacity available. So I would call this an orderly renewal and hence, price changes where, in my view, overall satisfactory, but of course, more moderate than some market observers had initially expected. As always, the status of the cycle depends on the capacity and demand mechanism. And even though capital was available for the January renewals this time, the pricing power was more favorable to the suppliers, which largely acted in a disciplined manner. Therefore, the market firming was broad-based that accompanied by improving terms and conditions, particularly regarding pandemic exclusions and silent cyber exposure. As usual, the trend in this renewal did vary quite notably, depending on geographies and lines of business when it comes to the level of pricing adjustments. In general, most dynamic developments could be observed in North America, in the U.K. and in the specialty business classes. Finally, I'd say that this renewal has underlined that the reinsurance market was willing to allocate capital and to support their clients' needs and has, therefore, shown the relevance of the reinsurance market in this turbulent environment. Moving on to the Hannover Re treaty renewal. I'd say that most of the described factors were also true for our own portfolio with improvements in the primary markets, reinsurance rates being adjusted up as well as trends and conditions, adding up to a clearly improved quality of the portfolio. Additionally, we, as Hannover Re, have continued to benefit from the flight to quality, which is a long-term trend in our business. And given our financial strength and the excellent market position, we could feel that trend again during the renewals. Therefore, I'm very pleased with the outcome of this renewal. The total price increase was 5.5%, and the risk-adjusted price change for nonproportional business was even higher at 8%. Sven will show you in a minute that this brings our book to a level surpassing the risk-adjusted trade quality we've seen in 2012 and '13 before the last phase of the significant market softening started. Looking at premium volume, our book grew by 8.5% in a firming market. You've seen higher growth rates at Hannover Re in the past years. Our focus here was on improving the portfolio quality. And therefore, the growth of our portfolio was mainly driven by price increases and less by an additional expansion of the P&C book. We also did not shy away from not renewing business or not fully renewing our lines where the profitability -- where targets were not met by our underwriters judgment. Additionally, the growth we have seen does not include our facultative business, structured reinsurance and other nontraditional reinsurance business. On top of this, we do expect to see some more growth opportunities in the upcoming renewals as well as in the nontraditional lines. Last but not least, the demand for reinsurance was in some cases dampened by reduced reinsurance commissions by the fact that some primary insurance premium is calculated on business activity, i.e., turnover or mileages, et cetera. In addition, we've clearly steered our risk appetite in the NatCat segment, and we're successful in diversifying the book outside of the U.S., where we were not willing to allocate significantly more capital. I'm particularly pleased with our team managing our retrocession. They successfully renewed the retro programs, placed the targeted level of coverage at a reasonable price, which is risk adjusted, well in line with the reinsurance market and could be absorbed by our own business portfolio. Last but not least, the ability to grow our book and to achieve high profitability. It's also based on one of our key competitive advantages, namely admin expense ratio. Therefore, it is important for us to further build on this advantage. This is in a nutshell, the development of this renewal. And I'm pleased to hand over to Sven, who will give you some more insights on our renewal performance.

Thank you, Jean-Jacques and also a very warm welcome from my side. Today, we are reporting about the treaty business, which was up for renewal at the 1st of January. This represents a total number of EUR 7.7 billion of premium out of our EUR 15.9 million of premium. So overall, 67% of our treaty business and 49% of our total P&C business. On the right-hand side of the graph, you can see the regional splits of our renewal portfolio. EMEA is of particular importance for us at the 1st of January, given that almost 90% of our total EMEA portfolio renews at 1st of January. And also when it comes to the specialty lines, a very significant part of that business is also focused at around 1/1. If you're interested in the details, you can see a slide in the appendix where we show the premium that is going to renew later in the year. And from that slide, you will notice that when it comes to the Americas and the APAC regions, there are significant volumes to come at 1st of April, 1st of June and 1st of July renewal dates. Out of the EUR 7.7 billion of premium that was up for renewal, we nonrenewed our seeding companies restructured business of -- in the amount of more than EUR 700 million, leaving EUR 7 billion of premium that we actually renewed. After the renewal, this turned into EUR 715 million more where the most influential part of this increase is actually the increase in price, which was 5.5%. This compares to 2.3%, which we had reported a year ago. So much more positive. And we had smaller contributions from the change in our shares and the change in the underlying premium from our seeding companies. The EUR 680 million, we could again show a significant amount of new business. This was very diversified. Again, like in the last years,with particular emphasis in the German market this year in our North American portfolio and business coming from the loan market. Overall, we grew the business by 8.5%, up to EUR 8.4 billion. As you can see, we had premium and price increases across all lines and regions, with the most dynamic development in the U.S., London market and specialty lines. The only area where we had a slight drop in premium income despite positive price momentum is our agricultural portfolio. I will come back to that in a few slides to give you the reason why. Let me look into our business on a proportional and nonproportional basis. This slide is giving you more detail. So you can see that the proportional portfolio shows an overall price increase of 4.4%. All regions and product lines have contributed to this. And again, it compares favorably to the 2.1%, which we reported a year ago. On the nonproportional business, we have seen even more positive momentum with an overall price change of 8.8%. This is significantly higher than the 2.9% we had reported a year ago and only slightly below the 9.9% we reported for our 1st of June, 1st of July renewals last year. You have to remember that the 1st of June and 1st of July business last year was very involved in previous loss activity, so mainly in the U.S., Chile and Australia. And at the 1st of January renewal, we have a much more diversified portfolio. The best price momentum we can -- could see from a regional perspective coming out of the Americas, both North and South America and from our specialty lines of business. Jean-Jacques already mentioned that adding our 8.8% of positive price development on the nonproportional business, this has been the most pronounced rate increase we could observe in the last 10-year cycle. And adding or deducting all the price movements we have reported over the last 10 years to you, this now brings us to a level exceeding 2011. But let me give me you a little more detail when it comes to our various portfolios, starting with EMEA. In EMEA, the overall premium grew by 10.6%, and this is on the back of a price increase of 3%. We had firming of the rates, both on the primary side and on the reinsurance side. The most notable firming on the primary side was coming out of our U.K. portfolio. Reinsurance rates were firming across all geographies. And as Jean-Jacques already indicated, we were also able to improve terms and conditions. We have increased our share in the Lloyd's market with particular emphasis behind our wholly-owned subsidiary agenda. As you know, the flagship syndicate of agenda 21 21 is not a fully aligned syndicate, but we have now grown our participation behind that syndicate to more than 50%. Germany was a particularly successful renewal. As you know, our subsidiary, E&S, is one of the market leaders in that market. And despite this already very strong market position, we could again widen our client base and increase our participation on existing programs. In North America, the premium growth was even more pronounced. The 15% with -- on the back of a price increase of 8.3%. Here again, we had a very positive trend, both on the primary and on the reinsurance side across both Property & Casualty. We could successfully introduce pandemic exclusions and in very many cases, also silence cyber exclusions in our renewal portfolio. And this allowed us to materialize premium growth across both Property & Casualty lines. Also, Latin and South America was successful renewal. Here, in particular, Chile, again, showed good levels of rate increase following the losses we had in Chile from the riots a year ago. On the APAC side, the growth was a little less pronounced compared to previous years with 4.1%. Here, the price increase is actually exceeding our premium growth with 6.1%. We had successful renewal in Southeast Asia and Korea, where we were able to write more volumes of business at more attractive terms and conditions. But where we had the drop in volume was out of our Mainland China portfolio, which from a single territory perspective is the biggest contributor to our APAC premium. And the reason behind that is twofold. Firstly, we did not achieve the levels of rate improvement that we wanted to achieve. And secondly, we have a few market dynamics in China, like the deregulation of the motor business, which has led to a reduction in our premium income from the Chinese market overall. Turning to the specialty classes. We grew our credit, surety and political risk portfolio by slightly above 5% with a very pleasing development on the pricing side where we almost hit 10% as an overall increase. This was a first step of a hardening as a result of the uncertainties linked to COVID-19. As you know, there are relatively few incurred losses in credit and surety at this stage, given the various government stimulus packages and monetary stimulus packages to have the effect that in quite a number of the countries, credit insurers had spec stop solutions from the governments. But nonetheless, given the overall economic recession, we still have to expect a certain wave of insolvency once those packages and protection mechanisms are phasing out. And given the level of uncertainty in this portfolio, we were able to successfully negotiate strong price increases. We have only very selectively grown our client and exposure base, given the background of the economic recession. But overall, a very pleasing renewal. In marine and aviation, the growth was a little more pronounced with 8.2%. Again, very good pricing momentum with 11% of an overall increase. This was on back of various losses, both on the aviation and on the marine side. So we were able to not only significantly increase the rates on the nonproportional business, but could also negotiate lesser commissions on the proportion of structures. In both markets, we see strong momentum on the insurance pricing. So the quality of our pro rata book has certainly significantly improved. However, premium volumes continue to be more stable due to the depressed turnover given the COVID situation, particularly with that particular impact on flying activity and the airline industry. As already mentioned a few slides ago on the agricultural side, we have dropped our premium income by almost 15%, despite the fact that we are able to show an overall price increase of 3.4%. We had various developments in this particular portfolio. So good growth and increased shares in countries like the Americas, Eastern Europe and Turkey, but a rather significant drop of our premium income in China. Here, the background is the fact that following the African swine fever China experienced at the end of 2019, the Chinese government decided to establish a state-owned reinsurer for agricultural perils. And they are given the priority session before the open market and that priority session made the overall premium pool for the open market significantly smaller and hence, resulted in a drop of our Chinese agricultural premium. When it comes to the non-treaty business, so the structured reinsurance and the facultative insurance, we wanted to give you a little bit of an insight of how we fared at the 1/1 renewal. In structured reinsurance, we continue to see a very high demand for solvency relief transactions worldwide. We have been successful to close an exceptional high number of new transactions at the 1/1 renewal. We lost only 1 contract, so a good growth in our structured portfolio at 1/1. We expect that trend to continue throughout the rest of the year. And overall, we do expect a premium development in the lower double digits area for this portfolio. On the facultative side, we are participating in the positive development on the insurance side. We have seen a significant flight to quality. So policyholders and facultative reinsurance buyers have been very security minded, and there was a lot of demand for Hannover Re security, which we could successfully turn into new business opportunities. In addition to the pandemic exclusions and silent cyber exclusions, I have already mentioned earlier, we can also report further improvements in terms and conditions on the facultative side. So very often, we have seen increases in underlying deductibles and reductions in supplements for certain exposures like non-damage business coverage. And overall, the rate increase can report is 8%, but up to 20% in territories like North America or product lines like, particularly downstream energy. Summarizing our cat renewal at the 1st of January, we can see that there was widespread improvement of our portfolio. From a terms and conditions point of view in most regions, the most positive rate movement we can report from our U.S. renewals with about 10% risk adjusted. Europe and the Rest of the World was ranging in the 2.5% to 5% range. Our premium, nonetheless, grew more pronounced in APAC and EMEA for the reason that was already mentioned by Jean-Jacques, despite the fact that the strongest rate increase came from the United States renewals. We were not willing to dedicate more capital to particularly U.S. wind coverage. So we are participating in the positive rate increase of 10% for that peril, but we have not seen this as an opportunity to significantly widen our exposure base on that side. Overall, we can report that we had diversified growth of almost 10% in our cat portfolio. Coming to my final slide. On the retrocession side, we had a rather positive renewal season. We were able to increase the limits that have been placed both in our aggregates on large loss -- excess of loss structure from EUR 200 million to EUR 225 million. We have also placed slightly more of our whole account protection coming from EUR 325 million, going up to EUR 337 million, where we have placed a little less is our proportional case session. Where last year, we secured a patient capital of $680 million. This year, $610 million. We could have placed more, but we did not wish to compromise on terms and conditions more substantially also in light of the fact that the protected portfolio has been seeing good improvements on the incoming side. So overall, we have been able to place according to our net risk appetite targets and the price adjustments we had to pay fully in line with the price increases we achieved from the incoming portfolio. So from a net position, a very welcome outcome of our retro renewals. With that, I would hand over to you, Jean-Jacques.

Thank you very much, Sven, for this overview. Now let me come to the guidance for 2021. Firstly, showing you the usual overview of the volume and profitability expectations. Just as a reminder, we are now looking at the financial year perspective. As we have seen in the 1/1 renewal report, in most of the markets and segments, we continue to grow based on the positive change in pricing in terms, explained before, we expect particularly strong profitability in North America, EMEA and specialty lines. But more importantly, all lines are expected to earn at or above cost of capital level. Therefore, the overall picture is quite satisfactory from our own point of view. In terms of guidance, even though there are some moving parts with the development of the pandemic and the P&C renewals, I can confirm the outlook for 2021 already communicated last year in November. In terms of volume, the renewals have confirmed our growth target, but we also have some important renewals later in the year, and there might be further opportunities to grow. Additionally, as Sven reported, the structured reinsurance and facultative business, which are not only 1/1 renewals, have a good pipeline for the remainder of the year. And finally, the -- in life and health, we have a strong pipeline for new business, particularly in financial solutions, but it's too early to revisit our guidance for the year. Therefore, we left the volume guidance for the group unchanged. But there is probably more upside potential than downside risk in my view. The return on investment is at 2.4%, as you know, taking into account the deterioration of the interest rates levels. We have maintained the group net income target in the range of $1.15 billion to EUR 1.25 billion. In P&C, we now feel much more comfortable with achieving our 96% combined ratio target, but this is also needed to offset the declining ROIs. This is also supported by the reserving for COVID-19-related losses we did in Q4 2020, which has significantly reduced the risk for further additional reserving in 2021. On the other hand, we have to expect further COVID losses in our life and health business group, in particular, driven by the expected development in the U.S., at least until we see the positive effect from the vaccination campaigns. So I would expect Q1 and Q2 to be impacted with a significant improvement later on in the year. We still do not see the need to change our group guidance, firstly, as a part of this development was initially already included in the outlook. But secondly, also because we expect to see a positive one-off effect in Q1 2021, triggered by a restructuring of the reinsurance arrangement for the ING portfolio. Altogether, this will help to mitigate the somewhat increased expectation for additional COVID losses. Regarding the dividend, we continue our policy of paying out 35% to 45% of the group's net income as an ordinary dividend and consider an additional special dividend that we reach our profit guidance for the year and have a comfortable level of capitalization. As usual, we published at this time of the year, our preliminary key figures for the previous year. The full set of numbers, as you know, will be presented to you on March 11. So at this stage, just a few comments on these preliminary pickers. In terms of gross written premium, we were able to exceed our guidance. In the end, we achieved a growth rate of around 12%. This is predominantly due to the expansion of our P&C business, where we continue to have strong momentum in 2020. The return on investment is expected to reach 3%, which is well in excess of the 2.7%, which we mentioned last time, benefiting from higher realized gains and a one-off effect from an equity participation in the fourth quarter. The group's net income of EUR 883 million is very satisfactory. And this bearing in mind that we're looking back at an extraordinary year with total claims related to COVID-19 of around EUR 1.2 billion for the Hannover Group life and nonlife. The P&C COVID loss estimates increased by EUR 250 million in the fourth quarter, which is more than we indicated in November. Here, we've taken more conservative and also more long-term view on the loss expectations with further reserves added for event cancellations, credit and surety and also long tail lines like casualty. This also entirely explains the combined ratio of 101.6%, which would be around 97%, excluding the exceedance of our large loss budget. The COVID-related losses in life and health were at about EUR 100 million in the fourth quarter, mainly from our U.S. business, which should be less surprising given the developments in this country. As usual, we will communicate the decision on our dividend in March, together with the full details of numbers for the full year financial results. At this stage, however, I can confirm that we expect to pay at least EUR 4 per share. Regarding the decision on the possibility of a special dividend, we will particularly look at the expected growth opportunities over the course of this year as well as 2022, where we expect continuous growth momentum. Altogether, Hannover Re again approved its resilience and the ability to achieve solid results even in a very difficult year like 2020. We'll give you the figures in full detail on the conference call on March 11, as mentioned. So with that, I close the presentation part and would welcome your comments, feedback or questions.

[Operator Instructions] And the first question is from Kamran Hossain, RBC.

Two questions. One on 2020 and then another one on the 2021 guidance. I guess, given your decision to take a more cautious view in the fourth quarter for 2020, could you maybe give us an idea of how much IBNR is as a percentage of total COVID claims? And how material kind of this cautious view has been in changing that? So that's the first question. The second question is, just really interested in the shape of guidance for 2021 might kind of read of what you're saying this morning is that you feel more positive on P&C, but clearly, excess debt on going away in the near term. Are you now thinking about the guidance being kind of slightly worse in life, slightly better on P&C? And then, I guess, the second part to that question is, I guess, one of the footnotes in your guidance talks about for 2021, excluding material impact from excess coming more trends. But you've talked about Q1, Q2 probably having those trends. So is that factored into EUR 1.15 billion to EUR 1.25 billion? Any thoughts about kind of the meaning of the word materiality would be really helpful.

Very good. Maybe I'll ask Sven to give the percentage of IBNR at this stage.

Yes, we would expect, we had additional losses reported from our seeding companies at the -- in the course of the fourth quarter. So one of the drivers behind our decision to increase our COVID reserves was to keep a robust level of IBNR, similar to what we could report in the previous quarters. So the EUR 950 million we are showing on the P&C side is still 2/3 -- approximately 2/3 IBNR.

Exactly. And 4 21, Kamran, I'd say P&C, it's a bit early to say. I mean, the momentum we have on the price line is, broadly speaking, in line with our expectations before the renewals. We will need to see how much growth we continue to have. But certainly, there is some upside. And some of the upside is not only price related but also related to the pipeline of nontraditional solutions. There is good demand and good momentum there as well. So depending on how it plays out, it might be within our expectations or ahead of them. So too early to say, I would say for P&C. For life and health, clearly, the expectations for the excess mortality, particularly in the U.S., last time we talked in the fall was a bit less than what we incurred. So Q4 at roughly speaking, EUR 100 million. It may reflect what comes out in Q1, possibly Q2, a lot will depend on the vaccination programs. Of course, the vaccinations are focused on the high-risk groups, so that might lead to a better effect on what we see in the first half of the year. We will still see that the delta between overall population and insured population continues to be quite material. We have an excess mortality on our U.S. book of about 6% at this stage versus roughly speaking 15% in the overall population. So this remains stable. So probably some more exposures in Q1, possibly Q2. But on the other hand, we have some positive one-off effect on our business, which will -- to a great extent, compensate a possible higher exposure in Q1. And we continue to have very, very good momentum in the transactional space in financial solutions, which partly is reflected in our 2020 results. But I also see a very, very strong pipeline for '21. So I would say, yes, possibly slightly worse in terms of COVID burden initially in a year possibly compared to what we said in November, but we have one-off effect and better traction than expected in financial solutions. So overall, I'd say the guidance is -- can be confirmed. And the level of confidence we have in this guidance has been increased based on what we know.

And the next question is from Vinit Malhotra, Mediobanca.

So my first thing is that the -- just a little bit on the exceptional disclosure on the structured book. One of the things I noticed in your outlook is that your profitability for structured insurance is now showing 2 positive sides. So I'm just curious, if it's a function of supply and demand? Is it likely that we should think of a better combined ratio for the structured reinsurance going forward or in '21 at least? Any comment on that would be helpful. Second thing is, I just noticed the comment you made about the fourth quarter COVID claims. Could you just shed a bit more light on casualty element you said versus driven by some COVID-related social inflation impact? Or -- and secondly, also, will there be any growth in net disclosure that you're able to share now or will wait for March 11? And my third and final question, sorry, is on Sven's comment on U.S. NatCat where 10% pricing perspiring is achieved, but lower volume. Could you just share any more comments on that, please?

Maybe I can say just a few words on the nontraditional business and ask Sven to comment on casualty and NatCat will also complement on structure. But I'd say this is the nontraditional space. It's a little bit different in terms of dynamics. What we see is continued demand. And I think the uncertainty on our clients financials and strategic shifts create demand. So we see that increase in demand. It's not a segment which is totally in line with the traditional market in terms of supply and demand. You need to look at it separately. So you don't have the same type of swings. It's more tailor made. It's one off. So I would say that there is possibly a bit more demand, but we don't have the totality of the market. It's very difficult to know. A lot of the opportunities are created. They are not part of an existing book of business being reviewed -- renewed. So I would say very, very difficult to say. At this stage, I would not really anticipate a significant change in combined ratio performance for our nontraditional book. But I would expect this increased demand to continue over the year.

When it comes to COVID and casualty, we still have very few loss situations reported from our seeding companies. So out of a certain prudency, we have decided to book a few additional loss ratio points across most of our casualty portfolio. We have no insights into which particular area of casualty will be impacted by COVID-19. So we do, of course, expect certain losses to be reported under D&O coverages for example. But overall, our approach has been a little more broad brush by increasing our in order to recognize this uncertainty, which, in the end, in a few years' time, I'm sure we'll show that in some product lines, we will have been too high. In some product lines, we will have been too low. But overall, when it comes to casualty, we are comfortable with the reserving position that we have now established. On the U.S. wind catastrophe side, we have renewed a stable portfolio from an exposure base. So we have not reduced our participation on the U.S. wind side. But we had no interest in further increasing our participation in that particular for the reason that is our peak by quite a margin from a net exposure base, followed by U.S. earthquake. And from a diversification point of view, we have decided already in 2019 that for us it makes more sense to have other country peril combinations grow more significantly, i.e., catch up with our existing U.S. wind portfolio. And that maybe in a few years' time, we start growing the U.S. wind side again, but we didn't want to have this peak peril to basically, yes, exceed the other perils we can write from a diversification point of view, even more than it already does.

Considering the capital allocation to the NatCat remains around 18%? Or...

Could you say that again, please?

The capital allocation to NatCat sort of stable as well at 18%? Or has it gone up?

It's around 18%, slightly up from the 16 and a bit percent in previous years.

And the next question is from Andrew Ritchie, Autonomous Research.

A couple of questions. So Sven, could you just give us some perspective on what you expect in later renewals? I'm sort of not sure to what degree some of those later renewals are loss affected or not. Clearly, Japan is less loss-affected than it was. But in midyear, some of it will and some of it won't. Just give us a perspective as to what you're thinking about those later renewals? The second question, I'm still quite judging what -- in the U.S., your growth. Was it casualty versus property? Was it -- were you happy to grow both? Was there a bias in it? Just give us a sense as to how comfortable you are, particularly growing U.S. casualty? And the final one is -- I think there's a very quick answer to this. But I'm assuming the reduction in the capital -- the K Cession won't materially affect the ton rate, which I think is 42% of your cat-exposed business, but I presume that won't change much, but you did mention that you're going to retain a bit more. So what will the decession rate be?

Okay. Thank you for those questions. We are positive whether it comes to the renewals at the 1st of April and 1st of June, 1st of July date. You're right, Japan has been a benign loss environment in 2020 from a NatCat point of view. But at the same time, we had a very active hurricane season in the 2 previous years. And at least according to the conversations we had with our clients in Japan, we made it clear that the rate increases we achieved in 2020 is not 100% sufficient to cater for our new view on risk so that there is more to come at the 2021 renewal. This development may be less pronounced compared to last year, but it will still be a positive momentum. The U.S. had loads of NatCat activity. This year, we had very significant tornadoes, the situation. We had a record high number of hurricanes. And one of them with was of a certain significance. So overall, again, a situation where there was a lot of frequency and that should keep the momentum positive on the NatCat renewals in North America. And lastly, in Australia -- I mean Australia really had terrible 2 years on the NatCat side. And not all of that is completely priced in. We could see that with a very few renewals in Australia, we had at the 1st of January renewal that there was strong positive momentum on the nonproportion business. And I would see no reason why that momentum should not materialize again.1st of July renewals. Our growth in North America is very diversified. So we have grown in property. We have grown in casualty, more or less to the same proportions. Part of North America is obviously, also Canada. So in Canada, we have also shown significant growth on the motor side. So overall, a diversified approach not emphasizing property over casualty or the other way around. So a rather similar approach compared to the approach we have taken in the last 2 renewal cycles. And finally, your question on the K-Cession, that's dropped by approximately 5 percentage points to 37%. But as you have mentioned and as explained by me, when I talked about our retrocessions, this comes at the moment in time when the incoming portfolio is at a much better rating quality compared to previous years. So from a momentum in cycle management point of view. We felt at an appropriate moment in time to have the session to drop a little bit.