SCOR SE (SCR) Earnings Call Transcript & Summary

Okay. Good afternoon, ladies and gentlemen. My name is Yves Cormier, Head of Investor Relations. I'm happy to welcome you to SCOR Investor Day 2023, during which we will take you through Forward 2026, our new 3-year plan, which we released this morning. So I'm pleased to see in the room a number of investors, sell-side analysts, rating analysts, Board members, including our Chairman, and many of our colleagues. I'm joined today by our CEO, Thierry Leger, as well as the entire Executive Committee team. So today's event is being webcasted and recorded. Please take note of the disclaimer on Slide 2 of the presentation. On Slide 3, we have the agenda for the day. So during the presentation, obviously, make sure your mobile phones are switched off. And the event will be split into 2 sessions. There will be opportunities to ask questions at the end of each session. And for those of us -- sorry, for those of you joining us remotely, feel free to write your question in the box at the bottom of the screen, and we will ask them after the questions in the room are being asked. In order to give all participants a chance to ask questions, we will ask you to restrict yourself to 2 questions maximum. I will also ask you to ask questions related to the part of the presentations that have just been presented. The first Q&A session will relate more to business elements, and the second one will cover more financial elements. I expect us to stay together for the next 3.5 hours or so. So have a good presentation. [Presentation]

Good afternoon, ladies and gentlemen, and welcome as well from my end. It's a great pleasure to have you with us today. Thanks to those that came to Paris in person, but I would also like to welcome those that are joining us online through the live webcast. This is a very special day, as you can imagine. It's my first Investor Day for me at SCOR, but it is also the first Investor Day in over 20 years to be held without Denis Kessler, former Chief Executive Officer and Chairman of SCOR, who passed away in June. Our thoughts are with him and his family. Of course, SCOR needs to move on. The Board, the Executive Committee and all the employees are looking in one and the same direction, forward. We are pleased and excited to launch our new strategic plan, Forward 2026. We will present in more detail what I outlined during the AGM in May. This is our road map for the next 3 years to deliver on ambitious targets and build an even stronger SCOR. I'm joined on stage by my colleagues from the COMEX who will cover their parts of the presentation. I look ahead with great enthusiasm, confidence and determination to meet the challenges and seize the opportunities ahead. Enthusiasm, first of all, because of a paradigm shift characterized by an exceptionally buoyant reinsurance market context, the most favorable in 20 years. Confidence because I believe in our starting point. I see SCOR very well placed to respond to our clients' needs and to profit from the current market conditions. And finally, we are determined to work together to drive value creation while shaping the reinsurer of tomorrow. Before talking about SCOR, let me take a short step back and have a look at the global environment. As I explained at the AGM, our world is facing a future of radical uncertainty as risks multiply and intensify. In this environment where market conditions are favorable and demand for protection is up, reinsurance has a major role to play. I will not repeat the list of unprecedented events, shocks that we have seen in the past few years. One thing is certain, however. The increase in volatility and uncertainty will drive demand for both Life & Health and P&C reinsurance products. Throughout these years, SCOR absorbed the shocks and has risen to the challenge of this new global environment. We have adapted our organization and developed differentiating strength. Today, we are ready to seize opportunities in each of our businesses. In Life & Health, protection covers were tested by the pandemic and proved their value. But the protection gap across all Life & Health lines remains very significant, and they will continue to be a material development potential for reinsurers. An important example is the aging global population, which will fuel the demand for retirement products and longevity solutions. The barriers to entry in Life & Health are high and we are competing with only a few key competitors. But differentiation, of course, remains key in terms of innovative products, tools and services. In addition, we will need to steer capital to the most attractive segments with the highest returns and positive contribution to diversification because that's what reinsurance is about, diversification. In P&C, we are operating in a very attractive and hard market, driven by the demand outgrowing the offer, leading to a shortage of capital. We expect the current demand-supply gap to only very gradually close over the next 3 years. As a result, P&C technical profitability should remain attractive throughout the strategic plan and allow for significant value creation. In investments, the increase in reinvestment rates will significantly increase the financial contribution of investments to SCOR's results. This will put downward pressure on technical margins in the long term but is likely going to be a relatively slow process. Therefore, I believe high yields are another tailwind to our strategic plan. Obviously, the current context brings both opportunities and challenges, but I'm very optimistic with regard to the current environment, the most favorable in 20 years, as I said already. We have a unique opportunity to drive value creation. The expansion and the complexity of the risk landscape mean that the role and the relevance of reinsurers like SCOR are growing and SCOR's business model will allow us to make the most of it. Over several decades, we have built a strong and complementary business model that has proven its resilience since 2002. With our equally weighted Life & Health and P&C businesses, we create significant diversification benefits, and SCOR has demonstrated its capacity to absorb very large shocks. But the advantages go beyond diversification, and our model is also complementary in terms of cash flow profiles and cycle management. Indeed, Life & Health generates economic value through CSM that converts into hard capital and stable cash flows in the long term, while P&C generates immediate earnings translating into hard capital and short-term cash flows. Life & Health benefits from more stable market cycles while P&C requires dynamic proactive cycle management. Our investment portfolio also has a key role to play. It enables a consistent and low-risk earnings stream through prudent investments of assets matching insurance liabilities and capital. This is a business model that we can further leverage going forward to create even more value. Our business model is today already based on the combination of 4 major strengths: our leading global franchise, our strong balance sheet, our differentiating in-house expertise and our Raison d'etre, which puts sustainability at the heart of SCOR. SCOR enjoys one of the best franchises in reinsurance across both Life & Health and P&C. It has been built over several decades by nurturing long-term relationships with clients, leveraging on a comprehensive range of risk transfer solutions and services, technical expertise and worldwide underwriting teams. SCOR's global franchise provides us access to all reinsurance placements throughout the world and for all segments. The strong balance sheet of SCOR is proven by a solvency ratio consistently above 200% over many years. Our solvency position benefits from a conservative investment strategy, an efficient retro -- retrocession program and a high level of diversification stemming from a well-balanced business model across activities, lines of business and geographies. We aim to maintain a AA level of security for our clients. SCOR's differentiating in-house expertise is broadly recognized by clients. We attract diverse talents by offering an inspiring working environment with meaningful problems to solve. Our expertise comes from our employees and the accumulation of knowledge and data over decades. We are one out of only very few companies able to provide leading capabilities and value-adding services beyond pure risk transfer. Thanks to our differentiating in-house expertise and offering, we have earned our clients' trust. We have put sustainability at the heart of SCOR's Raison d'etre, combining the art and science of risk to protect societies. Our purpose is not an ambition. It's at the heart. It's the core of our business model. We have engaged on a net zero path based on science. Our aim is to be net zero by 2050. We take actions on a regular basis to make sure we remain on this path. Claire will communicate our latest actions shortly. Forward 2026 is about driving value creation and shaping the reinsurer of tomorrow. As I said, we are not starting from 0. We are well positioned already. We will make the most of the favorable market environment and leverage our strengths to grow our economic value by 9% per year. At the same time, we will shape the group's business model to be future-ready. SCOR will evolve with the fast-changing landscape and become a more dynamic, adaptable and data-driven manager of risks, capital and resources. To grow economic value by 9% per year, I have provided clear guidance and expectations to each business. Life & Health comes with significant in-force CSM under IFRS 17. We will leverage the full potential of our platform to further grow the CSM and translate it into profits and long-term cash flows. It is of utmost importance to ensure stability of expected cash flows and the emergence of these margins over time. We will continue to focus on protection, longevity, financial solutions and services to clients. The protection portfolio will benefit from our leading position in North America and Europe and from the dynamic evolution developments in APAC. Our longevity book, currently mostly built in the U.K., will be diversified away into new markets. We will seize opportunities in financial solutions where we see increasing demand driven by the more volatile environment we are in. And we will continue to offer first-class services and tools to our clients. In P&C, we want to make the most out of the current P&C hard market. Our teams will leverage the hard market to expand into attractive lines, while at the same time, building an even more balanced and resilient portfolio overall. While we grow selectively, we will make sure that we avoid outsized exposures and improve our diversification overall. Each line of business will be assessed based on its economic attractiveness and its contribution to diversification. Further, we will accelerate the development of Alternative Solutions, in particular for products with low capital intensity. And we will maintain a prudent approach to climate change-exposed businesses and U.S. casualty. In Specialty Insurance, our direct commercial business, we will actively manage the respective cycles of each line of business to build a diversified portfolio and leverage our technical expertise to support the energy transition. Finally, in investments, we will maintain a prudent approach, continue to increase the income yield and grow fee income through third-party asset management. The second strength of our strategy is to prepare SCOR better for the future. We have identified 4 ways to enhance SCOR's platform further and make it ready for the world of tomorrow: capital allocation, risk partnerships, ALM and tech and data. We will proactively allocate capital across all lines of business, seize market opportunities to adjust our exposures, timely maximizing diversifications and returns on capital deployed. We will develop risk partnerships. SCOR is already advanced in retrocession buying and will evolve its model further and embed it into the group's strategy and capital management. I would like us to build increasingly centralized retrocession and accelerate the development of risk partnerships with new and existing partners. This will allow us to manage our balance sheet, the diversification and the capital intensity of our portfolios even better, and on top of it, monetize the group's franchise and expertise through the generation of fees. IFRS 17 offers the opportunity to enhance our asset liability management capabilities, thanks to the availability of more granular data. This is especially important as we have entered a high inflation and high interest rate environment. We will adopt a more granular framework with a refined view on liabilities duration and cash flow projections to better manage the cash profile, and hence, our investment income and to offer new products. Data is the main resource for reinsurers, has always been. It is the basis of all risk assessment and modeling from underwriting to reserving. SCOR long ago recognized the value of technology and data, and we are building on existing strong foundations. Business processes are digitized and we have developed significant data and AI capabilities. SCOR will enhance the use of available data through a dedicated platform, global platform and holistic governance. We will continue to improve operational efficiency, streamline our businesses and improve core business capabilities to drive innovation. I view tech and data as a key differentiator in the long run. I'm determined to adapt SCOR to the new environment and enhance our business model to become the reinsurer of tomorrow. We will maintain an upper mid-level risk appetite. And Fabian, our Chief Risk Officer, will take you through this in more detail in a few minutes. It is, to me, of utmost importance that we remain very disciplined in our line setting and accommodation management as we grow into this attractive market. To shape the risk profile of the group, I have given clear guidance to the businesses. For example, we will grow our exposure to longevity if we can achieve sufficient geographical diversification away from the U.K. We will grow exposures to select these long tail lines in P&C, but we won't allocate more capital to U.S. casualty. In Morbidity, P&C short-tail and NatCat, we will grow our exposure in line with our capital generation. This means that we will remain underweight in NatCat. In Mortality, we will manage exposure by growing at a lower pace than our capital generation while implementing management actions on our in-force. We will complement these directions with a refined steering of our portfolio with the aim to maximize the return on our capital deployed. Strategically, we maintain 2 equally weighted targets for the next 3 years, a financial target and a solvency target. The financial target is economic value growth. We target a growth rate of 9% per year. The solvency target has not changed with the optimal range between 185% and 220%. The return on equity is expected to be above 12% per year. I'm now going to outline a few assumptions of our 2024-2026 projections. We assume that P&C insurance revenue will grow slightly quicker than Life & Health, 4% to 6% for P&C versus 1% to 3% for Life & Health. The P&C net combined ratio is expected to be below 87%, while the Life & Health insurance service result should be around EUR 500 million to EUR 600 million per year. Our focus will be on value creation and profitability. And we assume a moderate but steady growth of our new business as expressed in new business, CSM for both P&C and Life & Health, around 1% to 3%. Our investment regular income yield is expected to increase to 3.4% to 3.8%, supported by the high interest rate environment we are in. We will seize opportunities to automate processes and streamline the organization and believe we can achieve a flat management expense in euro amount over the planning period. These assumptions translate into our 2 targets for the plan, a 9% annual economic value growth and the solvency ratio within an optimal range of 185% to 220%. Again, I cannot repeat it enough. We are entering a very favorable reinsurance cycle, and we intend to make the best of it with significant opportunities to create value. I will now leave the floor to my colleagues. Fabian, over to you.

Thank you, Thierry. Good afternoon, everybody. Let me now spend a few minutes on our risk appetite. SCOR has a long tradition of starting with the risk appetite to develop a new plan. We always start with the calibration of the optimal solvency ratio. And as you have seen, we confirmed the optimal range of 185% to 220%. On the calibration of the risk limits, we have reviewed our approach and enriched the framework with additional data points, experience and features. Our methodology has improved, the metrics are now more homogeneous and more conservative in the sense that we adjust our loss cost estimate to take the recent experience into account. We measure the risk exposure on a fully economic basis as deviation from the expected profit. We also reshape underlying exposure aggregation to build a full risk view of our top risks, for example, by pooling all climate-related risks into the NatCat pool. Another evolution that we introduced is that we strongly control the exposure with an optimal range around the defined target limit in a very similar way as we have defined the optimal solvency ratio. To have a range around our targets allows us also under economic volatility to steer our risk pools optimally. As part of this mechanism, there are also clearly defined actions to bring the exposure back to the target. This new approach allows a better steering of our risk profile and strictly control the risk appetite. For each risk pool, limits were set based on the scoring of internal and external factors. Overall, you see that we confirm an upper mid-level risk appetite but with a more balanced risk profile. I'd like to highlight a few changes. We have slightly reduced our limit for P&C short-tail. This is a management adjustment to provide a tighter framework as we were not using the full limit. This will drive the portfolio into further diversification. We have moved our existing morbidity limit to a risk pool as we have built a meaningful portfolio over Quantum Leap and it's an area for further growth. We also have reduced the limit for mortality. We were not using this limit to its full extent since the big life in-force transaction, and we have decided to reduce our limit for the new strategic plan. This will balance the risk pools, but our ambition for new business is unchanged. NatCat, P&C long-tail and longevity do not change. All the limits have been extensively discussed with the business units. They define the framework for our portfolios at a macro level and translate into more detailed operational limits internally that are closely monitored. I will now leave the floor to Frieder to explain the Life & Health strategy.

Thank you, Fabian. Good afternoon, everyone. I'm really happy to be here with you today to present SCOR's Life & Health strategy for the next 3 years. Earlier in the presentation, Thierry touched upon SCOR's unique complementary businesses. I would now like to take this opportunity to have a closer look at the Life & Health business. Life & Health is a strong driver of value for SCOR, delivering stable and predictable profits and bringing significant diversification benefits to the group. The economic value of SCOR's Life & Health portfolio is now better reflected under IFRS 17 accounting, with value generated by new reinsurance contracts captured in the contractual service margin, which converts into hard capital and cash flows over time. This stock of value helps to quantify the profit that will arise from the Life & Health portfolio going forward. The environment for Life & Health reinsurance business is very positive, supported by growing insurance markets with a significant protection gap remaining. In terms of future growth, our global platform and strong franchise positions us well to further expand in protection, longevity and financial solutions, in addition to generating further profits through services and risk partnerships. Our strategy for the next 3 years has 2 main priorities: grow the CSM, which represents the long-term value of the Life & Health portfolio, delivering strong profits by leveraging the full potential of the global Life & Health platform; and improved cash generation, mainly through profitable new business and active portfolio management. I will now share with you further details of the Life & Health strategy. We are excited about the current market environment. The demand for protection continues to grow as the impact of COVID-19 becomes more and more limited. The Life & Health reinsurance market favors incumbent players, and SCOR has a very strong Life & Health franchise with a global footprint and balanced product offerings enjoying leading market positions in its local markets. Our core competitive advantage is rooted in our long-term deep client relationships, which are widely recognized by our clients. We provide a full range of product offerings, ranging from traditional protection to consumer-engaging solutions, helping us to regularly win new collaborative partnerships with clients. According to the recent NMG report, we have constantly improved our Business Capability Index. We believe this is due to our consistent commitment to listen to our customers, understand their needs and develop solutions together. I am convinced that SCOR is very well positioned to seize opportunities in this positive environment and will leverage the full potential of its platform to realize profitable growth over the next 3 years. Let me now talk you through our strategy by segment. Our protection portfolio accounts for more than 70% of SCOR's Life & Health CSM. And we are really proud of our franchise in this market, partnering with over 1,000 clients globally. SCOR has a strong brand recognition and has large market shares across mature markets in North America and Europe. Going forward, we will continue to leverage our strong position, knowledge and history in U.S. mortality, drive attractive business with an increasing share of new business driven by partnerships and innovation. We also look at opportunities for risk partnerships with the aim of increasing diversification. In Europe, we have a very well-diversified portfolio in terms of geography, size and deal type. In these markets, we aim to strengthen our leading positions. In APAC, we have successfully invested over the last few years in building a strong franchise. We target sound growth focused on profits and continue to help to close the protection gap through innovation and data-driven solutions. One example is SCOR's Good Life app, which is powered by our biological age model algorithm. This app has been widely adopted throughout 8 markets in Asia with around 200,000 active users. Overall, in protection, we will look at profitable growth opportunities across all the regions. We target an average growth of 2% per annum in protection for our new business CSM over 2023 to 2026. While other segments of our Life business might grow faster, our protection book will remain our largest in terms of both stock and new business throughout the plan period. Moving on to Longevity. Longevity provides a natural diversification from mortality and morbidity risks and currently contributes around 1/4 of SCOR's CSM. The market context to develop Longevity is favorable as aging societies fuel demand for retirement protection solutions. SCOR has developed its expertise in Longevity in the U.K. market, covering 450,000 in-payment pensioners covered since 2010. Our team of dedicated professionals with their in-depth expertise, our collaborative client partnerships and the growing need for longevity risk transfer solutions in aging societies have all played a key role in our achievements. We will leverage the know-how acquired in the U.K. to establish a global footprint in Longevity, including the U.S., the Netherlands and Australia. To achieve this, we will focus on the needs of our customers, combining our global expertise and our experienced local teams. In 2026, we expect to significantly increase the share of Longevity CSM from countries other than the U.K. and to increase the Longevity share in the total Life & Health new business CSM from 9% expected in 2023 to around 15% in 2026. On Financial Solutions, we anticipate a growing demand from cedents for capital and liquidity management solutions in a volatile environment, driven by changing economic conditions and by evolving regulatory and accounting frameworks. Our financial solution offers include in-force block acquisitions, regulatory capital optimization products, financing and new business strain financing. We continue to support clients with innovative tailored capital product offerings and intend to increase our collaboration with risk partners to fully leverage the potential for alternative risk transfer solutions while remaining within our core risk preferences. We expect to double our IFRS 9 fee income compared to 2023 and to reach EUR 50 million of new business CSM in 2026. SCOR Life & Health has developed a comprehensive portfolio of digital assets aligned with clients' needs and covering the entire reinsurance value chain. This gives us a strong competitive advantage and access to profitable business. A large part of our business already comes from clients we partner with to develop new services, which creates value for them and for SCOR. We are supporting the development of fully digitalized, accelerated and innovative underwriting solutions, with underwriting ranging from decision-based underwriting support, automated underwriting and API-enabled disease calculators to accelerated and continuous underwriting solutions. We also offer advanced digital claims solutions and work closely with clients to maximize the potential they are offering. Let me give you a few examples. First, Velogica. This is our highly sophisticated automated underwriting solution, which improves our clients' underwriting process by reducing manual intervention to increase straight-through processing and overall reduced time to underwrite the risk through a simpler process. Second, DASP or Data Analytics Solutions Platform is our advanced tool that enables our data scientists and experts to build and deliver high-quality technical solutions powered by AI. As I've already said, the Life & Health business generates long-term value and delivers stable and predictable profits. This is notably true under the IFRS 17 framework. The large stock of in-force CSM represents future profits, which is gradually amortized over the lifetime of the contract as services are rendered. As for SCOR, we expect to have a stock of CSM of between EUR 5.3 billion to EUR 5.5 billion at the end of the year. This is a proxy for the value of our in-force business. We expect the CSM to be amortized and to converted into profits at a pace of around 8% per annum of the opening stock. The CSM amortization is a major contributor to the insurance service result of EUR 500 million to EUR 600 million per annum over the next 3 years. The amortization of the CSM is offset by the generation of CSM from profitable new business. We expect to progressively grow the CSM stock, ensuring a sustainable level of profit emergence over the long run. Life & Health business is a long duration by nature. In this regard, ensuring a steady conversion of profits into recurring and foreseeable cash flow is a key measure of our underlying performance. We hear the questions we have had on this specific topic in recent quarterly calls. IFRS 17 provides a more detailed view of the performance at the contract level, which further helps us to actively manage our business. Our operating cash flow is expected to improve over the course of the plan, driven by profitable new business growth, the wearing off of COVID claims and improved in-force performance, following proactive management actions. We expect the 2023 operating cash flows to continue to be impacted by a U.S. legacy coinsurance block with accumulated reserves from the past, which is currently in a phase where claims are projected to exceed premiums and a certain amount of late payments of 2002 claims on the U.S. book. This negative cash flow impacts are projected to decrease as positive cash flows from new business and from management actions outweigh the negatives. We expect Life & Health operating cash flows to reach approximately EUR 0.2 billion to EUR 0.4 billion in 2026, mainly supported by improved insurance technical cash flows. On this slide, we present a view on the longer-term Life & Health technical cash flows beyond the strategic plan period. On the graph, you can see that we expect our cash flow to steadily improve in the medium to long term. This is enabled by profitable new business and active portfolio management. This will optimize the value from the in-force, and it is further accelerated by the runoff of the legacy coinsurance block of business with a negative cash contribution. As presented on the graph, the growing positive contribution from new business is projected to offset the decrease in contribution from the in-force runoff, and the positive cash flows are expected to significantly outweigh the negative outflows over time. To conclude on Life & Health reinsurance, there are 3 points I'd like you to take away. Life & Health is a core pillar of SCOR's business model, delivering stable and predictable profits as well as significant diversification benefits. You should expect to see an insurance service result of EUR 500 million to EUR 600 million per year generated by the Life business throughout the plan period. The environment for Life & Health is very positive. We have a global leading platform that enables further profitable growth across the world and across all classes of products. And growing CSM and delivering recurring and foreseeable cash flows is our key focus and priority. With this, I will hand over to Jean-Paul.

Thank you, Frieder, and hello, everyone. I will now take you through a closer look at the P&C strategy at the overall level. And then I will go and highlight the key features of the strategy for the P&C reinsurance side, and then Romain will take you through the strategy for the Specialty Insurance plan. As mentioned by Thierry earlier, we have a very well-diversified business model between Life & Health and P&C and investments. Within P&C itself, we also benefit from the complementarity between reinsurance and Specialty Insurance business. Market cycles between these 2 business engines are more and more decoupled and we can therefore redeploy capital accordingly. Our strategy for both businesses follows the same guiding principles. First, make the most of market conditions. We expect expertise-driven lines of business such as engineering and structured solutions to be the most attractive ones. These require specific underwriting capabilities and, therefore, limit the number of players. We feel very confident in the skill sets we have built in these areas as key differentiators to our peers. Second, increase our diversification while rightsizing our exposures. This will lead us to grow some attractive areas where we're currently underweight and adjust our net exposures to some other segments. Third and last, maintain a prudent approach to climate-exposed business and to U.S. casualty. The implementation of the strategy across reinsurance and Specialty Insurance will be different since both business units rely on different risk drivers. So I will start by developing the specifics for P&C reinsurance. In reinsurance, our strategy we built on 3 building blocks: first, make the most of the current market conditions to grow in attractive segments and enhance our portfolio diversification; second, maintain a prudent approach to climate-exposed business and to U.S. casualty; third, actively grow our Alternative Solutions portfolio. I will now detail each of these points in the following slides. To start with, we're very excited by the current market conditions in reinsurance. Pricing adequacy levels are the best I have seen in several decades and are expected to be long-lasting. To make the most of this market, our key differentiators can be summarized into 2 elements: our people and our franchise. Starting with our people, we are recognized experts in the lines we operate in. Our strong modeling capabilities allow us to understand the risk we take and seize opportunities in a fast-changing risk landscape while protecting the portfolio resilience. We also have a large global team operating in all major countries and all major lines of business. The combination of our global footprint and expertise allows us to access attractive and diversified businesses. Hence, we can allocate our capital to the regions and product lines that provide the best returns. Our second core differentiator is our franchise. This has been built through a client-centric approach over the past 50 years. Proximity and continuous engagement with our over 1,000 clients throughout the year enables us to adequately identify the specific needs and offer appropriate solutions. One of these solutions, I would like to highlight is our pricing tool called SPOT, the SCOR Pricing Online Tool, which is a web-based pricing solution that we propose to midsized clients who wish to enter a new line of business. We have offered this solution to our clients, introducing new offers in SME property, environmental liability, construction, motor and inherent defect insurance, which I will refer to as IDI. Leveraging these 2 core differentiators, we plan to grow in 4 main segments, offering attractive profitability: engineering, marine, international casualty and IDI. Looking at the first 2, we believe engineering and marine continue to offer attractive return for reinsurers. Given the current underway presence in these segments and our in-house expertise, including recent hires, we have all the ingredients for strong and profitable growth for SCOR. We have also identified IDI as an area of profitable growth. We are a global market leader, thanks to our expertise developed in France and Europe. We support today clients across a large number of developing countries while overseeing the entire supply chain from policy wording to risk inspection. Lastly, we believe non-U.S. casualty also offers attractive returns for SCOR. Relying on our strong European and Asian and Latin American franchise, we plan to grow in markets which are substantially less strategic and more nonproportional than U.S. casualty, ensuring a better control of claim frequency and social inflation. In total, we want to increase the premium on these 4 lines of business by roughly 8% per year over the plan while maintaining stable capacities. Looking now at the lines of business where we have a more prudent approach. Despite expected favorable reinsurance conditions, we plan to maintain a prudent approach to climate change-exposed business, mainly agriculture and property cat as well as the U.S. casualty. Starting with agriculture, the effects of climate change in this line of business has been very similar to what we observed in property, leading to a high level of claims. We have already taken substantial management actions to help us better manage this increased volatility. This will continue going forward by creating a better global balance across our 5 key markets. We reduced our exposure to our peak countries, which are Brazil and India, while looking to grow in countries we're currently underweight, such as France, the U.S. and Turkey and Canada, depending on market conditions. On property cat, we're already a large provider of cat capacity to our clients. We intend to continue to provide significant capacities on an excess of loss basis while maintaining a conservative view of climate affected risk. Following the significant portfolio remediation done over the past 2 years, we are today underweight in property cat compared to our peers, with a good balance between U.S. and non-U.S. exposures. We plan to maintain such position with only a modest growth projected in cat exposures. Finally, on U.S. casualty, we plan to cap our capital allocation to this segment, adopting a prudent approach to the extreme volatile litigious environment in the U.S. To help us with these actions, we will rely on the solid risk partnership platform we have built with third-party capital providers across both property cat and U.S. casualty. We plan to expand this platform during the strategic plan, leveraging our franchise to provide attractive returns to our partners while keeping a stable net risk profile. The last key item to highlight is a significant projected upscaling of our alternative solutions offering. What we mean by alternative solutions is structured solutions specifically designed for each client to address bespoke needs such as capital management. It is not a new line for SCOR as we have built a solid European anchored portfolio over the past decade. We believe the market conditions create an increased demand towards bespoke transactions around solvency solutions. As a result, we expect to see a growing number of opportunities as the clients look to manage increased capital constraints, following the increased reinsurance retentions and continued portfolio volatility in a context of increased cost and reduced availability of capital within the market. We're very well placed to address this demand having built a strong team of experts with a solid track record of very profitable performance and therefore, target a doubling of our premium in this segment by 2026. To conclude on P&C reinsurance, we are entering a market with the best conditions most of us have seen in decades and intend to make the most of it adopting a balanced strategy between our products. I would like to leave you with 3 key takeaways from our strategy in reinsurance. First, we will grow in engineering, marine, IDI and international casualty. Second, we will maintain a prudent approach to agriculture, property cat and U.S. casualty. Third, we'll actively grow our alternative solutions portfolio. I will now pass to Romain, who will guide you through the strategic plans for Specialty Insurance.

Good afternoon all. For specialty insurance, the guiding principles just outlined by Jean-Paul, will be implemented in accordance with the following building blocks. Grow diversifying lines, whilst considering their respective cycles, leverage leading position in construction and energy to meet the world's infrastructure and transition needs, and build a balanced and resilient book, actively managing volatility. So first, a few words of introduction to our specialty insurance business. It comprises 2 components, single risks is our direct commercial insurance and facultative reinsurance business. We tend to focus on large corporates with an underwriting DNA based on technical expertise and an intimate knowledge of the industries we ensure. So this makes up for 71% of specialty insurance premium. Portfolio is our delegated underwriting business. So that's mostly through MGAs or binders at Lloyd’'s. It focuses on niche risks, mostly from small- and medium-sized enterprises. We put a very strong emphasis on the extensive due diligence of the programs that we support. And once onboarded, we monitor them with regular audits and a proprietary tool, which checks compliance with the pre-agreed underwriting guidelines. SCOR has been active in specialty insurance for decades, having originally developed the business from facultative reinsurance. But we've been growing our specialty business significantly since 2017 when the commercial insurance market began to harden and to offer good opportunities. This timing proved right Now this chart with bubbles shows the split of our single risk book by line of business as well as what we're seeing today in terms of pricing adequacy and short-term pricing trends. So as you can see here, property, energy and construction form the bulk of our book. Property lines are highly attractive today. So we will aim to protect this profitability if rates start to plateau or even decrease. Construction and Energy are clear areas for growth and, respectively, transformation. So I will touch on them in a moment. And then there are smaller lines that we believe it makes strategic sense to grow, a good example being alternative solutions. There is today a robust demand for structured, multiyear solutions in the U.S. and with the growth of captives in Europe, we're seeing the need for new risk transfer solutions. We have the ability to meet this demand, and we plan to do so with a doubling of alternative solutions premium over the planned period. D&O is a line that we launched in 2021 off the back of the market dislocation that we were seeing at that time. We still want to grow it, but how and when we do so will depend on the cycle of that specific line of business. And similarly, cyber is of strategic importance but we want to stay cautious. Lastly, on U.S. casualty, we have decided to reduce some of our exposures and we will continue to keep a close eye on this line of business, while international casualty is a clear area for expansion. So now that we've had this general overview, let's zoom in on how we intend to leverage our leading position in construction and energy to meet the world's infrastructure and transition needs. We are seeing strong pipelines of projects in a large number of countries. The Inflation Reduction Act in the United States, setting the path for billions or hundreds of billions of investments in infrastructure, exemplifies this trend and the focus placed on the energy transition. SCOR is ideally positioned to benefit because construction and energy are 2 lines where our expertise is particularly recognized on the market with a proven track record of leading landmark projects. Two recent examples are shown here, the world's largest offshore wind farm in operation located in the U.K. and the world's largest green hydrogen storage facility in the United States. Our strategy is simple, play to our strength and right this way. So over the course of the plan, we want to achieve 12% average per annum growth in construction business. And we plan to multiply low-carbon energy premium by 3.5 by 2030 compared to 2020. Lastly, we want to build a balanced and resilient book. To achieve this objective, diversification is key, I have already mentioned, our intention to grow diversifying single-risks lines. Our portfolio business, i.e., delegated underwriting will also continue to bring diversification by design because we select niche business, mostly SME risks that complements the rest of our P&C book. And beyond diversification, we will reinforce the resilience of the specialty insurance book by actively managing volatility. So to do so, we will carefully control business interruption exposures which is today the main driver of claims in first-party lines, much more so than property damage. We will also rebalance our casualty book more towards international, which is less volatile than U.S. and whilst we will remain focused on performance on a gross basis. The use of reinsurance will be key in managing the size of our net exposures were needed. So before I hand back to Jean-Paul, here are the main points I would like you to take away. We want to continue developing our specialty insurance book by growing diversifying lines, whilst considering their respective cycles. We are ideally positioned to benefit from ensuring the world's infrastructure and energy transition needs, and we will actively manage volatility. So I will now let Jean-Paul conclude this section with the P&C ambitions over the plan period.

Thank you, Romain. To summarize our plan for P&C overall, we expect to grow our insurance revenue by 6% per year between 2023 and 2026. This growth reflects how we plan to harvest the most of the favorable market environment while ensuring a balanced risk profile with more predictable cash flows and better ability to absorb shocks in the new environment. In terms of combined ratio, we expect to stay below 87% over the plan period. This assumption is similar to what we have communicated for 2023 because we adopt a new approach and adding into our projections some prudence as explained during the Q2 2023 results. And finally, our new business CSM is expected to grow between 1% and 3% on average between '23 and '26 starting with an assumption of roughly EUR 1 billion for the full year 2023. You need to keep in mind that the CSM for P&C is rather short term and tend to transform rapidly into profit. These assumptions provide you a good overview of where we're heading in terms of growth, profitability and value creation. I strongly believe that we are well positioned to leverage current market conditions and grow into profitable lines or carefully selecting the risk we take, rightsizing our exposures and diversifying our portfolio. These reasons make me highly confident in SCOR's ability to reach these assumptions over the plan period. Many thanks for listening. And now -- I will now hand over to Yves.

Okay. So thank you, Jean-Paul. Thank you all. So we are now going to start the first Q&A session. [Operator Instructions] Kamran?

Two questions for me, both on P&C. The first -- sorry, it's Kamran Hossain from JPMorgan. Two questions on P&C. On the -- in the 4% to -- you kind of described a very favorable outlook for P&C or continued kind of firm conditions in the plan period. What do you think -- in your 4% to 6% insurance revenue growth assumption, what are you thinking is right in that? And what's kind of exposure? How should we think about those 2 things playing out? The second question on the 87% or better than 87% combined ratio. You've hopefully given us the nat cat number. You've kind of given a bit of a footnote about you'll continue with what you did at Q2 on the -- being prudent on reserves. How should we think about that developing in -- over the plan period? So is this going to be similar to Q2? Or is it just kind of as and when you need? Or how should we think about that overall?

Okay. Thank you, Kamran. So there were 2 questions. The first one, which is on the P&C outlook. And if I understand well, what is rates increase, what is exposure increase in the 4% to 6%. So Jean-Paul will take this question. The second question, which is actually more of a reserving question, this is something we'll focus on during the second part of the presentation, if that's okay. Jean-Paul?

Yes. Thank you, Kamran, for the question. I think the answer really depends by line of business. So in property cat, we expect significant rate increases. We also expect to grow our exposures as mentioned before. In other lines of business, we expect the growth to be mainly rate driven. So the 4% to 6% provided is the IFRS 17 metric and is a combination of rate change and exposure. It's difficult to give you an exact split of this because it's going to be very line of business specific.

Thank you. Can we move to the next question?

I had 2 questions. One -- first to Thierry. You had some time to look under the covers now. What are your first impressions in terms of what's called as well and where things can be done better? Second question to Jean-Paul. How should we convert your discounted 87 -- lower than 87% combined ratio target to the undiscounted number? And just on that, I suppose what combined ratio do you currently write the business at now? I assume around 87%. And you also assume the hard market will last for a while. So what are you going to do with the rest of the rate? Should we expect you -- if it gets to a point where you can print 85% would you do it? Or should we expect that to sit in the reserve credence?

Yes. Thank you, Darius. [Operator Instructions] So there were 2 questions, the first question on Thierry's first impression, which will be taken by Thierry. The second one on the discount, we have extensive material around these points in the second part of the presentation. So I would suggest we tackle it during the second part, though Jean Paul can give like an overview of the quality of the business he is currently seeing. But Thierry, you can start.

So on your question to my first impressions. Certainly, what impressed me first were the people, the expertise, the know-how in the company, the high integrity of the employees, the teamwork. That is very, very impressive at SCOR. Another positive one is the brand of SCOR. I knew it's a good brand, I would not have joined SCOR otherwise. But when you're in the inside, when you talk to clients, to brokers, to our partners, you actually start to realize that the brand is second to none. It's an excellent brand, very appreciated by clients. And definitely, I see, therefore, opportunities to grow where you want to grow because actually clients would like to do more with us. So I would really want to stop here with the positives. I could mention other ones. But those 2 are so much standouts that I'd like end here. On the more development side, I would call it, I think the bigger thing that I want to achieve through the strategic plan is to move SCOR from something that I perceive as maybe a bit static across the board. So for example, capital management was done, kind of Life and Health, P&C, 50-50 and then the rest was done in a more ad-hoc way. And I think just generally, we should move SCOR to become more dynamic, more adaptable, and therefore, we have put a lot of emphasis on more refined dynamic capital management but also the whole ALM, where we're going to invest more to just match the challenges, but also opportunities of tomorrow better. Tech and data is something I think that has been very well started. There's so much more we can -- we need to do there. Another example is risk partnerships, they were primarily focused on protecting our limits, our capacities and really the evolution to actually use our expertise, use our brand and access to clients to write more business than our balance sheet can actually currently carry and share, therefore, that risk with some risk partners against the fee, feels like a very, very natural extension. So those are the 4 areas we focus most on in this -- in our strategic plan and now certainly the 4 areas I thought need to be enhanced the most.

And to quickly answer your question on the combined ratio, so as Yves said, Francois will tackle your question on discounting. In terms of how we price the business, yes, we price business to a combined ratio below 87% for sure. However, we expect some amount of volatility. The pricing is our best estimate. So around that best estimate there is ups and downs. And so there's a certain level of prudence in our pricing. And as mentioned, the 87% and below combined includes amount of prudence that's baked into the projections that we have.

Okay, thank you. Will?

Will Hardcastle, UBS. Thierry, you just started touching on -- actually on the risk partnerships expansion there. When we're talking about the retrocession here, there's clearly an opportunity for a fee income, which you just mentioned there. But do you also anticipate any structural change in the way this is -- your own retro is structurally purchased and therefore, maybe some form of saving or you feel that the current retro protection is already optimized from the action that has already been taken. And could this be something that could change at this upcoming renewal? And secondly, just moving to the Life and Health. You've talked about the improved cash generation from a profitable new business and the active back book management. I'm just trying to dig a bit deeper on the active back book management here first and foremost, are we expecting any large-scale, a structural large back book transactions? Or is this much more just about standardized, regular active management? And any colors on where this can be, that would be helpful.

All right. Thank you, Will. So 2 questions here. The first one is for Thierry on the risk partnerships, whether they'll generate fee income and the impact on our retro, and the second one for Frieder on the back book managements in the life business. Thierry, over to you.

So on risk partnerships and our retro in general, I will start the other way around. And just want to emphasize. So we already have a particular knowledge and strength in our retro program that we have today. And the optimization you were referring to is really something that we do throughout the year. And the optimization is not just the price that you mentioned. But of course, depending on availability in the market, we try to cover ourselves a bit more here, a bit less there. So we're really trying to play with that in a more opportunistic way. Clearly, we have the balance sheet that allows us to do so, and so we are using this as a commercial leverage in the way we purchase retro. And I -- you were referring to, is there a way to more -- to improve our model, make it more effective. This is, again, a constant work and I see the current program is working really well for us. I mean it's built on years of improvement and experience. On the risk partnership side, I mean the only purpose why we would do risk partnerships. So write business beyond our balance sheet is that -- let's take cyber. I mean the demand in the world for cyber insurance is huge. I think that the market today could already be a market of above $100 billion premium, if only we have enough capacity. So to build that capacity, of course, we need models, accumulation controls, to improve, we need all of the costing capabilities to improve. And as we do that, we will realize that it's such an accumulating diversifying risk that the balance sheets of incumbents are just far too small. So in my view, that's a typical example of a line of business if we find partners that are interested in this line of business that want to deploy capacity in that line of business, there's enough to do. And if they trust our models and our leadership and our pricing, we are very happy to write more in cyber on a gross basis, keeping the net under control for ourselves and share the risk. And if we do that, of course, it's only going to be if we get an over writer that provides us with a fee above our own costs. So we are very excited. We've also said that our target is to more than double the fee income of SCOR in the 3 years to come. So we have not declared it as one of our key targets, but we are certainly very excited about the opportunities that present themselves there.

Thank you. Frieder?

Yes. We have a well-established practice of strongly managing our in-force book. This uses the whole range of techniques and tools, which are available, including, obviously, termination of contracts, which are not profitable, but also changing underwriting conditions, increasing premium rates, where this is appropriate and feasible. We also work with clients to improve lapse experience where this makes sense and we have scope for this. So what we've planned for the next 3 years is taking this to a new level and making sure we capture all these opportunities, and we extract as much value and cash from our large in-force book as possible. We have not planned sort of a one off large back book transaction, that's -- so the plan is not contingent on us being able to execute something like that. Which doesn't mean we would not consider such an opportunity if conditions are right and it makes sense for us, we would look at this, but it's not part of the base plan.

Thank you. Vinit?

So my -- so Vinit Malhotra, Mediobanca. So my 2 questions. The first one is maybe for Jean-Paul or Thierry, but climate change and nat cats, I mean, it sounds from the outside slightly a hesitant approach because you want to limit climate change and you want to also have some nat cat growth. Could you comment a bit about this seeming contradiction on how do we understand this from the outside? Second question is, I don't know if it's specific for Frieder or also for Jean Paul but it's on the new business CSM numbers, the 1% to 3% CAGR from both business units. I mean I hear strong growth words. For example, protection was meant to be a growing area as well. But when I see a number of 1%, 2% or 3%, I struggle to see the excitement of growth here. Or is this meant to be a message that, okay, so the markets are not really growing and -- or maybe reinsurance pricing in non-life is peaking. So how do I square growth message with a 1%, 2%, 3% new business CSM?

Thank you, Vinit. So the first question on nat cat strategy in the context of climate change. Thierry, you -- or Jean-Paul?

Both.

Both. So Thierry starts and then Jean-Paul will comment on it. And the second question on the new business, CSM, Thierry, do you -- you can make like high-level comments, and then we'll go into the details of this in the second session.

Okay. So on climate change, I think it will be good to hear a bit both views because it's a very, very important element in our strategy. And so before Jean-Paul goes a little bit more into the details, I just wanted to say climate change and nat cat is not the same field entirely. So climate change impacts only part of the natural catastrophes. And I always like to take earthquake as an example, earthquake is not climate change exposed. So when you grow net cat book overall, we're actually trying to avoid those elements that are climate change exposed the most, those we are targeting before. So everything that has to do with heat, dryness, or too much water flood, too much rain, these kind of things. That's climate change-related exposures. Those are more smaller claims, lower layers as we call it, to be avoided. As soon as you move up, you actually tend to end up with more of the key perils. Let's take hurricane U.S., it's actually not that much impacted by climate change. There is some impact that we will probably see more larger hurricanes, but overall, it is still more impacted by demographic change than by climate change. So just want to make sure that what we are saying, we don't view it as a contradiction. Jean-Paul?

Yes. And to complement what Thierry is saying, I think we are today a large cap provider to clients. And the ambition is to remain a large cap provider. As I mentioned before, we think the market is as good as we've seen it for a long time. So price adequacy is very strong. However, there's still a lot of volatility in that line of business. And I think the first half of 2023 is a good illustration of that volatility. So there, what we want to do is maintain a prudent approach but continue to develop in line with the development of our own funds. So not be over concentrated on cat, but for that line of business to grow in line with the rest of the portfolio.

On the CSM growth. So it's obvious that we are still in a phase where we are trying to adjust our portfolio overall. So we have said it very clearly, we would like to profit from this generally attractive market around us to actually grow and adjust our portfolio at the same time. And in Life and Health, for example, that means that our appetite for U.S. mortality is going to be below, I would say, growth of our capital, so a bit subdued in the years to come. There will be a strong emphasis on management actions. That's one area where growth will not be very large. We have a particular critical illness portfolios in certain areas where we feel we have to reduce our growth, too. So that's very specific. And if you go to P&C, if you take top line as a number, if we shift a few percentage points of our proportional business to nonproportional. This has a big impact on premium, but actually not on capital and therefore, these shifts that we are still in led us to this 1% to 3% growth. I still believe that in the environment we are in, we should actually favor profitability over volume and certainly the teams have heard the message and will be focused on this first. If we can grow more at the profitability levels we look for, we will be doing that.

Thank you. Phil? Yes.

Phil Ross, BNP Paribas. It's just a clarification on P&C really. You talked about growth in diversified lines, but you also talked about using reinsurance for capacity reasons where needed. And I would have thought if you're growing more and more profitable on more diversified lines, you'd maybe need less reliance on reinsurance for capacity reasons. So can you just elaborate on that for me, please, and then spell it out a bit more clearly?

Thank you. So well, Jean-Paul, on the need for reinsurance when we diversify the lines.

Yes. I think the reference you're making is more linked to specialty insurance. Where we said we're going to be using reinsurance to manage our volatility. So we want to grow in the lines that are attractive, but even the lines that are attractive from a pricing perspective, still have volatility. So that's where we want to use reinsurance to sort of manage -- help us manage the volatility. On the reinsurance market, as Thierry said, we use today a retrocession to protect our capital and some of our earnings. And there is not so much the amount of volatility, but if we see lines of business that are very attractive, and where there's an interest from third parties to again involve in the line of business, that's where we try to leverage the risk partnerships.

Thank you. Next one, Freya? James you got the mic already so.

James Shuck from Citi. My 2 questions. Thierry, the first one, the language you used around the credit rating that you were going after, you mentioned you target a AA level of security. Can you just clarify what that means? I understand that you need a AAA level of capital if you want a AA rating, you're obviously single A rated at the moment. And kind of linked to that, how does any potential decision from S&P around the calibration and inclusion of the CSM within that, perhaps, affect your capital management priorities? Second question was linked to this whole concept of diversification and taking out volatility. There is a very interesting chart, I thought, at the end of 2022 full year earnings where you showed the earnings at risk correlated with the capital at risk, and that showed the earnings at risk kind of coming down '21, '22 through to '23. Obviously, we've seen changes in the reinsurance market, at the moment, moving kind of up through the layers. I'm interested in the trajectory of that 2023 earnings at risk under this new strategic plan, please.

Thank you, James. So here's the first question on the AA level of security. For this one, Thierry can comment on our clients and why we will use the AA. When it comes down to the capital itself, I think that's a question we'll keep for the second session. And then the second question on earnings at risk, capital at risk, is for Fabian. Thierry?

So on the AA level securities, so there are really 2 things. The first is we -- what we say is that we will offer and do offer already a AA level of capital to our clients. So that's one message that is out there. It is true that today we do not enjoy the AA rating by the rating agencies. On the other hand, that has not led to any loss of business so far. However, we are keen to insist that our clients do actually enjoy this AA level of security. You made reference to the AAA capital required for our AA. So S&P has shifted -- they have shifted to a new model. And as you can imagine, we are in discussions, intense discussions with them, how this is exactly going to play out. Certainly, in their model, CSM is included, is accepted as a kind of capital. And therefore, this is very beneficial to SCOR. In -- with regard to the AAA, the verdict is still out there. A model change brings new expectations with it. So I wouldn't -- I'm not able today to confirm that they are still expecting a AAA level of capital. As far as I can tell, this discussion is still out there. I must say, though, that we are not targeting to steer our business to regain a AA level from the rating agencies. I mean, we are clearly targeting economic growth. First, we want to grow the best possible portfolio at highest possible margins in the years to come. I think that's what you should expect as shareholders from us because this is how we're going to create most of the value. And I'm sure that at some point in time, the rating agencies will reflect that, but it's out of our control. So we are really focused on what we can actually influence directly.

Thank you. Jean-Paul will actually take the question on earnings at risk.

All right. Thank you. Yes, your question about the earnings at risk and capital risk is more related to the cat book. And there, we've kept in '23 and plan to keep in '24 the same framework. This is why we maintained a prudent position on cat. The cat is very profitable, but still very volatile. And so we want to maintain a profile that is similar from a risk perspective to the current portfolio.

Fabian, do you want to add?

Yes. Maybe as interesting, we make it very, very clear, the diversification plays differently at the different return periods. And when we look at capital at risk, the portfolio diversifies differently when we look at earnings at risk. And we try to optimize and look at both in parallel. But as Jean-Paul said, the framework has not changed since year-end.

Freya Kong from Bank of America. Just looking at these Life and Health operating cash flows on Slide 37. Is this gradual recovery entirely due to COVID payments? Or is there something else? And can you help us split out the difference? And I guess, what's the business's ongoing resilience if we had another COVID-like pandemic? And second question is on protection gaps in P&C. You and the industry talk about why protection gap but on the flip side, we are already seeing some states in the U.S., which are looking uninsurable to reinsurers. Is there any concern there?

All right. So thanks a lot. So we've got our first question on the recovery of the life business and whether it's related to COVID, maybe we can show the slide on the screen, which will be answered by Frieder. And the second question on the P&C protection gap, which will be taken by Jean-Paul.

So a number of factors which we are planning, which will in aggregate lead to the improvement in the cash flows. So you mentioned waning off of COVID, we have -- still have some late outstanding claims from the COVID period, which we have to make this impact, in particular 2023. So we expect this to go away. In addition, there's a sort of historical legacy block of business, which has been written in the early 2000s. On a coinsurance basis, that means we've received a level premium or we're receiving level premiums for term insurance contracts meaning that in the early policy years, we get more premium than we need in order to pay claims. And then as the insureds get older, they -- their mortality probability increases, claims payments increase and towards the end of the level period and the term period, it is expected, and that's what's happening now that some of the claims payments will be made out of accumulated reserves. The business is performing well in line with expectations. We're making good profit margin on the business. But it's just that this block of business has reached the point where some of the claims have to be made out of accumulated reserves. So we are seeing outflows in line with plan, and this is going to continue in the future, but it's going to reduce as the block becomes smaller and smaller. We've written less of that business in the more recent years. The underlying market has changed. The clients are demanding less of those solutions. So this block is becoming smaller and therefore, the payouts will also gradually decrease over time. In-force management is an important factor as we discussed earlier, and that has sort of growing and steady contribution and it's growing over time to cash flow. And the, yes, new business is going to be added with positive cash flows from day 1. So yes, these are the main drivers. Other levers we are having we will also use overall, now this will lead to this recovery of operating cash flow, which we are very confident with and which is a key component of how we will manage the business in the next couple of years.

Thank you. And Jean-Paul on the protection gap.

Yes, I mean protection gap is a large driver of the expected increased demand for reinsurance. I think Thierry in his part of the presentation, identified the cat protection gap of roughly $130 billion for -- globally. So that will continue to increase the demand for additional cat reinsurance. In developed countries, we see, for example, in the U.S., some protection gap on perils like flood, earthquake in California, as an example, and maybe soon a hurricane in Florida. So the protection gap is not just a developing country problem, it's a global problem. On developing countries, we see a number of markets doubling every 5 years. So the demand is increasing exponentially. We also have other lines of business where there's a protection gap currently. Thierry mentioned cyber, we see cyber is an area where the demand for protection outweighs the supply currently that the market can provide. We also see -- and this is where we -- I mentioned spot. This is more in typically underdeveloped markets where clients introduce new products that don't exist in that marketplace. So we're helping our clients address a new need in their own local market by helping them and bringing their global expertise. So for us, it's a big driver of what we do.

Okay, but -- so can I [ ask another one ]?

Okay.

I guess, protection gap, even in developed markets, or is anyone rushing to write flood insurance in California?

I mean there is a market, there is a private flood market that's developed. I think the problem is the insureds are not interested to pay the price that's being offered to them. So I think from an insurance -- reinsurance capability, there is offers. Then it's a question of whether the insureds themselves are willing to pay the price that insurers or reinsurers think this is an adequate price.

And from a societal perspective, I think the question is super relevant. Also, if it is our [indiscernible] to help societies build resilience. And clearly, the trends that we are seeing across the world, actually, it's regression. It's not that we can't protect some of the new wealth. We don't even protect some of the existing wealth. And I also said that reinsurance is needed more than ever today. And so I think what is happening in some countries is clearly the reaction to just less reinsurance capacity in the market. Our clients are not able to carry the risks and they have to make choices. And choices means they stop insuring certain clients.

All right. Thank you. For the next question -- okay. Yes, so -- no, I saw Vinit, but Vinit already asked a question. Sorry, Vinit. Now we've got quite a few people who have questions online. So we're going to switch to online questions. So can the questions be read at the back of the room, please?

Sure. We've received a number of questions online, and our first two questions come from Andrew Ritchie at Autonomous. He first asked, do management envisage increased retrocession relationships in Life as well as Non-Life? His second question is on Life fee income from FinSol business. And he asked, can we clarify the starting point for this ambition to double? And he asks, is this ambition ambitious enough? Our Life reinsurance piece appear to be generating significantly more income from financial solutions, especially in the context of the broader strong Life franchise.

All right. Well, thank you, Andrew, since you're listening to us. So the first question is on whether we plan to increase the retro on the Life side. And the second one on the starting point of the fee income in FinSol as well as a request for comment on our ambition on this. So Frieder will take both questions.

Yes. Thanks very much. The answer to the first question is clearly yes. We have some sort of partnerships with retrocessionaires, which already help us create leverage on our franchise. They do provide some fee income in terms of overrides which we are receiving and provides capacity, which we can then use vis-a-vis our clients and maximize the potential which we have with our franchise. We think there's definitely room to grow this in different forms, and that's clearly a component of our strategy in the next 3 years. On FinSol, so in terms of the starting point, we booked about EUR 6 million of fee income in the first half year. I think that gives you an idea of the run rates we are earning currently. That is something where we think there's clearly a lot of potential for growth. We see that there's room to grow this beyond the strategic plan also in excess of what we have currently put out as a plan. But we want to make sure we can actually deliver over the next plan in doubling. This is already a good ambition. I should also say that some of the financial solutions business is booked in our insurance technical result when there is enough risk transfer so that it is covered under IFRS 17. So we have a piece of Financial Solutions business, which will actually grow within our IFRS 17 accounting and then you've got the fee business, which is booked separate and both can be very similar and be ways to provide capital solutions to our clients.

And Frieder, on the IFRS fee income reported for last year and the first half?

So -- sorry, what was -- so we booked...

And this starting point, yes.

Yes, we booked EUR 6 million in the first half of 2023.

Thank you. Can we move to the next online question please?

Our next question comes from Ashik Musaddi from Morgan Stanley. He asked, the Life insurance service result, it guided at EUR 0.5 billion to EUR 0.6 billion. Is it fair to say the current normalized number is more towards the top end of this with a risk adjustment of EUR 150 million and a CSM release of EUR 450 million based on the 5% -- on the 8% guidance? There's a second question on investments that we'll take later.

Thanks a lot. So the question is whether the actual assumption is at the top end of the assumption provided of EUR 500 million to EUR 600 million for the Life ISR. Frieder, do you want to comment on this?

I mean this is currently our assumption. It presents -- represents growth compared to what we've guided for 2023. So we think this is a good ambition. We want to make sure we deliver on this ambition for the period of the strategic plan. And I don't know, maybe we can also pick it up in the finance section later.

Thank you. Can we move to the next online question, please?

Our next question comes from Claudio Morando from Synpulse. Claudio asks what are the main levers for differentiation of SCOR in its portfolio strategy relative to peers?

All right. Thank you. So a question on the main levers of differentiation of SCOR. Thierry, do you want to take that question?

I'm happy to. I think that the differentiation that we have is what I mentioned before. So I think that in -- that there are 2 ways that I see we will do with a lot of discipline. One is that we will improve our modeling of the ideal portfolio. So we'll improve our capability to say what the best portfolio is in terms of return on the deferred capital ultimately. So there you have to look at every single line and how much it contributes to diversification, what the returns are on these lines and so on. So that's something I think we can build further and make a real differentiating strengths. But it's worth nothing without the second strength that you want to build. So the second differentiating strength is, as I mentioned before, it's our access to clients and our brand. We have the opportunity today to grow in almost every market and every line of business with every client around the globe. So whilst -- when we come up with this optimal portfolio, we actually have a relatively easy access to those risks. And therefore, we can combine the two, the model and the access to clients, to get to the best possible result.

Thank you. Can we move to the next online question, please?

The next question comes from Sourabh from Societe Generale. How do we think about your efforts to manage volatility in the Specialty business for reinsurance in the context of higher reinsurance pricing? Have you been able to source adequate capacity?

Thank you. So a question on the volatility management in Specialty insurance for Romain.

In our single-risk business, we insure large corporates. We are talking about large risks. So this is definitely a profitable business, especially after years of hardening. Now it's a business where we may sometimes take large shares. And so it's absolutely appropriate to manage the net line sizes by partnering with reinsurers. So having growth line size that are sufficient helps us access the business at good terms and selling part of it to reinsurers allows us to meet our constraints in terms of volatility.

Thank you, Romain. So we are reaching almost the end of this first Q&A session. Maybe there's a final question in the room. Okay, Vinit, go for it.

Apologies for this. But there's a lot of material and good materials, sorry. The economic value growth, 9%. Now in 1H, we saw that kind of number, but was not coming from CSM, was coming from shareholders' equity. CSM was much smaller, 2% or so. How do you envision this 9% in the future? Is it going to be a repeat of the story? Or is it you're hoping to get more CSM growth in this?

Vinit, there is a slide exactly on this in the second part of the presentation, like exactly on this point, so I think we will cover it then. And I think we're reaching the end of the 45 minutes. So I'm conscious of time. It's 10 to 3. So we are now going to break for 15 minutes. So we'll restart at 5 past 3 sharp. Thank you very much. [Break]

So I'm going to hand over to Claire for the beginning of the second session. Claire, off you go.

Good afternoon, everyone. I'm thrilled to be here to present our sustainability strategy. As already mentioned earlier by Thierry, SCOR has set an ambitious agenda on sustainability and that goes beyond the strategic plan horizon. Over the next 3 years, our priorities will remain unchanged. We will continue to deliver on our raison d'’être, to combine the art and science of risk to protect societies. We will keep on providing innovative solutions for prevention and protection throughout our core business, and we will continue to contribute to protecting economic agents from extreme events. Nothing is possible without the full dedication of our talented people. SCOR brings together a variety of skills and profiles, actuaries, data scientists, underwriters, modelers, engineers, to name a few. We have more than 65 different nationalities represented in our workforce, of which more than 50% -- nearly 50% are female. We are strongly committed to investing in the development of our people and to make them grow into powerful leaders. These talented people are our main asset. And we relied daily on their skills, their expertise and their knowledge to offer a better service to our clients and stakeholders. We are reaffirming our ambition to promote diversity and inclusion within the group and to deliver on our commitments to gender diversity with the reinforced commitment compared to that had been taken by the Board in 2021 to reach 30% female in the top management by 2025. In order to successfully deliver on our ambitious road map, we are committed to attracting, promoting and retaining strong talents in the reinsurance industry and ensuring as well a work environment where they can thrive, grow professionally and a culture of trust and integrity where inclusivity is the norm, well being is prioritized and employees find fulfillment. Going beyond our long-term sustainability strategy is to concentrate on the most material, environmental and social matters for SCOR in order to optimize our positive impacts. Climate change is our main concern as it may have highly damaging effects on people, their health, their safety, their habitat. This may directly affect our business over the long term. And it is also an area where we can act. Our main long-term commitment still relates first to climate change with the objective to become net zero by 2050 following science-based pathways. They relate as well to biodiversity with the objective to reverse biodiversity loss by 2030 on investments. Those strategic long-term commitments drive our road map on a shorter term basis. Over the course of the next strategic plan, we will accelerate our journey. While affirming our ambitious targets on decarbonation of our investments, we are thrilled to announce today new targets on decarbonation of our underwriting activities and our operations. First, on the business. We will reinforce our engagement with clients, partners and investees to support them in their transition and optimize our impact on the real economy. We are very proud to leverage our leading business position in energy and construction to foster the transition to a low-carbon economy by materially increasing our business in new energies. As already mentioned earlier by Romain, we target to multiply premium by 3.5 by 2030. This complements the ambition to double those premiums by 2025 as had already been announced at SCOR's 2022 Annual General Meeting. Second, on the investment side. As you will hear in Francois' presentation, we will also work over the plan to deliver our targets on investments. The minus 27% decarbonation target set for 2025 on corporate bonds and equities has been complemented by a minus 55% target by 2030. On biodiversity, we continue to improve our policy to progressively move to a deforestation-free portfolio by 2030 as a first concrete action to reverse biodiversity loss. Finally, regarding our operations, we must be exemplary with our own footprint and behaviors, and I am very pleased to announce that we commit to be net zero by 2030. Combining GHG reduction targets with engagement and increased business and investments in low-carbon activities is the most effective way to allow for reduction of GHG emissions in the atmosphere, limiting global warming and its adverse impacts and enabling a more sustainable future. Thank you very much for your attention. And I will now give the floor to Francois for his presentation on investments.

Thank you, Claire, and good afternoon, everyone. I start my presentation with the key investment highlights of our new strategic plan. And after this, I'm going to present you our financial strategy for the next 3 years. So let's starting by the investment side. Over the last strategic plan, we have been following a prudent investment strategy. We hold a very high-quality and diversified fixed income and loan portfolio aligned with our strong culture of capital preservation and also, as mentioned by Claire, our sustainability targets. The implementation of our investment strategy is done by SCOR Investment Partners, our dedicated asset management company, which has now, I think, a proven expertise and a proven track record. This investment portfolio provides to the group, as mentioned by Thierry, low risk and stable financial cash flows. It is also an important contributor of -- to the earnings of the company. One minute. It happens at the end of the day always. So as I said, I mean this investment portfolio brings a strong important contribution to group net income. So for the next 3 years, we will maintain our current road map. First, we carry on our prudent and sustainable investment strategy. Two, we continue to significantly increase the regular income yield, benefiting, of course, from high reinvestment rates. And we are going to maintain and extend our third-party asset management within SCOR IP. So just now to look into more details at each of these 3 items. So the first one, our low risk appetite for investment risk is maintained. This translates into a stable strategic asset allocation. In terms of positioning, we will continue to further diversify our portfolio into value creation assets with new commitment of up to EUR 200 million per year, mostly on private equity and infrastructure. I draw your attention on the fact that investing today in value creation assets will not impact our financial significantly over the next 3 years due to the longer time horizon of these investments. However, these investments will positively impact the year after 2026. Claire has already presented our sustainable targets on investments. SCOR has been an early mover on climate change, leveraging upon its internal climate risk expertise to kick off its sustainable investment journey. Since then, we strive to better understand the sustainability challenges, focusing more recently on biodiversity and nature. We constantly explore nascent methodologies and cutting-edge approaches to achieve our 2-ambition commitment, becoming net zero by 2050 and also reversing biodiversity loss by 2030. Given the level of inflation across countries and that will take time to receive, we expect interest rates to stay high during the next 3 years. It will allow, of course, to maintain high reinvestment rates. In this market environment, our fixed income portfolio, that's an intimate conviction, is ideally positioned with a relatively low duration. It benefits quicker from high reinvestment rates. We expect our regular income yield to continue to significantly increase during the next 3 years. On an average, I would say, 60 basis points between '23 and '26. It should be at the end of the plan in '26 between 3.4% and 3.8%. Quickly, a reminder on the current unrealized losses on the fixed income portfolio. Given the high level of cash and short-term investment we have -- in the invested assets portfolio, we can have a buy and maintain strategy for each bond of the portfolio. This will allow, of course, the convergence of the market value of those bonds to par at redemption. Given the duration of our portfolio, we should benefit, of course, from the progressive mechanical unwind of the current annualized losses accumulated mostly over the last 12 months. These are expected to decrease from EUR 1.2 billion in 2023 to EUR 300 million in 2026. And as you will see later in the finance section, this should be one of the components of the shareholder equity growth over the next 3 years. I mentioned a few minutes ago, the proven expertise and the proven track record of SCOR Investment Partners, our dedicated asset management company. We continue to monetize this franchise by expanding our third-party asset management activities. We offer today to our external clients a differentiated value proposition on selected investment solution such as ILS, liquid credit and private debt -- or private assets. We should generate by the end of the plan at the end of 2026 an EBIT -- fee income EBIT related within SCOR IP of roughly EUR 20 million. So to summarize my messages on investment today, first, we are very happy with our historical strategy and performance, and we will maintain it. We expect a significant increase of the regular income yield during the next 3 years, thanks to high reinvestment rates. And we will further monetize SCOR Investment Partners franchise to contribute to the increase of fee income during the next 3 years. Let's now move on to the finance section and more specifically, our financial strategy for the next 3 years. I know this is the last presentation of the day, and that's why my message today will be very simple. I know your concern about SCOR, and we are actively working on them. This is my priority, and I would like you to be convinced about it. I have identified 8 areas of improvement. Let me review them. First, our risk appetite and risk limits. You've just listened to Fabian and Jean-Paul, we have reviewed our risk limits and enhanced our risk appetite framework. Second concern our reliance on soft capital. On this, as you will see, we will grow the economic value, mainly through a faster growth in shareholder equity in the next 3 years, thanks to strong net income on one side, which means our equity and also the unwind of unrealized losses. Third point, the lack of clarity on P&C discounting effect and IFIE developments under IFRS 17, on which today, we will provide you with simplified mechanism to help your modeling in the future. Fourth, the lack of visibility on our reserving position. We are at best estimate. Thierry and I have signaled a change in the reserving approach in Q2. Today, I would like to share with you a comprehensive view on how we can build resilience into our reserving during the next 3 years. Fifth concern, our low operating leverage, especially versus peers. Today, I can tell you that we maintain our total management expenses flat in euros over the plan by extending our cost-saving plan until the end of 2026. Sixth concern, our financial leverage. You will see it will mechanically decrease as our economic value grow during the plan with the first debt refinancing in 2 years from now. Seventh concern, our operating cash generation. Our answer is to deliver stable and growing cash flows and to maximize the net cash remittances from our subsidiaries to SCOR SE. And the last point, our dividend policy that is perceived as, I think, lacking clarity and commitments. I am very pleased today to present with Thierry our new capital management framework, which has been approved by the Board of Directors. So now -- let's now look at all these 8 points in more details. Let's start by the first point of our controlled risk appetite and risk limits. We -- as explained by Fabian, we enhanced our risk appetite framework in 4 ways. First, we introduced a new operational limit layer to steer the portfolio and strengthen underwriting risk taking. Second, we reviewed also all other layers, and this result into -- this result to one comprehensive and standardized framework to monitor SCOR's risks. Third, we revisit the methodology for risk tolerance to make the top risk exposure transparent and comparable. And finally, we apply the new framework to set new risk limits and rightsize our P&C portfolio. Point #2, addressing our reliance on soft capital. First of all, as I told you in April during the presentation of our KPI for 2023, IFRS 17 validates our strategic sources and showcases the full value of our portfolio of risk, especially for Life & Health, thanks to the CSM. The CSM represents our future profits. Having said this, I think we all have a strong preference, of course, for today's rather than tomorrow profits. Our financial targets, the economic value growth is ambitious, 9% per year over the next 3 years. Looking at our return on equity, we have an assumption above 12% during the next 3 years. We expect our shareholder equity to grow faster than our CSM during the plan. The equity will benefit from fast translation from CSM into profit, notably for P&C, as well as, as I mentioned, the unwind of current unrealized losses in fixed income assets. As a consequence, we expect to see the equity share of our economic value to increase from 50% to 55%, 60% in 2026. It means that we will be less reliant on soft capital at the end of the plan. Point #3, I would like to provide you with more clarity on P&C discounting impact and IFIE developments. As you will see, it can be done relatively easy. We are sharing today with you in the presentation first slide to describe simple mechanism and indication that you can use to forecast the impact in your model. On the P&C discounting impact, I would say this is just the application of the old Macaulay duration formula. With this methodology, for 2023, we estimate EUR 350 million discounting impact, which is just the multiplication of EUR 4.8 billion net income claims x 2.1, which is the average locked-in discount rate, x the duration, so the meantime to payment between 3 and 4 years. Similarly for 2024 using exactly the same methodology, and we give here just an illustration, we provide an estimate of EUR 440 million. On IFIE, the approach we provide allows you to estimate about, I would say, 60% of IFIE. You can then scale it up to get the total amount. For 2023, we estimate the IFIE to be around EUR 340 million for the year. And for 2024, it would be more in the range of EUR 400 million. Let's move to the point #4 on the reserving approach and the fact that we apply to the conservative reserving approach. First, I want just to make clear, as I mentioned it at the end of July, let me tell you how our reserving process works. Financial reserving is now under the responsibility of the CFO, who determines the level of reserves with the best estimate range set by the Group Chief Actuary. This organization provides a more independent and conservative approach. We have 2 sets of reserving exercises. First, reserve -- what we call a reserve roll-forward process during Q1, Q2 and Q3, so the first 3 quarters. And as you know, at the end of the year, in Q4, we have an annual detailed reserve review. In the roll-forward process, so Q1, Q2 and Q3, reserves are adjusted by the finance reserving team, taking into account claims experience and new events. This is performed, of course, in conjunction with the risk team and validated by the Group Chief Actuary. If we move to Q4, at each annual review, a thorough and extensive portfolio review takes place to assess the reserving level to ensure that the overall reserving position is at best estimate. And of course, we did it last year, external assessment on selected business lines may also be performed to obtain an independent third-party view. At the end of July, we gave you a clear signal around the change of our approach. We are building conservatism in our P&C reserves. Given our good half year results, we took the opportunity to start to add, for the first time, some prudence of buffers in our reserving. The market cycle should provide us with the opportunity to continue to build up further prudence into our reserves during the new plan period. And we will do it, especially when we have a strong quarter. To build the conservatism and additional comfort to our P&C reserves, we will act on 3 levers. The first one, more conservatism on opening loss ratios and conservative view on provisioning losses for large events. Second, a deliberate increase of reserves in selected business lines to create the famous buffers. And third, moving up the reserving percentile to a higher part of the best estimate range and that will be done mostly at the end of the year. Let's move now to the fifth point, addressing the low operating leverage, especially compared to peers. I would say that in terms of cost ratio, SCOR is in the middle of the pack compared to peers. During the next 3 years, we will continue to work with determination on our expenses by maintaining the total management expense flat again in euros at EUR 1.2 billion between 2023 and 2026. And during this period, of course, we will offset the costs related to new initiatives supporting business development during the next 3 years, payroll increases and, of course, the burden on inflation, thanks to our transformation and simplification initiatives. In November 2022, if you remember, we announced the launch of this program. The initial objective was to deliver EUR 125 million efficiency gain by the end of 2025. Today, we are increasing this ambition to EUR 150 million and extending the time line of the plan to 2026. Well, we -- in the implementation of this cost saving plan. Already, today, we have 150 initiatives that have been well identified, out of which 78 has been successfully launched to date and 12 have been already delivered. They cover a number of fields such as office space optimization with the implementation of flex office in our main location. I would mention Zurich, London, soon Paris, as well as continuing the transformation and simplification of our organization and processes, including, of course, automation. This gives you a -- give you an update on the execution. Already, today, EUR 20 million of savings have already been secured, which corresponds to 19% of the total ambition and will fully materialize in 2024. EUR 35 million of savings are in execution today and will decrease '24 budget by roughly EUR 30 million. The remaining will be delivered during the following years. As mentioned during the introduction by Thierry, data is 1 of the 4 levers we will focus on to accelerate our value creation and to shape also the reinsurer of tomorrow. It's done. The new data platform has been selected at the beginning of the summer. The data office will be created soon. It's a question of weeks. This new data platform will become the single source of truth across the group. It aims at improving capital allocation and performance and promoting also the development of new models, products and services. Capital allocation, capital and economic performance, ESG and strong use cases for both Life & Health and P&C are among the first project that will be onboarded on our new data platform. Moving to the sixth point, point #6, decreasing our financial leverage. Last year, you saw it as a result of the rapid rise in interest rates and consequently, the decrease of the book value, we observed a surge in our IFRS 4 financial leverage ratio. Under IFRS 17, our financial leverage takes now into account the CSM. So it stands at 22.1% at the end of 2022. At the end of June, at the end of H1 2023, it has decreased to 20.7%. This is, of course, supported by a strong result and also a positive impact of the reserve evaluation. We expect the leverage ratio to continue to mechanically decrease through our economic value and shareholder equity growth. We plan our financial leverage to be below 20% in 2026. On the debt side, let me remind you that SCOR has a low cost of debt and strong refinancing flexibility of first line to be financed is in 2 years from now, that's in 2025, and that's a pretty low amount, EUR 250 million. So which mean that options remain open on the refinancing of this debt. And depending on market condition, we may seek to reduce the number of debt tranches and replace them with larger and more liquid tranches. We will remain, of course, opportunistic in our debt management during the next 2, 3 years. Point #7, improving our cash flow generation. We started to discuss this in the first session. But if I had to rank concern, of course, after the dividend policy, I guess, that cash flow generation is likely to be at the top of your list. In recent years, we have generated, that's true, low to negative operating cash flows. It was largely driven by COVID-19 claims payment for more than EUR 1 billion and also large nat cat losses. So what is our road map for the next 3 years on cash and cash flow? We are going to act on 2 levers. First, you saw it during the first session, a clear focus on business underlying cash flow generation. And second, new central initiative focused on cash. On the first lever, we're confident that the underlying cash generation is going to improve over the next 3 years. Indeed, the COVID impacts are wearing off as well as nat cat claims payment of the last years. On top of this, both Life & Health and P&C new business will deliver strong positive cash flows. We expect the 2026 operating cash flow from Life & Health and P&C to reach EUR 1.5 billion. It represents, of course, a significant improvement of more than EUR 1 billion compared to 2022, and this would be a record level for SCOR. Let's look at the second lever, new central initiatives, focus on cash. Our goal is to maximize the net distributable cash at SCOR SE level. To achieve this, we've just validated new principles and rules regarding internal retrocession to the mother company as well as what we call internal capital management and liquidity management frameworks. We are setting up a new team in charge of ALM. This whole function will be highly centralized, and I'm fully committed to this topic. As I'm sure you will agree, cash is indeed [indiscernible]. Let's now move to the point #8, our dividend policy. I think, Thierry, you share this point with me, both of us, we are very happy to present to you today our new attractive capital management framework. This framework has just been approved by the Board of Directors. How is it going to work? The framework follow a 4-step process. First, we ensure that the solvency ratio remains within the optimal range, 185% to 220%. Second, we consider the economic value growth and we analyze its drivers. Third, we determine each year the regular dividend, which will be at least equal to the dividend per share of the previous year. And fourth, we determine the excess capital return through share buyback of special dividend on an optional basis. I think I would have many questions after the calibration of the first regular dividend and the amount of the share buyback of special dividend for 2023, if any, will be announced on the 6th of March 2024 with the publication of our 2023 annual results. This new capital management framework, I think, demonstrates the resilience of our balance sheet, the trust of the Board of Directors and also the commitment of the management team to deliver this 3-year strategic plan. You understood my messages today. Our implied cost of capital is way too high, and we act on all its lever to try to reduce it. SCOR is working on new concern and on the delivery of Forward 2026, leveraging the favorable tailwinds on our 2 business and also on asset management. We will be able to allocate capital to the most attractive businesses while maintaining our disciplined risk appetite approach and building further conservatism into our reserving. We will further strengthen our balance sheet while delivering higher cash flows and earnings with lower volatility. To conclude my presentation today, I want to tell you that we are determined and confident that, one, we will deliver on our 2 targets, an economic value growth of 9% per year and the solvency ratio in the optimal range, 185% to 220%; two, we will turn this value creation into cash; and third, we will increase the return to our shareholders over the next 3 years. Thank you for your attention. I hand it back to you, Yves.

So we're going to start the second Q&A session. Same approach as the previous one. We start with the questions in the room. Those connected online, you can input your questions at the bottom of the screen. Two questions each. Try to focus on what has been presented, but I suspect this will not be an issue. And we can start straight away. So we can start with Hadley.

Hadley Cohen, Deutsche Bank. I think I'll leave the dividend questions to someone else. But the -- firstly, on the investment side. So you're talking around about 60 bps uplift over 3 years, which is about 20 bps a year. You're reinvesting 20% of the portfolio of the cash flows every year, which would imply that there's only around about 100 bps uplift from the maturing bonds in current levels, and that feels very, very low. I think even if you were to assume bond yields fall from here. So can you just tell me what I'm missing there, please? And then the second question, I think you mentioned that around the prudency in the reserve buffer buildup and what have you, you would look to do that in strong quarters. I'm just wondering, does that mean you will only really look to build buffers, which is what you did in the second quarter when cats are light or in a normal loss experience quarter, so 10 points of cat losses and what have you, can you still build up buffers in that scenario? And how do you go about that? And then just a very quick clarification point, if I may, sorry. The economic value growth of 9% per annum, is that in absolute terms or is that per share because I think now that you've thrown the word buyback into the mix, I'm just wondering to what extent that is a consideration in that growth?

Thank you. Francois, so three questions. Investment, income uplift, reserving and EV growth, all for you.

So on the investment side, as in the previous plan, we exactly use the same methodology. So we use the production of the cash flows, including the one that you saw on the screen over the next 3 years. We'll take the asset allocation of the portfolio at the beginning of the plan. And then there is no view of the investment team on the yield. So we take just the forward curves in all the currencies that we've got in the portfolio. And we project -- we model then the rest -- the expected reinvestment rate when there is a redemption of any bond in the portfolio and that gives you the simulation that you saw here. So there is no positive view or negative view on the evolution of interest rate, just the reflection of the evolution of the rates. You have to take into account that many curves today are inverted. So that's why we maintain also, I would say, a significant allocation to cash and short-term investments. It allows us, of course, to buy and maintain all those bonds in the fixed income portfolio. But also I would say the carry cost to be short is [indiscernible] today. So that was the first question. The second one on the buffer. So we mentioned it at the end of July during the call. So we reiterate the message today. So we want to add some buffer, some what we call some prudence in our P&C reserves. I guess you understand today why we started to mention this, and you connect maybe the dividend, the capital management framework with what we do also on the reserving side. Do we have a target? Yes. Am I going to disclose it? No. Of course, during good quarters, it could be look at positive experience variance on Life or in P&C. Of course, we will do it, or I would say we will accelerate during those quarters. But there is really determination of the management to pursue this strategy. And I guess, again, you connect the dots to -- of what we are doing between resolving on one side and the capital management framework on the other side. The third question was on the 9%, it's in absolute terms. You know that we take -- we extract the impact of economic assumption from this. And that's not over a cycle. It will be measured each year.

Thank you. Will, here?

William Hardcastle, UBS. Just coming back to something that you said that you're using forward curves effectively rather than spot on new investment income. Will you use them as well when you're assessing capital management and thinking of Solvency II? Just thinking, presumably, that means you're happy running a bit in excess of the top end of the range. That doesn't mean you won't do anything dramatic at that point if you're using forward. I appreciate you're not going to give a target number of reserve prudence you build over the next 3 years. Just trying to really get any color on that. Presumably, it feels like you'll obviously take benefits of CAP. But on an ongoing basis, should we assume that the net benefit of discount rating versus IFIE also gets rotated in? And then anything on top is there? Because obviously, within your sub-87, there's a component where we need to do the math to try and get to the exit rate for beyond. I mean, in 3 years' time, it's quite a long way off, but we're just wondering, I guess, how any sort of guidance there is helpful. And just one really quick one, sorry at streak. The 30% tax rate implied in the ROE. Why 30% just thinking about historical levels? Is there anything we need to think about there?

Thanks. Before I hand over to Francois, I just want to make sure the question -- the first question was clear for Fabian on the solvency range. So first one for Fabian and the other 2 for Francois.

Yes. We project our solvency over the 3-year strategic plan with forwards, but also with -- at constant economic assumptions. And what we have seen in some sense to predict the solvency ratio and where we land in the band, the constant economic assumption is the better or simpler model because the forward curves were very badly in back testing. And so that's the model we use, and it's quite straightforward and simpler constant economics.

So Will, on maybe your second question. So I would say evolutional impact of discount -- P&C discount impact IFIE. Let's look first separately at each item. So we provide an estimate of the discount impact, EUR 350 million for 2023. It's a simple methodology. It's much more complex than this. But from what we see with this methodology, it gives you at least a good indication, a good level, but also the trend. And if you do the exercise, so we provided for 2024, you will see that it will increase materially, I would say, from EUR 350 million to EUR 440 million. Again, calibration of the amount we could discuss this, but look at the trend. If, and that could be a nice -- a good assumption, if you consider that interest rates are going to be stable in the second part of the plan, it means that lock-in rates are going to be stable in the future. And you could expect that in the second part of the plan, the discounting impact should be relatively stable compared to 2024. Now if you move to IFIE, again, that's exactly the same thing. We provide the methodology. I don't know if it works for the others, at least for us, I mean the proxy that we give with the whole 60%, then you scale up, works pretty well and it gives you a nice indication of the way you can compute it. So EUR 340 million in 2023. Of course, it will increase, EUR 400 million expected in 2024. On IFIE, I would say that you have, of course, to take it to again the other part, which is the investment income. We don't manage like this today, but I look at the 2 components. So the discounted -- the IFIE and the investment income. If you look at the portion of the investment income related, of course, to P&C reserves, of course, the investment income is going to increase, which means offsetting the IFIE impact. We did some simulation. If you do the same, you will see it will be pretty stable at the end of the plan also, the net effect, the net effect. And then you had a question on tax, Mr. Will. So you know that in previous plan, that's true that the effective tax rate of the group was lower. It was higher during the last few years, especially due to the significant losses in our account. We increased temporarily the assumption to 30% for a simple reason, fungibility of liquidity in the financial industry is decreasing everywhere. Fungibility of capital in the financial industry, when I say financial industry, bank, insurance, reinsurance is decreasing everywhere. So our objective is to increase the amount of cash that is upstream to SCOR SE from all the subsidiaries. That's the priority number one. Priority number 2 is to locate more profits in France. When you say why? We're going to pay a tax rate of 25.8%. We have a significant amount of tax losses carry forward on the balance sheet of SCOR SE. You saw it in 2022. We had to write down a significant amount of DTA. The day we can use and start to consume those tax losses carry forward, then the tax rate of the group will decrease significantly. So we will need a few years to be there. But that's the strategy we start to implement. So that's why temporarily, but see just maybe as a transition. It could increase during the, I would say, time that we need to remove cash and profit in Paris. But on the medium term, it will be a good news for the group. Now if you look at the assumption of the tax rate that is used in CSM, in the CSM, we use a tax rate of 25%, it's a national tax rate. That's mostly CSM, that's mostly Life & Health item in the balance sheet. Our CSM for Life & Health has a very long duration. Most of those contracts are located in jurisdiction with a tax rate that is below 25%. So I'm totally comfortable by the fact that temporarily, the effective tax rate of the group could move to 30% and maintaining the 25% national tax rate in the Life & Health CSM. And again, I expect in the medium term, the effective tax rate to reduce to 25%, even below.

All right. Thank you. So Kamran here.

Kamran Hossain from JPMorgan. A couple of questions. The first one is just on -- I'm just intrigued, you mentioned the word buyback, and there was -- sounded like a little bit of kind of mysteriousness about it. Just thinking about the context of the last year, obviously, at the end of 2022, there's a little bit of dividend restraint. How are you thinking about that relative to like the hard -- the target about hard capital rebuild. So if you did get to a position where you're over 220%, would you say actually like this year, we need to build a bit more hard capital. How would you think about that? How does that interplay? Or is this just a consequence of maybe not targeting the S&P AA actual rating rather than the level of security? The second question is, it sounds very much like you're moving to the model of managing earnings, which I think is a really fantastic move, managing it, being more sensible providing more consistent results. How does that work culturally? A lots of people have been at SCOR for a long time. How does that work culturally? What work does that take? And then this isn't a question, but a more request. I guess when you're a couple of years down the line on the reserving actions, could you maybe tell us in 2025 what the number looks like?

So Francois will take the first question on the buyback in the context of the hard capital growth. On the second question, Thierry, you want to say words and then Francois can complete.

So maybe on the first question, it's not linked, your question. It's not linked yet to the dividend policy of the capital management framework. You saw it on one slide, the first slide of -- on the first slide of the finance section. So we have a strong economic value growth. The growth is mostly coming -- if you look at the CSM, CSM is relatively flat over the next 3 years. So the growth is mostly coming from equity, at least 12% per annum, which means that we have 50-50 today between CSM and shareholder equity. It should increase by 5 -- up to 10 points, depending on the dividend policy and the share buybacks we could do in the past. I would say, as mentioned by Thierry, in the first section, this is our focus. Our focus is to create value. So the focus is on economic value growth. It translates, thanks to a strong return and a strong appreciation of shareholder equity. I mentioned also the double effect of the unwind of unrealized losses. So you have the 2 effects. So then if you -- part of your question was related to S&P. Again, as mentioned by Thierry, our focus is on the economic value growth on the growth of shareholder equity, which means up capital. So the consequence of this strategy is that we are going to create a lot of S&P capital during the next 3 years. And we hope, I think or love S&P analysts in the room that are going, by the end of the plan, to recognize that we have created a lot of S&P capital during the 3 years.

The second one, on cultural change, it's an obvious one. I think that as a management team, we have engaged on a past that is sometimes significantly different to the past. You mentioned just one area, which is the volatility, what you heard about volatility, reducing volatility, bringing it more in line with overall group capabilities. I think this whole integrated risk and capital management that you're kind of bringing at the core of what we do and do what's economically right is something that's going to take a while to actually come through. I think it's going to be a process of several years. Where the impact is immediate, of course, the moment we look at our balance sheet, our capabilities. And we define that in a particular line, we have less or more appetite or we want to reduce limits. That's obviously with the new risk framework immediate and has an immediate impact, culture doesn't need to change in those. I just want everyone to be assured that whatever you heard today about the new risk framework is implemented, doesn't wait for the culture to change. But the culture where almost every underwriter has an integrated approach, economic-based, decision-making is going to take longer. But we definitely have the talent at SCOR that we'll get there.

I just want to complement my answer on the first question. Even if this is obvious, but the slide on the evolution of the economic value and the split between shareholder equity and CSM is net of any dividend and share buyback during the next 3 years, so it could give you an indication.

All right. Vinit, yes.

Sorry, if I can take you to Slide 83, please. The second bullet point there on the right is saying you want to analyze the drivers of this EV growth. Your commentary is today suggesting that you're very happy with just the shareholders' equity growth. What is the significance of this from the outside? Should we think management might have some different views about this capital management, if something changes in this? Or what are those risks? Second thing is, Thierry, you mentioned when you showed us in your first presentation -- I'm sorry, we're going to the first section, but you said the solvency ratio has been above 200% for a while. Cheeky question, but is that sort of the kind of level you think you need to be? And then -- or should we think of a excess capital deployment only above 220%. So can you guide us a bit on where you think you need to be before we start dreaming about some more money coming back?

Okay. So Francois, the first one?

We'll start with the first.

So Vinit, on the on the capital management framework. So the step number two was already in the slide for 2023, the dividend policy. What we mean by consider the economic value growth, so we look at the growth of the year. We just want to understand how -- I mean and where -- how to explain the growth. So we don't want to have a rule that say X percent of the growth is a dividend. But you have to read -- I see the slide also here. You have to read the left part of the slide, we want to distribute to our shareholders a significant portion of the economic value growth. So of course, we have to take into account that this is coming from interest rates, FX and so on. That's really the underlying profitability of SCOR that is increasing.

I think, Francois, you should take the second one as well.

The second one, can you remind the question?

Vinit, can you clarify the second question what you want to dream about.

I mean, Vinit, if I understood you well, I referred to -- we have been historically above 200%. At the same time, our range goes up to 220%. So if I understood your question well, that's why we were talking with each other. You say whether you can dream, you as investors? So your dream was that we already pay back capital above 200%. Is that the question?

Well I mean, it's a bit of a teaser question. But I mean, should we really wait for 220-plus? Or should we say, "hey, you're on the upper end." So people can define different levels of comfort and even a few points of excess solvency can lead to a reasonable start to this capital management framework. So it doesn't take that much, but we need to understand how you think about that excess.

I think in reality, as you know, and I know that not everyone likes the answer, but it is all here. And in the end, it's a consideration of the Board to set the appropriate level of dividend and/or -- sorry, buybacks potentially. So it's tough for us as a management to foreshadow what that will mean. But I can definitely say 200% is probably not realistic. I think if you go to the 220% and more, you're certainly closer to where a Board would want to be. But again, we clearly have to keep the governance in place here. Francois?

And also, Vinit, on the economic value growth, we have to admit. I mean, at least I do it, and I guess you do it. IFRS 17 is a new norm. It's a pretty complex one. We are just at the beginning to understand everything, and especially to understand the full extent of the dynamic of the financial under IFRS 17. So that's why also to put to the formula before -- it will take quarters before everybody, and I would say, including us, we will understand the full dynamics of everything under IFRS 17. We are quite modest on this.

Okay. Phil, you've got the mic.

Sorry, good timing. Phil Ross from BNP Paribas. The question, the obvious one, I guess, on step 3 of the capital management framework. Last year's DPS, should we be thinking about EUR 1.40 paid or the EUR 1.80 in the solvency calculation?

Thank you, Phil. I was expecting the answer -- the question earlier during this Q&A session. Before I answer, I think because -- let's put things in the right order. In any company, especially in the reinsurance industry, the dividend is disclosed the day you disclose your annual results. So that's normal. So what would be a normal would be to disclose it today. So you will understand that we cannot give any indication -- I mean, any number since we need and the Board will need it. And Thierry and I to make the proposal to the Chairman and the Board, we will need to have a view on the full year annual result 2023. So what we are doing today is different. Today, we introduced a new -- it's not a dividend policy. It's a capital management framework. And what do we see is that if you look at the slide, the capital return to shareholders will be the sum of 2 or 3 items, the regular dividend, plus optionally plus share buyback or special dividend. And you have to take into account -- so that's why before I answer to the EUR 1.4, you have to take into account the 2 elements or potentially 3 to assess the quality of the remuneration of our shareholders. And I want to be very clear on this, and that's clear also in the press release. So the total capital return will be determined according, as we just discussed, the solvency ratio and the economic value growth. Now if I look to the cash component, the regular dividend, you have to value something today that is just fantastic. The day you know the first one. It's a floor forever. It's a floor forever, look at the way it's worded. It's a floor forever. It can only increase. And the day it increases, it becomes the new floor. So that's -- I think it's a fantastic news. If now you look at the other component of, what we call, capital management framework, so share buyback or special dividend. The idea here is to bring, when we have a good year, the upside. But there is no guarantee that the upside will be maintained the year after, if we have, I would say, normal results. So I understand fully, if I were in the home, I will ask the same question. I understand fully your question and the question you have on the calibration of the first one. So you have to be patient to wait for early March. Don't forget one sentence I pronounced in April 2023, EUR 1.4 is not a reset. I can't say less, I can't say more. You imagine that I had the authorization to pronounce this sentence in April [indiscernible]. So EUR 1.4 is what I said. And again, 2022 was really, really a bad year.

Not so.

Yes. And also, what we are doing is if I just appeal to your memory, if you look at what did Munich Re over 1 year or 2 years ago, they did exactly the same thing. During their Investor Day, they changed their framework or the policy. And in February or March, when they published the annual result, they published the first one. So you have to wait, but I gave you indication of what you could expect. But again, you have to view the sum of everything.

Okay. Darius here.

Darius Satkauskas, KBW. Sorry to come back to capital management. So I appreciate you do the line under the ordinary, but I'm still sort of struggling to understand how to think about the special buyback. And the reason being is, if you just targeted Solvency II range and economic value growth, we could sort of work with that. But I suppose you've also communicated the need to rebuild the reserves and manage earnings, and I struggled to consolidate. So maybe if you could provide some help, is your reserve rebuild, is it a multiyear sort of venture? I appreciate if you kind of give us a hard number, but I assume if you make more than 12 -- substantially more than 12% ROE, we could sort of imagine the surplus and have a decent solvency. The surplus going to specialty repatriations, but now we know you can manage it down to you to rebuild the buffer. So how do we balance it? You wish to rebuild the buffers and also repatriations in special or buyback?

So it's an excellent question. We've got our Group Chief Actuary, that is on the fourth row of the room. We want to add buffer, that's clear. We are going to do it when we have good quarters or when we have positive experience variance, either on Life or P&C. There is a limit to buffer. Any point when you move within the best estimate range, at the end it starts to be exponential. So if we want to stay within the best estimate range, but to add buffer and resilience in our reserves. You understand clearly that we cannot communicate the target. This target is achievable over the next 3 years, given good market environment and [indiscernible] market on P&C. I don't think it will affect a lot the dividend policy and the share buyback policy. If you look at what we did in Q2, again, when we had EUR 500 million of results for the first 6 months, that's the semester to start -- to initiate and to do this. So I can't give you any quantum. You can imagine it can't be enormous. If not, at the end, we will be outside the best estimate range. So I think our auditors and the tax authorities will start to have issue with us. Again, I gave you an indication, make the link between the dividend policy with the floor, the idea of the buffer theory is really to smooth the volatility, to absorb a large event, deterioration of the solvency ratio, again, to have the facility to pay the regular dividend. It could give you an indication of the size.

All right. James?

My 2.5 questions. So firstly, the decision of kind of running the business on economic value, commendable. If I roll forward your kind of whether it's solvency or whether it's your economic value at the 9%, that's not really the limiting factor. The limiting factor is your free cash flow generation, which is the 1.5 that you're targeting by 2.6. So ultimately, your solvency is building more quickly than your distributable cash is. So how do you actually square that? I mean, at some point, you're going to have to reset that solvency level by doing some sort of back book transaction or what are the options available to manage that solvency versus cash flow situation? That's my first question. Second question, you mentioned that the reinvestment rate is based on forward curves. I just wanted to be clear that the IFIE and the discount rate benefit is not based on spot curves. It's also based off forward curves because otherwise there'll be an inconsistency there. And then my issue of clarification was just, Francois, what you said about the absolute level of economic value growth of 9% because you said it's net of dividend and buyback. But I seem to recall reading a footnote that is adjusted for the prior year dividend. So just to be crystal clear on that point for me, please.

Okay. So well, let's start with Fabian and Francois. Is it Francois, Fabian? Well, let's start with Fabian, then Francois.

Okay. On the cash flow, I don't think we see disconnect that you have described. I mean we have quite an integrated way of looking at this. You have the consistent cash flow between IFRS 17 and Solvency II and we use exactly the same basis. So we manage that in an integrated way and the focus on, in some sense, improving this cash flow situation will help, obviously, solvency as well, but this is integrated already in the current framework. And maybe because you mentioned the way we steer the business, it is clear that the economic value approach that we've got is at the level of the group and the level of the Comex. You listen to Jean-Paul, the underwriter Jean-Paul, they have to deliver a combined ratio below 87. So that's the way we manage and practice, on the ground, the business. On your second question, maybe I was not clear. So the economic value growth, as we did already for the first 6 months, we take -- it's absolute in terms of evolution during a period of time. We are going to measure it for the dividend every year. And the target is per annum and not over the cycle like before. And of course, we subtract the dividend that is paid in a given year for the year before.

And there was just a question on the forward curves as well.

Yes, I think if I read your question properly, you're asking -- you said the investment return is based on the forward curves and you're asking whether the same was done for IFIE and discounting.

So what you saw, I mean, the guidance we give or the assumption we give on the investment income and the regular income yield has been computed, just for the illustration of this slide and the assumption of the plan has been computed based on the forward curve, so which means what I said is that there is no view of the team of acceleration or deceleration of the increase or the decrease of interest rate. We take the view of the market as of today. On the fee and the discounting, the methodology we give is just based on the lock-in rate.

Okay. Freya?

Freya Kong from Bank of America. Could you just update us on, I guess, any more color around ALM capabilities, where you are on improving that? What's the time line? And how much could your economic value and solvency ratio sensitivities reduce?

So maybe on ALM, let's start by what we are doing today and what we would like to do tomorrow. What we have been doing at least now for the last 10 years, we use the economic balance sheet and not the IFRS 4 balance sheet. So we use the economic balance sheet under Solvency II to compute the duration. And the objective of the ALM strategy still today is to have a full immunization of the economic own funds under Solvency II. And if you look at what we did, and then we compute the implied duration and convexity of the invested asset portfolio to have an immunization of those own funds and then we position the portfolio according to this target duration. We used -- in the past, if you remember, we used to disclose this target duration. Over the last 10 years, we have been always matched except 2 years ago during a quarter where we took some gains on the fixed income portfolio. I think it was early 2021. But over the last 10 years, we were matched. What Thierry mentioned is that, thanks to the investment we made for -- to deliver IFRS 17. We have access today to more granular information. So the economic balance sheet, we have less granular information to do this -- to put in place this [indiscernible] more. We have access now to information at contract level. So we have more granular information, especially on the pattern of the cash flow and the sensitivity of those cash flow to interest rate and also ultimately to FX since we consolidate everything under -- in euro. So the idea is to use this granular information to improve the methodology, to improve the framework and to make sure that at least we make those future long-term cash flow as stable as possible at least in connection with any interest rate valuation or FX valuation. And we are going to create a team that will be focused on this.

Exactly. And like in -- just to add, so like with everything else, in ALM, we will also -- I mean, today it's very clear. It's the eligible own funds that are being stabilized. Tomorrow, we'll have to do what we do otherwise in other areas. We'll have to say, okay, what comes first, second, third, fourth, because what we cannot do is just stabilize everything. So the first thing you would expect from the new team is actually going to come up with a proposal of what we do and how are we going to achieve this. So that's the evolution of our ALM.

All right. May I check if we have any questions online?

We have 3 questions from Ashik Musaddi from Morgan Stanley. The first question refers to Slide 62. Slide 62 shows the limits for equities and real estate is 20% combined, but you're at 3% now. Should we expect more in equities and real estate going forward? Ashik's second question is on cash flow. He asked for a definition of operating cash flow. The EUR 1.5 billion is a big number compared to your holding company cost and dividend cost. What are the amounts we need to adjust in this number to understand the cash flows available to be distributed and/or used to grow and/or used for M&A? And the third question is a follow-up on one asked in the room. Is there space to build extra buffers based on your 87% combined ratio guidance? And assuming nat cat normal experience variance, is the buffer built solely possible in the event of lower cat losses or better experience variance?

Francois?

I think I've got the 3 questions. So we don't change the asset -- the strategic asset allocation. So we don't change the risk appetite. It's true that we have a limit for equities at 10%, real estate 10%, so the sum is 20%. We have relatively low exposure, almost no listed equity in the portfolio, and 3% exposure to real estate. While we have such a low exposure to listed equity, in the past, it was linked to the fact that under all capital rating models and all -- I include all capital models, equity is a costly asset class in terms of capital charge and capital intensity. So you saw it since, what, 2011, we started to decrease massively our exposure to listed equity. It brings volatility. And since the implementation of IFRS 9, you have only the dividend in the P&L and the difference of the treatment could -- is not favorable. So don't expect an increase of our exposure to equity. On real estate, I gave an indication at the end of July. We've got some fears about real estate, not only in France or in Europe, but I would say everywhere in the world, that's linked to the increase of interest rate. I don't know if there is a bubble on real estate today, but at least I expect real estate prices to significantly go down in many countries. We start to see it on the real estate market entirely for offices. You saw it, we impaired 1 building in H1. So we won't increase the exposure to real estate before the explosion of this potential bubble. So that's not planned over the next 3 years. On your last question on cash. So cash, that's the operating cash flow coming from the 2 business units, Life & Health and P&C. So you see we have a significant improvement, EUR 1 billion improvement. So it was clear and mentioned by Frieder and also described in his section. Most -- the EUR 1 billion improvement is coming from Life over the next 3 years. And that's linked to the fact that COVID payments start to be behind us, and we bring new business with positive cash flow that's start to offset the effect of the coinsurance book in the U.S. Frieder was mentioning earlier this afternoon. On the P&C side, if you look at 2022, we had EUR 1.2 billion of operating cash flow from P&C. This should decrease a little bit over the next 2 years. We are in the payment phase of the large claims over the last few years. It's what, between 3, 4 years, the timing or the duration to pay those claim. So it should reduce a little bit, unless there is big events during the plan, but it should normalize again to EUR 1.2 billion by 2026. Is it enough to finance expenses, financing costs and so on? of course, yes. No, but you saw it. We have management expense budget of EUR 1.2 billion and it doesn't take into account the contribution of the investment portfolio. And the significant change on expenses is that we are going to maintain flat this budget over the next 3 years. So that's also a source of increased profitability of SCOR over the next few years.

Just one point on the buffer because the question came twice. Whether we can build reserve buffers in a year where we have normalized or normal -- sorry, not normalized, normal cat losses and normal attritional losses. So the answer is, yes. Over the planning period, we can build. Assuming there is just a normal quarter and a normal attritional loss quarter, we can actually still build buffers if we decide to.

Okay. Are there any other online questions that have not been asked yet?

Yes. There are 3 questions from Andrew Ritchie, Autonomous. One is a finance question and 2 are business questions. The finance question first. Where was the weakness in centralized liquidity management, which we imply, given the work to improve this? I thought SCOR already had quite high levels of fungibility, even improved already in recent years. Then the business questions. The first one is, can you comment on the group's man-made per risk limit appetite, and whether this needs remediation? Is it consistent with the desired volatility outcome of the P&C Re and specialty books? And the third question, what has been the historic profitability of the IDI business in which the group is a leader? Is it fair to say that this is a very long tail line of business quite associated with lots of reserve uncertainty?

All right. Thank you. So we've got one question on liquidity management, which Francois will take. And then 2 questions on P&C, which Jean-Paul will take.

So on liquidity management, I mentioned 2 items. So the first one is internal acquisition and the other one is internal capital management. We are going to change the way it was structured in the past. Again, the idea is to bring back more profit and more cash in Paris. So we are going to change the structure of the internal retro, it's a massive restructuring. It will take to at least 2, 3 years, by putting in place mostly quota shares between our entities, especially for P&C and SCOR SE. Today, I mean, we have a little bit the opposite effect. We bring the bad news to Paris when there is a large event. So that's in the account -- in French gap of SCOR SE. And again, my idea here is to bring more profit in Paris to start one day to use the DTA that we've got in the balance sheet. So to do this, it will be better implemented by a single team, of course, in connection with the 2 business units and all local CFOs in the world. So that's on internal retro. Internal capital management and equity management, the goal and the direction is clear. We would like to do dividend as much as possible, of course, by maintaining the local solvency ratio and be in compliance with the local regulation, but the idea is to upstream the maximum amount of liquidity to SCOR SE. Jean-Paul?

I think the other -- first question was on the per risk retentions for the large corporate risk. So we intend to continue to deploy significant capacities in that segment, which allows us to act as a leader in these lines of business and extract the terms and conditions that we're looking for. However, we've been actively managing our retention through reinsurance. This is what Romain mentioned in his presentation. And so we'll continue to actively do this going forward. This is what we've been doing over the past 2, 3 years. Some of the losses are related back to underwriting years that were prior to this. But on the more recent underwriting years, that's something we're actively managing. The other question was regarding IDI. This is a line of business that's in -- so it's 10 years typically of, let's say, the tail. In the way it's implemented, in the way we underwritten first in France and Europe and then globally, it's been extremely profitable. It's probably one of our most profitable lines of business today. Your question relates to reserves. We find that the process, which includes the policy wording, crafting with our clients as well as the risk inspection is actually a key to claims management, and this is the main driver of the good claims experience. And this is what -- we've been implementing the same methodology in developing countries, and this is also why it has been developing very profitably in developing countries.

All right. So we exceeded the 45 minutes. So I'm now going to leave the floor to Thierry for a closing remark.

Thank you, Yves. So over the last few hours, I hope you're not too tired by the way. It has certainly been very intense when you're sitting in front here, but I do recognize that it is a long time. So over the last few hours, we have presented our ambition, our strategy and targets for the next 3 years. I'm convinced that SCOR has the strategic edges to deliver an attractive value proposition to its shareholders. With the launch of Forward 2026, SCOR will focus on driving value creation by shaping the reinsurer of tomorrow, and Francois said it, addressing investors' concerns. We're all, of course, in a market with large opportunities, and I see SCOR ideally placed to support our clients first and make the best of the market. We will deliver on our 2 targets. We said it many times, I repeat, 9% economic value growth per year and the solvency ratio within the optimal range of 185% to 220%. Through our new capital management framework, we intend to distribute the significant part of the value creation and to offer a resilient and predictable dividend to our shareholders. I, together with all SCOR employees, look ahead with great enthusiasm, confidence and determination to meet the challenges and seize the opportunities ahead. And to you, I would like to address two thanks. The first goes to the entire SCOR team. I'm in this job since 4 months. And you can imagine that I will never be able to stand here and tell you what we have told you today without the amazing support I got from this group of people, but also from many SCOR employees over the last 4 months. So my first thanks goes to all of you and all the people that have contributed to this -- to bring us to this. We are very proud about our Forward 2026 ambition. We all believe in it, and we're all really ready to deliver on it. With that, I thank you all for your time coming to Paris as well. For some of you and to everyone online, again, many thanks. Yves, back to you.

So that's the end of the presentation. So thank you very much, everybody. Thank you, Thierry. So we'll be releasing the Q3 results on the 10th of November. And I think now we can all head outside. Thank you.